Business and Business Environment: Types of Organizations, Interrelationships of Organizational Functions, and Impact of Macro Environment on Business Operations

This report discusses different types of organizations, their legal structures, interrelationships of organizational functions, and the impact of macro environment on business operations. It analyzes BBC, Tesco Plc, and Oxfam. It also evaluates the advantages and disadvantages of interrelationships and complexities of different types of businesses.

Business and Business
Environment
Table of Contents

Introduction......................................................................................................................................3
Main Body.......................................................................................................................................3
TASK 1............................................................................................................................................3
P1. Different types and purpose of the organisations and their legal structure......................3
P2. The size and scope of the different types of organisation................................................4
M1. Critically analyse the structure, size and scope of different organisations in relation to
product and services of the organisation................................................................................6
TASK 2............................................................................................................................................6
P3. The relationship between the organisational functions and their link with organisation
objective and structure............................................................................................................6
M2. Critically analyse the advantage and disadvantages of the interrelationships between the
organisational functions and their influence over organisational structure............................8
D1. Critical evaluation of complexities of types of business and interrelationships of different
organisational function...........................................................................................................8
TASK 3............................................................................................................................................9
P4. Identify the positive and negative impacts of the macro environment on business
operations...............................................................................................................................9
M3. Apply the PESTLE model to support detailed analysis of the macro environment.....11
TASK 4..........................................................................................................................................11
P5. Internal and external analysis of the Tesco plc to identify the strengths and weaknesses11
M4. Analysis of the SWOT model and their influence on decision making........................12
P6. Strengths and weaknesses interrelation with external macro environment....................12
D2. Critical evaluation of the macro and micro factors on business objectives and decision
making..................................................................................................................................15
Conclusion.....................................................................................................................................15
REFERNCES:................................................................................................................................16
Books and Journals:..............................................................................................................16

Introduction
Business environment is the place or the surrounding in which business conduct its
operations and perform all its functions (Kurniawan and Yun, 2018). The business environment
plays crucial role in influencing the operations of the business either positively or negatively.
The business environment consists of factors like environmental, political. Social etc. that
provide the business organisations opportunity to foster their operation and earn more profit and
also act as threat in declining the productivity and profitability. The present report will discuss
about three organisation types i.e. BBC is the type public sector organisation and is world’s
leading public service broadcaster, Tesco Plc is the type of private sector organisation and is the
leading multinational groceries and general merchandise retailer headquarter in Welwyn Garden
City, England and Oxfam a voluntary type organisation founded in Oxford, London and is the
charitable organisation which focus on mitigation of the poverty globally. Further in the report,
interrelationship of the various functions of the organisation and they relate to organisational
structure. Report also demonstrates the impact of macro environment on business operations. At
last the internal strengths and weaknesses of the business and its relationship with external macro
factors is discussed.
Main Body
TASK 1
P1. Different types and purpose of the organisations and their legal structure
There are different types of the business organisation in the business environment and each
organisation is categorised into those different types on the basis of the purpose and aim of
earning the profits. There are three basic types of the organisation in business environment and
each has its own purpose and legal structure that is discussed below:
Public organisation: the public sector organisations are fully controlled by the government
authorities and all the decisions of these organisations are taken as the government norms (Van,
Phong and Loan, 2018). BBC is the public ltd. organisation with the objective to provide its
broadcasting services to the citizens which can help them in improving their living standards.
 Purpose: The purpose of this type of organisation is to provide their customers with the
best quality product and services at low price in order to enhance their living standards
and to gain the essential resources.

 Legal structure: The three legal structure under the public sector organisation are
discussed below:
Central government: The
State government:
Local government:
Private organisation:
 Purpose
 Legal structure
Sole proprietorship
Partnership
Cooperation
Voluntary organisation:
 Purpose
 Legal structure
Unincorporated organisations
Charitable trust
P2. The size and scope of the different types of organisation
BBC (British Broadcasting Corporation)
Background: The BBC is the national broadcaster of the United Kingdom and is headquartered
at London. The company is the statutory public corporation organisation founded on 18 October
1922 and is established under the Royal charter. The founder of BBC is HM government John
Reith and key products are Broadcasting and Wen Portals and key services are Television, Radio
and Online.
Mission and Vision: The vision of the BBC is to become the most creative organisation and
reach globally with its broadcasting service. The Mission is to act in the public interest and to
serve their customers impartially with high quality service that educate, inform and entertain
(Kodhelaj, and et. al., 2019).
Tesco Plc
Background: The Tesco Plc is the private sector multinational general merchandise and
supermarket chain headquartered at Welwyn Garden City, England, UK. The company was
founded in 1919 by Jack Cohen and currently has 7,005 shops at different locations. The

company operates under retailing industry and has products like electronics, toys, clothing, food
and beverages, petrol etc.
Mission and Vision: the mission of the Tesco plc is to “We make what matters better, together”
and the vision of the Tesco plc is to become the most valued business for the community in
which they operate and among the customers they serve and to remain loyal and committed to
their colleagues and shareholder’s.
Oxfam
Background: The Oxfam is the charitable trust comes under the voluntary type organisation. The
organisation is non-profitable organisation founded at the Oxford, London in 1942. The Oxfam
is the group of 20 charitable organisations and all work for the single aim.
Mission and Vision: The mission of the company is to serve the long lasting solution to the
problem of poverty, hunger and injustice. The vision is to provide the safe, secure and better
living to each human being on planet (Subramanian, 2018).
Basis BBC Tesco plc Oxfam
Size and Scope With the international
dimension the BBC
has a scope to
increase its online
connectivity and
provide its service to
global audience.
The Tesco plc is the
multinational
organisation with
scope of serving its
products and services
to whole world.
The scope is to
abolish the injustice
poverty and to
provide the people
with essential
resources for their
better living.
Number of employees There are 22,749
employees in BBC.
Currently in Tesco
there are 4,23,092
employees.
The Oxfam is
charitable
organisation with
10,000 staff and
50,000 voluntary
interns (Chang, Wong
and Chiu, 2019).
Objectives The BBC has an
objective to provide
the fair and impartial
The objective of
Tesco to make the
Tesco a fair place to
The main aim of the
Oxfam is to mitigate
the poverty and

news that inform,
educate people and
engage them with
world.
work by providing the
employees a chance to
upgrade themselves
by enhancing their
strengths and by
supporting their work-
life balance.
injustice from the
world.
M1. Critically analyse the structure, size and scope of different organisations in relation to
product and services of the organisation.
It is a critically evaluated that different types of business have different size, scope and legal
structure in relation to their product and services. For example, the Tesco plc is the private
organisation with the service of groceries and general merchandise and is supermarket defining
its large size and scope of business as multinational organisation and also therefore the legal
structure is partnership (Yang and Rhee, 2020). The Oxfam is the voluntary type business and is
poverty resolving charitable trust with global reach and huge size with legal structure of
charitable trust. Therefore, the company has the service of charity to world. The BBC has the
service of Broadcasting and web service through TV, radio and online representing the public
sector organisation under the large size and scope.
TASK 2
P3. The relationship between the organisational functions and their link with organisation
objective and structure
In every organisation there are different types of organisational functions and each has
their own roles and responsibilities to perform. In organisations like Tesco Plc, the organisational
functions interrelate with each other in order to enhance each other’s productivity to align their
working towards the organisational objectives. The interrelation of some of the organisational
functions of Tesco plc is discussed underneath:
IT and Finance: In Tesco plc the IT functional department has the main role of installation and
maintenance of the machines and computer network (Hasan and et. al., 2019). Whereas, the
main role of the Finance functional department is to manage the cash flow and other financial

resources of the organisation. Both the functions of Tesco plc work t6ogther as the IT function
help the finance department in updating their financial system’s and also install new financial
software’s. Similarly, the finance department provide the budget to the IT department for the
updating of new technology in organisation.
Marketing and Customer service: In Tesco plc the marketing department has main role to
handle the sales and promotion of the products and services of the Tesco. The customer service
functional department has role of resolving the customer’s issue and maintain the healthy
relationship of Tesco plc with customers. The marketing department of Tesco Plc collects the
customer’s feedbacks through survey and other methods and inform customer service department
to resolve those issues so that Company can meet they goal of providing customers best service
(Freudenreich, Lüdeke-Freund and Schaltegger, 2020).
Human resource and production: the human resource department is the essential as they look
after the activities related to the employees and other staff of the Tesco. Whereas, the Production
department has the role of producing the product and services that company offers to the
customers. For the operations of the production department the human resource department help
them in hiring best candidate’s and also assign duties to employee at initial stage. The human
resource also looks after the training and development of employees of the production
department in order to align them towards the objective of Tesco to deliver best quality product
to customers.
Organisational structures
Divisional organisational structure: the divisional structure refers to the type of organisational
structure in which each functional unit are grouped into one division on the basis of product or
geographical region. Most of the Public sector organisations like BBC has the divisional
structure as they have the objective to act in the public interest and to serve their customers
impartially with high quality service that educate, inform and entertain. Therefore, the
geographical divisional structure is used in the BBC in order to reach different customers of each
country effectively (Kudlats, McDowell and Mahto, 2019).
Matric organisational structure: The matrix structure is the type of the organisational structure
in which employees are grouped together via operational perspectives. Voluntary organisations
of the large size mostly inherit the matrix organisational structure as they operate with different
geographic regions and industry. Oxfam is the large and leading voluntary organisation based in

UK follow this type of structure. The matrix structure of Oxfam is aligned to the organisational
objective that is to create long lasting results to the issue of poverty.
Functional organisational structure: The functional organisational structure is the type of
structure divided on the basis of the different functional areas such as IT, HR, marketing, finance
etc. Most of the private sector multinational organisation follow this type of organisational
structure. Similarly, Tesco Plc been a private sector organisation has fo0llow this structure as the
company’s objectives is serve the customers best product and best customer service and to earn
profit in return. This objective is easily achievable with this type of organisational structure.
M2. Critically analyse the advantage and disadvantages of the interrelationships between the
organisational functions and their influence over organisational structure
It is a critically evaluated that the interrelationship of the organisational functions has its
own advantages and disadvantages. The advantages are: the interrelationship lead to better
accuracy of work of the Tesco plc and also employees learn transferable skills as the part of peer
to peer learning. The interrelationship is also useful to Tesco plc in increasing operational speed
and build team working. The disadvantage of the interrelationship of functions is weakening of
the common bonds of the employees, leaking of data, territorial disputes and lack of
coordination. It is also analysed this impact the functional organisational structure of the Tesco
plc as the any departmental conflict can disturb the whole structure. On the other hand, the
advantages of the interrelationship make the organisational structure stronger and help in
fulfilment of its purpose to achieve organisational objectives (Apriliyanti and Kristiansen, 2019).
D1. Critical evaluation of complexities of types of business and interrelationships of different
organisational function
It is analysed that different types of businesses based on their size and scope has their
difficulties as the organisation like public organisations have different legal structure and each
has different powers to regulate the business and its operations which impact the decision
making and make it slow compared to the private organisations where the profit earning is the
main objective. In private the partnership legal structure has problem of breaching and conflict
issue and also loss is bearded by both. In voluntary organisations like Oxfam there are changes
that donation provided for the betterment society may be misused. It is analysed that
interrelationship of functional areas of the Tesco plc may foster the productivity and also align

them towards organisational objectives but this may also create internal disputes between the
departments. There is also the risk of unethical usage if each other data.
TASK 3
P4. Identify the positive and negative impacts of the macro environment on business operations
Pestle analysis is the appropriate tool to analyse the macro environment in which business
is operating and also to identify the positive and negative impact of those factors over the
business functions and operations (Volkodavova and et. al., 2019). The pestle analysis of the
Tesco plc is conducted and discussed below:
Political factors: The Tesco is headquartered in UK and is multinational global organisation that
operates in other several countries. The company is the supermarket chain and operate in grocery
and general merchandise and is leading organisation therefore the political factors majorly
impact the company’s operations. The recent example of Brexit which is the withdrawal of the
UK and EU membership has adversely affected the sales and revenue of Tesco. This political
imbalance of UK with European Union has adversely impact the trading of the goods of Tesco
which has negatively impacted the Tesco’s productivity and profitability.
Economic factors: Tesco covers the wide variety of products in its portfolio therefore the
economic factors play huge importance in the consumption of these wide variety products. In
order to maintain its market share and annual profits the Tesco has to keep keen eye on economic
changes of the UK and other countries in which it operates (Hasan and et. al., 2019). Tesco main
market to earn higher revenues and profits is UK therefore, the decline in the disposable income
of the citizens of the UK has created the negative impact over the sales of the Tesco. Due to
which company is more focusing on advertising its value products rather than luxurious
products.
Social factors: Social factors has a great influence on the business of the Tesco as the customer
preferences and meeting their demands is the main aim of the Tesco. The changing customer tste
and preference in food products that created the positive impact on the Tesco plc as the company
has innovated new vegan and organic drinks and food items to meet the consumer demands and
also increase brand value by making customer feel that their demands are recognised. Also with
the change in customer trends towards healthy food the Tesco plc is effectively adopting these

changes which is creating positive impact on its customer services as well as on productivity and
profitability (Ahmad and Miskon, 2019).
Technological factors: The advancements in technology has always considered as the
opportunity by the Tesco as the company adopt new technology effectively and reliably in order
to enhance its current functions and operations. For example, the technology development of the
online shopping service and home delivery service during the covid-19 has benefitted the
company highly as this increased the company’s sales. The online shopping and home delivery
service of Tesco is considered as the best in the UK market. The E- payment and self- service
check points for the customers has also created the positive impact on the Tesco customer
service s this has provided the customers convenience and fast shopping experience and also this
has reduced the labour cost of Tesco.
Legal factors: Tesco has its operations in several other countries including UK. Therefore, the
legal changes in the policies, tax, trading, import and export impact the business of Tesco plc. In
order to stay away from any legal obligation Tesco has to maintain and obey the legal policies
locally and internationally. The minimum wage policy of the UK government for the labourers
has the negative impact on the Tesco as this increased the company’s labour cost. The
introduction of food retailing commission code of practice for the grocery stores and
supermarkets has banned many current practices of the Tesco such as the company has lower the
prices of some of its product and also has to introduce the discount over the products. This
impacted badly over the profitability of the organisation (Leminen and et. al., 2020).
Environmental factors: The organisations are under the increased pressure to reduce the impact
of their operations on the environment and focus on innovate the operations that are safe and
secure for the external environment. Tesco has highly positive impact from this factor as
company is working actively to reduce its carbon footprint by 50% by this year. The company is
also known for its sustainability through its waste management model. Tesco has also taken an
initiative by adopting new opportunity of residual plastic usage. As working in retail industry the
company has huge responsibility to source sustainability and work towards the sustainable
development for which company recently has started the second phase of reuse, recycle and
reduce.

M3. Apply the PESTLE model to support detailed analysis of the macro environment
It is critically analysed that political factors of the macro environment create the negative
impact on the productivity and performance of the organisation. The economic factor of decline
in disposable income creates a negative impact on Tesco as this reduces the sales of the
company. The social factors of changing customer taste and habits of buying has positive
influence on Tesco as this foster the innovation within the organisation and its employees. The
technological factors are always the opportunity that Tesco adapts in order to stay competitive.
The legal factors of macro environment create the bad impact on the internal environment of
Tesco as employees are more aware of their rights and also the labour cost is increased (Tseng,
Yi and Yeh, 2019). At last, the Tesco has positive influence of environmental factors in
becoming the leading sustainable organisation in the retail industry of UK and also to contribute
in making the nature and planet beautiful.
TASK 4
P5. Internal and external analysis of the Tesco plc to identify the strengths and weaknesses
SWOT Analysis of Tesco plc
In order to analyse the strengths and weaknesses of the Tesco plc the swot analysis is used and
discussed below:
Strengths Weaknesses
 Tesco is the leading British grocery
retailer and is recognised as the number
one supermarket chain in the UK. This
strength of Tesco is useful in
generating higher sales and revenue
compared to the competitor’s.
 The Tesco supply chain network is also
unique and efficient thereby provide the
company a strength. The company has
simplified and basic business model
with effective waste management
system and also holds the profitable
 In the time of Covid-19 the low cost
strategy of the Tesco seemed as the
weakness as this lead to the low cost
profit margin.
 It is analysed that Tesco has poor
operational performance in the stores
and grocery outlets some of countries.
This indicates the improper market
expansion strategy and less research of
Tesco plc before the entering new
market (Kong and et. al., 2020).

relationship with the suppliers.
Opportunities Threats
 With the growing technology Tesco has
huge opportunity to optimally use it to
enhance the shopping experience of the
customers and also to ease internal
functions through introducing digital
barcode system, mobile payments and
advanced M- commerce facilities to
gain competitive advantage (Kodhelaj,
and et. al., 2019).
 After the covid-19 crisis and social
distancing measures Tesco has huge
opportunity to expand its online
shopping service and home delivery
service.
 The changing customer taste and
preferences for the food products as
customers are more inclined towards
the vegan and organic food. This is
pressurizing the Tesco plc to change is
product portfolio immediately.
 The competition with the other
supermarket giants like Aldi, Walmart
etc. is also the threat to the market
position and market share of the Tesco
(Roman, Stoica and Rusu, 2018).
M4. Analysis of the SWOT model and their influence on decision making
It is critically evaluated that Tesco plc is leading supermarket chain and the retail operator
in UK this influence the Tesco decision making as this makes easy for firm to diversify and
expand under the same brand name in order to gain customers. The Tesco weakness of
inefficient market research influence its decision making during the internationalization as
company takes wrong decision which result in low operational performance in that market. The
company has huge potential in exploiting the market opportunity especially related to technology
which helps the company to make quick decisions as the technology arrives which provide the
company competitive advantage (Loon, Otaye‐Ebede and Stewart, 2020). The threat of
competitor’s will make the Tesco alert during decision making related to new product
development and diversification to stay competitive.
P6. Strengths and weaknesses interrelation with external macro environment
External macro environment Strengths Weaknesses

factors
Political factors The political stability of the
UK with other countries of the
world is the strength of Tesco
as this make the easy for the
company to adopt
internationalization in new
market. The political changes
such as change in tax rates has
benefited the company as the
export prices where increased
this benefited the company
economically.
The political issue of the
European Union and United
Kingdom which lead to the
withdrawal of the membership
of the UK from EU was
weakness for the Tesco
business. This referendum
decreased the operational
performance, shortened the
skill pool and also the free
trade barriers were modified
causing problem to Tesco
operate in Europe.
Economic factors The economic changes in the
UK such as decrease in
disposable income is strength
for the company as the Tesco
plc has low cost strategy for
its wide array if product
making it easy for customers
to choose the Tesco over the
other supermarket chains. This
factor provides the
organisation better sales and
competitive advantage.
The downfall of disposable
and household’s income has
increased the advertising cost
of Tesco as the company is
focusing more value based
products which is declining
the demand of luxurious
products (Mosteanu, 2020).
Social factors The social changes in the
customer shopping habits,
taste and preferences is the
strength for the Tesco as by
this company is able to foster
The changes in the customer
habits of eating that more
inclination towards the healthy
food is considered as
weakness for the Tesco. As

innovation within
organisation. With bulk
shopping habit of customer
Tesco has chances of earning
more profit.
due to this the sales of other
eatery such as soda drinks,
chips and oily food products
etc. is declining rapidly and
also the Tesco has to meet the
demands of customers rapidly
in order to stay ahead in
competition.
Technological factors The technology advancements
that has developed the concept
of the E- payments is strength
to the Tesco as through this
company is able to ease it
payment system and also
recordkeeping has become
easier. This factor has
decreased the labour cost and
also improved the customer
service by providing them
convenient transaction system.
The technological factors such
as online shopping system and
home delivery has provided
the weakness to the Tesco as
because of this the company is
facing high maintenance cost
for its brick and motors and
also the customers are visiting
stores less which make
difficult for company to
analyse customer buying
behaviour.
Legal factors The legal factors that favours
the company’s policies such as
the equal pay to men and
women labour and other
equality acts is the strength of
the organisation as this make
easy in other countries in
which company operates
(Appiah-Adu, Okpattah and
Amoako, 2018). This also help
in maintaining corporate
The constant legal changes in
the policies of different
countries is weakness for the
Tesco as this makes difficult
for the Tesco o meet the legal
requirement for each country
actively. For example, the
amendment of minim wage act
of UK has increased the
labour cost of Tesco in UK.

social responsibility.
Environmental factors The environmental changes
such as to reduce the usage of
plastic, recycle and reuse of
plastic serves the advantage to
the Tesco plc in moving
towards the sustainable
development which results as
the competitive advantage for
the company (Kurniawan and
Yun, 2018).
The environmental pressure of
converting all the activities of
the retail chain into
environmental friendly and to
reduce carbon footprints etc.,
any misconduct in any
environmental policy stated by
government can lead the
Tesco into jeopardy causing
the huge damage to the brand
image.
D2. Critical evaluation of the macro and micro factors on business objectives and decision
making
It is critically evaluated that both macro and micro environment factors has their impact over
the organisational objectives and decision making. The macro environment factors like
technology bring a major influence ion the organisation objective of Tesco as the company is fast
in adopt technology and the objective is accomplished with the help of technology. It is also
analysed that company’s strength plays an important part in decision making as this helps the
company during the decisions related to grabbing new market opportunity and is also useful in
mitigating the weaknesses and threats. The macro environment factor such as social factors has
huge role during the decision related to product and service development and also during the
changes in existing product (Van, Phong and Loan, 2018).
Conclusion
It is concluded from the above report that in order to run business operations smoothly, the
business owner must have key knowledge about relationship of business and business
environment. The three different type of organisations like private (Tesco plc), public (BBC) and
voluntary (Oxfam) each work differently as their size, scope and legal structure. It is also
analysed that macro environment of Tesco plc create the both positive and negative influence on

the its business operation’s and decision making but technology is the factor that with both
positive and negative impact. It is also concluded that Tesco brand recognition and diversified
portfolio is the key strength that help in mitigating the weaknesses and threats and also Tesco is
highly strong in adopting new technology to exploit market opportunities in order to stay
competitive.
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