Business Environment Analysis of Two Firms

This assignment presents an analysis of the business environments faced by two distinct organizations: ASDA, a retail giant, and a welfare organization providing social and health services. The report examines the impact of social, political, and legal factors on both businesses' operations. It highlights ASDA's focus on customer service and product offerings, contrasting it with the welfare organization's mission of supporting individuals in need. The analysis also includes references to relevant academic literature and sources.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Types of business, purposes and ownership..........................................................................3
P2 Stakeholders who influence the purpose of organisation......................................................4
TASK 2............................................................................................................................................5
P3 Description how two business are organised.........................................................................5
P4 Style of organisation helping to fulfil their purposes.............................................................6
TASK 3............................................................................................................................................7
P5 Influence of contrasting economic environment on business activities.................................7
TASK 4............................................................................................................................................8
P6 Impact of political, legal social factors on business activities...............................................8
CONCLUSION................................................................................................................................8
REFERRENCES............................................................................................................................10

INTRODUCTION
Business environment means all the internal and external factors that affect how the
company functions including employees, customers, management, supply and demand and
business regulations (Constangy Marger and Brompton, 2015). The term ‘business environment’
connotes external forces, factors and institutions that are beyond the control of the business and
they affect the functioning of a business enterprise. These include customers, competitors,
suppliers, government, and the social, political, legal and technological factors etc. The
interaction between the business and its environment would identify opportunities and threats to
the business. It helps the business enterprise for meeting the challenges successfully.
Environmental understanding helps the business organisations in improving their image by
showing their sensitivity to the environment within which they are working. The following
assignment is based on two organisation ASDA a profit organisation and Welcare, a non-profit
organisation.
TASK 1
P1 Types of business, purposes and ownership.
Type of Business:
ASDA Stores Limited, commonly known as ASDA, is the second largest retail store and
a national public limited company. It is a profitable business and it is the subsidiary of American
Company Wal-Mart. It was founded in 1949. Furthermore as ASDA is a profitable business it is
also in the private sector.
Welcare is a local charitable, non-profit organization. They earn no profit out of their
work however do accept forms of donations and fundraisers. The charity was set up by a church
over 100 years ago. It was originally founded in 1894. Furthermore as it a non-profit business
and is giving service it is in the public sector.
Purpose of the business:
A charity is a group of profitable people whose aim is to give a service and help those in
need. Welcare charity provides services which include social work and family support, support
groups and life skill workshops and also a children’s health clinic. They work to keep families
together, and encourage parents to give their children a happier childhood (Klapper and Parker,
2011).

ASDA is a retail supermarket and the purpose of ASDA is to make profit and to supply
goods to customers. It sells general merchandise such as food, drink, clothing and various other
items. It also has services such as insurance, financial services and a mobile telephone network.
Business Ownership and level of liability:
ASDA was founded by Associated Dairies & Farm Stores Limited in 1949. This is
situated in Leeds. The company has limited liability, therefore any debts within the company are
paid by shareholders investment and this means the owners wouldn’t have to sell their assets and
belonging to pay the debt. (Kolk and Van Tulder, 2010). Being a shareholding company you can
freely sell shares, this is an easy way to have money contributed to the company.
Welcare was founded in 1894, and was originally called The Diocesan Association for
the Care of Friendless Girls. This company has limited liability, this means any debt is paid for
and the owners do not have to sell any assets.
P2 Stakeholders who influence the purpose of organisation.
Stakeholder is a person, group or organisation that has interest or concern in an
organisation. Stakeholders can affect or be affected by the organisation’s actions, objectives and
policies. Some examples of key stakeholders are creditors, directors, employees, government,
owners (shareholders), suppliers, unions, and the community from which the business draws its
resources.
The stakeholders of Welcare are:
Manager – The manager influence Welcare, because the manager is the one who makes
decisions everyday which includes what medicine or service should be offered should be offered
and the manager also decides who he/she should take into service or fire. Doctors have influence
on the patients as they have to help people by treating patient’s illness, providing advice and
support, and seeing the effects of both ill health and good health from the patient’s point of view.
They have to examine the symptoms presented by a patient, and consider a range of possible
diagnoses. If they are unable to do this it will affect the patients and the company as the patients
will lose their trust in the doctors, and as a result it will affect the company’s reputation.
Patient/Client have an influence on the company, because without the patients/clients Welcare
won’t have any service to offer. This means that if there are no patients then the Government will
decide that the company should shut down. Admin and Clerical staff have a great influence on

Welcare, as they are responsible for paper work e.g. keeping patients records and send e-mails
and letters to patients regarding their health (Klapper and Parker, 2011).
The stakeholders of ASDA are:
Employees influence ASDA because employees are the people who are responsible to
carry out variety of business activities, e.g. they are involved in decision making of the business,
controlling the Health and Safety regulations and planning the merchandise. Customers want
low-priced, good products. Modern customers also have high expectations of organisations. They
will want them to get involved in the local community (Taipale-Erävala, Heilmann and Lampela,
2014). They will then want to know about them. ASDA stores and depots have community
notice boards and a monthly magazine is produced which features community events. Suppliers
at a national level are the very large providers to ASDA. They would want to sell goods in
volume at good prices. This gives them economies of scale. ASDA has worked hard at building
up links with local suppliers. It works with small and medium-sized businesses that are able to
provide products for groups of stores at terms that suit them. Colleagues like to serve the
community. The retail industry is not highly paid – customers demand low prices and operations
require a large number of colleagues. So working with the community helps to motivate
colleagues. All the events that ASDA holds are shared in an in-house monthly newsletter.
TASK 2
P3 Description how two business are organised.
All organisations need an organisational structure which can help to manage the business
so that it can be successful.
Hierarchical structures are used by businesses to show how an organisation is organised
by showing the levels of authority, the span of control and the chain of command. In a
hierarchical structure the person with the greatest authority is at the top and each level has a
subordinate apart from the bottom level. Each level has managers or employees of equal
authority or status.
The advantages of a hierarchical organisation is that it shows the lines of authority, the
formal lines of communication between managers and, how many people each manager is
responsible for. Hierarchical organisations also show where each individual is in the chain of
command and the status of the post they hold as well as the departmental structure of the

business. The disadvantage of a hierarchical organisation is that it can make the organisation
inflexible and slow to respond to changes such as consumer tastes or market conditions due to
the longer chain of command meaning there are more people in the business (Klapper and
Parker, 2011). Communications between top and bottom levels of the hierarchy can be slow as
there are more people in the business between the person at the top and the bottom of the chart.
(Harrison, 2011). Separate departments can lead to poor coordination between them and
decisions made can be for the benefit of the department not the whole business.
The span of control tells you how many people are directly reporting to and accountable
to the person above them. For example a manager may have a span control of up to four numbers
of staffs who report back to them on the progress of the business that they are in charge of. The
chain of command runs straight from the top to the bottom (Cantwell, Dunning and Lundan,
2010). This is the line of authority through which orders and downward communication are
passed.
Flat organisational structures have few levels of hierarchy and management which are
usually 2 or 3 levels. It has a short chain of command and each manager has a shorter span of
control.
P4 Style of organisation helping to fulfil their purposes.
The style and organisation of ASDA and Welcare helps them fulfil their purpose by
organisation and making a clear understanding of what an organisation needs to do in order to
run its business and how and who is running what part of the organisation. Their hierarchy helps
them organise different departments and who is in control and running that certain department.
The style helps an organisation know what areas need improvement and how they are
going to achieve their aims and goals (Kolk and Van Tulder, 2010).
The structures help simplify the units in an organisation to smaller units making it easier for an
organisation such like ASDA and Welcare to get task done and do their jobs accurately as staff
will have a better understanding of their roles and what department they are based on etc a sales
assistant will identify their job, the roles they need to do and what right they have followed by
what department they are based in and who they can go for in any problems etc….
An example would be store manager managing the security manager to make sure what
stores they need security and they the security manager will need to organise the security
employees and send them to the stores needed this can be seen on ASDA hierarchy as the

security manager is linked under the store manager showing that the store manager has
responsibilities in dealing with the security for the organisation.
TASK 3
P5 Influence of contrasting economic environment on business activities.
Boom
With boom, this means that it is a period of fast economic growth; this means that it is an
output is high due to being increased demand, this would mean that the unemployment is lower
than it should be. With the business confidence means that it may be a high leading to increased
investment. This therefore means that with the consumer confidence, which then may lead to
extra spending (Kolk and Van Tulder, 2010). With boom what happens is that they may have the
experience of businesses producing more products for them to sell. Boom is also shown as a
period of time in which sakes of a product or a business activity may increase rapidly. In the
actual stock market, the booms are associated with clothing markets, rather than busts are
associated with food industry’s markets with the actual cyclical nature of the market and the
actual economy in general suggests that with every strong economic growth.
Recession
With recession this means that it may be a period on time in which the economical
growth may slow down, and the level of output may actually decrease rather than increase or
rise. This therefore means that with the unemployed that it may have the chance on increasing. If
this happens then it will be bad for businesses from the fact that they may lose confidence and it
also may have to experience the reduced investment. This would be bad because it would mean
that their customers may save up instead of spending their money buying products from the
company.
During a recession period, the actual economical activities actually slow down. But when
demands starts falling down then the overproduction and future investment plans are also later on
given up. There is also a steady decline in the output, income and also employment, prices and
also profits. The businessmen then lose their confidence and even become pessimistic in which is
negative. This then reduces investment, the banks and the people therefore try to get greater
liquidity, so that credit also gets contracts. With the expansion of businesses stops then that
means that the stock market would also fall along with it.

Inflation
Inflation occurs when there is a general rise in the price of the goods in the ASDA. Not
every price is rising but the average price is rising (Klapper and Parker, 2011).
GROWTH STRATEGIES
Economic growth:
"Economic growth is an increase in the output that an economy produces over a period of
time, the minimum being two consecutive quarters."
This could be measured by Gross Domestic Product (GDP) or Gross National Product (GNP)
Some reasons for economic growth can include:
 Investment in technology.
 Increased productivity - task analysis and division of labour.
 Development of new production methods.
 Increase in the labour force.
 Discovery of new sources of raw materials.
During a period of economic growth, the 'ripple effect' has far-reaching consequences, for
example:
 Income rises.
 People have more residual income.
 Spending increases.
 Productivity increases.
 More jobs are created.
 Business activity grows.
 The economy grows.
TASK 4
P6 Impact of political, legal social factors on business activities.
Political factors: Politics can affect ASDA both negatively and positively through changes made
to tax, labour and national security laws. For example, politicians can raise taxes directly on
businesses or on individuals, which ends up costing the company in the long run as people spend
less money on goods and services. Alternatively, ASDA profit when citizens receive tax
incentives.

ASDA would respond accordingly to the games of politics. From increasing interest rates to
adjusting their demographic models (Taipale-Erävala, Heilmann and Lampela, 2014).
Legal Factors: Businesses can be affected by many aspects of government policies. In
particular, all businesses must comply with the law. They must also consider the impact of any
forthcoming legislation on their operations. This may require taking action before the legislation
comes into effect. One issue that affects manufacturers and retailers of electronic goods is the
disposal of these products at the end of their life. Recycling is high on the public agenda. There
are government initiatives to promote more recycling. These initiatives are sometimes backed by
legislation.
Social Factors: Society is continually changing. For example, tastes and fashions constantly
change. As an example, consider the growing popularity of social media such as Facebook,
especially among younger people. Unlike their parents, young consumers have been brought up
in an age where mobile phones and computers are used every day. Young customers are more
likely to use digital technology, to shop online and to prefer online methods to print images.
Older generations are more likely to stick to traditional methods. (Yagyasen, Darbari and
Ahmed, 2013).
Demographics:- The increase of people’s population in the country or area. This is like the
number of people changing from the percentage of 90 to an increase of 100% increase of
population in the place. Businesses sell more products and the shareholders get more profits. Due
to the increase of customers, there will be high demand of products from the customers. More
people in the area will lead to more setting up of new business whether big or small businesses
from other people.
Religion:- It can be a big factor to the business simply because there many people who are living
in the area, many people have got different religions believes that they follow for the best of the
religion towards the lord. I will give an example here of Muslim’s are have got different believes
towards the business like all Muslims in the world do not eat pork as its part of their religion,
they also don’t drink alcohol or even smoke, so all of this can affect the business that can that
can be in the area of there are only Muslims around that place so if your business is selling one
of the mentions things above you are most likely to net losses from them all since you not getting
any other customers.

Older staff:- ASDA have long recognised the benefits of a mixed-age workforce, and our
research has shown that older employees are more loyal and less prone to absenteeism. We were
one of the first companies to positively encourage the recruitment of the 50+ age group. We are
members of the Employers Forum on Age, and are an Age Positive champion under the scheme
run by The Department for Work and Pensions. We won the Personnel Today 2004 Age Positive
Award for our work on supporting both younger and older workers in the workplace.
CONCLUSION
From the above report it is being concluded that both organisation work for different
purposes. ASDA operates for providing products and services to its target customers apart from
this Welfare organisation works for providing social and health service for the needed
individuals. The impacts of social, political and legal factors on the business activities has been
studied.

REFERRENCES
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