Business Environment: Types of Organizations, Legal Structures, Competition Policy, and Macroeconomic Objectives

This report analyzes different types of organizations, legal structures, competition policy, and macroeconomic objectives. It covers the PEST model, Porter five forces model, and UK competition policy. It also discusses the process of Competition and Markets Authority operates and the impact of competition in the UK market. The report is relevant for students studying business environment, economics, and related courses.

Business Environment

Contents
INTRODUCTION.........................................................................................................................................14
MAIN BODY...............................................................................................................................................14
PART -1......................................................................................................................................................14
(Covered in PPT)........................................................................................................................................14
PART-2.......................................................................................................................................................14
1.Overview of the different types of organisations in different sectors................................................14
2.Different legal structures including their advantages and disadvantages:.........................................15
3.Differences between public and private ownership...........................................................................15
4.UK Competition policy and the legislative framework........................................................................16
5.Process of Competition and Markets Authority operates:.................................................................16
6.Objectives and fiscal and monetary policy instruments:....................................................................17
7.Globalisation and how it affects business:..........................................................................................17
CONCLUSION.............................................................................................................................................18
REFERENCES..............................................................................................................................................20

Slide 1

Slide 2

Slide 3
• It will analyse the PEST model in detail to identify various macro environmental factors that
affects the working either in positive or negative manner.
• Lastly, the presentation will identify the Porter five forces model in context of quoted firm so
that competitive strategies can be developed in the future.

Slide 4
• In context of Tesco political factors may either create positive or negative impact depending
upon the situation of any particular country. For example: if there is political instability in any
country than government may not allow to sells goods easily because of certain trade
restrictions.
• Moreover, prices of good could be increased when tax rate is high in any particular region and
thus it may create negative impact on sales of Tesco as consumers would switch to buy local
market goods

Slide 5
• Moreover, with the new reforms in United Kingdom such as Brexit reforms, inflation rate is
higher that may be demerit for the quoted firm as demand of the products becomes lower as
purchasing power decreased.
• Moreover, salary expectations of Tesco workers increased and thus there was higher
production cost that may also create a negative impact as demand of its shareholders has to be
met to work in long run. Economic factor proved positive for Tesco in time of Covid-19 when
unemployment rate was higher and thus it has opportunity to higher workers at low salaries
thus reducing the cost of operations.

Slide 6
• This factor may create positive impact on the brand image of Tesco as it can change its variety
and include more healthy options such as organic food products. Also, consumer’s behaviour
demands in fair trade movement where the right prices must be given to farmers and other
suppliers for various products that are kept in the supermarket.

Slide 7
• Also, Tesco made this factor turned out positive as it has come up with an idea of selling its
goods online and also given various interesting promotions, discounts and rewards etc. to
build brand loyalty.Moreover, the recent announcement of Tesco with Amazon Go to create
new technology for cashless transactions is also very popular.

Slide 8
• Tesco competitive atmosphere can be understood as below:
• Threat of new entrants:
• There is always fear that new rivalries will enter into the market at some point of time but
Tesco does not have to worry much as it has its own competencies different from others and
also enjoys economies of scale. However there is threat of opening of certain small retail
outlets in UK that will serve the consumers’ needs when rest others are unable to fulfill.
• Competitive rivalry:
• The rivalry is very high in the UK due to increasing demand of various goods among the
people in various regions. As result most of the retail outlets try to introduce those products
that are completely different and unique from the rest others to stay ahead in competition.
Example: Sainsbury, Morrison’s, Aldi etc.
• Threat of substitutes:
• There are various substitutes that are available in the market but the Tesco is considered super
brand because of its price strategy of making the goods available at lowest prices as possible.
Hence, even if other substitutes are present they cannot compete with big retailers with limited
investment and business strategies.
• Bargaining power of suppliers:
• In UK it is considered from low to moderate because of large number of suppliers that are
ready to provide raw materials and other resources at lowest prices. Hence, due to number of
suppliers Tesco can easily avail the services at lowest prices to fulfill certain business strategy
• Bargaining power of buyers:
• It is high in United Kingdom due to presence of various vendors in the market. Thus,
consumers are kept at high priority as customers awareness is increased due to various social
media platform and thus they can easily switch to other options if demand remains unfulfilled
in certain retail outlet.

Slide 9
• Moreover, the presentation analyzed that through using porter five forces model quoted firm
could gain competitive advantage in short period.

Slide 10
• Pervan, M., Curak, M. and Pavic Kramaric, T., 2018. The influence of industry characteristics
and dynamic capabilities on firms’ profitability. International Journal of Financial Studies.
6(1). p.4.
• Safeer, A. A.and et.al. 2021. Role of brand experience in predicting consumer
loyalty. Marketing Intelligence & Planning.
• Wiid, J. A. and Cant, M. C., 2021. MARKET CONDITIONS IN GAUTENG TOWNSHIPS:
CONDUCIVE TO BUSINESS GROWTH AND SUSTAINABILITY. Academy of
Entrepreneurship Journal. 27. pp.1-16.

Slide 11

INTRODUCTION
Business environment affects the company operations on large scale that consists of various
customers, suppliers, stakeholders etc. The present report will analyse different types of
organisations along with certain examples to identify the aims and objectives of each
respectively. Moreover, different legal structures will also be discussed through examples. Also,
the study will identify various sources of financing for public and private ownerships. Moreover,
UK competition policy in comparison with the EU policy will also be presented. Role of
competition and market authority in interest of consumers will also be discussed. Lastly, fiscal
and monetary policy instruments as part of macroeconomic objectives for various organisations
working globally will be analysed in detail.
MAIN BODY
PART -1
(Covered in PPT)
PART-2
1.Overview of the different types of organisations in different sectors
There are several organisations that work for profit such as Sainsbury that is largest chain
of supermarket in United Kingdom and sells range of ready meals, groceries, clothing, wines,
desserts etc. For the not for profit charities the one that is popular among UK is WWF (World
Wide fund for nature) that is a conservation organisation for wildlife and nature. Further, one of
the best public sector charities is UNICEF (United Nations children’s fund) that is responsible
for providing development aid to all the children’s across various nations (Nudurupati, Garengo,
and Bititci, 2021).
The aim of Sainsbury is to provide great food at fair prices. Similarly, the motto of WWF
is to stop the misuse of earth resources so that human being can live in harmony with the nature.
On the other hand the aim of UNICEF is to protect and promote the basic rights of children
across various parts of world.
Moreover, UNICEF works entirely on all voluntary funds where every year government
support by contributing some amount towards the development of this organisation. In WWF
most of the grants are from government, foundations, individuals and corporations. On the other
hand Sainsbury finances are from stakeholders in form of debt and equities.

2.Different legal structures including their advantages and disadvantages:
Legal structures includes consists of partnerships, sole traders, limited liability company,
and cooperation’s. These are made up based on the objectives of the company
Advantages of partnership are that it is more cost saving method as financial burden is shared
among the others. Also, it helps in creating more business opportunities for the firm. Moreover it
ensures better work life balance and moral support to the business Foe example: Marketing
Runners in UK (Escaleras and Chiang, 2017). Certain disadvantages of such type are there are
liabilities in sharing the profits and losses of the company. Moreover, there is loss of autonomy
as the business is run by other parties too. Thus there is lack of stability too if business does not
work well.
In case of sole trader certain merits are that it can be started immediately after generation
of idea. Also it has simple process of registration, lower fixed overheads. Also the individual has
complete control over the firm activities. Certain demerits are it involves unlimited liability as it
is sole responsibility of the trader. Further, there are barriers to finance and sale limitations. In
Limited Liability Company basic advantage is that there are fewer corporate formalities and
there are no ownership restrictions (Virglerová and et.al., 2017). Example: Oxfam. Also, tax
flexibility is present along with no restrictions on the total number of members. Certain
disadvantage of this form is that it is more expensive than other legal structures and also it has
limited life. Further, transfer of ownership in such form is difficult. In Corporation there is also
limited liability and ownership transfer but however there are excessive tax filling formalities
and is quite expensive method. Example: Anglo American Plc.
3.Differences between public and private ownership
Public ownership is one where the provision of services and goods are in hands of
government (Sinay, 2019). For examples: railways, airlines, utilities etc. On the other hand
private ownership is owned by private organisation or individual. For example: family owned
businesses.
The major difference on both of them is that in public company is made for promoting
public welfare while private company is made with motive of earning profits. Further, in public
sector decision making is not so fast while in private it is more efficient due to fast decision
makers. Also, public companies are guided by certain social objectives like development of
smaller sections of societies while for private companies social objectives are not very important
as specified goals need to be achieved within set time period.
Although, the similarities between the two types of ownerships is to create public
satisfaction at the end. Moreover, they both have to fulfil certain legal formalities that are same
for both. Also, business of both continues even if single or more number of shareholders retires
or passes away at particular time period (Ahmed and Alam, 2021). Further both have limited

liability that means that if business fails the risk of its shareholders is only limited to amount of
its shares.
The private ownership uses equity financing, venture capitalist, angel investors, debt
financing, and loans from banks etc. as its medium to raise it funds for its operations. Similarly,
the public ownership raises various sources of funds through sale of its securities either in form
of debt or equity to all those who are interested in creating value of shares in the future.
4.UK Competition policy and the legislative framework
There are different types of structure in market such as monopolistic competition where
large number of small organisations competes with each other. They are specialized in selling
different products. Other is oligopoly in which few firms lead the market and rest others follow
them that further leads to limited competition. (Fila and et.al., 2020). In competition market
structure there are large numbers of firms that are selling variety of goods and hence sales of
firms are dependent on the demand and supply existing within the market. Pure monopoly is
market where single firm is controlling the entire market in any particular region. Moreover,
entry and exist of different firms is dependent on this firm.
The UK competition policy bans any anti agreements such as fixing any prices in the
market by two firms. Also, it supervises the mergers and acquisitions of large organisations.
Further, it also bans the abusive behaviour by any firm that is dominating the market. Moreover
it also prohibits any agreement. In contrast with the EU competition policy it restricts agreement
between two or more market that set of policy of restricting any competition in the market
(Babatunde and Ayodele, 2018). Also EU is similar in way that it also restricts the misuse of
dominant position by any of the undertakings in particular market. EU is been formed for
ensuing proper functioning in the internal market as key driver force for wellbeing of
individuals.
5.Process of Competition and Markets Authority operates:
Competition is relationship in which two parties strive for achieving the same resources at
the same time and place. Here one party wins and other parties’ losses depending upon the
environment they are working in. Market authority on other hand refers to company that is
sales driven and does research for the local industries (World Bank, 2017). Thus they help their
client in increasing revenues and sales of their firm through immediate and measurable results.
Competition in any economy operates in free environment and in open markets where
firms offer different prices and quality of goods to the consumers to choose from. Here, the firms
compete with each other through process of continuous innovations so that unique products can
be offered from its rest competitors. In case of market authority they operate through undertaking
various investigation and studies to identify consumer’s problems and provide better solutions to
their clients (Erasmus, Strydom and Rudansky-Kloppers, 2017). Also, they analyse if there is
any breach in UK or EU law’s due to certain situations.

Impact of competition in UK market would that consumers are able to consume variety of
goods and different prices. Also, consumers are able to consume quality products at lower prices.
Moreover, they also help in raising the standards of the people in the country. In case of market
authority impact on customers is that they are able to get goods and services at fair prices as
market authority controls and monitor prices. Also, it ensures that consumers are offered services
by the firm in uniform manner every time. Further, public interest is ensured and thus improves
the living of the customers.
6.Objectives and fiscal and monetary policy instruments:
Macroeconomic objectives ensure price stability in the market. Also, high and sustainable
growth is maintained in any economy through employment opportunities and balance of
payments in foreign exchange market. In regards to instruments such as fiscal policy, monetary
policy, income policy etc (White, 2018). they are confined only to full employment and rapid
growth unlike the macroeconomic objectives that is much wider in context. Fiscal policy is
instrument that is related to all credits of the economy and monetary policy is budgetary policy
and both are just a part of the objectives that need to be attained.
The government enter the economy through various taxation, regulation and subsidies. It
also intervenes in the market to promote economic fairness. Also, it does through fiscal policy
that estimates the total taxes and government spending, monetary policy that allows buying and
selling of securities of government in open market and supply side policies that helps in
increasing the supply of goods for economic development.
Government impact on employment helps in creating more employment opportunities
through identifying the loopholes in the economy. As result more workers are hiring and
standard of living is improved. In case of taxes if rate is higher than supply of goods would be
higher but demand would be less due to high prices (Gao and Li, 2020). This is done to adjust
the demand supply curve if government found that demand is higher than supply for certain
goods. In case of interest too, government increases the rate when it need more cash from the
public for investment purpose and vice versa. In balance of payments the government may
exempt of certain luxurious good to enter into the market to encourage local market growth.
Exchange rates are also changed over a period of time by the government in case when more
foreign currency is needed or to reduce the flow of home currency to other countries.
7.Globalisation and how it affects business:
It is process where the world is getting interconnected through massive cultural exchange
and trade. With the upcoming of globalization production of various goods and service shave
been increased to large level. Also, one particular company is operating in more than one
economy. Moreover, there is free movement of goods, capital and services in a region.
With this the companies are more involved in conducting research and development so that
better products can be offered. More new companies are starting up there business. Trade sector

increased the number of people through imports and exports. Also, more competitive
environment is made up in any region so that companies can stay ahead in competition and stand
out in the market (Bratianu, Hadad and Bejinaru, 2020). In economy cost of manufacturing is
decreased due to globalization. This means companies now can offer goods at lower prices.
Off sharing helps in growth of economy through domestic employment. Although
according to some critics there are problems of time zone differences, communication and
language issues. Moreover, off sharing creates cultural and social differences among various
individuals. Also, there are quality control issues that may also cause problems in delivery
quality products to the individuals.
CONCLUSION
Based on the above study it can be concluded that there are various types of firms that
are designed to achieve certain goals in the future. Moreover, certain legal structures such as
partnership, sole trader had been discussed along with certain merits and demerits. Also, the
study had analysed difference in public and private enterprise along with the UK competition
policy for various business practices. Moreover, the role of market authority and competition had
also been analysed. Lastly, impact of globalization along with fiscal and monetary policy of the
country had also been investigated.

REFERENCES
Books and journals
Ahmed, F. and Alam, M. A., 2021. Business Environment: Indian and Global Perspective.
PHI Learning Pvt. Ltd..
Babatunde, B. O. and Ayodele, M. D., 2018. Work Environment And Employees
‘productivity In A Competitive Business Environment. Strategii Manageriale. 56.
Bratianu, C., Hadad, S. and Bejinaru, R., 2020. Paradigm shift in business education: a
competence-based approach. Sustainability. 12(4). p.1348.
Erasmus, B., Strydom, J. and Rudansky-Kloppers, S., 2017. Introduction to business
management. Oxford University Press: Cape Town.
Escaleras, M. and Chiang, E. P., 2017. Fiscal decentralization and institutional quality on the
business environment. Economics Letters. 159. pp.161-163.
Fila, M., and et.al., 2020. Innovations for Business Management: Motivation and Barriers.
Gao, P. and Li, J., 2020. Understanding sustainable business model: A framework and a case
study of the bike-sharing industry. Journal of Cleaner Production. 267. p.122229.
Nudurupati, S. S., Garengo, P. and Bititci, U. S., 2021. Impact of the changing business
environment on performance measurement and management practices. International
Journal of Production Economics. 232. p.107942.
Sinay, J., 2019. Safety management in a competitive business environment. CRC Press.
Virglerová, Z., and et.al., 2017. Key determinants of the quality of business environment of
SMEs in the Czech Republic. E a M Ekonomie a Management.
White, S., 2018. Creating better business environments for micro and small enterprises.
Technical Report, Donor Committee for Enterprise Development. Cambridge. 55.
World Bank, 2017. Doing business 2018: reforming to create jobs. The World Bank.