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

This report discusses different types of organizations, including public, private, and voluntary sectors, and their legal structures. It also explains the relationship between different organizational functions and how they link to organizational objectives and structure. Additionally, it identifies the impact of macro environment on business through PESTLE analysis, with a focus on Tesco. The report provides insights into the strengths and weaknesses of Tesco and how they interrelate with external macro factors.

Business
And
Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
P1 : Different types and purposes of organisations; public, private and voluntary sectors and
legal structures............................................................................................................................1
Organisation in public sector:-.........................................................................................................1
P2 : Size and scope of a range of different types of organisations.............................................3
P3 : Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.......................................................................................5
P4 Identifying the impact of macro environment on business - ................................................7
...................................................................................................................................................7
P5 Identifying the strength and weaknesses on the basis of SWOT analysis...........................9
P6 Explain how strengths and weaknesses interrelate with external macro factors................11
CONCLUSION..............................................................................................................................12
References:.....................................................................................................................................12

INTRODUCTION
Business refers to buying and selling goods or services in exchange for profits. The main
motive of the business is to make profits. Business environment refers to the all internal and
external factors such as suppliers, employees, customer needs etc. which can affect function the
business. There are various positive and negative effects of macro environment upon different
business operations. Analysis is important to determine the different strengths and weakness of a
business organisation and they are inter related to external macro factors. This report is made on
the context of Tesco, Admiral sports wear, Sobell Leisure etc. This report contains different
types and purposes of organisations, size and scope of a range of different types of organisations
(Belyaeva, 2018).
MAIN BODY
P1 : Different types and purposes of organisations; public, private and voluntary sectors and
legal structures.
An organisation refers to a group of people who work together in order to run a business
or achieving goals of the organisation with a motive of personal profits. Different types of sector
in which an organisation can grow are :
Organisation in public sector:-
These are the organisations which are owned and controlled by the state government or
central government or partially by state and central government. The main aim of the public
sector organisations is welfare of the society. Organisations in this sector is not focused on
making profits from the business operations (Nudurupati and et, al., 2021). Organisations in this
sector focuses on improving living standards of the people and national growth. It plays an
important role in ensuring smooth functioning of the society. England and Wales Cricket Board
and UK Sports comes under this sector. Generally these organisations are funded by government.
Purpose – The purpose of organisations in public sector is to serve the society and provide the
goods and services to the needed people at free or subsidized rates.
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Legal structure-
 Central government – Public sector organisations are generally funded by the central
government by taxes, fees, and funds given from treasury etc. British Electricity
Authority is one of the best example for this (Contractor and et, al., 2020).
 State government – Usually influence of state government is present in these types of
organisations but at a limited level. Public sector organisations are controlled allotted
department of state government. A suitable of example of this is British Business Bank.
 Local government – it refers to municipal authorities which control the public sector
organisations by generating revenues from local communities. For example –
Corporation for Public Forecasting.
Organization in private sector:-
The private sector organisation is owned and controlled by individuals without the
interference of government in the operations of the business. The main motive of the business
organisation is to make profits from the business operations and remain in the market for a
longer period of time. This sector plays an important role in the economy as the organisations in
this sector contributes to the growth of the economy. Admiral sportswear, Mitre Sport
International Ltd., Umbro etc. are some suitable examples for the private sector organisation.
Also these organisations plays an vital role in employment (Gogokhia and Berulava, 2021).
Purpose – The main purpose of the private sector organisations is to generate more and more
profits and increase their market share in the relevant industry.
Legal structures-
 Sole proprietorship – In this type of business structure business is owned and handled
by a single person. That single person have unlimited liability which means that person
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will be personally liable for the debts and losses of the business. IKEA is a perfect
example of this type of structure.
 Partnership – Two or more persons when agreed to run a business with a motive of
personal profits is known as partnership. Every partner in the partnership firm acts as
principal as well as agents because of mutual agency. Red bull and GoPro aresome well
known partnership organisations in this sector (Khajeheian and et, al., 2018).
Voluntary organisations :-
These organisations are also known as non profit organisation. It is the group of people
who voluntarily comes into an agreement with a motive of social welfare. The main motive of
these organisations is to achieve a objective related to the welfare of the society in a specific time
period. Sobell Leisure, Stock City FC., etc. are some examples of voluntary organisations.
Purpose – The purpose of these type of organisation is to provide social services towards the
greater good instead of making profit.
Legal Structure-
 Trust – Members of the organisation is known as trustees who are responsible for the
actions of the organisation. The perfect example of this is Barts Health NHS Trust.
 Unincorporated Association – Generally there is no need to incorporate a voluntary
organisation to register under any law or act. However there are certain cases when it is
necessary to register the organisation. For example like Glaxo Smith Kline plc.
P2 : Size and scope of a range of different types of organisations.
A) Voluntary firm
Sobell Leisure centre -
 Background – Sobell Leisure Center is situated at the Borough of Islington in London. It
was established by Sir Michael Sobell. It offers health and sports facilities to the public.
 Product and service offered – Organisation offers many healthcare and sports facilities
such as gyms, fitness studios, swimming pool, indoor and outdoor pitches, trampoline
parks etc.
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 Size – It is considered as flagship fitness centre with more than 60 hubs in the borough
which offers affordable fitness classes.
 Scope – The organisation aims at providing new facilities and equipments in the market
for the customers.
 Vision – Vision of the Sobell Leisure Center is to become first choice of fitness freaks
and sportsperson.
 Mission – Mission of the Sobell Leisure Center is to provide best services in the field of
health and sports to their customers and develop sports and legacy .
 Business objectives – The main objective of the organisation is to set up new centres in
other cities and helps in generating employment , new opportunities etc.
 Stakeholders – Stakeholders in the Sobell Leisure Center involves trustees, customers,
voluntary staff members etc.
B) Private firm
Admiral Sportswear -
 Background – Admiral sports wear is situated in the Leicester, UK and founded in 1914.
The company offers high quality sports wears to the customers.
 Product and service offered – Company offers many sports and apparel items such as
shoes, sport accessories, sports equipment, sport wear etc.
 Size – Annual turnover of the Admiral sports wear is more than 32 billion dollars with
the employment range of more than 75,400 people.
 Scope – Admiral sports wear deals in high quality products which matches the quality of
products used in national and internation level games and sports.
 Vision – Vision of the company is to become one stop solution for the sports person in
the across the globe.
 Mission – The mission of the company is to open new stores and become the number one
high quality sports wear brand.
 Business objectives - Admiral sports wear wants to capture more market share and
increase their sales.
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 Stakeholders – Stake holders includes sportspersons, board of directors, employees,
members , suppliers etc.
C) Public firm
UK sports ( UKSP) -
 Background – Uk sports is a UK based company which was established in 1997 through
national lottery and government funds.
 Product and service offered – UK sports provides trusted high performance experts which
provides training and knowledge to athletes, teams etc. to achieve positive success.
 Size – The company has invested a lot in athletics and British sports and sucessfully
brought 65 Olympic medals and 120 Paralympic medals in London 2012.
 Scope – UK sports aims at providing high performance and quality assistance and
training to their athletes to perform better in the sports.
 Vision – The vision of the organisation is to make high powered athletes to win as many
medals as they can.
 Mission – Mission of the UK sports is to create more and more high performance athletes
and sports person and to show them way to achieve their goals.
 Business objectives – The main objective of the UK sports is to provide more
professional and efficient training and guidance to the athletes.
 Stakeholders – It includes sponsors, players, athletes, trainers, members of board etc.
P3 : Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.
Organisational functions
Organisational functions are set of activities which are operated within the department of
the company. These functions ensure the smooth flow of business operations inside the
organisation (Nikitina and Lapiņa, 2019). The main functions of the business are marketing,
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sales, research and development, customer service, finance , human resource etc. Some of the
functions are discussed below-
 Human Resource Department – It refers to the the group of people which hire and
gives effective training to the employees. Their main aim is to managing the effective
flow of business environment among the employees and maximize the potential of the
employees in order to achieve organisational goals. They are also responsible for creating
policies for the benefit of the employees.
 Sales and Marketing Function – Marketing department is responsible for the research
of customers needs to develop new products and strategies according to the needs of
customers in order to increase their sales. Their main aim is to increase their sales and
branding their products. Marketing includes packaging, advertising, and promotion of
their products. Sales and marketing department is directly related to HR department as
HR department recruits employees for sales department (Hamilton and Webster, 2018).
Organizational Structure – The organizational structure is defined as the system that
borders around the certain activities which are directed in order to achieve the organizational
goals. Such system may relate to the responsibilities, roles, rules and manage task within
individuals. The organizational structure is the method which inculcates the flows between levels
within the company (Jiang and et, al., 2020).
 Divisional Structure- The divisional structure also called the multi divisional structure
(M-Form) structure is where a certain company operates through guidance direction and
leadership to a group of individual based on the product, project and subsidiaries they
use. It is a structure where each business unit acts as own company & has its separate
president.
 Hierarchical Structure- The hierarchical structure mostly acts like that of a pyramid
shape. There is a chain of command in the company which passes that from the senior
most employee to general employees. There are different levels of authority creating a
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long organisational structure leading to clear lines of authority and reporting within the
business. Example of such structure can be Tesco which have different authority level.
Hierarchical organisational structure is followed by the the Tesco company in which do not give
any chances of miscommunication as information and orders are passed through superiors.
P4 Identifying the impact of macro environment on business -
PESTLE ANALYSIS - PESTLE Analysis studies the key external factors that influence an
organisation. It is a tool used to gain a macro picture of an industry environment. It is often used
as broad fact- finding activity (Chukhray, N.I. and Mrykhina, 2018).
Now, we are going to discuss about the PESTLE analysis of TESCO -
 Political Factor - These factors relate to government controls and influences over
economy or industry. Political factors create major affect on the running companies due
to changes in government rules & regulations and their policies. Government factors
may be legislation or economic policies. Political factor plays an important role in
determining the factors that can impact TESCO long term profitability in certain country
or market. TESCO is the big retailing company and operates worldwide. These include
tax rates, acts of legislation and the stability of the country. TESCO plays an important
role in creating employment opportunities.
 Economic Factor – These factors determines the economic performance that directly
impacts a company and have resonating long term. Economic factors influences the
company in a certain way . It defines the economic condition or situation of the company.
Economic factor are the main concern for TESCO , as they are most likely to leverage
costs, demand , profits, and prices, revenue (Cartwright and et, al., 2021). In a rapidly
economical changing world, TESCO seek to create strategies that would fit changes such
as inflation rate, taxes , interest rates as well as exchange rates.
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 Social Factors - These factors determines the social environment of the market, and
determinants like cultural trends, demographics, population analytics. The main concern
of this factor is society and the needs of the society . In context of TESCO, due to a
variety of social changes, trends indicate that people prefer buying everything in bulk or
in one go. TESCO has planned out its stores to facilitate these needs. The products that
are demanded by its various customers, depend on their social influence.
 Technological Factors - Technological factors are variables which relate to existence,
availability, and development of technology. For TESCO, the advancement in technology
have brought various new opportunities. These include the online shopping, the social
media promotions etc. are all a part of influencing the customer, by providing various
technical benefits. It has also invested a significant amount on energy efficiency projects
to fulfil its long term objectives (Halbert and Ingulli, 2020).
 Legal Factors - These factors have both internal and external sides. Legal factors are
those that emerge from changes to the regulatory environment, access to materials ,
resources, and taxation. In a business legal environment, don't undermine key areas
where law changes that can affect business performance to achieve organisational
objectives. In TESCO, government policies and legislations directly create an impact. It
needs to follow both the local as well as the international market laws, in order to
continue with smooth operations.
 Environmental Factors - These factors include all those or are determined by the
surrounding environment. With increased pressure on companies to identify
environmental issues to adopt ways of operations which would benefit society. TESCO
has undertaken various initiatives in order to help improve the environment and create a
more sustainable society. Its home market has a politically stable environment through
Brexit ha created a lot of uncertainty. These factors factors include tax rates, current and
impending legislation, political instability, unemployment rate, economic conditions of
the countries where it is operating.
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P5 Identifying the strength and weaknesses on the basis of SWOT analysis.
SWOT Analysis - SWOT Analysis is a strategic planning and strategic management
technique used to identify the forces influencing a strategy, actions or initiative. The primary
goal of SWOT analysis is to increase awareness of the factors that go into making a business
decision or establishing a strategy (Vyakina, 2019)
In context of TESCO , here are the SWOT analysis given below-
STRENGTHS
 TESCO has a strong market leadership
position in the Retail industry. It has
helped the company to rapidly scale
new products success.
 TESCO has their own private label
brands, which gives high brand equity
in market that attract more consumers
towards company to purchase their
products. It increase their brand
reputation in the current market.
 For its loyal or daily customers, the
company has a good loyalty program,
which is offers several benefits to
repeat customers. It helps company to
build better and strong relationship with
them.
 First mover advantage in the
WEAKNESSES
 The company faced a legal issues &
lawsuits which destroy its brand image.
Any legal actions taken by government
towards company can affect the brand
image brutally which will create impact
on the sales of the company.
 Niche markets and local monopolies
that companies such as TESCO able to
exploit are fast disappearing. The
customer network that TESCO has
promoted is proving less and less
effective.
 It needs to work on its online sales
operations on global level. The
company has been slow in catching up
to its competitors.
 High turnover of employees at the
lower levels is also concern for the
TESCO. It can lead to higher salaries to
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increasingly crowded market share. The
new products are rapidly increasing
TESCO market share in the industry.
maintain the talent within the firm.
OPPORTUNITIES
 Trend of customers migrating to higher
end products is a great opportunity for
TESCO, as the firm has strong brand
recognition in the premium segment . It
can be a win-win condition for
company.
 The market's growth would result in a
dilution of competitors advantages,
allowing company to improve its
competitiveness compared to its
competitors.
 The low inflation rate increases market
stability and allows TESCO customers
to obtain credit at lower interest rates. It
is an advantage for the customers and
opportunity for the company.
 As customers have to migrate from un –
organised operators in the service
industry . It will provide TESCO an
opportunity to penetrate entry level with
a no- frill offering.
THREATS
 Rapidly change in government policies
and taxation system can affect the
business operations of TESCO.
Government rules and regulations
create a certain affect on the company .
 High competition from supply sides as
maintaining relationship with them is
big concern for companies. Suppliers
plays an crucial role in development of
the company or providing goods to the
company at the suitable time with the
quality also.
 Changing demographics can be threat
of TESCO because this can lead to
higher profits in the short run for the
company but reducing margins over the
long run.
 Growing technological expertise of
local players in the export market is one
of the biggest threat of tie-up with local
players in the export market.
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P6 Explain how strengths and weaknesses interrelate with external macro factors
In the above mention section of this report , the strengths and weakness were already
analysed with the help of SWOT. Strengths and weakness of the organisation are linked with
the external macro factors because in some cases organisation may be affected by the outside
factors. An organisation can change its policies considering the macro environment conditions
that affect the business but cannot change the macro environment conditions itself. Strengths and
weakness are the opposite factors of each others that power and weakness to the organisation.
Proper analysis of these two given factors provides different kind of achievement to the business.
Strengths and weakness both are interrelated and opposite of each others and they may increase
the risk of external macro factors in the business organisation (Ivanovich, 2020).
The interrelation of the strength and weakness can be evaluated with the help of macro factors.
As we have seen one of the internal strength of the TESCO is in the operational sector that is
private label brands which attracts more customers. This strength has made the firm strategically
strong by increasing the customer base and reputation of the firm. So the strength will affect the
social and the technological environment positively. Apart from this , the strength of the
company will help it in taking the shock of the economy by creating a financial back up for the
company with excess capacity in the peak sales period. The weakness , on the other hand , is also
correlated with the macro factors like a social and overall business environment. The significant
weakness is found in the business operation of TESCO which is creating negative impact on
business (Ohiomah and et, al., 2020). The weakness is that the company faces the legal issues
and also it need to work on online sales. So the weakness can be negatively related to legal and
technological factor . To be specific both the strength and weakness is related to the macro
factors affecting the industry and business itself . The correlation among the macro factors and
the strengths and weakness factor is to be taken under consideration while analysing the business
and business environment.
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CONCLUSION
It was concluded from the above report that there are different organisation in different
sectors with different aims and working. Every organisation has their own set of objectives. The
organisations are of different size and scope such as private, public and voluntary. The
relationship between various organisational functions such as human resource management and
sales and marketing. Then there are various benefits and drawbacks of macro environment that
impacts the business operations of the organisation.
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References:
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