Business Environment of Small and Medium-Sized Enterprises

The provided text appears to be an extract from a thesis or research paper on the business environment of small and medium-sized enterprises (SMEs) in selected regions of the Czech Republic and Slovakia. The document references multiple sources and studies related to SMEs, including their knowledge management practices, innovation initiatives, and productivity. It seems that the assignment requires students to analyze and discuss these topics in relation to the business environment of SMEs.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
SECTION 1......................................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explain different types and purpose of organisation.............................................................1
P2 Explain size and scope of range of different types of organisation.......................................2
TASK 2............................................................................................................................................4
P3 Relationship between different organisational functions and how they link to
organisational objective and structure.........................................................................................4
SECTION 2......................................................................................................................................5
TASK 3............................................................................................................................................5
P4 Positive and negative impact of macro environment on business operations........................5
TASK 4...........................................................................................................................................8
P5 Internal and external analysis to know strength and weakness for UK Retail sector............8
P6 Identify how strength and weakness relate to external macro factors...................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Business refers to activities which helps to earn livelihood of individual. There are
different types of organisations which works to achieve goals and objectives such as
earning profits, social service. Business environment refers to external environment of
enterprise which affects operational activities in either positive or negative way (Bah and
Fang, 2015). It is responsibility of managers to analyse external market and corrective
measure has to be taken. This essay is based on retail Supermarket of UK. This essay
highlights on different types, size and scope of organisations, interrelationship among
different department of organisation and its relation to organisational structure. Apart
from this it also highlights positive and negative impact of business environment on
business operations and lastly strength and weaknesses to external business factors.
SECTION 1
TASK 1
P1 Explain different types and purpose of organisation
According to Khan and Quaddus, 2015 Business organisation means place from
where business operations are operated. These days there are different types of
organisations having various motto to operate in society. These different motive affects
working style of personnel. There are mainly three types of organisations, i.e. profit, non
profit, non government organisations.
In this report, there is discussion ASDA as profit organisation, Fairways is the
example of non profit organisation and Oxfam is example of non government
organisation. There is difference in motto, aims, objectives of these organisations which
are discussed as under-
Profit organisation are the organisation which serve society to earn profit. In
these business retailer, restaurants, etc. are considered. Profit business organisations
can be in form of sole proprietor, partnership or company. They have motive to earn
profits and expand business. Source of funds in this business is profits from selling of
product and services. ASDA, ALDI, TESCO, Sainsbury are examples of profit
organisations. They have aim to earn profit and expand business. Capital can be raised
through bank loans, crowd funding, etc.
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Non profit organisations are the enterprise who wants to serve society with basic
services. They do not work to earn profits. Revenue earned by such organisation are
reinvested to improve services. Club, trust, public hospitals, etc. are examples of non
profit organisation. Non profit associations has motive to serve society. Revenue
generated from public is revenue. But surplus is reinvested for future use. Fairways is
example of non profit organisation. This organisation has aim to provide social care,
support, training and education services to children and young people. These are the
organisations which operate in service sector.
Non government organisations are the associations which work for some social
cause. Association of people is run as non government organisation. These form of
business are run by volunteers (Belás and et. al., 2015). They have motive to improve
living of standard of society. They work to improve condition of sufferers from disease,
human rights, etc. Subscription fees, donation, etc. source of revenue to operate such
organisations. Oxfam is example of non government organisation. This organisation
works to remove poverty from society.
P2 Explain size and scope of range of different types of organisation
Business organisation means person or group of people working together to
attain same goals and objectives. There are different types of organisations hence there
is difference in working style of association. There is difference in their scope and size
also. There are mainly four types of organisation which have different scope, size and
objectives. They are discussed as under in detail-
Micro business are the organisations which are owned by single or two people.
This business is generally family owned business at operate at very small level. In this
business there are maximum five employees. In UK around 76% business are managed
and owned by single person (What is a micro business?. 2015). For example- hair
dresser, cobbler, plumber, boutique, etc. are example of micro organisations. These are
the organisations which operates to earn basic livelihood. Quantum Technology
Marketing is example of micro scale organisation.
Scope of this business organisation is not so wide because they can not operate
in long run. These business gets shut own in case of lack of funds or change in external
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environment. Micro small business does not get affected with external environment and
they do not analyse market to alter their business.
Size of these organisations have less than five workers which may be part time
or full time. This business is operated by family members. Annual turnover of such
organisations is less than £2 million.
Small business has larger than micro scale business. After growth and expansion
micro business organisations turn into small business enterprise. Small business
enterprise are privately owned associations in the form of sole proprietor, partnership
(Botha, Kourie and Snyman, 2014). Example of small business organisation are Brain-
labs. This is the organisation which manages online marketing campaigns. These
organisations work to make long term sustainability in industry.
Scope of these business organisation does not operate at high level. They have
lower revenue and turnover as compared to medium and large scale business. There is
lack of funds which affects business operations in negative way. These business
organisations affected with external environment but due to lack of funds, they are not
able to respond to external business alterations.
There are less than fifty employees. Turnover of small business organisation is
less than £10 million.
Medium scale business has aim to expand business. They have objective to
increase goodwill hence they analyse market and then take actions. Managers of
medium organisation plan operations according to external market. They have funds so
they tries to use approaches through which satisfaction of customers can be achieved.
Medium organisation operate at larger scale as compared to small business
organisation (Cai and Yang, 2014). Orion electro-tech limited is example of medium
sized organisation. This organisation has group of more than 50 consultancy firm which
provides skilled and qualified employees across UK.
Scope of this organisation is more because it has operations in all over country.
They have good profits and at the same time. They analyse market trends and then
product and services are offered. These organisations have aim to expand business in
all world.
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Medium sized organisation has less than two hundred fifty employees. They
have turnover of £50 million. They have operations in overall country.
Large scale organisations are largest in terms of operations in industry. These
are associations which operates in different parts of world. They accept market
changers frequently because they have different sources of funds. These business
organisations wants to compete with competitors and able to diversify business. TESCO
is best example of large scale business organisation (Caiazza, Shimizu and
Yoshikawa, 2017). This is one of the biggest retail store in United Kingdom and have
outlet in different parts of world. Such as India, Russia, China, America, etc.
These business organisations have largest scope. They have outlets in different
parts of country. It is essential for these organisations to pursue operations according to
customer demand. This helps to maintain long and good relations with customers.
In these organisations, there are more than five hundred employees. They
innovate new services in order to get edge over competitors. They have branches,
stores and outlets in different parts of country.
TASK 2
P3 Relationship between different organisational functions and how they link to
organisational objective and structure
There are different organisational structure such as functional, divisional, matrix,
etc. They have different working style. Apart from this there is use of project,
international and global organisations are part different organisations which operate at
different levels to achieve aims and objectives. Some of the them are discussed as
follows-
Functional structure is also known as bureaucratic organisational structure. In
this structure UK retail sector organisations are divided on the basis of various
functions. Divisional structure is used for large retail organisations. This structure is
relevant for different geographical region. In divisional structure, there are different
departments which are working in order to accomplish goals and objectives. In this
there is correlation among divisions but commercial activities are performed on their
own. Hence sometimes, there is duplication of activities which affects cost for
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organisation. Project organisations are established to accomplish some specific project
such as launching of new product. After completion of project these organisations
dissolved. Matrix structure is also known as hybrid organisation. This structure is
followed by multinational organisations and has feature of both divisional and functional
structure. International organisation are established by treaty which is governed by
global law. These organisations have operations in different countries and hence
governed with respective laws.
Size of such business organisations are large and scope of working is also wide
because they have membership in different countries. Global organisations have
headquarter is one country but they serve goods and services in different countries
(Cull and et. al., 2015). When national organisation expands its business in other
country then it becomes global association.
Size of global organisation is large and they have less legal restrictions as
compared to international organisation. Scope of growth for global enterprise are more
because they can enter through different modes such as partnership, joint venture, etc.
Mission and objectives of functional department can be determined with the help
of completion of assigned targets. There are different tasks which has to be performed
in organisation such as field sales, e- commerce sales, etc. there are some specific
targets which has to be achieved within specified time. With achieving of this target,
mission and objectives can be achieved. This helps to provide knowledge about
different task to employees and objectives gets attained in positive sense.
SECTION 2
TASK 3
P4 Positive and negative impact of macro environment on business operations
In modern world, it is necessary to recognize all external factors in advance to
accomplish goals of retail sector. The main motive is to adopt new technologies and
trends in order to serve customer in effective manner. In respect to UK retailer sector,
several elements are there which affects the growth of various firms dealing in retailer
sectors. To identify various various conditions pestle is used as follows:-
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In pestle analysis P stands for political component. Legal bodies plays vital role
in developing retail industries (Eling and Schaper, 2017). The factors are government
rules, regulations and policies which are mandatory to perform in this sector. In context
to chosen UK retailer sector, this action have their own terms and conditions. The
positive impacts of this component is government stability in UK so government policies
are implemented in appropriate way. The best part of this country is that they attract
investors from various countries. Hence the role of Foreign direct investment are liberal
for development of various sectors like grocery, sports, technologies, real states etc.
The negative impacts of this factor is they have a lack of clarity about intended exit of
UK from European Union which make it difficult for retail sector for effectively plan for
long run (Epifanova and et. al., 2015). If there is fluctuations in tax rate will also hamper
the growth of UK retailer sector.
In pestle analysis E stands for economical factor such as tax rates, Fiscal
policies, GDP rate, etc. This model plays vital role in trade practices. It helps in
diversifying the sale of industry and generate more revenues. In context to UK retail
sector, needs to maintain impressive sales operations because through this shape of
economy enhances and develop higher disposal income which aids to customer
confidence. The positive impacts of this factor is that they allow large number of
population for developing small markets that is some how profitable for economy. UK
retailers also have an opportunity to diversifying their large private and public industries
for processing better economics of scale. This component also have negative aspects
like low recovery in economic recession in UK. Also have huge amount of money is
invested for providing cashless services to migrants in recent years.
In pestle analysis S stands for social factor such as population growth, age
distribution, etc. This factor plays key role in retail sector because society is framed from
the ultimate consumer. In respect to UK retailer, their main motive is to provide accurate
services as per the customer demands and wants. The positive impact of UK retailer
regards to this factor is that they provides autonomous public services to consumer like
health services. This country offers high standard of living to society. This factors also
have negative aspects such as, UK population is multicultural so the retail sector needs
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to develop new variety products which are as per their cultural aspects. Through these
drastic upgraded changes in education cost level according to time.
In pestle analysis T stands for technological factor. Technology plays vital role in
developing retailer sector. This components develops higher infrastructure and
opportunity to retailers. In context to UK retailers, London is greatly known for both
technological and financial establishment (Georgescu, and Popescul, 2015). Retail
industry are often processing technologies and offer excellent solutions for customers.
This component contains positive aspects in respect to UK retail sector are like they
develop innovative thoughts and skills. This helps to provide best services to customers.
Technological factor also have several negative aspects like regular changes and up
gradation in technologies which increase the cost of industry as they have have to cope
with current innovation in order to deal with customers demand.
Legal factor includes rules and regulations which are essential to be followed by
Retail organisations. There are some laws such as employment act, safety and security
act which has to be followed by retailers. Positive aspect of legal factor is that it is
beneficial for employees because they are working under healthy environment. This
helps to build good and long term relations with employees. Negative aspect of legal
factor is there is requirement of legal practitioner which provide knowledge changes in
legal aspects. This is costly approach for UK retail sector organisations.
Environmental factor includes changes taking place in climate. These days there
is more emphasise on use of source of natural energy. This is renewable source of
energy which is cheap and readily available. As positive aspect it insist on more use of
natural energy such as solar energy, consumption of retail sector, etc. This is beneficial
from environmental prospect also. As negative aspect there is issue in quality of raw
material or availability of material because of rain which affects quality of retail sector
organisation or delay in delivery of product and services to consumer which affects
growth of business organisation.
From the above discussion it is clear that there is important role of external
factors which are crucial and relevant for organisation to attain good image in industry.
Political factor is important because, there is change in political parties so UK
organisations has to understand and take actions to deal with it.
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To operate in retail sector, it is responsibility of managers to deal with changes
which are crucial and significant for attaining good image. External factors are not in
control of managers, so accepting change is the best way to improve brand image.
According to change in policies external factor managers has to be alter working style,
to attain long term sustainability in industry.
TASK 4
P5 Internal and external analysis to know strength and weakness for UK Retail sector
Porter's five force models are helps in identifying, summarising, classifying and
analysing the competitive aspects that shape industry sector and aids to recognise
strength and weakness. This model contains five elements are as follows.
Bargaining power of consumers specifically deals with how the ultimate users
can drive higher price into lower (Huang-Horowitz, 2015). In context to UK retail
industry, consumers have rights reduce or lower the cost as per they want. Power of
suppliers in term of UK retail industry have techniques to rotate the price of goods and
services. To adopt several changes and techniques suppliers have high bargaining
power which affects the growth of UK retail industry. Threat of new entrants plays vital
role for UK retail sector because entering of new industries in current markets creates
competition for others. This model offers tough barriers for existing industries by
launching new trendy feature to attract customer. Threat of substitutes in context to UK
retail sector is high because they have similar products to purchase. If one commodity is
not available or it's price is advanced then consumer have other choice so this factor
becomes dangers for other products.
In context to UK retail sector industry rivalry creates threats for several industries
those production units are similar to each other. If competition between industries are
low then they have greater opportunity to achieve goals and generate more profits.
With porter's Five Forces Model, competitive advantage of association can be
attained. But there is requirement of some internal skills which are crucial and relevant
for attaining good brand image. Hence SWOT analysis is done which provides
knowledge about internal strength weakness and external opportunities and threats.
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With this retail sector organisation, external analysis can be understood with SWOT and
hence they are able to compete with other firms.
SWOT Analysis in respect to UK retail sector
Strength of this sector is when industries have plenty of financial backup in terms
of capital, more stake holders, investors etc. Another major strength is retailers get low
price of products from wholesaler. Weakness of UK retail sector is if in present time
brand have weak image or lack in identifying the consumer taste and preference in
market place is a major drawback for industries (Khan and Quaddus, 2015). Retailers
needs to focus on customer mind instead of others segments. Many opportunities are
there for UK retail sector like they have to identify possible outcomes through market
survey or researches. The main motive is to serve consumer in accurate manner. Also
analysis the new techniques and try to adapt in current market. UK retail sector have
many threats like fluctuations in demands of customer through dynamic environment.
Increase and decrease in recession rate and price challenges between competitors
(Virglerová, Dobes and Vojtovic, 2016). Most important shopping nature of consumers
etc. are threats for London retailer industry.
From the above discussion it is clear that there is important role of internal
strengths and skills which helps to make long term resistance in industry. This is
relevant and crucial for maintaining long term resistance in industry. There is
opportunities for diversification of product to achieve good profits and revenues. Hence
SWOT analysis is important for making good brand image and achieve competitive
advantage.
P6 Identify how strength and weakness relate to external macro factors
Elements of external environment plays important role of growth and
development of organisation. These factors plays important role as strength as well as
weakness.
Political policies for UK retail sector is consistent so this is opportunity of growth
for retail industry because they are consistent related to operational plans and policies.
Economic policy of UK such as tax rate, fiscal policies, etc. are high, so this is threat for
retail organisations. This affects profits and revenue of retail sector organisation in UK.
In UK there are people of different backgrounds, so growth prospects enhanced. This is
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opportunity for growth of retail sector through diversified product and services.
Technological changes are taking very fast in retail sector such as packaging of goods,
operations through artificial intelligence, etc. In this case, this is costly approach for
retail organisations (Menychtas, A. and et. al., 2014). Hence this is threats because this
affects cost and profits of UK retail sector. Legal policies of UK are strict. In case there
is alteration in rules and regulations, then retail organisations has to later it. This is
opportunity for growth because it boost satisfaction of employees and customer as retail
organisations are working up to the mark as legal policies. Environment of UK is good
and friendly. There is more use of natural energy, so this is opportunity of growth
(Moroni, Arruda and Araujo, 2015). This helps to reduce cost and conserve natural
energy.
CONCLUSION
From the above discussion it is clear that business enterprise is the place where
one or number of employees are working to attain good profits and maintain resistance.
Private organisation has aim to earn good profits. While at the same time non
government organisations has aim to serve society. There are different types of
organisation such as micro, small, medium and large scale organisation. There is
difference in their working style, size and scope also. For instance small scale
organisations has less than 50 workers. This report highlights different types off
organisational structure such as functional, divisional, matrix, etc. SWOT analysis is
done to analysis internal positive and negative point of organisation. PESTLE is done to
analyse external environment of organisation. Porter's Five Forces model is used to
know competitive advantage in industry for sustainable development.
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Online
What is a micro business?. 2015.
<https://www.thecompanywarehouse.co.uk/blog/what-is-a-micro-business>
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