Analysis of Business Environment for Expansion

The assignment involves identifying key aspects to consider when expanding a business, including market conditions, internal strengths and weaknesses, opportunities, and threats. It also covers the importance of understanding the business environment in making informed decisions for growth and development.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
P1. Describe the type of business, purpose and ownership of two contrasting businesses.........1
P2. Describe the different stakeholders who influence the purpose of two contrasting
businesses....................................................................................................................................2
Task 2...............................................................................................................................................3
P.3 Describe how two businesses are organised in terms of their structures and functioning
areas.............................................................................................................................................3
P4. Explain how the style of organisation of your chosen businesses helps them to fulfil their
purposes.......................................................................................................................................4
Task 3...............................................................................................................................................5
P5. Describe the influence of two contrasting economic environments on business activities
within a selected organisation.....................................................................................................5
TASK 4............................................................................................................................................5
P6. Describe how political, legal and social factors are impacting upon the business activities
of the selected organisations and their stakeholders...................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business Environment means a collection of all individuals, entities and other factors,
which may or may not be under the control of the organisation, but can affect its performance,
profitability, growth and even survival. Every business organisation operates in a distinctive
environment, as it cannot exist in isolation(Wetherly and Otter, 2014). A business gets impacted
by different types of factors that exist in its internal or external environment. These factors as
well as elements related to a business organisation have direct or indirect link with its
performance and effectiveness
Task 1
P1. Describe the type of business, purpose and ownership of two contrasting businesses.
Tesco PLC is a British multinational grocery and general merchandise retailer. It is the
third largest retailer in the world measured by profits and ninth-largest retailer in the
world measured by revenues. It has stores in 12 countries across Asia and Europe and is the
grocery market leader in the UK (where it has a market share of around
28.4%), Ireland, Hungary and Thailand(De Jonge, 2011). It does retailing of books, clothing,
electronics, furniture, toys, petrol and software; financial services; telecoms and internet
services. It is a public limited company where public can buys its share through trading in the
stock market. The purpose of Tesco is to supply products; Tesco also offers services but that isn't
their primary way of doing business. Tesco is driven by profit meaning that they make sure that
their sales cover all of their running cost and more(Fernando, 2011).
Tesco is a owned by its shareholders, the shareholders do not run the business. The shareholders
put capital into the business buying shares they then receive a dividend payment.
National Health Services (NHS)
It is a not-for-profit organisation. The NHS is a public company meaning that it is owned
by the government. The NHS is a not-for-profit business it is run mainly using money from
taxation and provide service to the general population(Bill Pasmore and CMC, 2010).
The purpose of the NHS is to provide high quality care for all and staff doctors and nurses. Taxes
given by the citizens are used to pay for all the running costs-staff wages, medicines,
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equipments, buildings etc. NHS is part of the public sector and as it a not-for-profit organisation
they try to make the services as efficient as possible.
P2. Describe the different stakeholders who influence the purpose of two contrasting businesses.
Customers, employees, suppliers, owners are the stakeholder of a company but in modern
theory of the idea behind the original notion to include additional stakeholders like trade unions,
employer associations, communities and government.
Consumers
Customers are also known as buyer, client or purchaser of a good, service or product.
Customers usually buy products or services from Tesco. The customers are interested in buying
products from Tesco because they have a interest in the firms goods. They want value for money
and also want quality price to be competitive(Klapper and Parker, 2011). If the customer is
satisfied with its product then they will recommend to others.
Staff
The employees of Tesco seek security of employment, promotion opportunities and good
rates of reward.
Suppliers
The suppliers will have an influence on the price because if they sell it as an expensive
rate to Tesco will also have to increase the value of their product.
Owners
These are the shareholders of the business they have an interest in the profit Tesco makes.
Owners are often thought to be the most important stakeholders because they have set up the
business and give a lot of time into the company to make it successful. Owners like to see their
share of profit increasing, and the value of their business rising(Teece, 2010).
Local and National Communities
The actions of business can have a dramatic effect on communities. A community leader
represents important interest groups.
Governments
The government wants businesses to become successful, to create jobs and to pay taxes.
They want to see good businesses that take a full responsibility on looking after the welfare of
society.
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National Health Services (NHS)
The NHS stakeholders are internal stakeholders.
Donators
The people who donate to NHS are major stakeholders as NHS would not be able to be a
successful charity without the donations as they are the key to the money that is raised. Donators
are major stakeholders as they’re also the largest investors to NHS and influence it greatly. The
donators would not be concerned about how much they spend as they know that the money goes
donated is going for a good cause(Chavis, Klapper and Love, 2011).
Employees
If the organisation is a non profit organisation then this provides a sense of generosity for
those who work for free.
Managers
The job the manager does is to build relationships and deals with customer issues. Their
job is to manage daily operations which are to meet the needs.
The Trade Union
The Trade Union are the people who try to make good working conditions for the staff
who are employed by NHS.
Task 2
P.3 Describe how two businesses are organised in terms of their structures and functioning areas.
Organisational structure is the way in which the internal stakeholders of a business are
organised. Both Tesco and the NHS organise their structure by functional areas. A functional
area is a group of people within a company that have a particular purpose, so each department
has its own speciality. They are different ways that companies can use the organisational
structure, these ways are based on; function, geographical areas, product groups and types of
customers. Tesco and the NHS are both big organisations and to ensure the success of both
businesses the work that needs to be done needs to be divided up(Aterido, Hallward-Driemeier
and Pagés, 2011). Both Tesco and the NHS divide their organisation up in the same way this is;
finance, marketing, production, customer service, sales, human resources. Dividing a business up
into financial areas helps business to establish lines of control to help with communication.
Dividing up the business also helps as it divides up the work to be done and ensuring the work to
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be done is possible. The lines of control are useful for employees so they know what they are
responsible for and what other employees are responsible for, which helps departments to work
smoothly.
P4. Explain how the style of organisation of your chosen businesses helps them to fulfil their
purposes.
The aims of organisations depend on the type of business they are. For example, the aims
of a charity organisation will be quite different from those of a for-profit global business. A
business needs to have a clear sense of direction, which must be clearly communicated to all
stakeholders. This is the aim of the business which can then be broken down into smaller aims
and objectives.
Tesco PLC.
There are previous suppliers that Tesco have had a positive relationship with and some of
which the suppliers have been kept at the current present time. Some of which supply resources
and products that are sold, others services to clean and fill up petrol for example. Yes it is likely
to be achieved as it is communicated to all other employees in every single department across
many of Tesco stores not only in the UK, but on an international level also. Yes it is realistic but
it needs to be more specific in order for people to value the statement, so maybe Marks and
Spencer should set a target and specify when they want to have this increase in profit, by how
much and by when(Commander and Svejnar, 2011). This objective can be long-term related as it
doesn’t need any long time periods as it doesn’t use any calculations for profit, it just states that
Tesco want to build long-term close business relationship.
National Health Service
NHS is a not-for-profit organisations whose aim is to provide aid to the residents of UK.
They only focuses on the health and sanitation making policies related to health so that citizens
should be healthy and free from any diseases. They make sure that there are proper hospitals and
health care facilities available in UK.
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Task 3
P5. Describe the influence of two contrasting economic environments on business activities
within a selected organisation.
These economic factors are: employment, income, inflation, interest rates, productivity,
and wealth. These economic factors can be effected by consumers, suppliers, bankers and
lenders, the government, and the monetary policy committee Tesco. These people all make
decisions that can affect the economic environment, although some affect it more than others.
The effects on the economic environment can cause a period of economic growth or a period of
recession. Economic stability is liked by business people because it means that they can forecast
what is going to happen. Tesco is influenced by changing economic environments(Gecevska and
et. al., 2010). When the economy changes Tesco have to respond to make sure that they can
continue to grow as a company, this changes can include them changing the way they run their
stores (cost-cutting), changing their suppliers and/or changing what sort of goods they sell.
What occurs when the economic environment changes?
Recession is a period of economic decline, and is the opposite of economic growth. A recession
occurs when people become more cautious, customers cut back their spending and manufacturers
and sellers reduce their investments so do not produce as many goods or do not buy as many
goods. Economic growth and recessions both cause a ripple effect, this is because when a big
decision is made it effects everyone else and how they make their decisions(Aula, 2010). CPI
takes into account price changes for consumer goods and services, such as transportation, food,
and medical care.1 Cost of credit fluctuates constantly.
TASK 4
P6. Describe how political, legal and social factors are impacting upon the business activities of
the selected organisations and their stakeholders.
Political impacts –
Political stability is usually defined as the state of peace that is normal experienced in a
country from the activities from the government. Also when the government chooses to
Investment finance this then involves selling part of your business (‘shares’) to an investor. The
investor will then take a share of any profits or losses that the company makes. The Government
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may change the tax rates up or down this will be to try help boost the economy, an example of
this is VAT.
There are different type of campaigns that the supermarkets will try to support to then try
get more funding or advertising for the company from the government. Also the government are
also offering support and funding to business that will or are offering apprenticeships, to then try
getting more people in to a job and working life(Oh, 2010).
Legal impacts –
The legal impacts that Tesco must follow the law. It is extremely important that it
describe the product well and accurately if not then the trading standards will have no other
choice but to get involved. Consumer protection is when a group of laws and organisations have
designed to ensure that the rights of consumers, these are put in place to hopefully prevent
businesses that engage or are planning on engaging in fraud or specified unfair practices to try
and gain or taking an advantage over competitors(Ishengoma and Kappel, 2011). The legal
frameworks is where the business chooses the way it operates, this will then determine who has
what role and share to the business, this will also determine the relationships between investors,
employee’s customers etc.
Social impacts -
The social impacts that Tesco may face are the difficulty to recruit the right people for the
job in the stores or the offices depending on where they will be based, also most of the workers
that are in the stores are an unskilled workers on the minimum wage given. Tesco cannot
discriminate anyone from having a disability, different religion or if they are pregnant and other
things on this terms and when they are employed by the company or if they are in the HR
Department they are then recruiting they are also not allowed to ask questions in these
areas(Harrison, 2011).
CONCLUSION
From all above report it has been concluded that if any firm wants to expand their
business they need to know the market condition. They should analyse all the internal and
external factors which are responsible for impacting the business of the company.
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REFERENCES
Books and Journal
Wetherly, P and Otter, D., 2014. The business environment: themes and issues in a globalizing
world. Oxford University Press.
Fernando, A.C., 2011. Business environment. Pearson Education India.
De Jonge, A., 2011. Transnational corporations and international law: accountability in the
global business environment. Edward Elgar Publishing.
Klapper, L.F and Parker, S.C., 2011. Gender and the business environment for new firm
creation. The World Bank Research Observer. 26(2). pp.237-257.
Chavis, L.W., Klapper, L.F and Love, I., 2011. The impact of the business environment on
young firm financing. The world bank economic review. 25(3). pp.486-507.
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.
Commander, S and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Gecevska and et. al., 2010. Product lifecycle management through innovative and competitive
business environment. Journal of Industrial Engineering and Management. 3(2).
pp.323-336.
Aula, P., 2010. Social media, reputation risk and ambient publicity management. Strategy &
Leadership. 38(6). pp.43-49.
Oh, S., 2010. New role-based access control in ubiquitous e-business environment. Journal of
Intelligent Manufacturing. 21(5). pp.607-612.
Ishengoma, E.K and Kappel, R., 2011. Business environment and growth potential of micro and
small manufacturing enterprises in Uganda. African Development Review. 23(3).
pp.352-365.
Harrison, R., 2011. Learning and development. Development and Learning in Organizations: An
International Journal. 26(1).
Teece, D.J., 2010. Business models, business strategy and innovation. Long range
planning. 43(2). pp.172-194.
Bill Pasmore PhD, S.V.P and CMC, T.O.S., 2010. Leadership agility: a business imperative for a
VUCA world. People and Strategy. 33(4). p.32.
Online
Marketing Environment: Definition, Micro & Macro. 2017. [Online]. Available through
<http://studiousguy.com/marketing-environment/>. [Accessed on 17th August 2015].
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