Business Environment Analysis and Impact

This assignment delves into the complex relationship between a firm's business environment and its competitive priorities. Students are tasked with analyzing both micro (industry-specific) and macro (economic, legal, social) environmental factors that shape a company's strategic decisions. The focus is on understanding how these external pressures influence a firm's choice of competitive priorities such as cost leadership, differentiation, or focus.

Business and Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Explain different types and the purpose of the organisations..........................................3
P2 Explain the size and scope of different type of organisation............................................4
M1................................................................................................................................................5
D1................................................................................................................................................5
P3 Relationship between organisational functions and their link with the company
objectives....................................................................................................................................6
M2................................................................................................................................................7
P4 Identification of the impact of the macro environment upon business operations........7
M3................................................................................................................................................9
D2................................................................................................................................................9
P5 Internal strength and Weakness of the organisation........................................................9
M4..............................................................................................................................................10
P6 How strength and weakness interrelate with macro factors..........................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
The business environment can be defined as the internal and the external factors affecting the
functioning of any organization. There are two types of business surrounding namely the
External micro forces and the External macro forces (Bryman and Bell, 2015). The external
micro environment involves the workers, input of the suppliers, the competitors, customers, the
marketing intermediaries, etc. On the other hand, the external macro environment possess the
factors like social, technological, political that influence the operation of the corporation
positively as well as negatively. The business environment is considered to be the best when the
organisation completely fulfils the need of the population of the nation. The present report is
based on the two different organisation namely Thomas Cook and Lloyds group that deals with
the private sector as well as the public sector respectively. The report is explaining the
company’s their legal status, the year of the establishment as well as the service offered by them.
TASK 1
P1 Explain different types and the purpose of the organisations
There are three types of organisation namely the private sector, the public sector and the
Voluntary sector. The private sector firms are those that are not owned by the government body.
The goods and the services are provided by the individual i.e. the company owner. The Thomas
cook can be the best example of the private based organisation. While the public-sector firms are
totally owned by the government itself and the supplying of the goods and services are only done
by the authorized bodies (Welford, 2013). The Lloyds group fall into the categories of public
sector. The legal structures are nothing but the legal definition of any business.
The Thomas Cook Retail Limited is firm dealing with travel and tourism sector which is owned
by the Thomas cook group. It was founded on June 19th 2007 by the merger of Thomas Cook
AG and their sons as well as by the MyTravel Group Plc. The corporation having their branches
in the United Kingdom and Republic of Thomas cook. After taking a survey it has been
identified that the organisation has around 19,000 employees. The aim of this organisation is to
increase the sector of travel and tourism by offering the holidays vacations. The corporation
offered cheap holidays, villa holiday, a luxurious holiday with cheap flights and hotels to their
clients. This venture has been a main sponsor of the Manchester City and Peterborough United
football clubs.
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The Lloyds group is an organisation that deals in banking sector founded by the John Taylor,
Sampson Lloyd and their sons. It is founded in June 1765 in the Birmingham. They made
successfully their 100 years with a single office by the help of their successive partners. They
become the powerhouse of the organisational revolution and also gain popularity as the
Workshop of the world. This organisation has also led a vital role in performing financing trade
as well as corporation in the town. The main job of this bank is actively participated in the
manufacturing as well as engineering sector. The legal structures of the Lloyds group is
discussed below:
The Council normally has eighteen different members of the board that is six working,
six nominated and other the six are external members. They are being changed during the year
of finance. Lloyd’s members choose or elect the working and external members for the
corporation. Additionally, the chair person and the Deputy Chairmen is chosen by the council
that are the members itself annually. It is the council who can take direct decision by resolve the
issues as per the laws and rules of the enterprise. The Franchise board and the committees
associated with it take other decisions.
The voluntary sector is also called the community sector or non-profit sector. The aim of this
type of organisation is to focus on the social work (Wheelen and Hunger, 2011). They do not
concentrate to make the profit. In contrast to private and public sector they deal with the social
or community based concerns without focussing on its economical development.
P2 Explain the size and scope of different type of organisation
The different taken organisations differ in the size as well as the scope. The size of the Thomas
Cook firm is discussed below:
 The number of employees working in this firm reflected the fluctuating points. The
survey conducted in the July of 2016 shows that the corporation had 21,940 employees
while in past years it was approx. 19,000.
 The turnover of the corporation is very attractive and shows fluctuating in year of 2014
having 8,588m Euro and in 2016 it was 7,812m Euro.
 This shows a decline of the turnover which is a matter of concern.
 The company perform operation in main five divisions that is UK, Central Europe,
Germany, West Europe and the Northern Europe.
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After conduction of the survey in the Lloyds group, has been found that there are 45,856
number of employees working in the past years but in the current year that is 2017 there are
75,000 employees in the venture.
 The turnover of the corporation is found to be 39.611 billion Euro in the year of 2106.
 The total assets of the corporation are about 817.793 billion Euro in the year of 2017.
 The net income of the enterprise was approx. 2.514 billion recorded in the year of 2016.
 The enterprise scope is to expand its business of banking in all around the world for the
purpose of serving the common people by providing them better banking or financial
services.
M1
The organisation objectives and the services offered by the corporation is highly influenced by
their number of employees, the structures as well as by the scope of the corporation. As in the
Lloyd group, less work is performed if the number of employees decreases. Because it is the
work of the employees that manufacture the product at the given deadline. Same in the case of
Thomas Cook, if the workers are not employed in proper number than the processing or the
operation is badly affected. As to manage the task of tourism and hospitality the number of
workers are required in larger number. The scope and structure are also affected positively as
well as negatively to the production and objective of the both corporation.
D1
The different business functions like human resource management, production, research and
development, marketing, etc. as well as the different types of business structures affects the
business objectives. The quality product if created successfully, fulfil the objectives of the
corporation. The marketing should be done properly in order to achieve the aim of the Lloyd's
group.
P3 Relationship between organisational functions and their link with the company
objectives
The Lloyds group functioning is closely linked to its business objectives and the structures.
Some of the important point in this regard are given below:
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 Production: The Company focuses on the better work of the banking sectors like giving
business loans, education loans, opening more and more accounts in the bank, etc. But
this will come true when the team members work properly by cooperating each other.
 Research and development (R&D) : The corporation concentrated on the development
process in order to increase the turnover of the company by hiring more and more people
(Zeng and et.al., 2012). This aim fully depend on the structure and strength of the
venture.
 Purchasing: The enterprise aimed to purchase fresh raw materials in order to proper or
accurate banking problem solution. (Schaltegger and et.al., 2012).
 Marketing: The Lloyd group goals to enhance their selling in every year but if the size
of the employee decreases then it become impossible.
 Human resource management: The venture focuses to achieve the guidelines of human
resource management by establishing ethical or moral values in the society. This will
come true when the structures or the pillars of the corporation is strong.
 Accounting and financing: The work of financing and accounting is the main motive of
the Lloyd group that can be achieved when the size and the structure of the corporation is
well suited to the manufacturing process.
The Thomas Cook has the same motto but the processing and the production differs. The main
functions of Thomas Cook are also discussed below:
◦ Production: The company having the aim to make more and more tourists or
consumers by drawing their attention towards the best hospitality served by them
(Elliot, 2011). But it might be achieved only if the size and structure of the tourism
sector is good.
◦ Research and development: The venture concentrates on developing their business
all over the world but for this purpose they have to examine the needs of the
customers. Additionally, to conduct survey in this regard the company needs large
number of workers so that this rigid research work do not take more time (Cai and
Yang, 2014).
◦ Marketing: The enterprise deals with the marketing purpose. The selling of holidays
tickets and the booking of more and more hotels and the buses for the transportation
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is the objective of this venture. But this will not be achieved if the internal and
external business structures are not best or satisfying.
◦ Human resource management: The Company focuses on the HRD by giving the
local people jobs and trying to improve their life style. This task needs a maximum
size of employees and a potentially strong structure.
◦ Accounting & financing: The accounting and financing achievement is the fruitful
result of all above listed process. The private firms want to secure good financing in
order to improve the economical condition of the employees as well its own.
M2
The interrelationship between the organisational function and its structure is quite interested.
The functioning of the Lloyd group as well as the Thomas cook is being affected by its structure
as the companies aims to do higher productivity, better research and development, marketing,
etc. But this will have achieved only if the size and structure of the business is arranged
according to the objective plans of the corporation. If the size increases this will surely give
advantage by incrementing the turnover of the corporation. On the other hand, if the size
enhances then the enterprises have to invest more revenue as it has to pay wages to the large
number of people. This is treated as disadvantage.
P4 Identification of the impact of the macro environment upon business operations
The macro environment is the general or common environment through which all the
company working. It includes the various factors like social, political, economic, Technological,
Demographic, population, Legal, socio- cultural and Environmental.
They influence positively as well as the negatively. Political factors: Political factors are those factors which is regulate by the government
of the country. The company can make the strategies to over comes from these factors.
The companies like Lloyds group and Thomas Cook faced many difficulties in this
regard (Cuervo‐Cazurra, 2011). The political factors include tax rates, fiscal policies and
other policies. These policies changes year to year. These tax lead to increase the
domestic price by which is not willing to visit these countries. The local shops, travelling
agency affected by these tax policy of the government. On the other hand if the
government reduce the taxes it can increase the demand of travel and tourism in UK.
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 Economical factors: Economical factors are those factor which are affect the the
economy of the country such as exchange rate, inflation rate, per capita income etc. the
travel and tourism sector face the hard challenge because of the economy factors. The
sector is affected due to less disposable income and unemployment in the country. The
sector is also affected by the oil prices. The GDP of UK decline so that there is increase
in unemployment. Other than these factors the global terrorism has impact on the travel
and tourism sector (Palo and Tähtinen, 2011). As now the economic condition and per
capita income of UK people are improving it tends to increase in the spending on the
tourism.
 Social factor: Social factor refer to the group of the people which share common belief,
values, norms. The economy of UK is growing by which consumer spend more from
their income. This consumers has the higher expectations from travel and tourism sector.
This growing economy tends to increase the demand of travel and tourism. Lloyds group
have to examine the different age group of the society that is the kids, mature, immature,
the elder as well as the old peoples. Technological factor: Technological factor refer to the usage of the new techniques,
idea and innovation in the particular sector. This is proved to be very helpful for the
Lloyds group. In context to this sector the usage of internet is increasing now a days
which allow the people to easy access of the websites by which they can book the trip or
holiday. Thomas cook aim to become the biggest online services provider and they are
using these services in effective manner. Legal factor: The last factor which affects the the business environment is legal
environment the company has to follow certain rules and regulation implied by the legal
authority. Every business unit has to follow the legal obligations (Schaltegger and et.al.,
2012). There many right made by the legal authority like human right, employment Act,
child labour Act etc. Thomas cook and Lloyds group has to follow all these rules to
conduct the business activities.
 Environment factor: Environmental factor refers to the activities which protect the
environment. The company has to operate its business in a manner so that they can serve
the its customers by eco friendly manner. Thomas cook provide information of each
fight on the environment by their eco labels. The labels are can been seeing at the time
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of buying the electronic equipments. The label provide the clear information about the
impact of flight journey on the pollution and other factors.
M3
The organisation like Lloyd’s group and Thomas Cook uses the PESTLE analysis that is the
nothing but examining the Political, Economical, Social, Technological, Legal and the
Environmental factors for the corporation. These factors influenced a lot in making the good
turnover in comparison to other competitive market. The factor like social effects negatively as
well as in positive manner. As the company needs to focus on the society. For making a good
product they should give importance to the consumer's demand. The life style must be examined
for this purpose. The legal factors also impacted by incurring various taxes like the income taxes.
Also, different laws are made in order to smoothly performance of the companies.
D2
The macro includes the various factors like social, political, economical, Technological,
Demographic, population, Legal, socio- cultural and Environmental. These all affects the
business objective and the decision making. For example, the socio-cultural factors are those one
that aid in discovering the lifestyle and the basic need of the population where the industry exist.
P5 Internal strength and Weakness of the organisation
The strength of the Lloyds group are given below:
 The Lloyds group expand its manufacturing process in the different nations.
 Lloyd’s group is highly recognised brand being at the top ten banking organisation.
 It has followed innovative business model in order to develop its performance.
 They also improved the best online shopping mode. By this consumers can easily select
their services or task like opening account, transferring balance to different accounts by
only one click. This enhances the yearly turnover of the corporation (Cavusgil and et.al.,
2014).
 The ventures made partnerships with different nations in all over the world like UK,
Central Europe, Germany, West Europe and the Northern Europe.,
 As the size of the company is so large they prefer to purchase items in bulk. They get the
resources like pc, keyboards, ATMS, etc. at the cheaper rate.
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 This becomes the reason that company compete with different other UK based banking
enterprises.
 The corporation provide home loans, personal loans, education loans, etc. to the clients.
This makes a permanent or long term relation of the customers with the company.
The internal weakness of the company are following:
 The profit making feature of the Lloyds group is badly affected by the debt in the credit
cards as the company provided online shopping.
 The house hold claimed are increases day by day (Welford, 2013).
 Lack of working experience in the business of smartphones and various gadgets.
 It has to invest a large revenue in the IT sector to prefer they web based technologies in
their products.
 As being a reputed brand small mistake in the terms of quality damage the whole
reputation in the eyes of customers.
 The violation of any law like child labour causes negative affect to the corporation.
 The competitors of the Lloyds group are rising day by day. (Bryman and Bell, 2015).
M4
Swot analysis used to determine the weakness and strength of the particular company. In this
report the Lloyds group is being considers and its analysis reflect that the company has some
strength and weakness that affect the decision making process. The weakness like rising
competition, the lack of experience in the web based technologies. The strength also exit as the
company spread their business in almost whole globe. This makes the company to be a
recognised brand and as a result the demand of the services increases.
P6 How strength and weakness interrelate with macro factors
The strength and weakness of the Lloyds group are mentioned above are closely related with the
macro factors. The macro environment includes various factors like the social, political,
economical, Technological, Demographic, population, Legal, socio- cultural and Environmental.
Each of the factors are following:
 Social: The strength of the Lloyds group is affected by the social factors like the life style
of the community, the taste of the different age groups, the demand of the modern
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society, etc. If the company is at the top ten retailer list then surely the corporation has
focused on the demand of the consumers. And the weakness of the venture also exits if
they failed to achieve the need of the consumers.
 Technological: The Company faced the lack of experience in the IT sector as they deal
with the working of gadgets like smartphones, etc. This is considered as the weakness of
the company. On the hand the advantages of the technological factors includes the
involvement of smart machines of performing automated works.
 Political: The political factor also affects the Lloyald group a lot. The innovation of new
schemes regarding the payment of different taxes make the system unbalanced. The
involvement of certain laws in favour to the society like 7th pay commission, the
restriction of child labour served the company in positive manners.
 Environmental: The Corporation is positively as well as negatively affected by the
environmental factors. If the pollution level increases due the processing and operating of
different food or clothing industry made a negative image in the eyes of society (Wheelen
and Hunger, 2011). And they receive a notice against this work to minimize the level of
pollution. But if the environment provided a bulk of quality raw materials like cotton,
brick, timber, etc. then the nature proved to be very beneficial for the company. This is
the matter that show the advantages.
 Economical: This is one of the important macro factor influencing the venture. The
economical factor proved to be negatively affected in case of sudden currency change of
the nation (Craig and Campbell, 2012). The fluctuating value of the currency in different
nations causes serious problem for the Lloyds group as it do partnership with different
countries like china, India, Australia, etc.
CONCLUSION
From the above based report it has been concluded that the macro as well as micro
environmental factors affects the objectives of the corporation. The swot as well as pestle
analysis of the Lloyds group has been successfully determined in order to reflect its impact on
the business environment. The swot analysis reflects the strength and the weakness of the
venture by doing the internal study of the given organisation. There exists also some
disadvantage of the above listed factors like micro or macro. The Thomas Cook dealing with
travel and tourism sector is influenced by these factors.
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Business Environment Types (External Micro and External Macro).2017. Available
through:<http://www.economicsdiscussion.net/business-environment/business-
environment-types-external-micro-and-external-macro/10095>. [Accessed on 8th May
2017].
Legal.2017. Available through:<https://www.tourismThomas cook.com/Legal>. [Accessed on 8th
May 2017].
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