Impact of Business Environment on Company Performance

This assignment delves into the significance of the business environment in shaping a company's performance. It highlights the importance of determining PESTLE (Political, Economic, Social, Technological, Legal, Environmental) factors to create a full-proof plan within an organization. Additionally, it emphasizes the role of organizational structure in promoting a positive business environment and how it can influence profitability. The assignment also touches on the perception of state's influence on its business environment among SMEs from Czech Republic and examines the impact of business environment on socio-economic performance of informal microenterprises.

Business environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Assessing the management, structure and governance of Burberry PLC company...................1
Evaluating the impact of external business environment on the organization............................4
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business Environment refers to all those factors that effects the ability of the business to
build and maintain the successful customer relationship. An Organization may be influenced by
its external and internal environment. This study will be based on the macro environment of
Burberry PLC enterprise. It is a British multinational fashion industry who provides the large
variety of luxury goods.
Burberry Group is a manufacturer, wholesaler and retailer company who builds a strong
customer relationship. This report will help in determining the structure assessing the
relationship of different stockholders within the business. This document will also help in
evaluating the significance of the PESTEL analysis in the business. It will identify strengths and
weaknesses of the organization.
MAIN BODY
Assessing the management, structure and governance of Burberry PLC company
History: Burberry PLC was founded in 1856 by Thomas Burberry, initially the organisation
focuses in producing Trench coats, ready-to-wear outfit etc. This enterprise originally focuses on
the development of outdoor type of attire and this company is now entered into a high fashion
market. Thomas Burberry was a 21 year, a former draper's apprentice who has opened his own
store in Basingstoke, Hampshire and England. This company signed agreements with the
worldwide manufacturers in order to produce complementary products (Prajogo, 2016). Such
products were initially manufactured and supervised by the Headquarters situated in London and
then such production was distributed through independent retail stores. In 2001, a chief creative
officer was appointed named Christopher Bailey. This company generally deals with the Ready
to wear outwear, fashion accessories, perfumes, cosmetics and sunglasses.
An organisation is a comprehensive unit which consists of various different types of
department in order to distribute tasks and activities who are aimed at achieving main objective
of the firm. Management is one of the important concept which consists of managers who
manages and directs all the activities of the business. Structure of the Burberry PLC can be
defined as the way in which supervision and task allocation takes place which helps in
identifying way of organising the employees and also determining the way employees answer to
their superiors (Hamilton and Webster, 2018). Burberry PLC company has a solid financial
performance till 2016 and also organisation consistently executes various key strategies in the
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business in order to collaborate the technology within business. Under the leadership of
Christopher Bailey, Burberry has exceeds its revenue achieving the continues global brand
momentum.
This organisation follows the division based management structure. This organisational
structure allows the manager to divide different teams on the basis of different departments. This
division within Burberry Plc may be performed according to various elements such as Function,
product, geographic territory etc. this structure is based on the functional activity performed in
the business. Such departments may be categorised as finance department, Human resource unit,
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Illustration 1: Divisional organizational structure
Source:(Organizational structure, 2018)

marketing and sales etc. Burberry enterprise generally uses the divisional approach to manage
the activities of the organisation because it helps in categorising into various different
department.
Corporate governance in Burberry
The main purpose of the governance is to facilitate the effective, entrepreneurial and
management which helps in delivering the growth and sustainable development of the company
(Hillary ed., 2017). Corporate governance is responsible for the relationship between
management of the company, its shareholders, its board and other stakeholders. It is the
responsibility of the board to support management in achieving the strategical objectives of the
firm. It enables the manager of the Burberry to continue to perform successfully for various
stakeholders. As the formulation power lay in the hands of board so ultimately they are
responsible for the long term success of the group. All the decision making powers have been
reserved for the approval of the board. Such decisions may includes the strategic decisions,
financial decisions, operating plans etc. it is very important to maintain the good relationship
Board of Directors and Stakeholders because BOD maintains all the records regarding the
business strategy, trading performance and Risk management which need to be coordinated with
all the staff members.
In Burberry, BOD consists of 8 members namely Chairman John Peace, CEO,
Angela Andrehns, Executive president, Stacey Cartwright, CFO, Andy Janowshki and five
non executive Directors (Shareholders). Also, the Chairman is responsible for leading the
Board and arranges the commitments with different non executive directors.
Stakeholders are those people of the organisation who may effects the policies actions
and objectives of enterprise (Bah and Fang, 2015). Some examples of stakeholders are creditors,
directors, employees, government, suppliers and all those communities from which the
company derives their resources. Poor oversight leads to the board publishing the additional
evidences that supports the disclosure in the annual report. The stakeholders may be internal or
external As the CEO of the company has asked for resigning, the board of the company decided
to appoint new director. This increases the chances of uncertainties that effect the long
term influences on the profitability of the firm and it may result in the governance risk for
investors. The Board of Director is the highest governing authority within the management
structure. The conflation of management and creative responsibilities at Burberry also perched to
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corporate governance principles. The committees can engage the third party consultants and
independent professionals, advisors and other stockholders such as company secretary, external
advisor and other directors. Different stakeholders and board members involved in Burberry are
as follows:
Employees: They also plays the important role in production of the goods and services on the
basis of the strategies made by the higher management authority (Virglerova, Dobes and
Vojtovic, 2016). Employees are directly involved in the production process so ultimately they
are one who serves the services to the people.
Shareholders: The shareholders are also known as the owner of the company as they owns the
company shares while the managers are those owners who manages the business. So a
shareholder has no right to be a director and director has no right to e a shareholder. The board of
director is appointed to act on behalf of shareholders in order to perform day to day business
activities.
Customers: Consumers are those stakeholders who consumes the quality based products at
reasonable prices. Customers are very important for Burberry because these are the final
purchaser of the product to which all the production process is held according to their demands.
Evaluating the impact of external business environment on the organization
External environmental factors influence the company's overall performance and also
affects the business environment of Burberry enterprise. These factors influence the decision
making power of the company which results in the ineffective performance of the organisation
(Miller and Jentz, 2017). Major external environment of the business includes six factors such as
Political factors, economical, social, technological, environmental and legal influences.
It is very important to carry out the Pestle analysis of the company because this helps in
determining significant changes in different factors of macro environment. As this company
operates its business all over the world, so different places are abided by different laws and
domestic rules. So such factors may prove unfavourable to the activities of Burberry. Pestle
analysis provides various operating challenges faced by the Burberry PLC which effects the
profitability of Burberry Plc company.
Political factors
This factor plays a signifiant role in determining the impact of political factors. Such
factors are mainly concerned with the rise in the taxes of the government which ultimately
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affects the cost of the production. Also, this leads to the political instability as high tax rates are
imposed on outsiders so that domestic production will be largely promoted and supported. Due
to the huge competition in the market where cheap products are generally produced, Burberry
company have faced various challenges. Effects of the political macro environment on business
are described below:
 Tax rates and incentives will be resulted in the high prices of products in Bur berry.
 Trade regulations and tariffs imposed on the goods largely impacts on the political factors
of Burberry
 Government of some countries is not stable. For example due to the terrorist attack in
Europe resulted in the sales of the goods and services.
 Exchange rates and currency of the host country also lead to the great impact on th
profitability if the Burberry industries.
 Political factors of the industry also gets affected by the wage legislation of the country
as the labours are directly related with the production of goods and services.
 Product labelling and other requirements associated with the manufacturing of goods and
services also effects the political factors of the Burberry.
Also, the fight against the boycott of the Chinese market influenced the purchasing power
of the people (Hair Jr And et.al., 2015). Meanwhile, Brexit brings benefit to Burberry by
increasing the image of the British goods.
Economic
Economic environment of the business are termed as the change in the inflation rate,
saving rate, interest rate and foreign rate etc. Economic influence of the business can also be
determined by the economic cycle which can be occurred due to the aggregate demand and
investment in an economy. Burberry Group Plc may use the economic factor of the country such
as growth rate of personal and household, inflation and economic indicators of the industry.
These factors may be affected by the purchasing power of the consumer. Such factors which
need to be considered while conducting the pestle analysis of Burberry are as follows:
 Economic system followed by the country as this organisation also operates the business
within different countries. So the government of every country follows different
economic system that may affect the operational activities of Burberry groups Plc (Khan
and Quaddus, 2015).
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 Political stability has lead to the development of personal and household goods in the
economy of the country.
 Business can also be huge affected by Unemployment rate, interest rate and economic
growth rate of the country.
 Skills ans knowledge of the workforce also affects the economic factors of the business.
Social Factors
It is referred as different tastes and preferences of the people in the society. Social culture
and the way people live at their places directly impacts the environment of the business. As
burberry Group Plc have to understand the behaviour and marketing demands of the people n
different countries in order to understand satisfy the marketing needs of the consumers. Various
social factors which affect the macro business environment of the company are as follows:
 Demography and skills of the people living in different countries.
 Cultural differences as roles and different gender of the people in different countries.
 Leisure interest of the people also effects the social factors of Burberry Group Plc
(Chang, 2016). As the managers have to understand the marketing needs of the people
out there which will help in increasing the profitability of the firm.
 Education level of the people also plays the important role as the ability to understand
greatly influence the ideas and concepts of the business.
Technological factors
This is one of the important factor which affects the growth of the business. In this high
technology world, organisations are adopting various organisations are adopting computed based
strategies to perform efficient and effective business operations. Burberry Group Plc can be
greatly influenced by this factor as technology has eliminated most of the human efforts within
the business. In order to compete with the other industries of the world, it is important for the
Burberry PLC to retain the technological changes (Pearson, 2017). This may affect the cost of
production and labour which can be result in decreased profitability of the firm. Various
technological influences in the business are as follows:
 Recent technology developments by the competitor or of the Burberry Group greatly
influence the purchasing power of the people and hence it affect the profitability of the
firm.
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 It also impacts on the cost of the production. For example technology helps in performing
efficient operations and thus it reduces the human cost consumed the human resource.
 As the Burberry becomes the first luxury brand who uses the snap code to enhance the
shopping experience. So technology will allow consumers to unlock the product
information.
 Also, Big data helps in tracking the tastes and preferences of consumers. So technological
factors plays the important role as it identifying the needs and requirement of the
customer.
 Technology also consists of social networking sites which may helps in strengthening the
marketing brand via social media.
 Technology allows large number of consumers in purchasing the products online which
generates huge revenue for the business (Business and its stakeholders, 2018).
Environmental impacts
Legal factors are concerned with the legal laws and regulations within the country. In
order to sustain the business for the longer run, legal factor plays the important role as favourable
legal laws have positive effect on the performance of the Burberry (Gavurova and et.al., 2017). If
these laws and regulations are unfavourable then it may effects the company for long term.
Company may have to suffer the huge loses. Various legal regulations which influence the
operations and activities of Burberry Plc are as follows:
 Certain unfavourable labour laws and employment laws may affect company's decision
making power (Prajogo, 2016). This resulted in the low performance of the business.
 Patenting the goods and services is a legal procedure that may effects the problem of
duplicate product within the market. It leaves an everlasting effect on the reputation of
the company. It may reduces customer loyalty on the Burberry products.
CONCLUSION
From the above study, concluded that organisational structure plays the important part in
creating the positive business environment. The above mentioned improvements bring the best
customer service experience within Burberry Group PLC. It has also been analysed that
organisational structure of the company plays the important role in promoting the positive
business environment. The study has also made a clear understanding about determining various
macro factors that influence the growth of the company. Determining PESTLE factors helps
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manager in making an appropriate strategy about the development of full proof plan within
organisation. This also helps the learners in identifying the factors that influence the profitability
of the business and also it is vital to perform pestle analysis because it allows the manager for
formulating the strategies accordingly.
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REFERENCES
Books and Journals
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics. 171.
pp.241-249.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Bah, E.H. and Fang, L., 2015. Impact of the business environment on output and productivity in
Africa. Journal of Development Economics. 114. pp.159-171.
Virglerová, Z., Dobeš, K. and Vojtovič, S., 2016. The perception of the state’s influence on its
business environment in the SMEs from Czech Republic. Administratie si Management
Public.
Miller, R.L. and Jentz, G.A., 2017. Business law today: The essentials. Cengage learning.
Hair Jr, J.F. And et.al., 2015. Essentials of business research methods. Routledge.
Khan, E.A. and Quaddus, M., 2015. Examining the influence of business environment on socio-
economic performance of informal microenterprises: content analysis and partial least
square approach. International Journal of Sociology and Social Policy. 35(3/4). pp.273-
288.
Chang, J.F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the
idea of dialogue. In Public relations theory (pp. 111-131). Routledge.
Gavurova, B. and et.al., 2017. Predictive potential and risks of selected bankruptcy prediction
models in the Slovak business environment. Journal of Business Economics and
Management. 18(6). pp.1156-1173.
Online
Business and its stakeholders. 2018. [online]. Available
through:<https://www.burberryplc.com/en/company/stakeholder-
map.html#shareholders>
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Organizational structure. 2018. [online]. Available
through:<http://www.yourarticlelibrary.com/organization/8-types-of-organisational-
structures-their-advantages-and-disadvantages/22143>
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