Business Environment Assignment Details

This document provides details about a business environment assignment. It includes a list of references from various books and articles related to the topic, as well as an online source for additional information. The assignment appears to be focused on understanding the role of internal capabilities and firms' environment in sustainable innovation, with a specific emphasis on Germany. The provided summary is written in English and provides specific details about the assignment.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
1. Structure of the company and its governing strategies as well...............................................1
2. Effects of external environment analysis in context of Ocado plc..........................................3
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment refers to a sum total of all internal as well as external factors that
have an impact on or affect overall functionality of business. These factors are known to have a
great impact on firm's capacity and brand image which further helps in building relationships
between customers and investors (Business environment. 2018). These factors may not even be
in controlling environment which may greatly affect working and overall operations of business.
This report has been framed on Ocado plc which is a multinational business entity dealing in
supermarket stores i.e. retail sectors. It was founded around 18 years ago in April 2000 with its
headquarters in Hattfield, UK. This report further encompasses various elements such as
PESTLE analysis and overview of the company along with data and information regarding
stakeholders and functioning of the company.
TASK 1
1. Structure of the company and its governing strategies as well.
Overview of the company:
Ocado plc is a UK based business concern which deals in retail sector and consumable
goods. It is basically an online British supermarket store which has a number of chain stores that
have been located all over the world. The company has been operating in competitive market
since April 2000. Ocado operates on international level in market and is known for its home
delivering and warehouse services. Also it has further been marked in London Stock Exchange
since July, 2010 ad is also an active member of FTSE 100 Index as well. Ocado plc has
developed its own unique identity by providing excellent quality goods and services and
adopting a unique business model as well.
Background of the company: Ocado plc began its business operations in the year 2000
and began working in a partnership structure. It joined its hands with Waitrose in the year 2002
in January. Products included in the product line of Ocado include groceries from their
production house as well as from Waitrose. Other than this they also obtain groceries and
consumable items from other brands such as flowers, toys, magazines (Hamilton and Webster,
2018). Ocado also developed an online application in the year 2017 which was initially set up as
a platform for promoting a new invention in speaker and voice tools Alexa by Amazon. This is
an invention which was brought up so as to allow users so that they can further order or add
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products of their choice in Ocado basket just by simply giving commands to that tool. Ocado
also happens to be first supermarket in UK that has adopted such as practice.
Recently in May 2018, it has also been examined that members of Ocado further signed a
contract with Kroger which is US based business entity. Main aim behind this contract was that
both these companies wished to build around 20 customer fulfilment centres by adopting
automated technologies being manufactured or launched by Ocado. It further operates in two
mediums or formats which are retail as well as solutions (Hillary, 2017). It is also involved in
development as well as monetization of of intellectual property which was further used for online
retailing, logistics, consumer goods and their delivery as well as distribution to suppliers. Ocado
launched its first online application named as Ocado on the go in the year 2009 on July 13. This
app helped people in doing online shopping for groceries without the use of PC.
Management Structure of the company: Management structure refers to a way which is
undertaken by a company so as to effectively organise their overall management hierarchy.
Organisation or management structure of a company covers three broad questions namely how
an organisation or company delegates roles and duties to its employees, decision making and
medium which helps in flow of information as well. In context of Ocado a number of directors
and stakeholders who are expert at their jobs which further helps in development and growth of a
company. Hence it can be said that Ocado follows a hierarchical management structure where
each director is placed on a similar level and employees are placed under them depending upon
their position. Ocado was initially founded by Jonathan Faiman, Tim Steiner and Jason Gissing
as well. All these three people were basically merchant bankers with Goldman Sachs in earlier
times.
Stakeholders of the company: A stakeholder is any individual who are expected to have
certain kind of a interest in function laity of business. These people can either be present in
groups or as single individuals. No organisation can function effectively without the presence of
stakeholders. In business terms, stakeholders is a quite important term which encloses a number
of people such as customers, board of directors, shareholders, suppliers etc (Laudon and Traver,
2016). In context of Ocado plc which is a multinational chain store its shareholders from the
initial days are Jason Gissing, Tim Steiner and Jonathan Faiman as well. Other key individuals of
Ocado plc are Stuart Rose who is the chairman of Ocado and Tim Steiner as the CEO. Michael
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Grade also became the non executive chairman of Ocado in the year 2006. Other than this
suppliers, customers and distributors are also an important part of stakeholders.
2. Effects of external environment analysis in context of Ocado plc.
For effective examination of external environment it is important that managers and
owners of Ocado plc conducts a PESTLE analysis of their market so as to gain productive
results.
PESTLE Analysis: A PESTLE analysis is a controlling tool or framework which helps in
monitoring and examining various external macro environmental factors that affect overall
functioning of business (Charter, 2017). This is basically done so that impact of all external
factors on business can be considered. PESTLE analysis is mainly undertaken by any company
when they wish to enter external market or join hands with some externally existing firm. This
provides a clarity about external factors and related business environment. PESTLE is an
acronym which is an abbreviation for political, economic, social, technological, legal and
environmental factors. Furthermore, various uses of conducting a PESTLE analysis in the
company have been mentioned as under:
Importance of conducting a PESTLE analysis:
PESTLE analysis refers to a strategic planning and controlling process which aims at
reducing threats or complexities present in a business. Examination or analysis of various
external environmental factors helps in gaining a number of advantages and benefits which
further further provide a strategic edge in respect of idea phase, content marketing, developing
products, launching products etc. All thee factors help in enhanced growth and higher success
rate in a business.
Maintaining effectiveness in respect of cost: PESTLE analysis is an important
framework which helps in organisation of input as well as feedback. The amount of research
conducted for a business concern is dependent upon organisation to organisation. For example an
organisation may require lesser funds or resources as compared to other. It further helps in
maintaining cost effectiveness of a company and reduces or eliminates any kind of wastage that
may be present.
Deeper understanding: PESTLE analysis in a company is quite important as without
this tool even direct or indirect affect that business may undergo can be neglected (Ketata,
Sofka and Grimpe, 2015). An example of this is that without critical examination of political
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situation in a country businesses will not be aware about various laws which can further hamper
its performance. Hence, PESTLE analysis helps in this context and provides a deeper and
effective understanding of the scenario.
Helps in exploitation of various market opportunities: Opportunities can either be
internal or external in a business. Opportunities that are present externally can only be found
once a company considers external analysis which further strengthens a business concern and its
business operations as well. An example in this context is by adopting PESTLE analysis a
businessman can have an exact idea about the movement of target market towards a new social
media channels (Ledgerwood, 2017).
PESTLE ANALYSIS OF OCADO
In context of Ocado its PESTLE analysis has been mentioned as under:
Political factors: Factors that are based on political elements and key terms are known as
political factors. These factors play a quite significant role which helps in determining or
defining market image or sustainability of a firm. These factors are related to intervention of
government whether it be national or local. In present context Ocado plc is operating in retail
sector in a number of nations worldwide. Hence it is quite necessary that it will have to be open
to various market risks and analyse political environment of each and every nation separately.
Various factors chosen by Ocado in this context are anti trust laws, various pricing regulations,
legislations related to wages, employee benefits, industrial regulations etc.
After UK's vote for Brexit , UK has been suffering a condition of uncertainty in terms of
political situation as well as economic conditions as well. If any company does not adopt fair
practices after Brexit it has been observed that there can be a quire higher rise in prices of food
and food products. Other than this, various governmental policies helps in enhancing investments
in service sector. Times scale of all these policies will be quite dependent on decisions and
policies that have been laid by UK government.
Economic factors: Economic factors are basic tools that provide data and information
regarding market information and economy . Economic factors further comprise of various
elements such as government activities, tax rates, inflation rates, policies etc. Various
environmental factors such as inflation, savings, interest rates etc. are helpful as they determine
or evaluate nominal amount of demand and supply in an economy (Schaltegger, Lüdeke-Freund
and Hansen, 2016). In present context it has been examined that Ocado plc can use economic
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elements such as inflation, growth rate etc in order to forecast current and future market
opportunities both in context of industry as well as specific organisation. Various economic
elements that have been considered by Ocado plc for conducting effective PESTLE analysis are
type of economic system, government intervention in consumer services, exchange rates as well
as efficiency of financial markets.
In context of Ocado, slowing of economy in UK after Brexit has an adverse impact on its
business and profitability. Also, grocery sector has been facing a quite higher cost inflation.
After examination of external market, Ocado has found out that they can further access financial
markets which provides them a quite effective liquidity position as well as global expansion
(Shchepakin and Krivosheyeva, 2015).
Social factors: Way of doing business keeps changing or modifying depending upon
nature and size of business and the area it is operating in. These factors provide two fold benefits
to a company such as better understandability regarding how a business is done along with
understanding regarding preferences and choices of customers. Social factors further involve a
number of elements such as gender roles, health and safety, societal roles and norms etc. Various
societal factors that impact Ocado are demographics, educational levels, hierarchy or power
structure that is present in a society along with culture. These factors are highly dependent upon
interests and choices of customers.
In context of Ocado it has been examined that consumers nowadays prefer healthy and
organic food products hence business owners will have to manufacture products that are healthy
substitutes for oily and fried foods. This will help the company in gaining a strategic and
competitive edge against its rival firms.
Technological factors: Factors which are used to define technological capabilities of a
business concern are known as technological factors. These factors are used to define
organisational functionality of a business along with the use of new and innovative tools and
techniques. These factors are related to existence, availability as well as development of new and
innovative means which promote overall functionality of a business. Various technological
factors examined in context of Ocado plc are recent developments in technology along with its
impact on cost structure that is currently present in retail industry(Šimić Banović, 2015). Every
business concern should undertake technological analysis so as to identify the need for
innovations which can be used in a business concern.
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An example of this is that Ocado has been using 5g technology in their online grocery
application which is not present in a number of companies. This enhances experience of
customers and improves overall goodwill of a company as well.
Environmental factors: Environmental factors are external forces which put impact on
the efficiency of company. These factors also known as “ecological factors” as it is related to
climate, water, and earth. These factors affects business in many different aspects of company
( Brocke, Zelt and Schmiedel, 2016). Some of environmental factors affecting business are
weather, pollution, availability of no-renewable goods, climate, biological species existence and
environment related laws. From last few decades sustainability of environmental factors are
becoming critical for business. It is mandatory for every business organisation to adhere to
environmental standards. As different markets have different standards for environmental factors
which impact profitability of companies in market.
Before starting new market or expansion of business proper evaluation of environmental
standards should be done to operate effectively in market. customers are having awareness of
environmental standards of OCADO strategy. Customer expectations are high from OCADO as
company not only adheres to legal standards but act as responsible stakeholder in society.
Products innovation at OCADO are based on norms related to environment rather than
traditional values. OCADO has increasing cost of operations as it carries out regular scrutiny
by environmental agencies. UK government has strict norms for waste management in urban
areas which leads to increases importance for OCADO.
Legal factors: Law plays very important role in the development and success of retail
sector company. Legal factors are those factors affecting business operations and efficiency.
Every company have different legal framework and it is not necessary that these are similar in
every county. Companies should carefully evaluate all factors before entering market because it
can lead to many disadvantages. These factors helps company in identifying whether selling
particular product will generate profitability or not.
Legal factors includes law and regulatory determinants that either positively or negativity
affect decision making of management of company functioning in particular country. Legal
factors sometimes are associated with ethical factors affecting business (Oriesek and Schwarz,
2016). These factors are also subject to country's legal and law system. OCADO carefully
considers average time for cases before entering into international market. There are various
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employment laws in united kingdom and it depends on company OCADO to how to meet the
specified rules and regulations (Hamilton and Webster, 2018). Their are many legal protection
acts like intellectual property, patents, and copyrights in UK which act as protection for
OCADO. There are various data protection laws which have emerged due to privacy issues and
OCADO has to consider as a protection against breach of data.
CONCLUSION
From the above mentioned report it has been concluded that business environment of a
business plays a quite important role in its overall functioning and growth as well. It is an
essential factor which even many have a quite relative impact or affect on business. This report
comprises of various types of business concerns along with their legal structure. Main tools
which affect business functionality of companies such as PESTLE analysis and SWOT have
been taken into consideration. This report also focusses on interrelationship between various
organisational functions in a business along with strengths and weaknesses of external factors on
business. This report also studies positive and negative outcomes of various macro factors and
their effect on profits and growth of business.
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REFERENCES
Books and Journals
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.
Laudon, K. C. and Traver, C. G., 2016. E-commerce: business, technology, society.
Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
Hair Jr, and et. al., 2015. Essentials of business research methods. Routledge.
Ketata, I., Sofka, W. and Grimpe, C., 2015. The role of internal capabilities and firms'
environment for sustainable innovation: evidence for G ermany. R&d
Management. 45(1). pp.60-75.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Ketata, I., Sofka, W. and Grimpe, C., 2015. The role of internal capabilities and firms'
environment for sustainable innovation: evidence for G ermany. R&d
Management. 45(1). pp.60-75.
Laudon, K. C. and Traver, C. G., 2016. E-commerce: business, technology, society.
Ledgerwood, G., 2017. Greening the boardroom: Corporate governance and business
sustainability. Routledge.
Morrell, J., 2017. How to Forecast: A Guide for Business: A Guide for Business. Routledge.
Oriesek, D. F. and Schwarz, J. O., 2016. Business wargaming: securing corporate value.
Routledge.
Saleem, S., 2015. BUSINESS ENVIRONMENT, 3/e. Pearson Education India.
Schaltegger, S. and Wagner, M., 2017. Managing the business case for sustainability: The
integration of social, environmental and economic performance. Routledge.
Schaltegger, S., Lüdeke-Freund, F. and Hansen, E. G., 2016. Business models for sustainability:
A co-evolutionary analysis of sustainable entrepreneurship, innovation, and
transformation. Organization & Environment. 29(3). pp.264-289.
Shchepakin, M. B. and Krivosheyeva, E. V., 2015. Management of increase of business
enterprise's competitiveness in the changing market environment. Международный
научно-исследовательский журнал. (9-1). pp.81-84.
Šimić Banović, R., 2015. Cutting the red ribbon but not the red tape: the failure of business
environment reform in Croatia. Post-Communist Economies. 27(1). pp.106-128.
vom Brocke, J., Zelt, S. and Schmiedel, T., 2016. On the role of context in business process
management. International Journal of Information Management. 36(3). pp.486-495.
Online
Business environment. 2018. [Online]. Available through:
<http://www.investorwords.com/19252/business_environment.html>.
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