Analysis of Business Environments

This assignment requires students to critically analyze the business environments of two selected companies using appropriate frameworks such as PESTEL, STEEPLED, or SWOT. The analysis should cover macro environmental forces drawn from the provided sources and other relevant literature. Students are expected to demonstrate a comprehensive understanding of how these external factors influence businesses.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1 (covered in ppt.).................................................................................................................1
TASK 2............................................................................................................................................1
P3 Relationship between different organisational functions and its link with organisation
objectives ...............................................................................................................................1
TASK 3............................................................................................................................................3
P4 Negative and positive impact of macro environment........................................................3
TASK 4............................................................................................................................................6
P5 Internal and external analysis of company for identifying weakness and strength...........6
P6 Weakness and strength inter linked with external factors.................................................7
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment is a major term which comprises of each component which give
impact on organisation in both manner indirectly and directly. Therefore, manager is going to
establish their enterprise, an person have to analysed all factors which are important for the
success of company. Generally, enterprise surrounding are divided into two parts such as micro
and with that macro. Both effect business in positive and negative manner. NatWest is a
commercial bank which is chosen in this report (Edquist, 2010). It was established in United
Kingdom as well as make them available of funds at a cheaper interest rates. Major aim of this
assignment is to mark different forms of organisation which contains voluntary, public and
private. Identify the strength and weakness of their enterprise so that they can have benefits from
their competitor at a place of market. Analysis of PESTEL and SWOT are also included in this
project. It is important to know demands of consumers as it vary as per country. Elements of
macro and micro can impact on making decisions process of company in a negative or positive
way it is necessary to identify in a effective way.
TASK 1 (covered in ppt.)
TASK 2
P3 Relationship between different organisational functions and its link with organisation
objectives
To run a business in an appropriate manner company performs various functions which
helps firm in achieving the goals and objectives in a certain time period of time. In order to carry
out the business operations a firm needs effective workforce in sales and marketing, R&D,
production, customer service and in other departments (Hoang and Rothaermel, 2010).
Therefore, functions of all divisions are linked with each other with common objectives i.e. to
avail customer retention by its products or services. Especially in banking sectors like NatWest,
role and functions of each department are interrelated with each other. Structures of an
organisation demonstrates its way and extend of business in which duties and responsibilities of
each person has described. To establish a company, business owners need to introduce capital
first without which they cannot operates functions. Mostly, all industries follow a supply chain
process to manage all departments and their functions appropriately. Some division sectors of
such companies are describing as below:
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Finance: It is a lifeline of company without which a company cannot establish its
business in the marketplace. Finance department looks out transaction of money and resources,
make necessary budget as well control it, raise funds from stakeholders or investors etc. For tax
purpose and legal formalities, this sector provides essential documents and statements (Helms
and Nixon, 2010). The main role of finance department is to provide proper finance to other
divisions like marketing, HRM and others, so that they can carry out their activities in desired
manner. With the help of marketing department, finance managers can allocate sources from
where funds can be arranged easily.
Human Resource Management: For an organisation, manpower is its most valuable
asset who contribute their efforts in achievement of business objectives and goals. In order to
provide them beneficial, human resource management carry its all functions regarding the same.
HRM helps a company to provide sufficient manpower by recruitment and selection process. It
takes all responsibilities like maintaining needs of employees, giving them healthy working
environment, compensation, training to develop their skills, performance appraisals etc. NatWest
has provided necessary training and development programs to freshers at time of recruitment to
increase knowledges in field of bank related terms (Chavis, Klapper and Love, 2011). Thus, this
department help other divisions in providing best employees and giving best training to them. It
will help marketing, finance and other departments in carrying out their functions more
appropriately.
Administration:This department manage needs of all other divisions in a company.
Administrators observes and examines performance of each section to ensure whether
functioning of them are carry out in a proper manner. They act as link between management and
other persons. Thus, they help to run business of a firm successfully in a legal manner.
Administration aid marketing, HRM, sales and other divisions in managing their operations and
giving directions to meet their requirement.
Sales and Marketing: This division concerns on demands and interest of customers.
Marketing one identify in which region of marketplace, sales can be increased by promoting and
campaigning products of a company. On the other hand, with help of this sector sales department
emphasise on selling the goods in demanded area. Team-members of both sectors makes
strategies to advertise company's brand at remote areas also which helps in increasing
productivity and profitability of their business (Auzair, 2011). Functions of sales and marketing
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departments are interlinked with each other. Both help each other in enhancing sales
performance through which profitability can be increased.
Research & Development: Since trends, taste and lifestyle of customers are changing
rapidly, therefore, in order to make modifications in products as per their requirement, R&D
division of a company conduct research and identifies the same. This helps in increasing
production of a company and stay ahead from competitors at marketplace. This department aid
Finance divisions in searching sources from where funds can be arranged. It also help marketing
department in determining purchasing power of people.
Relationship of departments and their functions:
On examining functions of various departments, it has concluded that each one is
interrelated with other. Like finance sector helps in allocating the capital required by all to carry
out their operations in an effective manner. It tracks records of each transaction carry within a
firm. Similarly, human resource management fulfil needs of companies by staffing, planning,
organising, and many other functions to retain workers in an industry. Sales and marketing team
helps in distributing products or services to customers according to their demand on time. In
addition to this, R&D carry out investigation process to identify market trends. On basis of their
identification, administration looks out whether it is necessary to introduce change management
in system of a company in order to make modification in existing products. Therefore, function
of each departments are connected with each one by supply chain management. Purpose of all
are common that is to achieve company's mission and goals as well as maximise its profitability.
TASK 3
P4 Negative and positive impact of macro environment
External environment can directly affect an organisation. It is uncontrollable for a firm. It
is very difficult to find out solution of external factors (Dong and Hou, 2009). It is important for
managers to identify their impacts because it can affect industry in both ways directly and
indirectly. Along with that, business makes their plans and strategies for extrinsic environment.
Employer of NatWest has to find out these factors, which gave impact on enterprise in
both ways, negatively and positively. For overcoming with external factors, every business
should conduct a PESTLE analysis. Using this method is very easy as well as managers can learn
their environment more deeply. It also enhances extrinsic thinking and strategies development
with the help of investigation. Organisation chief can easily identify their threats and solve them
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immediately from enterprise (Chang, Hughes and Hotho, 2011). Therefore, it will help in
achieving desired targets and objectives in an efficient and effective way. With this, it will also
help in beating their competitors at a place of market. Hence, they can make improvements in
maintaining goodwill at marketplace. If company’s director will do not take any appropriate
decisions within a stipulated time period, then extrinsic environment will affect their enterprise.
PESTLE analysis of an organisation is discussed below:
Political factors: NatWest is a powerful banking domain as well as they are very wider
in nature. Laws of government affect a banking domain (Barnett and Salomon, 2012). For
example: rate of interest, legislative laws, tariffs, trade restrictions, labour laws etc. affects
organisation a lot. Positive Impact:If taxation and other policies are in favour of banks then it will prove
beneficial for expansion of their business. Negative Impact: Governmental laws and policies create adverse affect on banking
sectors. They can intervene in the matters of banking like corruption among political
parties, trade restrictions,tariff rate etc. Therefore, it impacts on profitability of NatWest
also in negative manner.
Economic factor: This component and banking business are interrelated with each other.
Individual income affects their buying behaviour. If NatWest is having good revenues, then
period of recession will never impact on their actions. For example: exchange rates affect
NatWest and other banks all over the world etc. Positive Impact:Economical conditions and banking sector are considered as interrelated
with each other. Therefore, situation of marketplace is tight then organisations or
individuals have to take loan from banks. This will prove beneficial for increasing
profitability of NatWest as well. Negative Impact: Fluctuations in economical laws assist banks to develop their policies
accordingly which may impact on profitability of business.
Social factors: People’s values, culture, beliefs and many more which impact on firms
either indirectly or directly are considered as social aspects. Therefore, people usually take
advices and support for loans for business, academics, home etc. customers gain knowledge
regarding investments, credit cards, saving accounts and many more. They give a better help to
social group.
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 Positive Impact:If spending habits of people is high then it aid banks including Natwest
to attract their mind by providing good schemes to them to borrow or spends funds at heir
institutions. Negative Impact:Changes in demographics, lifestyles, purchasing habit mostly create
threat for NatWest.
Technology factors: In today's times, it is a world which constantly takes changes.
Hence, NatWest are using the latest techniques and tools into their enterprise. For example:
people are withdrawing cash by debit cards, ATM and many more. By using these technologies,
it helps in easy transfer of fund with the help of using online apps. Positive Impact:Digital technologies provide many benefits to banking sectors. It
increases capabilities and potentials of banking services. Therefore, investing in IT
technologies, NatWest prevent banking activities from fraud, cyber risk and more. Negative Impact:A single technology can do work of more than 10 employees
simultaneously. Therefore, it increases unemployment also which affect living standard
of people.
Environmental factors: Through proper utilisation of applications, it will make a friendly
environment. Hence, paper work is eliminating in higher ranges(Demil and Lecocq, 2010). It is
also reducing footprints of individual environment. For example: agile, FinTechs etc. Positive Impact:Transition to low carbon or reduce usage of paper aid NatWest to
provide online statements to customers while making communication with customers. Negative Impact:Environmental considerations like natural habitats, calamities, flood and
more, is a major concern for banking institution.
Legal factors: It is important for every organisation to follow each law as this will help in
giving privacy and security to their customers. For example: consumer laws etc. NatWest follow
all laws within their company for providing better services to their consumers. Positive Impact:Running operations in legal manner help in enhancing image of NatWest
in positive manner. Through this, it can enhance its customer base.
 Negative Impact: Banks including NatWest has to follow strict rules and regulations like
consumer laws, trade structures and more. Therefore, it may increase complexity for
NatWest as this bank has to develop policies as per legal laws.
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TASK 4
P5 Internal and external analysis of company for identifying weakness and strength
Business environment is generally divided into two parts as external and internal of
nature. It is affected by various problems and factors because it is necessary to properly evaluate
and analyse all elements in an effective way by using the latest and smart techniques. SWOT
analysis helps in effectively measuring organisation weaknesses, strengths, threats and
opportunities in a very proper manner. An intrinsic environment contains management, vision,
mission, managers, employees etc. and extrinsic environment includes government, competitors,
suppliers, customers etc. NatWest is a group of royal bank of Scotland. It is the largest
commercial and retail bank in United Kingdom (Macro environmental forces, 2017). For
analysing a companies present status and position. Organisation use SWOT analysis within their
firm.
SWOT analysis are mentioned below:
Strengths
 In present times, Royal Bank of Scotland is having numbers of franchises in the whole
world. Through that, they became one of the major financial group in United Kingdom.
 They used a strong network of distribution in their workplace through which it helps in
proper distribution of banking services to all consumers.
 Records are tracked successfully for developing new banking products and services.
 In the terms of brand portfolio, this firm is investing fund for establishing proper and
strong brand portfolio (Boons and Lüdeke-Freund, 2013).
 NatWest is having a highly skilled employees, due to investing capital in the training and
development program. It will help in increasing their capabilities and skills of working.
 Their main concentration of all functions is to satisfy their consumers.
 Brand presence and aggressive marketing.
 NatWest was connected in sponsoring main events of sports. They are having 8, 50,000 accounts of small industry and 7 million consumers.
Weaknesses
 They are not able to face challenges of entering a new segment along with they loose all
share of small market of organisation.
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 This enterprise has to invest finance for utilising and adopting the latest technology for
accomplishing work and giving them the best services to their consumers.
 Manager's finance planning is not done in efficient and effective manner because
liquidity and current ratio is not represent properly.
 Main weakness is disputes linked to organisation for internal audits, which destroy name
and brand image. Global penetration is less.
Opportunities
 New significant policies and taxation system influence the workplace of NatWest bank
which will help in raising level of profitability (Crane and Matten, 2016).
 Lower rate of inflation in United Kingdom, bring external market stability.
 Smart and new technology helps in giving better opportunities to the company. It will aid
in maintaining customer’s loyalty by giving them the best products and services.
 Developing of Forex market. Emerging economic expansion.
Threats
 Latest technology manufactured by NatWest competitors will be the main threats for
business.
 Daily basis competition is raising in this enterprise.
 Stringent fluctuating market of finance and policies of government.
 They face lawsuits in different domain.
P6 Weakness and strength inter linked with external factors
Both PESTEL and SWOT analysis are important for firm. It will easily help in
identifying large and small scale of environment. They play a very major role in achieving goals
and targets of company within a given period of time (Business and the environment, 2017).
Extrinsic and Intrinsic environments are interrelated with each other. If there is any
modifications seem among individuals then it will affect companies operational division because
of wider thoughts with difficult nature. Generally, these two terms are connected with each other.
Perspective of SWOT contain impressive numbers of parts which influence enterprise from
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inside. On other side, PESTEL contains controls and standards or distinctive segments from
outside are authorized by governing bodies.
There are various targets of recognizing SWOT from PESTEL are discussed in detail
below:
 Upgrading obstacles and present problems existing in corporation.
 Within a company segments are expected to decide all the inside problems of agents,
customers, suppliers etc. On other side, outsider have to consider every one feelings and
gauges which are set by governments for creating a free space from isolation.
 Expenses things are mainly affected in the context of advance components.
 Friendly in setting additional problems and covered issues (Bryman and Bell, 2015).
 Proper allocation of important resources for collecting imaginative things.
 Social affairs of exact information and data by driving problems of investigation.
 Proper process for supporting threats.
 Survey of future cost.
All these above focus shows an proper relations with internal and external situation in
this part and friendly towards completing of affiliations. It has been understood that both analysis
are mainly based on running considerable undertaking (Borio, Drehmann and Tsatsaronis, 2014).
It is examined above that they both are inter linked with one another in various way which
influence affiliation is completed in lighting in a manner that these assemblies of mechanical are
helpful in the process of organisation and also based on leadership system.
Additionally, PESTEL and SWOT gather data and information. It is useful in
implementing a convincing a model for satisfying needs and demands of consumers. Hence, this
framework is used by NatWest for learning again establishment in slants and taste of consumers
or general society by managing a process of examination.
Political Economic
It includes various factors which enhance
strengths and weaknesses of organisations. It
includes taxation law, trading policies and
more. In context with NatWest, it may
Factors including per capita income, cash flow
inflation and deflation rate etc. create both
opportunities and threats for NatWest in
following manner:-
Strength: If per capita income is increased
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described as:-
Strength: If laws are in favour of baking
sector, then NatWest gain opportunity to
enhance its business market in other countries
more easily.
Weakness: As every country has own political
laws, therefore, it increases complexities for
banking sector to change policies of business
accordingly.
then people will save their funds in banks.
Therefore, providing attractive saving rate by
NatWest help in enhancing its customer base.
Weakness: It seems to be difficult for banking
industries to change policies frequently as per
economical conditions.
Social Technological
Preference, lifestyles and demographical
changes impact on business of banking sectors
also.
Strength: Launching banks in developing
countries aid NatWest to increase its
profitability.
Weakness: Ethical consideration assists
NatWest to make investment in CSR activities.
Therefore, if this bank does not take part in
such activities then it may affect its business
image in negative manner.
Technology and innovation provide various
opportunities and threats for banks.
Strength: Through online applications,
NatWest can develop effective connection with
its customers and provide timely information to
them about bank rates and more.
Weakness:Technology advancement create
various threats for banks and individuals. It
includes cyber attack, fraudulent activities and
more.
Legal Environmental
Legal factors assists organisations including to
adhere laws strictly.
Strengths: Legal factors aid managers of
NatWest in forming effective organisational
structure. It helps in reducing occurrence of
conflicts between workers and providing good
working environment to them as well.
This factor includes providence of activities for
saving ecosystem from carbon footprints and
more.
Strength: It assists Banks including NatWest
to avoid paper work and keep information
about clients details on software.
Weakness: Environmental conditions like
natural calamities harm business of all
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Weakness: Adhere each and every law
sometime creates complexity in business
operations.
organisations.
CONCLUSION
As per above report it is concluded that it is important for each type of organisation to
analysed its environment in an proper manner. As their outcomes, they can manage alternatives
easily. Therefore, they can improve their reputation and profits in a place of market. In this
project, there is a description of many kinds of firms like as private, public and voluntary. In
business, there are having many departments such as human resource, marketing, sales, finance
and many more. If company wants to expand their enterprise then it is necessary for them to
establish a new services and items for their consumers. Manager of organisation can help in
investigation of PESTEL and SWOT to comprehended their internal and external environment.
Hence, they can easily accomplish their rivals at commercial centre and increase their goodwill
at a place of market.
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REFERENCES
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Online:
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Business and the environment. 2017. [Online]. Available through:
<https://www.imperial.ac.uk/environmental-policy/msc/msc-environmental-
technology/options/business-and-the-environment/>.
Macro environmental forces. 2017. [Online]. Available
through:<http://www.referenceforbusiness.com/management/Log-Mar/Macroenvironme
ntal-Forces.html>.
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