Business Model Innovation and Environment Analysis

This assignment tasks students with exploring the concepts of business models, environment analysis (SWOT and PESTEL), and competitive strategy using a range of academic sources. Students are to critically evaluate the business model of an established company (Sainsbury) by analyzing its structure and processes, and applying their understanding of business environments and strategic management.

Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Covered in PPT.......................................................................................................................3
TASK 2............................................................................................................................................3
P3: Explain the relationship between different organisational functions and how they link to
organisational objectives and structure..................................................................................3
TASK 3............................................................................................................................................6
P4: Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples...........................................................................6
TASK 4............................................................................................................................................8
P5: Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses.......................................................................................................8
P6: Explain how strengths and weaknesses interrelate with external macro factors.............9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
In today’s business scenario, main aim of every company remains to operate in a better
manner so it can generate more revenues and can sustain in market for long run. A business
organisation mainly aims over gaining the maximum outcome of their investment by offer
innovative products to their clients. In order to investigate these, firm needs to understand the
various components within the business environment. There are various elements or factors that
can affect a business environment in several ways (What SWOT Analysis is in simple words,
2017). Hence, this is indispensable for a company to evaluate these elements in order to achieve
their target through utilising better techniques or methods. The project studies Sainsbury i.e. a
multinational supermarket organisation who operates their business in overall UK. This company
is one of the largest supermarket chain with approximate 16.9% market share. The report will
analyse various aspects of business environment including different types of organisations, their
size, scope, purpose along with functions and objectives of company (Shigang, 2010). As
undertaking Sainsbury as the private sector company, this will also evaluate different business
environment of firm through conducting SWOT and PESTLE analysis in order to establish a
proper interrelation within the internal and external business environment of company.
TASK 1
Covered in PPT
TASK 2
P3: Explain the relationship between different organisational functions and how they link to
organisational objectives and structure
Sainsbury's is one of the most popular and leading retailin organisation within the United
Kingdom's marketplace. They mainly focus over the business expansion through satisfying their
consumer requirements in order to gain more profitability and revenues in an adequate manner.
The company operates their business in more than 18 nations owning more than 10000 stores
dealing wide range of services according to demand of consumer. Hence, there are numerous
duties and roles that can be performed through all staff members for satisfy demands of
international and domestic consumer (Osterwalder and Pigneur, 2010). Most of their activities
and functions are interlinked with each other for success of company. There are different
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elements of Sainsbury which consist of financial team, human resources, R&D, advertisement,
promotion etc.
Entire structure and business function assist Sainsbury in achieving their business
objectives. After evaluation of entire elements, this can state that market share and development
rate of Sainsbury is more than its major competitors as this perform their functions in appropriate
manner (Aterido, Hallward-Driemeier and Pagés, 2011). The hierarchical structure is utilised for
employee administration as well as their chief play wide role in its functioning in ideal manner.
Here are mentioned major functions as well as their interlink with business objectives i.e.
mentioned as under:
 Marketing: According to the major business functions, this has been evaluated that
marketing is one of the essential function. Company create new identification through
division of marketing by advertising of services and products in effective manner at large
marketplace through utilising numerous tools and methods (Scheer, 2012). With this, the
major aim of this division is to increase sales of organisation through attaining consumer
attention to persuade them to purchase more. Different tools are there that can be use be
company to carry out promotion of its product such as brochures, pamphlets, hoardings
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Illustration 1: Structure of Sainsbury
Source 1: Structure of Sainsbury, 2018

and other promotional tools that aids them in improve overall revenues and benefits of
organisation. It also support in creating proper branding and recognition of enterprise as
well. Human resources: This is one of most essential as well as major division of Sainsbury as
the company consider their worker as the first person and treat them as main asset of
company. The major objectives of this department is to handle the activities related to
personnel such as hiring, selection, staffing, training and development, negotiation etc.
which is managed by human resource manager of organisation. This is liable for creating
friendly and sound working environment in Sainsbury. It is responsible for motivate
workers within organisation. Finance: Capital or financial assets demonstrate as the organisation's backbone because
entire elements or functions are implemented with the utilisation of accurate amount of
funds. Without the accurate money availability, company would not be able to perform
main operations and functions of organisation (Klapper, Lewin and Delgado, 2011).
There are two types of entities which handles the activities related to it i.e. accountant
and financial manager. Accountant monitors and tracks entire expenditure, outcome and other activities linked with the finance. Whereas financial manager aligns budgets,
manages the financial investor etc. This assist the company through managing imbalance
of enterprise's expenses along with maintaining investors and sponsors etc. Development and Research: Sainsbury will play a major role in the accumulation of
information and data which is utilised through them that helps in making the essential
decision. R&D division helps organisation during the process of manufacture which can
support in considering the preferences and taste of numerous other consumer group.
Hence, after gather information about different consumer demands, production teams can
easily design effective products for understanding this.
 Production Division: The success and growth of corporation is entirely related on the
production team as they are liable for the unique production of services and goods which
is provided by company in international and domestic market. This division helps in
achieving the business objectives through creating more consumer preferences, choices
and supports in fulfilling consumer demands through producing certain types of services
and products in better quality.
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Hence, this can be evaluated from the explained report that business activities and
objectives need proper functioning of business structure and functioning which plays a major
role in the organisation growth and development in an effective manner (Hamilton and Webster,
2015). Sainsbury has been reached the heights of success in retailing market of United Kingdom
through following effective techniques and methods.
TASK 3
P4: Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.
Macro environment can be considered as the major term that demonstrates entire external
elements that are needed to be analysed and controlled through the enterprise. Organisation's
business environment can be distinct into various elements like external and internal
environmental factors which affects the growth and success of whole company. Cause of a single
component, huge impact on the venture can be made. This is fundamental for Sainsbury to
recognise negative and positive impact of macro factors of environment of enterprise. Hence, the
company can investigate PESTLE as well as their influence which is discussed as below:
Political factor- The state authorities of certain nation is always come up with distinct norms,
regulation and terms which often are applied in whole corporation cause of its major focus i.e.
to remove exploitation and discrimination from industry (Trkman, 2010). This directly
influence different operations and functioning of Sainsbury in several manner which is
mentioned as below: Positive- Formation of new norms, terms and rules that help the sellers and buyers, both
has distinct sources like products cost that are determined packages which are set which
are set through management that has been undertaken the position. Through this
outcome, this protect from both parties from numerous losses.
 Negative- There are times when advisory bodies terms and regulation affect act like
limitation while exchanging the services and products in the entire world. There are
huge strategies and policies which require to be complied at the time of merchandising
with the international clients.
Economical- As per the growth elements of organisation which influence the company in
distinct manner. Taxation rate, currency rate etc. are the another element which can affect the
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economical elements of nation as well as company (Fernando, 2011). Influence of economy is
mentioned as below: Positive- Different small companies are emerging in huge marketplace that can assist
Sainsbury in formulation of organisation in effective manner as well as development of
the enterprise along with nation through rendering employment opportunities. In
addition, this can help in gaining more benefits to the organisation and revenues to the
company along with innovation of services and products in effective manner.
 Negative- Fluctuation and taxation cost is straightly linked with the business contract
influence of Sainsbury that sales influence.
Social factors- It consist of social lifestyle change, mobility of society and whole increment
through large numbers services and products introduction in ideal manner. According to the
social changes, trends, culture and preferences of people, company create new services and
products in more efficient and effective manner. Here are mentioned major influence mentioned
as below: Positive- As people of UK are looking for more affordable and value added products
and services after the recession period, company has more chance to develop and evolve
their business cause major purpose of Sainsbury is to provide cheap and reasonable
price commodities with good quality.
 Negative – Modification in preferences and modification that can create more problems
and issues within the sited company.
Technological- Modern technology growth has helped the manager of organisations in
selecting new methods and techniques through which one can emerge and achieve their level of
growth and functions in effective manner (Drucker, 2017). Here are discussed some of the
major impact: Positive- Cost decline and value through opting modern technologies for achieving the
entire business processes in more efficient manner.
 Negative- Technology rates help in declining the drastic changes in the advanced
technologies that has made the process more complicated to understand.
Legal- Legal authorities are majorly liable for the enactments of different policies and laws
within the organisation that a company has to follow for forming their enterprise in better
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manner. It consists of employment laws, taxation and various consumer rights etc. which is
needed to adopt in order to functions the business operations and activities in more effective
manner. Here are mentioned the impact of these factors of Sainsbury: Positive- Workers exploitation at workplace, unethical employee activities along with
distinct practices as well as functions that can be declined through the legal managerial
authorities.
 Negative- Sometimes, it can lead company to problems and issues when the business is
performing smoothly cause of mass number of legislation as well as this is a very large
procedure that can consume more time (Dahan and et. al., 2010).
Environment- External environment acquire resources i.e. essential for organisation in order to
perform various effective practices and operation in adequate manner. Here are mentioned
some of the components that influence the whole procedure: Positive- Evaluation and concern of environment can help Sainsbury in developing and
evolution for rendering more effective services on certain duration.
 Negative- Negative recognition in context of environmental impact, bad recognition of
company can lead to loss of potential consumers.
TASK 4
P5: Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses
Internal elements are majorly considered as the micro factors where those elements need
to be entirely controlled and maintained through company as per the requirements and demands.
SWOT assessment is also organised through Sainsbury team that can aid in recognising the
major issues and problems within their company which directly influence the performance of
organisation. Managerial departments of the respected organisation will opt such plan for
analysing the nature as well as try to execute those alternation requirements and demands of
market (Craig and Campbell, 2012). Here is presented the SWOT investigation of Sainsbury
which is mentioned as below:
Strength- Directing capability and requirements of organisation:
 SAINSBURY has a strong reputation in retailing market among the competitor
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companies.
 This has various branches number in approximate 18 countries along with more than
1000 stores in distinct areas for increasing their consumer demands.
 Hence, they are presented as global international organisational at the corporate level.
Weakness- Recognising concealed company's demerits that restrain their growth:
 The imbalance and ineffective communication among personnel which is leading to
decrement in firm's service quality.
 Less worker skills hampers entire activities and performance of workers.
 Optimum resources absence can lead to decline the growth.
Threats- The probable restraint that can emerge in future:
 Currency cost modification.
 Economical rate instability of United Kingdom.
 Increase in the retailing competition other substitute through distinct competitors.
Opportunities: Development and evolution opportunities
 Large growth number help in increasing modern technologies in the existing system can
lead to achievement of objectives and goals (Commander and Svejnar, 2011).
 Online ads of company's commodities effectively can help in increasing their sales and
attract potential services users.
Hence, the evaluation of internal factors of Sainsbury can help the managerial team in
convenient designing of new services as well as products as per the demands of consumer and
build strategy according market trends or conditions.
P6: Explain how strengths and weaknesses interrelate with external macro factors
Macro and micro environmental elements has the major relation between each other as
these determines the major elements that shapes organisation and its various activities.
Potentially and shortcoming business organisations as well as new venture are linked with micro
environmental elements that sets the duties and roles in regard of developing firm. Company's
managerial division compare with their micro elements along with their external factors which
consist of technological, social, economic, environmental and legal etc. After the analysis of
SWOT analysis of the company, here is established the major interrelation of macro environment
with weaknesses and strengths of enterprise i.e. discussed under:
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 Economical Elements: It consist of exchange rate of services at marketplace along with
interest rate of modification (Chesbrough, 2010). For example, if the company is having
the limited funds and reserves, then any modification in currency types cannot influence
their business. Companies that operate on a global level such as Sainsbury get largely
affected by the changes that take place deflation rate, inflation rate and in purchasing
power of customers. To deal with these it is essential for Sainsbury to carry out research
on continuous basis so it can generate more number of profits and can sustain in market
for long run. Legal and Political Elements: According to these elements, regulation and legal rules, it
can address that these legal laws are compiled by a company in order to function their
business in effective manner. So expertise and skills availability of individual which
helps company in dealing with distinct issues emerged within the company. It is very
important for firm to identify and examine the legal policies given by government so
organisation can formulate strategies accordingly and can maintain its competitive
position in market. Cultural & Social Factors: While handling the challenges and social issues, organisation
need to choose the skilled and more qualified worker who has sufficient investments and
funds as well as gain the required or optimum resources. Sainsbury is one of the largest
retailer so company can carry out research to collect information about needs and wants
of customers in order to better satisfy their needs and to retain them for a long time
period. In this way, company respond to the frequent changes that take place in
requirements of customers and can generate more number of profits.
 Technological Factors: When the sited business organisation need to adopt the new
methods and modern techniques which can help in achieving the assigned business
activities and task in lesser period of time (Charter, 2017). One of the main reason behind
success and growth of Sainsbury is that it uses updated technology to manufacture
products for its customers. As company is financially strong so it is easy for enterprise to
replace new technology with old one and can sustain in market for long run.
CONCLUSION
It can be summarised from the report that business companies are majorly focus over
maximisation of their invested amount and revenues. There are different types of companies
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which are distinct from each other on the basis of size, purpose, structure, vision and their
objectives. There are major three organisation types i.e. voluntary, public and private sector with
legal structure as well as their aims which can be mentioned in ideal manner. Organisation's
business environment can be differentiated into distinct elements like external and internal parts
which affect the growth and success of whole company. Cause of the single component that
impact on the venture, the whole functioning of organisation can be affected. Internal elements
are majorly considered as the micro environment in which the elements need to be controlled and
maintained through company as per the requirements and demands. Macro and micro
environmental elements have the major relation between each other as these determine the major
elements of organisation shaping each other.
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REFERENCES
Books and Journals:
Aterido, R., Hallward-Driemeier, M. and Pagés, C., 2011. Big constraints to small firms’
growth? Business environment and employment growth across firms. Economic
Development and Cultural Change. 59(3). pp.609-647.
Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.
Carroll, A.B. and Shabana, K.M., 2010. The business case for corporate social responsibility: A
review of concepts, research and practice. International journal of management
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Charter, M. ed., 2017. Greener marketing: A responsible approach to business. Routledge.
Chesbrough, H., 2010. Business model innovation: opportunities and barriers. Long range
planning. 43(2). pp.354-363.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Craig, T. and Campbell, D., 2012. Organisations and the business environment. Routledge.
Dahan, N.M. and et.al., 2010. Corporate-NGO collaboration: Co-creating new business models
for developing markets. Long range planning. 43(2). pp.326-342.
Drucker, P.F., 2017. The Theory of the Business (Harvard Business Review Classics). Harvard
Business Press.
Fernando, A.C., 2011. Business environment. Pearson Education India.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Klapper, L., Lewin, A. and Delgado, J.M.Q., 2011. The impact of the business environment on
the business creation process. In Entrepreneurship and Economic Development (pp.
108-123). Palgrave Macmillan UK.
Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries,
game changers, and challengers. John Wiley & Sons.
Scheer, A.W., 2012. Business process engineering: reference models for industrial enterprises.
Springer Science & Business Media.
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Shigang, Y., 2010. Competitive strategy and business environment: The case of small enterprises
in China. Asian Social Science. 6(11), p.64.
Trkman, P., 2010. The critical success factors of business process management. International
journal of information management. 30(2). pp.125-134.
Zott, C., Amit, R. and Massa, L., 2011. The business model: recent developments and future
research. Journal of management. 37(4). pp.1019-1042.
Online
What SWOT Analysis is in simple words. 2017. [Online]. Available through:
<http://pestleanalysis.com/swot-analysis-examples/>.
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