Business Environment Analysis Simulation

This assignment involves analyzing and simulating various aspects of the business environment, drawing from a range of provided resources. Students are to focus on topics such as business simulations for training and education (Burns & Winter, 2011; Cronan et al., 2011; Siewiorek et al., 2012), broadband networks with enterprise wireless communication systems (Chow et al., 2011), corporate-NGO collaborations in developing markets (Dahan et al., 2010), service business development (Gebauer et al., 2010), environmental uncertainty and management perception (López-Gamero et al., 2011), entrepreneurial orientation and business performance (Mahmood & Hanafi, 2013), and business models, strategy, and innovation (Teece, 2010). The assignment encourages the use of simulations to understand these concepts better.

Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 & P2 Covered in PPT.............................................................................................................1
P3 How organisational functions are interrelated with its goals and objectives ........................1
TASK 2............................................................................................................................................3
P4 Positive and negative impact of macro environment.............................................................3
TASK 3............................................................................................................................................5
P5 Conduct internal and external analysis .................................................................................5
TASK 4............................................................................................................................................6
P6 How strength and weaknesses are related with macro environmental factors ......................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
A business can be establish easily, but to sustain successfully it needs various resources,
i.e. finance, human resources. Businesses organisations works under a framework which is called
business environment; its an intermixture of various internal and external factors which reflect
firm's function's including staff members, management, customers, supply and demand as well as
business regulations. Although business environment presents opportunities and threats for a
business; a good manager not only determines the environment but also take actions to respond
these forces. It is essential for business to be aware towards ongoing change which occurs in
environment, like – customers requirements, new government policies, emerging trends and
technological changes etc. so as to make necessary decisions. Therefore, firms which are
thoroughly evaluate their environment can easily deal with these changes and gain high
competitive edge at marketplace (Agarwal, Grassl and Pahl, 2012). The present assignment is
based on Starbucks; it is one of the leading coffee house chain over the world. Apart from this,
the report will be described different types of business organisations, such as – public, private
and voluntary sectors. Readers will also come to know about interrelationship between various
organisational functions. Furthermore, an internal and external analysis will be conducted so as
to know strength and weakness of the firm.
TASK 1
P1 & P2 Covered in PPT
P3 How organisational functions are interrelated with its goals and objectives
In this competitive era, companies are tend to improve its working procedures so as to
complete all tasks and activities. For this, they are trying to collaborate all departments together;
it results enhancement in production level of the firm. It is assistive for Starbucks to accomplish
goals and objectives in a certain time period. In a business organisation, there are different
functional areas which are stated as under: - Marketing department – This department of the firm is liable for promoting and
advertising products & services to the firm at marketplace. Marketing department
promotes and implement a business in its niche which is rely on the products or services
of the businesses (Aterido, Hallward-Driemeier and Pagés, 2011). In Starbucks, the units
determines those areas in that a product can be befitted, by this firm can focus on its
marketing strategy. Thus, formulating marketing budget accordingly. In addition to this,
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marketing creates awareness towards products as well as also increases customers'
interest to purchase these products and services. In context of Starbucks, marketing
manager of the company focus on attracting potential customers and grab better future
opportunities from target market. Human resource department – This unit of a corporate association provides labour law
compliances, recruiting, selection, training, development, record keeping, compensation
and handle employee grievance as well as performance related issues. These are the
essential functions because by this any firm cannot meet needs or desires of management
and staff members. Along with this, HR manager of companies also look out how to
manage strong employee relations so as to implement healthy and positive working
environment. Another role of the person is to hire well qualified and skilled people who
have efficient abilities to complete tasks in most innovative manner. HR professionals of
Starbucks timely organise training and development programmes for employees so as to
improve their skills and knowledge level. Accounting or finance department – Growth and advancement of any business
organisation is highly depends upon its financial health. Financial department of the
company is liable for treasury management, it encompasses with all necessary things,
such as – level of risk. Another role of the unit is to control entire cost by reducing
wastage and time. The finance department of the firm ensure that all funds or capital are
spend as per the budget and operating needs of the firm. In some companies, there is no
separate budget for to cover up all deficits (Auzair, 2011). Furthermore, in Starbucks'
accounting department managers have responsibility that their customers pay their bills
on time. The department also determines investment opportunities for the firm so as to
grab better market growth and success; for this there can be used capital budgeting as
well as investment appraisal technique. Production and operational department – In this competitive era, it is essential for
business organisations to generate new and innovative products so as to obtain maximum
cutting edge. Production managers focus on generating new and innovative products so
as to deliver something to society, beside this they also tend to modify existing offerings
of the firms and make them able to satisfy customers' needs and wants. In Starbucks,
production managers identifies availability of raw materials and machinery which is
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required for completion of any task or activity. The department also ensure that health
and safety needs are met in the best possible manner, it also determines product's quality
control standards. Another responsibility of operational unit is to overseeing production
processes and organising the repair and routine maintenance of production equipment. In
multinational business associations, there is a close relationship between production
management as well as strategic management. It is supportive for businesses to attain
their goals and objectives in an effective manner.
 Research and development department – The department is associated with generating
new and effective products which are able to satisfy customers' needs in the best possible
manner. R&D department also concerned with getting market information so as to make
necessary business decisions and grab better opportunities. Although, research activities
are associated with marketing activities in order to assure that firm is providing exact
services to customers which meets their desires and expectations in most economical way
(Avramenko, 2012).
TASK 2
P4 Positive and negative impact of macro environment
Business environment insists with macro and micro environmental factors in which
macro environment has a vast impact on growth and viability of the firm. Below is defined major
macro environment with their positive and negative impact on business organisations: -
Political and legal factors – It involves government policies, foreign influences, vat
rates and taxes.
 Positive impact – having strong relations with political parties help a business
organisation to gain high competitive edge and increases growth opportunities as well.
Flexibility in government laws also provides various opportunities to business. Negative impact – If the political condition of the nation is not so good in which a firm
operates then it affects its profits and sales revenues (Burns and Winter, 2011). In context
of Starbucks, the firm has blamed for extra hour laws and violation of wages which
reflects market image of business in direct and indirect manner.
Economic factors – It involves interest rates, inflation rates, foreign currency exchange
rates etc.
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 Positive impact – if the economic condition of a nation is good then it can easily allows
business to grow and diversify at there. Now customers' interest has shifted to lower
priced alternatives and its a great opportunity for Starbucks to improve its proficiency. Negative impact – Due to economic recession, people of UK are still not able to spend
much amount on leisure activities; it results they prefer to eat low amount of food rather
than brands.
Social factors – It encompasses with cultural of the society in a firm lives, their values,
beliefs, faith, morales, region etc.
 Positive impact – Starbucks offers low price products as mentioned earlier; it is focusing
on making necessary innovations without sacrificing quality. It improves customer base
for the firm (Chow and et. al., 2011). Negative impact - In present scenario, needs and wants of people are rapidly changing.
Now people prefer to consume low calorie food items. Thus, they usually ignore to visit
Starbucks; this can put an adverse impact on annual profits of the firm.
Technological factors – In modern era, different tools and techniques of production has
been introduced which will also supportive in reducing operational costs. Now technology has
transferred to coffee framers it helps in generating more coffee beans that is beneficial for
companies like – Starbucks.
 Positive impact – The firm provides wi-fi facilities to customers who visited in its outlets;
as they can access to web and complete their work while enjoying coffee. In addition,
Starbucks also gives facility of mobile payments to people it reduces need of cash
(Commander and Svejnar, 2011).
 Negative impact – Due to technological advancements, different cyber crimes and web
attacks occur; it increases different issues and problems while dealing in international
market. Apart from this, threat of rising availability of coffee making machines at home
reduces the need of going other places to drink coffee only. Due to innovations, people
can easily find various ways of making at home rather than going to outlets.
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TASK 3
P5 Conduct internal and external analysis
Internal and external analysis of a company can be done through SWOT analysis; it
involves strength, weaknesses, opportunities and threats.
STRENGTH  WEAKNESSES
 Due to its global market presence,
Starbucks is known as the largest dealer
of coffee by having highest market
share as well as efficient brand value. It
firm focus on providing quality and
value added coffee by putting an
exceptional service experience; it
delivers maximum brand equity in
comparison with other rivals (Cronan
and et. al., 2011).
 The firm is getting higher profitability
by raising the number of customers and
far surpasses that any of its competition
in respect of revenues and entire
performance.
 Starbucks has effective and talented
workforce, that is liable for providing
value added services to customers.
While people enter into its outlets,
employees give warm welcome to
them. This is the main reason behind
huge client base because people feel
respected at there.
 The expanded food offerings provide a
way to Starbucks which make it an
 Due to higher prices of some products,
people prefer to go other coffee
retailers and then starts comparison
between quality of products.
 The brand has no real diversity in its
outlets over the world there is no
recognition of local cultural taste
(Dahan and et. al., 2010.).
 Starbucks is still dependent on
customers' love coffee as it does not
focus on making other products; it
results firm cannot gain high
competitive edge.
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attractive place to do breakfast, snacks
and lunch.
OPPORTUNITIES THREATS
 Due to strategic partnerships and
strategic alliances in emerging markets;
helps Starbucks to introduce its
products over the world.
 Starbucks has further opportunity to
expand its market in food and beverage
sector, including cross selling of its
retail items, i.e. sandwiches and ice
creams (Fernando, 2011).
 The coffee chain is trying to expand its
supplier network; so as to get vast
availability of raw materials, i.e. coffee
beans; it results to reduces suppliers
involvement.
 Saturation in coffee market forced
Starbucks to shutdown its stores at
several locations.
 Threat of activist stakeholders results
decreasing market image of the firm as
well as its goodwill. (Gebauer, Paiola
and Edvardsson, 2010)
 In addition, profitability of the firm can
also threatened by economic recessions
and credit crunches; at this customers
have lower disposable income and they
cannot buy coffee and other products.
Influence on decision making process of Starbucks -
Starbucks is one of the leading coffee chain supplier over the world as the quality of its
products and services is excellent. As above defined, the main strength of the company is having
global market presence which helps to generate several market opportunities for it. Starbucks has
large number of skilled and qualified workforce which help it to produce new and innovative
products. By which, the brand will entered into emerging markets and gain high competitive
edge. In order to overcome with weaknesses and future threats, Starbucks has developed various
strategies and policies thus to effectively perform in market. By considering SWOT analysis,
managers will get know complete about their core competencies and make necessary
modifications as per the market trends. Due to flexible political system of UK, companies are
enable to explore their business areas in others countries without paying high taxes. All this will
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aids to improve decision making process of the company and help it in increasing sales revenues
and profitability.
TASK 4
P6 How strength and weaknesses are related with macro environmental factors
In this over dynamic environment, various macro environmental factors like – political,
economical, social, technological etc. has a great impact on strength and weaknesses of the firm.
It is fundamental for management to identify the future impact of all these components so as to
make necessary business decisions and grab better future opportunities.
Political factors – These factors refer with political condition of a nation as well as its
laws and regulations. The political condition of Starbucks is not good as it should be. The firm is
being blamed for the violation of wage and hour laws.
 Strength – Starbucks has great political relations then it can easily survive for long term
period in target market. Due to lack of government interference in other countries
managers can easily expand their business in international markets as well. Weaknesses – As Starbucks has expanded itself over the world, thus it may be quite
difficult for company to follow laws and regulatory policies of various nation. This may
affect company's sales revenues and profitability.
Economic factors – These aspects encompasses with exchange rates, inflation rates,
employment conditions, poverty and so on. As Starbucks Imports coffee from various countries
so they really have to be aware of changing imports laws which could hinder the importing.
 Strength – Due to globalisation, most of the countries allowing foreign direct
investments, it helps in improving financial conditions of the company and increases
employment opportunities for people. In past years, economic condition of UK has
improved and there is also raised GDP rate of the nation. Weaknesses - Economic recession in 2008 has become one of major weaknesses for
firms which are operating in UK; because due to lower disposable income of people they
cannot spend higher amount on luxurious activities. Credit crunches also forced
businesses to shut down; it raised up the situation of unemployment and poverty.
Social factors – According to this, firms should produce products values, beliefs,
morales, interest level, taste and preferences of customers, thus to gain high competitive edge.
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 Strength – Starbucks targeted demographical segmentation. The firm provides wide range
of products prefer by 11 to 50 years of people. Its coffee is loved by youngsters and
considered at top when individuals think about coffee. Weaknesses - individuals need and want are changing very fast in different regions, thus
sometimes it get difficult for companies like Starbucks to meet clients expectations who
lives in diverse areas (Hamilton and Webster, 2015). In order to overcome with this
weaknesses, firm is required to conduct a market study to know more information about
market.
Technological factors- In this, modern era, technology has facilitate working activities
and organisational structure of companies by reducing their production time and wastage.
 Strength - Due to innovation and technological upliftment, multinational firms are tend to
acquire new and innovative tools of productions; it results improving performance level
of the firm and they can easily grab better market opportunities and increase market share
as well.
 Weaknesses - Technology is changing at fast pace and required effective skills to used.
Thus to hire and trained technical specialists and execute effective plant & machinery at
workplace; all this require high cost or expenses which may not be afforded by all
companies.
CONCLUSION
From the above mentioned report, it get analysed that business environment plays a
crucial role in growth and success of every organisation as it reflects its functions and working
activities in direct and indirect manner. The report has stated various types of business
organisation, such as – public, private and voluntary sector all of them has their own missions
and visions. Along with this, Crown Prosecution Service is a public sector organisation, whereas
Starbucks is a private sector and British heart foundation is taken as voluntary sector
organisation. There are different organisational functions, such as – finance, human resources,
operation and production, research and development etc. SWOT analysis is helpful for firm to
determine its strength, weaknesses, opportunities and threats in order to make imperative
business decisions.
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REFERENCES
Books and Journal
Agarwal, R., Grassl, W. and Pahl, J., 2012. Meta-SWOT: introducing a new strategic planning
tool. Journal of Business Strategy. 33(2). pp.12-21.
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.
Auzair, S., 2011. The effect of business strategy and external environment on management
control systems: a study of Malaysian hotels. International Journal of Business and
Social Science. 2(13).
Avramenko, A., 2012. Enhancing students' employability through business simulation.
Education+ Training. 54(5). pp.355-367.
Burns, C. and Winter, S., 2011. Introduction. Australian Farm Business Management
Journal. 8(2). p.iv.
Chow, A. T. and et. al., 2011. Broadband network with enterprise wireless communication
system for residential and business environment. U.S. Patent 7.944,948.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Cronan, T. P. and et. al., 2011. Decision making in an integrated business process context:
Learning using an ERP simulation game. Decision Sciences Journal of Innovative
Education. 9(2). pp.227-234.
Dahan, N. M. and et.al., 2010. Corporate-NGO collaboration: Co-creating new business models
for developing markets. Long range planning. 43(2). pp.326-342.
Fernando, A.C., 2011. Business environment. Pearson Education India.
Gebauer, H., Paiola, M. and Edvardsson, B., 2010. Service business development in small and
medium capital goods manufacturing companies. Managing Service Quality: An
International Journal. 20(2). pp.123-139.
Halbert, T. and Ingulli, E., 2011.Law and ethics in the business environment. Cengage Learning.'
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Hamilton, L. and Webster, P., 2015.The international business environment. Oxford University
Press, USA.
López-Gamero, M.D., Molina-Azorín, J.F. and Claver-Cortés, E., 2011. Environmental
uncertainty and environmental management perception: A multiple case study. Journal
of Business Research. 64(4). pp.427-435.
Mahmood, R. and Hanafi, N., 2013. Entrepreneurial orientation and business performance of
women-owned small and medium enterprises in malaysia: competitive advantage as a
mediator. International Journal of Business and Social Science. 4(1).
Siewiorek, A. and et. al., 2012. Learning leadership skills in a simulated business environment.
Computers & Education. 58(1). pp.121-135.
Teece, D. J., 2010. Business models, business strategy and innovation. Long range planning.
43(2). pp.172-194.
Ullah, A. and Lai, R., 2011. Modeling business goal for business/IT alignment using
requirements engineering. Journal of Computer Information Systems. 51(3). pp.21-28.
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