Business and Business Environment: Types of Organizations, Organizational Functions, and Macro Environment Impacts

This report discusses the types and purposes of organizations, their legal structures, and the relationship between different organizational functions. It also identifies the positive and negative impacts of macro environment on business operations, supported by specific examples and PESTLE analysis.

BUSINESS AND
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
P1- Explain different types and purposes of organisations; public, private and voluntary
sectors and legal structures..........................................................................................................3
P2- Explain the size and scope and scope of a range of different types of organisations...........5
P3- Explain the relationship between different organizational functions and how they link to
organizational objectives and structure.......................................................................................7
P4- Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples. ..............................................................................8
P5- SWOT analysis to identify strengths and weaknesses .......................................................11
P6- Relation between internal and external macro factors of an organization..........................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
A business is a entity which is involved in commercial or professional activities. Business
can be profitable and non-profitable and can be operated by a single person or by group of
people. Business involves buying and selling of products and services. A business works in an
environment which influences it internally and externally. External factors which are effecting a
business operations are beyond the control of business entities (Cartwright, Davies and Archer-
Brown, 2021). There are various types of organizations which are public, private, and voluntary.
In this report public company taken is BBC, which is a broadcasting house in UK. TESCO is a
private company which is a multinational grocery store headquartered in England. Oxfam is a
voluntary organization working to reduce poverty. In this report different types of organizations,
their structures and objectives along with their range are discussed. Further the report describes
the internal and external macro factors and their relation with each other.
MAIN BODY
P1- Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures.
The main purpose of a business entity is to earn profits but there are some non-profit
organizations which are working for providing free services to other people. Organizations work
to achieve their short- term and long-term objectives. Organization is the coordinate effort of a
group of people, which work together to achieve organizational goals. There are various types of
organizations like public, private and voluntary, which have different purposes and legal
structure.
Public organization- A public organization is controlled by the government. The company is
funded by the government itself. The main aim of public enterprises is to render services to the
public. The services provided by the public enterprises are mainly free of cost. These
organizations play a important role in smooth functioning of the society. Public sector comprises
companies owned by central government, state government and local bodies.
 Centrally owned companies- These are the companies which are partly or wholly
owned by the government of UK. The companies can operate in different countries. The

business can have headquarters and offices in multiple countries. These companies have
the access to a larger market share due to their multiple locations.
 State owned companies- These are the companies owned and controlled by state
government and territorial governments. Some funding in state companies can be from
private sector or equity markets. The state companies usually possess minerals, oil and
gas companies which are produced locally.
 Local bodies- These business operates in a particular area and has a corporal presence.
These organizations sell goods and service in the surrounding communities. Local
business can be a sole proprietorship store or a company, or an office space (Contractor
and et. al., 2020). These business are usually owned by community people, or the
government agency.
Private organization- These companies are run by individuals or group of individuals. The main
motive of these companies is to make profit. These companies hold a larger market share in the
economy. The private businesses can also collaborate with the government, and are called
public- private partnership. Most common organizational structures used in private sectors are
sole proprietorship, partnership, and company.
 Sole proprietorship- In a sole proprietorship a single person is responsible for all profit's
and losses of a company. In this type of organization the business owner and the business
are same. A sole proprietorship business is easy to setup, the legal structure of the
business is the easiest and tax deducted. The business can be set up with a low cost and
dissolving this business is easy.
 Partnership- A partnership firm is owned by two or more individuals. The business
partners bring capital and earn profits according to the profit sharing ratio. This is the
most common business structure as the structure allows the partners to make decisions
together.
 Company- A LLP is a structure where the owners and the partners of the company limit
their personal assets and liabilities. Members are protected as they do not have to pay
from their personal assets to pay off business debts. The company can have more than
one member and the profits and losses are divided according to the capital brought in by
the partner.

Voluntary organizations- It is a organization where a group of people come together into an
agreement, to form an organization to achieve a purpose. Voluntary organizations are non-profit
organizations, the volunteers do not get paid for handling the organization. The term voluntary
implies that, the individuals themselves take initiative to take part in organizational activities
without any benefit and profits.
P2- Explain the size and scope and scope of a range of different types of organisations.
Public company- A public company is owned and controlled by government, all the decisions
are taken by government. Public companies are funded by the government and provide their
services to the general public for free of cost. British Broadcasting Company is the company
having headquarters in London, United Kingdom (Gogokhia and Berulava, 2021). It is a public
organization, the scope, mission, vision and background of the organization are discussed below-
1. Summary- The company was formed in 1922, it is the publicly financed system in Great
Britain. It is the broadcasting company in the UK, having headquarters in the London,
UK.
2. Size- BBC is the world's oldest and the largest national broadcaster. It had employed
over 22,000 staff out of which 19,000 are working for public- sector.
3. Vision- Nation shall speak peace until nation, the vision is adopted in 1927 and it
reflect the purpose of the company.
4. Mission- The mission involves to work for public, and serve all the types of customers
without discrimination. Also providing customers with high-quality news which educate
them as well as entertain them.
5. Organizational structure- The organizational composition include the board of the
governor, administrative board, the imaginative board, the media board, and the
commercial board.
6. Stakeholders- They can be internal as well as external. The internal stakeholders of the
company include owners, managers and employees. External stakeholders include
customers, suppliers, banks, and local community.
Private company- A private company is owned by individuals or a group of individuals. It is
owned by different shareholders, company employees and some non-governmental enterprises.
TESCO is a privately owned British multinational company, headquartered in Welwyn Garden
City, England. The size, scope, mission, and vision are discussed below-

1. Summary- The company was formed in 1919 by Jack Cohen. It is a grocery retail store
and has shops in UK, Czech Republic, and Hungary.
2. Size- TESCO is the largest retailers in the world, it has employed over 326,000
employees and also provides online services .
3. Vision- TESCO aims at providing services to customers and communities and build a
better planet by serving everyday. The company is using fully recyclable packaging and
is eliminating deforestation from the products. The company tends to serve the
community more broadly.
4. Mission- TESCO is formed with a mission to be at the top and be the title- holder in front
of customers. With this mission the company keeps the customers at top of everything.
5. Organizational structure- The structure is hierarchical, which means there are many
levels of management, and long chain of command. The organizational structure
comprises of mainly three levels which are top, mediate and base.
6. Stakeholders- Main stakeholders which are effected by the working of the company are
customers, competitors, suppliers, and local communities.
Voluntary organizations- These are the organizations in which individuals or a group of
individuals come together to a harmony (Ivanovich, 2020). These individuals take initiative to
work in the organization and do not get any pay or salary. Oxfam is one such charitable
organization which focuses on eliminating global poverty.
1. Summary- Oxfam is founded in 1942, it is a British organization that works to eliminate
global poverty, and also provide relief funds during crisis.
2. Size- Oxfam has less than 300 staff, and around 10,000 staff and approx 50,000 interns as
volunteers. Oxfam is running in around 90 countries.
3. Vision- Vision of Oxfam is to make a world free from poverty. The organization is
working to provide equal opportunities to all individuals, and enjoy their rights to the
fullest.
4. Mission- Oxfam is working towards a mission to help create methods for poverty. The
company is empowering citizens to make a secure and free from poverty future.
5. Organizational structure- The global structure comprises of multi- stakeholder
assembly and an international board of directors.

6. Stakeholders- The main stakeholders which are effected by the operations are suppliers,
government, public, donors, academic institutions.
P3- Explain the relationship between different organizational functions and how they link to
organizational objectives and structure.
Organizational functions- Organizational functions are the activities or the functions which
have happened in a department or in different areas of a company. There are various departments
in an organization which come together to build a company (Khajeheian, Friedrichsen and
Mödinger, 2018). Every department is important as the functions performed by the departments
are different from each other. These organizational functions helps an organization in achieving
the desired goals and objectives. The departments need to be well coordinated to perform
business operations and earn profits.
Importance of organizational functions-
 Specialization- An organization is divided into various departments like human resource,
finance, management, research and development, etc. The department heads and the team
workers are specialised in their work and are assigned the tasks according to their skills
and qualifications. This division of work enhances the specialization in the activities of
the organization.
 Well defined jobs- The jobs allotted in the organizational structure are according to the
individuals qualifications and skills. This helps in allocating the right individual to the
right job profile. Assigning roles to the individuals clarifies the role of every person and
defines the job to every individual.
 Growth and diversification- The growth of an organization is measured by the
efficiency of the workers and the departments. Efficiency in the work can be brought by
defining roles and positions to the employees. A company can think of diversifying if the
organizational structure is well defined and the roles and responsibilities are co-ordinated
with the authorities and delegation.
 Co-ordination- Co-ordination is important in an organization, as there are various
departments in an organizations which are co related with each other. For the smooth
functioning of the company, it is important that the authority and the responsibility are

co-ordinated. It is said that authority without responsibility makes an individual
ineffective and worsens the behaviour of an individual.
Relationship between different organizational functions-
There are various business functions like- production, sales, marketing, research and
development. These organizational functions are inter related to each other. There are separate
departments in an organization, and each department has separate managers or team leader. In an
organizational structure, an organization has an advantage of clear authority and delegation of
tasks (Kokodey, Gnezdova and Lomachenko, 2018). There are decision makers in every
department who oversees the goals and objectives. A proper structure enables a employee to
concentrate on a particular mission or goal. If an organization has different product lines then
each product has its functional groups to carry out business operations. If the departments are not
coordinated than it will be difficult for the organization in smooth working. In an organization
the marketing department is accountable for satisfying customers, creating value. The marketing
department had to work with other departments such as finance, human resources and operations
to be prosperous. Human resource plays an important role by recruiting appropriate staff for the
marketing department. Finance department manages all the transactions related to money. Other
business functions need financial budget to perform their activities, which is provided by the
finance department. Operations department ensures the availability of the inventory in the
production and manufacturing department. The operations department have to support other
departments in execution and planning of daily activities. Thus it is important for an organisation
to have coordination among different departments for better productivity and efficiency in work.
P4- Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.
There are various threats and issues to an organization. It is not easy for an organization to work
in the environment having uncertainties. Changes in the tastes and preferences of the customers
affect a business in the short run. There are various factors which effect the macro environment
of an organization.

PESTLE ANALYSIS-
Political factors- These factors include the changes in the government activities. These factors
affect the marketing strategies of an organization. Various subsidies, taxation policies, interest
rates, effect the organization. There are both positive and negative outcomes of political factors
on TESCO.
 Positive impact- TESCO has a great possibility in the countries where there is a stable
political environment. Like, the political stability of United Kingdom helps to minimize
challenges in execution of plans and strategies and also helps setting up long-term goals
of the organisation (Luiz, Ganson and Wennmann, 2019). The company also has
possibility to expand the business globally in developing countries as most developing
countries have a free trade policy, goods and services can be bought and sold across
international borders with little or no government tariffs, quotas.
 Negative impact- The governmental issues in the European union have capability to
evolve threat against TESCO operations in the neighbourhood goods industry. Brexit is
also having a negative impact on Tesco's business, the company is facing issues in
delivering goods to North Ireland. European commission and food and drug management
has announced the regulative restrictions and guidelines on TESCO. If the company
neglect the peculiar standards, the company would face legal issues and risk fines.
Economic factors- Economic factors have a straight consequence on company's long-term
outlook in a marketplace. The economical surroundings may affect how a company
strategies its pricing policies for their products or influence the supply and demand
framework. The continuos change in tax rates, inflation rates, and demand/supply
framework have a direct impact on buying pattern of consumers.
 Positive factors- Chances of growth for TESCO are majorly in processing countries like
India and china. The economic steadiness of both the countries are regular which enables
TESCO to accomplish objectives like stable prices and sustainable growth and it also
charge the right surroundings for job creation and balance of payments.

 Negative impact- The economy had started flourishing in developing countries, the
labour costs have also enhanced by the time. Due to this TESCO is facing financial losses
as the initial costs have increased and there are many manufacturing facilities located in
those countries.
Social factors- Social factors include cultural standards and expectations,population growth
rates,age distribution,career attitudes, health, and safety. These elements are particularly
important for marketers as they target certain customers.
 Positive impacts- TESCO employs around 150,000 employees worldwide every year.
When individuals earn a living, economy is directly benefited by the per capita income.
Employment allows individuals to spend on a decent standard of living, covering a
family's basic needs, creates job opportunities, and also helps small businesses. Helping
community always had a good impact and creates brand image.
 Negative impacts- Social and economic factors influence a individuals education and
employment opportunities. The community is affected by the ability of a company to
make healthy products.
Technological factors- Technological factors defines the introduction and developments in
technologies. Several new developments like artificial intelligence, machine learning, deep
learning, are being made in the technological field and if a company fails to match up the
trend of advancement in technology then it may loose its position in the market.
 Positive impacts- TESCO is continuously spending on IT services to modify its business
and focusses especially in the area of e-business. This improves brands communication
and market through internet, making dealings simple along chain of supply (Nam and
Bao Tram, 2021). TESCO has been committed to make 100% of packaging recyclable,
reusable or compostable by 2025. It has formulated a new technology to recycle sachets.
This technology is helping the environment saving resources as well as it is cost cutting
to TESCO

 Negative impact- The improvement in research and development investments have put
TESCO in danger because it also increases the competitive advantage to other firms in
the goods industry.
Legal factors- Legal factors include changes in lawmaking which put an effect on employment,
approach to material, allocation of resources, imports/exports, and taxation. These factors
have both extrinsic and interior sides. Certain laws have an impact on the business
environment in a country.
 Positive impacts- Heads of all the market cluster/country boards or seniors leadership
teams and heads of all category, corporate and functional leadership teams must ensure
the relevant legal business this will ensure the enforcement of law in subordinates.
 Negative impacts- The legal factors prevent TESCO from changing the prices of the
product without informing customers. After BREXIT UK have to define its own laws
which have a great impact on Tesco's long term profitability as the company also have to
make changes in its rules and regulations according to the new laws.
Environmental factors- These factors are mainly obsessed with the consequence of the
encompassing environment and the determinant of ecological aspects. These include waste
disposal laws, environmental protection laws, energy consumption regulation.
 Positive impacts- Business has to tackle partiality and exploitation. Human rights is a
non- negotiable part of doing business with TESCO. Contributing to surroundings can
have an extraordinary effect on society. The consumers concerned about the environment
will be attracted to the company. The company can enhance its sustainability programs to
strengthen its competitiveness against other firms in the consumer goods industry.
 Negative impacts- There are various issues regarding climate change, chemical pollution
and poor infrastructure (Nikitina and Lapiņa, 2019). Factories have triggered the climatic
change and soil erosion, and they are dumping waste in lakes and rivers which is
exploiting surroundings and making the quality of water poor.
PESTLE analysis is a framework that examine the external factors which effect the operations of
TESCO. There are various factors which effect the operations and performances of a company.

PESTLE analysis is useful for TESCO as it provides different scenarios that are useful in
business activities. There are various factors which create opportunities for TESCO and increase
the productivity.
P5- SWOT analysis to identify strengths and weaknesses
SWOT analysis is a tool that helps an organization or enterprise to determine the strengths and
weaknesses, it also allows to analyse the opportunities and threats which are externally affecting
an organization.
SWOT analysis
TESCO have to examine its internal strengths and weaknesses, so as to work upon the
weaknesses and strengthen them. This will help the company to reduce the weak points and
allows the company to increase productivity and efficiency.
STRENGTHS
TESCO is the market leader, and has the
advantage over its competitors. The company
had created a brand name and image in the
retail industry, as it furnish quality products in
competitive price to the customers. During
pandemic TESCO has experienced the
boosting online sales, which helps the
company to increase the volume sales and earn
remarkable profits. The company continuously
put efforts in introducing something new for
the customers to retain existing customers and
attract new customers (Nudurupati, Garengo
and Bititci, 2021). The main reason why
TESCO is successful is the executive team or
management team. The decisions taken by the
management team are creative and allows the
business to grow in international markets.
WEAKNESSES
The biggest competitors for TESCO are
Sainsbury, Morrisons and Unilever. TESCO
tends to control all quality measures, but if a
customer had put a query or is not satisfied
with the services then the company had to go
through the quality check with all the products.
This is a time consuming process as well as
require resources and money. Company have
to stock the required products as the customer
can demand any product. This increases the
cost of storing products and also if the products
are not sold then they will get expired and
discarded. TESCO sells food products so the
company is required to measure the food safety
issues which are different for different
countries. Changing in the leadership and
shortage of products are short- term
weaknesses for the company but quality

control is a long-term weakness which is to be
reduced so as to increase productivity.
OPPORTUNITIES
There are very few firms in the retail industry
which holds a great place during pandemic.
TESCO is one of those supermarket chains
which have provided services during
pandemic. TESCO is also providing online
grocery services to the customers, which
makes it easy for the customers to get goods at
their doorsteps. Also TESCO has the
opportunity to employ labour at a very low
cost in developing countries, which reduces
costs and increases productivity. The company
is having an opportunity to adapt to more
technological advancements, this will provide
a competitive advantage to TESCO over other
companies.
THREATS
UK is experiencing a political crisis, and
economic crisis. The competitors are making a
comeback in the market place which is
becoming a threat to TESCO (Sedej, 2019).
The separation of United Kingdom from
European countries, had affected TESCO in
the long- run as the customers have been
divided and some labourers have also moved to
other countries. This had negatively affected
the supply chain of TESCO. The purchasing
power of consumers have dropped drastically
in the past few years. Unemployment is the
another reason as there is no financial certainty
for individuals which not allow to build more
customers.
There are various strengths which are unique to TESCO but there are various weaknesses which
are common for all the firms in the retail industry. So there is a great chance for TESCO to gain
reputation in the market place. The management of TESCO is strong, the decisions taken are
strategic and reap more profits to the company. Strong management can help a company to grow
and transform the brand image.
P6- Relation between internal and external macro factors of an organization.
Both SWOT and PESTLE are the tools utilized by a company to analyse the performance and
growth internally and externally. These are the strategic tools which identifies the opportunities
and threats which are effecting a company in the premises and outside the premises. SWOT
analyses defines the internal factors and PESTLE analysis focuses on external factors which are
out of control for a business (Shukla and Pattnaik, 2019). Both the tools are closely related to

each other, the threats identified by the company in SWOT analyses are because of external
factors. PESTLE put emphasis on external factors, and the factors influence the internal factors
of an organization. Social and environmental factors are influencing and are a advantage for
some companies. The companies generate source of living and allows an individual to earn and
provide necessary utilities to their families. Enhancing technology will positively affect the
business environment as technological advancement will become a opportunity for a company.
TESCO is having a opportunity over its competitors as the company has emerged as a leading
company in the retail industry. This strength allows TESCO to have a positive impact on the
customers. Thus both SWOT and PESTLE are interrelated to each other.
CONCLUSION
From this report it is concluded that the different types of organizations have different
organizational structure. There are various functions or department which are used in an
organization like sales, marketing, human resource, IT, production and research. Different
functions are performed by different departments, and are handled by individual managers. The
employees are diversified according to their skills and their education and are introduced in
different departments. Further in this report it is concluded that there are various internal and
external factors which effects the operations of a business. The relationship between SWOT and
PESTLE is discussed which are helpful in analysing the opportunities and weaknesses of a
company. Also they allow a company to yield higher productivity.

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