Business Organization and Environmental Factors

This report provides a detailed analysis of business organizations, including their types, size, scope, and legal structure. It also examines the importance of analyzing both macro and micro environmental factors that affect business operations. The report concludes by highlighting the interrelation between these factors and how they impact business growth and development.

Business Environment

TABLE OF CONTENTS
INTRODUCTION:..........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT ..........................................................................................................................1
TASK 2 ...........................................................................................................................................1
P3: Explain the relationship between different organisational functions and objectives............1
TASK 3............................................................................................................................................6
P4: Identify the positive and negative impacts the macro environment has upon business
operations....................................................................................................................................6
TASK 4............................................................................................................................................8
P5: Conduct internal and external analysis to identify strengths and weaknesses......................8
P6: Explain how strengths and weaknesses interrelate with external macro factors ...............10
CONCLUSION :............................................................................................................................11
REFERNECES : ...........................................................................................................................12

INTRODUCTION:
Every business evolves around several factors that affects its operations. These factors
are internal or external that depends on scope and size of business. It is very important to
understand the surrounding environment so that accordingly strategies can be developed.
Business is interrelated with those factors. So change in them will directly affect its operations.
Moreover, operations are dependent on environment. This report will describe different types of
business and their size (Silvius, 2018). Also, it will show impact of micro and macro factors on
its operations. Beside this, how business functions are related to objectives is also studied. In last
section relationship between internal and external factors is described.
For undertaking this present organisation selected is tesco. The cited firm belongs to
retail sector and operates globally. Thus, it is necessary to understand change in factors. Thus,
this report will help in doing so for the cited establishment.
TASK 1
Covered in PPT
TASK 2
P3: Explain the relationship between different organisational functions and objectives
There are different types of organisational functions that exit in business. These helps in
achieving goals and objectives that is determined. The organisational functions are interrelated
with each and work together (Delina, 2014). In this there are various departments. The type of
organisational function will depend on size and nature of business.
Functional Structure-

In this type of structure, activities are determined on the basis of purpose. It includes various
types of departments such as human resource, marketing, finance, etc. that have different roles
and responsibilities. Besides this, they have to work by communicating with each other
effectively. The roles are decided by top-level management. Different departments combine
together to form an organisational structure. Moreover, an organisation can set up this structure
as per its size in the market where they operate.
Divisional Structure-

this type of structure is followed by large companies as they operate globally. In this, there are
various departments that are based on products and services that is offered by business
(MacGregor, Doyle and McEachern, 2015). They are known as divisions. Each division have
its own geographical area in which they operate. In each division, functional department can also
be included. The communication in divisional structure is complex. In addition, each division is
having different goals and objectives. Huge amounts of resources are required to manage
different divisions. Therefore, most of the organisations prefer to develop functional
organisational structure.
Matrix Structure-

Matrix is a combination of both functional and divisional. Generally, it is followed by large
MNC's that operate globally (Silvius, 2018). In this, each division contains a functional
structure. The main purpose of doing is to make it easy to achieve goals and objectives.
In addition, each division have their own management. For example- for area A, there
will be different functions such as marketing, finance, etc. It is very difficult for the management
to manage and control activities of each division. Sometimes, it may lead to conflict among them
as they do not agree upon decisions that are taken. However, it is easy for them to operate in
different markets according to their conditions. Matrix structure can vary in size as it is
developed according to market.
TESCO operates in all over the world so it can follow matrix structure. It will be easy for
them to work in different markets. Along with this, TESCO provides a variety of products so
they require various divisions for it (Othman and Rahman, 2014). In addition, it will be easy to
assign goals so that overall mission and vision can be achieved. This will make communication
easy as well.

Other than this, there are several departments in an organisation. They depend upon its
structure and size. Each department is assigned roles and task. They contribute in achieving
overall goals and objectives. These departments are described as follows:-
Administration – the main role of this department is to manage and control the overall business
operations. It includes top-level management where people such as COO, CEO, etc. exist. They
decide goals and objectives and develop mission and vision. They are also responsible for
developing plans and strategies through which goals have to be achieved. Their main role is to
control business activities and evaluate performance according to goals set. Besides this, it also
allocates resources to each department or division.
Accounting- this department is responsible for managing the overall finance related to activities
of an organisation. They have to develop budgets and accordingly allocate resources to
departments (Tukker and Tischner, 2017). Also, the control the input and output of finance in
organisation. Moreover, the regularly evaluate financial performance of business and making
changes to improve it. Furthermore, they develop report and present it to the top management. It
includes CFO, CA, manager, etc.
Sales- It is the most crucial department of an organisation. The goals and objectives can only be
achieved if sales force works effectively. The main responsibilities of sales department are to
promote and sell products in the market. In addition, they identify customer needs and solve their
problems. Other than this, sales force provides relevant and specific market information to
various departments. These people interact with customers to take their feedback and building
relations with them.
Marketing and Advertising – their main role is to promote and advertise products in the
market. This helps in making aware people about company products (Dutt and Mitchell, 2016).
In addition, they develop various strategies on how to promote product. Apart from this, they
regularly coordinate with research and development unit so that strategies can be developed
accordingly. An effective marketing of a product will help in increasing sales and profits.
Production – This department is engaged with production of products so that market’s demand
can be met. Their responsibility is to manage production process so that product quality is

maintained. In addition, they ensure that raw materials are sufficient. Besides this, they look after
the inventory and storage of goods. Basically, main purpose of production unit is to manufacture
goods at low cost.
Human Resource – It is related to hiring to perform various business activities. HR’s role is to
hire right people for the right job position. Furthermore, they provide training to them, evaluate
their performance, etc. In addition, HR must manage employees in an organisation by putting
them at right place (Lichtenstein, 2014). They also perform activities like preparing salary,
appraising employees, taking feedback, solving conflicts, etc. they ensure that organisational
culture is maintained and provide proper working conditions for employee to work.
Research and Development – This department exists only in large and medium size
organisations. They perform a crucial role by conducting research in the market. With this
information is collected regarding changes in taste and preference of customers, market
condition, etc. It helps in developing strategies accordingly. It is linked to marketing and
production unit so that changes in product can be done. They collect data and provide useful
information to organisation.
TASK 3
P4: Identify the positive and negative impacts the macro environment has upon business
operations
An organisation surrounding environment can impact its operations in both positive and
negative way. These factors include macro and micro environment in which organisation
operates (Schaltegger and Wagner, 2017). Therefore, it is necessary that business analyse those
factors so that its impact can be minimised. For this pestel analysis is done that helps in
evaluating several factors such as legal, political, social, etc.
Political – It is related to political condition of a country. A business can be highly affected by
this. It is because business has to follow rules and regulations. So change in government will also
lead to make changes in laws and regulations. They are related to trade policy, import- export,
etc. Tesco operates all over the world, so they have to follow laws of every country. The major

affect of political factor on tesco is due to brexit. It has reduced its growth in European countries.
Also, they have imposed tesco tax in UK.
Economic- this factor is related to economic condition of nation that is currency, inflation rate,
etc. A little rise or fall in this will affect the business operations. Similarly, tesco have to make
changes in cost of product (Wheelen, Hunger and Bamford, 2017). They have to revise their
pricing policy. Moreover, tesco products are available for every segment of customers. Its
positive impact is that most of the tesco products are cheap and affordable. So customers can
easily buy it. Negative impact is tesco is still dependent on UK market, so any change in UK
economy will highly affect their profits and sales.
Social – It is related to change in taste and preference of people. This affects business operations
as they have to produce products in order to meet the needs of customers. Tesco provides a
variety of products to people (MacGregor, Doyle and McEachern, 2015). Also, they have to
change features of products according to customer requirement. Its positive impact is tesco has
created many loyal customer, so it is enjoying a large market share in UK. Negative impact is
people needs are changing so they are using substitute for fulfilling needs.
Technological- Advancement in technology can affect business operations in both negative and
positive way. This is because organisation uses technology in different departments. This helps
in growth and development of organisation. Tesco also effectively uses technology to expand
their business. The positive impact is it will help in innovating production process that will lead
to reduction in per unit cost and increases profit margin. On the other hand, there will be rise in
expenses as innovating process requires expensive tools and equipments.
Environmental - this is the main factor that affect business because every organisation operate
in a particular environment that includes climate, atmosphere, etc. so they have to work
accordingly (Othman and Rahman, 2014). Also, government imposes certain restrictions that
works as boundaries for business. Moreover, business always works to protect the environment.
Its positive impact on business is they strictly follow various laws so that atmosphere is
protected. Besides this, they use renewable resources that benefit them for long term. But on the

contrary negative impact is tesco belongs to retail sector so it uses plastic materials a lot. This
affects the environment to a great extent.
Legal- It consists of various laws and regulations related to health and safety, working
conditions, wages of labour, etc. these rules differ in different countries and has to be followed
by company. It has a great impact on business operations. Also, external entities like trade union,
local authorities, etc. play a vital role in this. Any change in them will affect business operations.
Its positive impact is it creates a proper organisational culture in tesco and negative impact is
company brand image is affected if laws are not followed properly.
TASK 4
P5: Conduct internal and external analysis to identify strengths and weaknesses
Along with external factors, business growth and development is also dependent on its
internal factors (Tukker and Tischner, 2017). They exist within an organisation and depends on
its size and nature. These factors include strength, weaknesses, opportunities and threats. These
are describes below: -

Strengths -
 Tesco is having a strong presence in UK so it enjoys a large market share. This gives
them a strong competitive advantage over its rivals. Also, it restricts other companies to
expand their operations in UK.
 Tesco provides a variety of products and services to people. This gives them options to
choose from product portfolio. It attracts other customers to buy their product.
 Tesco uses advance technology in developing products. This helps in reducing cost of
product. Moreover, tesco holds a strong patent license agreements in different countries
that is providing them huge benefits.
Weakness
 tesco major revenue comes from countries like US, UK, etc. so it is not having a strong
presence in continent like Asia (Dutt and Mitchell, 2016). So any change in economy of
those countries will result in reduction of sales and profits of company.
 Another weakness of tesco is it has been involved in some controversies with companies
like Varco and Weatherford. This has affected their brand image and goodwill. Also, it
has lead to increase in legal cost that is decreasing its profits.
Opportunities
 tesco can expand their business in Asia. It will help them to gain market share and create
a strong customer base. This will also help in sustaining for long term in competitive
market. Also, it will help in generating large amount of revenue.
 Tesco must invest in research and development. It will help them to develop products and
improve quality of service. Also, with this more people can be attracted by offering them
new products.
 Tesco can merge and acquire small companies that will help in providing them better
technology (Schaltegger and Wagner, 2017). With this tesco can build their own

information technology infrastructure. This will help in saving time and cost on
technology.
Threats
 The major threat tesco can have is change in economic condition of countries. There
always remains an uncertainty about global market condition. This can affect tesco
growth and development.
 There is a high risk involved in oil and gas industry. The occurring of an accident can do
great damage to tesco. It can also result in death of many people. It can affect tesco future
business operations.
 Another threat can be change in seasons. It can result in decrease in demand of products
or change in taste and preference of people. This can lead to fall in sales and profits of
tesco (Wheelen, Hunger and Bamford, 2017).
P6: Explain how strengths and weaknesses interrelate with external macro factors
An organisation internal and external factors are interrelated with each other. It is because
weakness arises due to change rules and regulations. This affects operations as business is not
able to operate freely. Also, it changes organisational culture and affect employee performance.
Similarly, strength is related to growth and development as political conditions are in favour of
business. Tesco has expanded their business in countries like India and China. This is because of
the economic conditions of these countries. It has provided them a platform to offer products to
people. However, tesco has been engaged in using technology in their operations. It has lead to
decrease in cost and improving quality of products and service. Tesco strength is a strong
product portfolio (Delina, 2014). This is because they have identified changes in social factors.
It has allowed them to produce products as per change in taste and preference of people. There
exist several threats that can occur. It is because change in political factor will affect tesco
growth. It might be that government may increase tax rates. This will result in reducing profit
margin. Besides this, due to economic slowdown in countries like UK and US, tesco may not be
able to regain market share.

Therefore, it is concluded that macro and micro factors are interrelated with each other.
Any change in macro factor will automatically affect business operations and micro factor. This
may be the reason why business have to analyse both of them in order to remain survive in
competitive market for long time (Lichtenstein, 2014). They also have to ensure that rules and
regulations are properly followed or not.
CONCLUSION :
From this report it is concluded that a business organization can be of different types such
as public, private, charity, etc. They all are having different size and scope. The nature of
business determine its size and scope. Also, legal structure differ to a great extent. Every
organization that differ in size and scope. This the main factor that helps in distinguishing
between them. These helps in achieving goals and objectives that are determined. An
organization surrounding environment can impact its operations in both positive and negative
way. These factors include macro and micro environment in which organization operates. Along
with external factors, business growth and development is also dependent on its internal factors.
They exist within an organization and depends on its size and nature. These factors are
interrelated with each other.

REFERNECES :
Books and journals:-
Delina, R., 2014. Transparency in Electronic Business Negotiations–Evidence Based
Analysis. Quality Innovation Prosperity, 18(2), pp.79-89.
Dutt, N. and Mitchell, W., 2016. How open system intermediaries address institutional
failures: The case of business incubators in emerging-market countries. Academy of
Management Journal, 59(3), pp.818-840.
Lichtenstein, J., 2014. Demographic characteristics of business owners. Small Business
Administration Office of Advocacy, Issue Brief,(2).
MacGregor, S., Doyle, T. and McEachern, D., 2015. Environment and politics. Routledge.
Othman, Z. and Rahman, R.A., 2014. Attributes of ethical leadership in leading good
governance. International Journal of Business and Society, 15(2), p.359.
Schaltegger, S. and Wagner, M. eds., 2017. Managing the business case for sustainability: The
integration of social, environmental and economic performance. Routledge.
Schaltegger, S., Hansen, E.G. and Lüdeke-Freund, F., 2016. Business models for sustainability:
Origins, present research, and future avenues.
Silvius, G., 2018. Integrating sustainability into project risk management. In Global Business
Expansion: Concepts, Methodologies, Tools, and Applications (pp. 330-352). IGI Global.
Tukker, A. and Tischner, U. eds., 2017. New business for old Europe: product-service
development, competitiveness and sustainability. Routledge.
Wheelen, T.L., Hunger, J.D. and Bamford, C.E., 2017. Strategic management and business
policy. pearson.