Business Environment and Organisation Structure

The provided study examines the role of the business environment in shaping a company's affairs. It highlights both internal and external factors that can either influence each other or together affect the company's working structure. The report also delves into H&M's strengths and weaknesses, analyzing their interrelation with macro environmental factors and organisational structure.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P 1: Overview Of three different types of organisation - ...........................................................1
P 2: Size and Scope of range of different type of organisation - ...............................................2
LO 2.................................................................................................................................................4
P 3: Relationship between different types of organisation and their link with the organisation
objective and structure - .............................................................................................................4
LO 3.................................................................................................................................................6
P 4: Positive and negative impact of PESTLE on Business operations - ...................................6
LO 4 ................................................................................................................................................8
P 5: Strength and Weakness of Organisation - ...........................................................................8
P 6: Interrelate Strength and Weakness with the external macro factors - ..............................10
CONCLUSION .............................................................................................................................11
REFERENCE ................................................................................................................................12

INTRODUCTION
Business environment is the most important aspect in any business as business
environment means the sum total of all the internal and external factors which influence the
working of business. Internal and external factors can also influence each others and work
together to affect the structure of business. Business environment reflects the business
organisation in various forms such as nature of the business, size of operation and many more.
Present report is based on description of three different types of organisation such as
public, private and voluntary and also includes their working structure such as the company
background, size, vision, mission, objective, legal structure and product and services of the
organisation. Further it describes the interrelationship functions within an organisation. This
report is also based on positive and negative aspects of PESTLE analysis in relation to
organisation and also lastly the strength and weakness of organisation and their interrelationship
with the external macro environment.
LO 1
P 1: Overview Of three different types of organisation -
Public Organisation ~ Public sector are usually comprised of organisation that are owned and
controlled by the government and all publicly issues controlled or publicly funded agencies or
enterprise that deliver public programs, goods and services(Hamilton and Webster, 2018).
In this TESCO is considered as the Public sector organisation. The main purpose of
public sector is firstly to engage in public services like providing quality products, other benefits
and timely delivery of goods and their second motive is to earn profit.
Private Organisation ~ Private sector are usually comprised of organisation that are privately
owned and are not a part of government. It is run by individuals and companies whose main and
only motive is to earn profit(Saleem, 2015).
The purpose of private sector is to earn profit and provides various befits to employees to
motivate or guide them to perform well in the company. H&M company is a private company.
Voluntary Organisation ~ Voluntary sector has been defined as a group of individuals or
volunteers who assemble together to address various issues and problems happening in the
society. It can also be in form of Non government organisation [NGO], and charity function.
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The main purpose of the voluntary organisation is to provide a proper welfare services to
the needy people and also develop the changes in the environment by providing various benefits
such as food, clothing, shelter and other useful things. OXFAM is structured in Voluntary
organisation.
P 2: Size and Scope of range of different type of organisation -
Range Public Organisation
(TESCO)
Private organisation
(H&M)
Voluntary
Organisation
(OXFAM)
Background TESCO company was
founded in 1919 by
Jack Cohen selling
surplus groceries stalls
in London. Its stores
spread across 12
countries and is the
third largest retailer in
the world measured by
gross revenues.
H&M Company was
founded by Erling
Persson in 1947. H&M
is the multinational
clothing retailer
company famous for
its fast changing
clothing fashions for
men, women and
children. They are
operated in 62
countries across the
world.
OXFAM comes from
Oxford Committee For
Famine Relief founded
in Britain in 1942. It is
configured with 20
independent charitable
organisation focusing
to remove global
poverty(Laudon and
Traver, 2016).
Product and services TESCO plc is the
global grocery and
general merchandise
retailer market
encompassing
products and services
such as food, clothing,
TESCO mobile and
financial services.
H&M deals in clothing
business so large
number of clients are
engaged with this
business and H&M is
speciality in providing
quality products and
timely deliver of
goods to the
OXFAM works to
bring innovative and
practical ways to move
people from poverty
and thrive. OXFAM
invented online
website so that many
people connected with
that and deal with the
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TESCO company use
its own brand
products.
customers. company services
which OXFAM are
providing.
Size and Scope TESCO is the first UK
retailer business
having strength of
500,000 employees
and almost 7000 stores
across the world and
also reach the target of
£2 billion pound and
also its scope is
successful because it
has powerful brand
name(Saleem, 2015).
H&M Company is
expanding its business
and operation in 62
countries had 4500
stores across the
global. Total 132,000
employees working
with the company
having net worth of
$12-16 billion. The
scope of company is to
make the fast growing
and top fashionable
industry in the global
world.
OXFAM is a voluntary
company having the
strength of 5300
employees worldwide
and engaged with more
than 22000 volunteers.
The major scope is to
develop humanity
among the people to
come forward to help
the needy people.
Vision and Mission TESCO company
vision is to serve every
day a better quality
and also its mission to
be zero carbon based
in 2020.
H&M company main
object is to lead the
changes towards the
circular and renewable
fashion market in
respect of 100% fair
and equal company.
OXFAM main mission
is to address the
structural cause of
poverty and injustice
and to help people
directly when local
capacity is insufficient
or inappropriate.
Business objective TESCO company
objective is to provide
good quality products
at low cost so to face
H&M objective is to
establish a climate
positive chain value in
2040 as it is private
OXFAM main
objective is to focus on
development of work
so that it reduces
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strong competition
with their competitors
in the market(Laudon
and Traver, 2016).
company so its main
object is to earn profit.
poverty, sustainable
solution to satisfy their
needs and
humanitarian work to
help those who gets
affected from natural
calamities.
Legal structure In TESCO Company
board of director run
the company and other
members have right to
vote and they have to
sell shares on market.
H&M company runs
by the owner decisions
and the company must
have its own
memorandum and
article of association.
OXFAM company is
governed by the
constitution, Legal
documents which
govern the association.
LO 2
P 3: Relationship between different types of organisation and their link with the organisation
objective and structure -
Organisation objective means the goal of the company in short term and medium term
object which the organisation seek to achieve. It helps to define company purpose, its business
growth and achieve its financial objective of the company. Organisational structure is system
which indicated the system of working in the company to achieve the target. Organisational
structure indicated how information flows in the company from one level to another
level(Laudon and Traver, 2016).
H&M company follow Tall organisational structure as in this structure it reflects the
hierarchy of the company as there are multiple layers of management from top mangers to lower
employees and their supervisors. The decision of the company are taken by the top managers or
CEO of the company and the instruction are followed by supervisors or employees working
under the company. As if the range of company is growing the post also increased with the
company expansion and more chances of promotion and increment in job. H&M company can't
keep all the employees in their decision making process because company is run ned by its
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owners and rights to take decision also vested in the hands of owners(Tall Organisational
structure, 2019).
Illustration 1: Tall Organisational
Structure
Source: Tall Organisational structure,
2019
Relationship between various function of organisation :
A) Marketing with Finance: Marketing and finance are the two pillars of the company on which
the growth and profits of the company are dependant. H&M company has to make a budget to
bring new product in the Market and also its strategies to implement in case of crisis arise
because changes in environment are not in hands of company and company suffer most of the
losses due to weather condition. Company makes budget according to the demand in the market
and by this the relationship occurs.
H&M company has to bring product in the market and this can only be possible by
having proper funds in the company as without funds or capital company can't launch new
product and also without finance the marketing of the product can't be assist.
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B) Production with Research and Development: H&M company is famous for its brand name
and company produce such quality products which is high in demand and according to research
and development, the research in market and identity the most demanding products and also the
issues arise if any relating to the product delivery and services to the clients. Market is expanded
in vast area and company also maker strong strategy to engage their business and products in
whole market that the only producer to reach the market and according to the demand the
production procedure is followed. H&M track the market record and according to that the
production department is instructed. H&M company research in the market about needs and
demand of the products and then instruct the product department to continue with the production
work and also the target are fixed for the production work(Hillary, 2017).
LO 3
P 4: Positive and negative impact of PESTLE on Business operations -
PESTLE Analysis closely examines the impact of H&M company
Political Factors - Due to global brand name, H&M company has to face many political
changes in the market.
Positive Aspect Negative Aspect
H&M company mange to diversify
government regulation in various market and
due to change in leader in USA, Europe and
Asia company has already planned their
strategy to deal with the market competitor and
the changes which occurs globally can also be
challenged by the company through their
strategy.
Company deals products across the world and
if they have any instability in the political
manner in any country relation to GDP market
rates than it directly affects the growth of
H&M company structure, as GDP rate reflects
the growth of the company(Laudon and Traver,
2016).
Economic Factors – At the time of Brexit company has faced many economic changes
such as changes in currency rate, economies of scale and inflation rate or import export
tariff barriers.
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Positive Aspect Negative Aspect
H&M company plans strategy in such a way to
if there is change in currency rate of any
country than it establish new way to promote
their products or services and also H&M
company made such good relation that no
problems arises in relation to imports and
export of good and services.
The exchange rate of Germany had direct
impact on H&M investment plan not only in
short term but also in long term. Due to
changes in labour laws and other policies it
influences the working of employees. As
employees are more motivated towards the
scheme which the company are offering and if
there is any change it reflects the employees
interest towards the company(Arrigo, 2018).
Social Factors – H&M company knows the taste of customers but there are some aspects
which reflect the company structure.
Positive Aspect Negative Aspect
H&M company due to their brand name attract
the customers and also catch the taste of
customers and their demand and need of the
product and then only the product is designed
to satisfy the clients approach and they also
maintain CSR relationship with the employees
of the company(Kolk, A., 2016).
Customers are more attracting to the different
designs and the taste are also changing
frequently which results in continuous
innovation of design in the company because
once the company lose their customers they
bring competitors in the market. Social media
also influencing the customers which is the
biggest challenge for company to maintain
their reputation in the market.
Technological Factors – Changes in technology bring development in company strategy
and for that many aspects are undertaken -
Positive Aspect Negative Aspect
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The Latest technology based on innovations
which bring more competitors in the market
because the company establish an expert team
of software which adapt the new changes
easily and ready to crack the market
competitors.
Due to changes in technology companies has to
retain the same person because it involves lot
of data and company important information
which the company can't trust easily on any
other person. New technology result in loss of
employment opportunities.
Legal Factors – H&M company has to carefully enter in the market before knowing the
norms and regulation of the other companies.
Positive Aspect Negative Aspect
H&M company makes a strong steam to
handle their legal matters and make strong
strategy against it in case if any matter arises
they already ready with their back up plans and
strategic legal team to win that dispute.
If there are no rules for legal protection of the
company as company lost the dispute arising as
the infringement of their known brand which
arises a big loss to the company and their
reputation in the market(Arrigo, 2018).
Environmental factors – H&M company product varies through the market demand
because of no stability in the climatic condition and also the people demand are
changing.
Positive Aspect Negative Aspect
By seeing lot of wastage H&M company
decide to recycle their products and clothing
into 100% renewable use by 2030. This
strategy attracts the customers because they
think that company is saving the environment
and their resources for future use(Kozubíková
and et.al., 2017)
Customers demanding are changing frequently
as they always prefer eco friendly products
which the company has to keep in mind while
designing the products. Company also
influenced by the climatic condition because
the changes in environment are not in hands of
the company and thus result in bear of losses
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and damage in products goods and services.
LO 4
P 5: Strength and Weakness of Organisation -
H&M is the one of the most leading fashion company, so it also has some strength and weakness
points.
STRENGTH:
 Famous Brand Name globally – H&M company is famous by its brand name and due to
many changes in global market still company maintain its dignity in the market and
famous among the customer. Customer attracts the H&M product due to its brand and the
product they are offering beat the other products and that the only reason H&M still
continue to be the top position in retailer market(H&M SWOT Analysis, Competitors and
USP, 2008).
 Fulfilling customers Demand – H&M company knows how to attract the customers as
company design the clothing according to the demand of the customers needs and they
fulfil the customer satisfaction at high level. Customers always demand product at best
quality and H&M company carries a speciality in this field.
 Financially Strong – Due to changes in global market many new techniques are adopted
which many company fails to adopt the technology result in lack of capital but H&M
company manages and make their company strategy in such a way that they are ready to
face all the challenges arising in the market and also plan accordingly so that they save
for future use(Hair Jr and et.al., 2015).
 Easily affordable and Pocket Friendly Prices – H&M company varies according to the
market research if the products are not sold or the customers taste are changed, they bring
new scheme in the market which attracts the customers and they offer the product at
affordable prices which is a pocket friendly for customers and at customer gets the
product at low price with very good quality(Arrigo, 2018).
WEAKNESS:
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 Designs are easily copied – H&M company designs are so common and the copy of the
design are easily available in the market at low price which is the weakness of the
company because they are lack in innovating their design structure and for that the
competitors in the market can easily beat the company.
 Response against complaints are slow – The taste of customers are rapidly changing so
company has to bring new design in the market so that they can continue to attract the
customers with the product. Sometimes there are lack in providing the services and also
delay in fulfilling the needs of customers which result in loss of customers interest which
indirectly reflect the buyers of the company structure(Kolk, A., 2016).
 No proper use of inventory – H&M company scheme can't attract the customers properly
and in that case the buyers rate are also decreasing which result in wastage of clothing
and the resources which the company are using such as transportation, packaging and raw
materials. Company facing loses due to lack in strategy planning for reuse of there
products.
 Slow procedure for promotion of employees – Many employees are engaged with H&M
company but the promotion procedure is slow in the company. Employees are motivated
and supported in terms to offer promotion but the top managers give chance to one or two
employees to promote their work which result in lack of employees trust in the company
working.
P 6: Interrelate Strength and Weakness with the external macro factors -
Famous brand name is related to technological factors of macro environment as due to
latest and innovative technologies the company can expand their business and by their
expansion they can promote their brand name which is popular among people and they
get attract through the company name. Company assigned a new technical team to handle
all the matters related to promotion of their products through different scheme and also
comparing the numbers and issues if the product is lacking in the market(Hair Jr and
et.al., 2015).
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Fulfilling customer demand is related to environmental factors. As customers taste are
changing frequently and demanding eco friendly products, H&M company known by
fulfilling the customers demands and they design accordingly to the customers needs ad
demand but the environment is affected by this procedure as lot of demanding for
resources arise which in result company take initiative action to utilize and reuse the
products in 2030.
Financially strong is related to Economic factor as economic factor is affected with
inflation rate, economies of scale and H&M company make the finance team stronger
that if any crisis arise or any change in global occurs company is ready to face the
challenge in the market financially and also make strategies to beat that challenges by
innovating or bring new products in the market at low rates and eco friendly
design(Saleem, 2015).
Design are easily traced is related to Legal factors in macro environment as in legal
factors copyright, infringement and patent terms are applied and in this H&M company
designs are easily copies and traced by other competitors in the Market and they didn't
have strong polices and rules to catch the person this result in affecting the importance
and brand of the company.
Response against complaints are slow are related to technological factors of macro
environment as the technologies are not up to date which result in lack of information or
coordination with their customers to assemble their issues and rectify their
products(Arrigo, 2018).
CONCLUSION
From the above study it can be concluded that Business environment play a marketing
role in the company business affairs, it has both internal and externals factors which may either
influence each other or they both together influence the company working structure.
Environmental factors such as social, economic, political, technological, legal and environment
itself had an impact on environment and business and also reflect the company strategy and
planning to overcome from theses factors.
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In this report company strength and weakness are also examined and their interrelation
with the macro environmental factors and also their relation with the organisation structure
which H&M company is following and their strategy in the organisation structure in relation to
production with marketing and marketing with finance structure which examines the complete
structure of the company.
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REFERENCE
Books and Journals -
Arrigo, E., 2018. The key role of retail stores in fast fashion companies: The H&M case study.
In Contemporary Case Studies on Fashion Production, Marketing and Operations.(pp.
121-137). Springer, Singapore.
Hair Jr, J.F and et.al., 2015. Essentials of business research methods. Routledge.
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.
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.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Kozubíková, L and et.al., 2017. The effect of business environment and entrepreneurs’ gender on
perception of financial risk in the smes sector. Journal of Competitiveness.
Laudon, K.C. and Traver, C.G., 2016. E-commerce: business, technology, society.
Saleem, S., 2015. BUSINESS ENVIRONMENT, 3/e. Pearson Education India.
Online -
H&M SWOT Analysis, Competitors and USP.2008.[Online].Available
through<https://www.mbaskool.com/brandguide/lifestyle-and-retail/2934-h-and-m.html>
Tall Organisational structure.2019.[Online].Available
through<https://www.learnmanagement2.com/Tall%20structure.htm>
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