Business and Business Environment: Types and Purposes of Organisations, Organisational Functions and Objectives

This report provides an overview of different types and purposes of organisations in the business environment, including private, public, and voluntary sectors. It also explains the relationship between different organisational functions and how they link themselves to organisational objectives and structure. The report includes examples of Tesco, NHS, and OXFAM, and discusses external analysis such as PESTEL and SWOT.

Business and the
Business Environment
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures.................................................................................................................3
P2 Explain the size and scope of a range of different types of organisations........................6
P2 Explain the size and scope of a range of different types of organisations........................7
LO 2.................................................................................................................................................9
P3 Relationship between different organisational functions and the way they link themselves
to organisational objectives and structure..............................................................................9
LO 3...............................................................................................................................................11
P4 Positive and negative impacts of the macro environment on business operations with
examples...............................................................................................................................11
P5. Evaluate the internal capabilities and factors of micro environment that affect business
and its performance..............................................................................................................12
P6 Interrelation of strengths and weaknesses with external macro factors..........................14
CONCLUSION..............................................................................................................................15
REFRENCES.................................................................................................................................16
2

INTRODUCTION
Business environment is defined as aspects associated with surroundings of business
enterprise that affects and influences its operations as well as effectiveness. This is known as
aggregate of all events and conditions that affects business operations. This encompasses of
different factors which affects operations of company as well as its customers, stakeholders,
competitors, regulations and other governmental activities. business environment is dynamic and
that is why companies have to improve technical as well as operational capabilities on regular
basis (Agwu, 2018). This is important for organisations to analyse internal as well as external
environment before running operations within market. The companies considered in this report
for private, public and voluntary sector are Tesco, NHS and OXFAM. This report will provide
explanation about scope, size, legal structure, purpose, types, vision and other factors of private,
public and voluntary sector. Moreover, there is also discussion about external analysis such as
PESTEL and SWOT.
TASK 1
P1 Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures.
Within a business environment, there are three types of organisations - private, public and
voluntary sectors. The explanation about company’s scope, size, mission and vision are
mentioned below -
Private sector organisations
Private sector is known as organisation that is owned by individuals and not
governmental bodies. These organisations operate within market for increasing profit and sales.
one of the example of private sector organisation is TESCO.
 Background details of organisation- Tesco was founded by Jack Cohen in the year
1919. This is a private sector organisation which conducts operations in retail sector
internationally. Tesco provides services to people through supermarkets, super stores,
hypermarket and convenience shop.
 Products and Service- This company is offering products and services like daily utility
products, groceries, bank, magazine, clothing, etc.
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 Vision- The vision of this company is to increase value of products and services and
provide high quality products to consumers. They also want to increase customer loyalty
and enhance number of potential customers.
 Mission- To mission is to develop value for customers in order to earn lifetime loyalty
from potential customers. Types-
◦ Sole Proprietorship: It refers to the organisations that are run by individuals for
earning profits. It is known as oldest form of private sector organisation and there are
very less restrictions while running these organisations. The example of sole
proprietorship includes Carpenter, Local Grocery store, Tailor, etc. Partnership- This is known as agreement that exists between two or more individuals for
running a private business (Aker, 2019). In context of partnership business, profit and
loss has to be beard by both the partners. Generally, the agreement depends upon shares,
authorised capital, ownership and profits. Joint Stock Companies- There are limited financial resources in joint stock companies.
This consist of heavy load of risk for owners. There are different values for companies
which are operating in joint stock. Board of Director, CEO, Shareholders are main
operating partners of joint stock companies.
 Purpose- The main purpose of Tesco is to become one of the biggest retailing
organisation across the world. This provides high quality products and services to
customers.
 Legal Structure- Corporate governance is the legal structure used in Tesco. This
company uses the strategy which helps to satisfy demands of all stakeholders.
Public sector
Public sector organisations are those which are ruled by governmental authorities. These
are an essential part of economy (Ali, 2019). These include industry of public sector consisting
of school, electricity, emergency service, fire services, gas, healthcare and many more. An
example of public sector organisation is NHS.
 Background details of organisation- NHS is a public sector organisation of UK that
provides health care facilities to people at low charge. There are four operating systems
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of NHS including NHS England, NHS Wales, Health and Social Care in Northern Ireland
and NHS Scotland. This organisation was founded in the year 1948 by Aneurin Bevan.
 Products and Service- It provides medical facility to people and ensure that individuals
are given effective treatment.
 Vision- To enhance medical help and promote health, care and value for individuals.
 Mission- To provide good health services to people in need and make them happy. Types-
◦ Departmental Undertakings- This is an old public organisation type which is
governed by government. It provides essential services like railways, telephone
service, broadcasting, etc.
◦ Public Corporation/ Statutory Corporation- These type of organisations are the ones
which are operated by parliaments, state or central government. The best example of
these are Airlines, State back, etc.
◦ Government Company- In this type of organisation, 50% capital is associated with
state or central governance. Moreover, in context of these companies it is seen that
government provide effective rules and regulations to run these.
 Purpose- The purpose of NHS is to create enthusiasm among people for promoting
health and care. This includes creating good facility for people in context of medical
need.
 Legal Structure- The legal structure of NHS is public corporate. NHS is operating for
improvising medical health and care.
Voluntary sector
This is type of organisation which runs for only social work. the main objective of such
type of organisation is to enhance society’s condition. These are generally non-governmental or
non-profitable companies (Debrulle, 2021). Such organisations take funds from national lottery,
government, rich individuals, etc. Oxfam organisation is an example of voluntary organisation.
 Background details of organisation- Oxfam is an organisation which was founded by
Cecil Jackson Cole in year 1942. This company is situated in Nairobi, Kenya. The
services offered by this organisation are mainly for poor people. This organisation wants
to remove poverty from surroundings.
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 Products and Service-. This company initiates campaigns for removing poverty among
people. It provides nutritional food, shelter, clothes to those who needs it.
 Vision- To abolish poverty from the world by helping poor and providing them means of
income.
 Mission- Mission of respective company is to develop effective solution for injuries,
disease and poverty so that they can change the world and make it effective (Craig and
Campbell, 2012). Types-
◦ Unincorporated Association- It is considered as business unit which is developed by
considering group of people who come together for some specific reason other than
profit. They didn't need any types of cost in order to get set up at the marketplace.
◦ Trust- This types of organisation considered as three party fiducial relationship at
which first party is trustor, second party is for benefits for the third part i.e.
beneficiary. It is generally developed when an individual (Settlor) gives property to
some other individual (Trustee) (Groebner and et. al ., 2013).
 Purpose- The purpose of respective company is to help other or society in order to offer
them long lasting solution of injustice in respect of poverty. Along with this, they also
want to change the world and make it better for every person.
 Legal Structure- The Oxfam's legal structure is unincorporated which is setup along by
considering agreement with peoples. They generally conduct their business operations
and functions for society instead of making profits.
P2 Explain the size and scope of a range of different types of organisations
Company Type Size Scope
Private Organisation
(TESCO)
Tesco is a UK organisation
that is operating across the
globe and is having
approximately 4,60,000
employees working at present.
There are different subsidiaries
of Tesco like Ireland, Stores
Tesco is having great
opportunities within market
and it is concluded that tesco is
doing a lot for expanding it’s
business in new countries.
They are continuously
involved in market analysis for
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Ltd, etc ( Farrukh, 2020). knowing different ways to
expand business in new market
and get success.
Public Organisation NHS is a big organisation and
it is operating in different
cities of UK. It provides
medical facilities to lot of
people. This medical
organisation provides services
in England, Wales and
Scotland.
The scope of NHS is very
huge. This organisation has
capability to provide medical
facility and service to every
citizen of UK. This is an
organisation that is involved in
majorly helping poor and
needy people.
Voluntary Organisation The size of Oxfam is
considered as middle to large.
This organisation has the
motive to offer social service
to people. Oxfam provides
help to those who are in need
ta the time of disaster. It wants
to remove poverty from
country.
The scope of Oxfam is to
expand services for needy
people across the globe. This
organisation wants to remove
poverty in different countries
and make every person live a
good life.
P2 Explain the size and scope of a range of different types of organisations
Company Type Size Scope
Private Organisation
(TESCO)
TESCO is large in size which
have more than 4,60,000
employees at the worldwide
location. Respective company
have number of subsidiaries
such as Ireland, Stores Ltd,
Bank and so on (Hair and et. al
TESCO activities are
considered as fundamental
element of practices. The
scope of company is to extend
their business at the global
level in order to earn more and
more profitability. For this
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., 2015). they need to conduct market
analysis which help in
identifying whether to expand
business effectively.
Public Organisation The size of NHS is huge as
they are operating in numbers
of countries in order to provide
healthcare services to society.
Along with this they also
provide free medical services
to the residents of United
Kingdom (Gao, 2020).
The NHS scope is to offer
media services to more than
64.6 million citizen at the
United Kingdom as well as
54.3 million at England.
Along with this respective
company deal with 1 million
patients per 36 hours which
include several services (Ilin,
2018).
Voluntary Organisation The Oxfam size is middle to
large as they are offering
social services at the United
Kingdom in order to minimise
or remove poverty, help
disaster faced people and so
on. Moreover, there are 20
independent voluntary
companies are working in
order to make nation free from
poverty.
The scope of respective
company is that they expand
their services around the
world. This is so because
through that they able to make
world a better place to leave.
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LO 2
P3 Relationship between different organisational functions and the way they link themselves to
organisational objectives and structure
The organisational structure is defined as the procedure followed within organisations for
assigning and supervising different roles and responsibilities of the company. This helps in
smooth functioning of business operations and activities ( Le, 2018). There are different
departments present in an organisation. They all are linked together and help in attaining
organisational goals effectively. Following is detailed information about functioning of different
departments present in Tesco and how they work together for attaining goals -
 Finance Department – This department in a company helps in managing and controlling
all cash related issues. The main objective of this department is to manage budgets for
different campaigns and operations that are run by the company. Within Tesco, finance
department handles budgeting, costing and financial forecasting. This department
manages funds and budgets that is needed by other departments of Tesco like marketing,
operational, human resource, etc.
 Operations Department – The operations department of Tesco is involved in ensuring
packaging and manufacturing related process. This department takes care of delivery that
all products are provided to customers on time. This department has to ensure that
products and services offered by the company are of high quality. Quality assurance is
the major factor of operational department. It is taken care that auditing and product
development is done properly.
 Marketing Department - The marketing department of an organisation takes care of
promotion and advertising of products and services offered by the company. This is a
special team that has to ensure consumer behaviour and provide products and services
accordingly. This department also evaluates strategies used by competitors and develops
more effective strategy for tesco.
 HR Department – The HR department of Tesco is involved in managing all issues
related to workforce of company. Recruitment and selection are two essential functions
that are focused upon more in Tesco. There is basic responsibility to hire only talented
and skilled employees so that goals can be attained in less time. The HR department of
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Tesco also emphasises upon managing employee relation within workplace. This is
helpful for avoiding conflicts and attaining assigned goals easily.
Finance and Operations Departments – The finance and operations department is involved in
managing coordination for attaining organisational goals. Finance department of the company
provides budgets and funds to operational department in order to complete the activities and
tasks (( Liu, 2017)). In tesco, operational department requires money for developing payment
machines, delivery process, supply chain, etc. For all this, there is need to have proper funds and
budgets.
 Marketing and HR Departments – The marketing and HR department are interrelated
and they work together for attaining goals. The human resource department of Tesco
hires skilled employees who can manage the operations effectively. On the other hand,
marketing department deals in developing good marketing plan. HR managers are given
information about the skills needed in new marketing professionals. They use this
information in producing advertisements.
Illustration 1: Organisational Structure
(Source: Organisational Structure, 2019)
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LO 3
P4 Positive and negative impacts of the macro environment on business operations with
examples
There are macro and micro factors within business environment that a company has to analyse
while operating within market. There are such elements that impact upon management and
operations of Tesco (Liu, 2019) . The decision making of Tesco depends upon the way
management is handling the business tasks. PESTEL analysis is used for analysing different
external factors that impacts organisations. The negative and positive impact on Tesco due to
macro environment factors are mentioned below-
Political factors – This consists of different regulations given by government, political stability
of country, etc. There is different government policy, foreign trade, tax policy, labour law in
different countries. Positive impact – Tesco has operational activities that are conducted in UK and there is
political stability in this country. This has positive impact upon Tesco’s business
activities.
 Negative impact – Brexit has negatively impacted upon business operations of Tesco.
This company had issues related to shipping due to taxes.
Economic factors – This means impact of economic elements like inflation, deflation, economic
growth, exchange rates, interest rates which have impact upon business operations. Positive impact – UK has good economic condition and it is profitable for company to
work in this country (Lyu, 2017). That is why Tesco is able to make huge sales by
expanding business in UK. Negative impact – Competition within retail industry of UK is very high. That is why
Tesco has to put more efforts for managing sustainable business.
Social factors – There are different social factors like consumer lifestyle, culture, beliefs,
population growth rate, career attitudes, safe emphasis, cultural barriers, etc. Positive impact: Tesco always operates business by adapting all consumer beliefs and
values. This brand has developed goodwill in market by considering all social factors in
business.
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 Negative impact: There is negative impact on company’s operations when social factors
are not considered while operating. If products and services are not according to the
social elements, then customers will be dissatisfied.
Technological factors - There is great importance for Tesco to indulge into technical innovation
and advancement as it helps to increase sustainability within market . Some of the factors
included in technological elements are innovation, Research and Development activities,
technological awareness, technological incentives, etc. Positive impact: Tesco has established competitive advantage by adopting new
technology. This has also helped in increasing the number of potential customers.
 Negative impact: The adoption of new technology has increased the cases of privacy
issues, hacking, and high costing for Tesco.
Environmental factors - This factor will include several other factors like climate, weather,
environmental laws, climate change, pressures from NGOs and many more (Michael, 2019).
 Positive impact: Tesco operates in market by considering different environmental
elements. This helps to increase company’s goodwill in front of customers.
 Negative impact: There are several environmental rules and regulations in United
Kingdom according to which respective company need to operate which impact on
decision making.
Legal factors – This factor is associated with discrimination law, employment law, customer
protection law, copyright and patent law, health and safety law and many more. Positive impact: Respective company can develop its strategies, plans and policies
according to legislation developed by United Kingdom government which can help it in
conducting work effectively.
 Negative impact: Tesco has been involved in different legal disputes and due to this there
has been negative impact on brand image.
P5. Evaluate the internal capabilities and factors of micro environment that affect business and
its performance.
SWOT Analysis is used within organisations for evaluating strength and weakness (Poth, 2017).
This helps to develop effective strategies for maintaining competitive advantage in market. In
context of Tesco, SWOT analysis is mentioned below -
Strengths:
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 Innovation: TESCO is using many innovations in their business which provides help to
company in maintaining sustainability within market. New innovation is according to the
preference of customers which results in high increment of sale and it results in
maximisation of profit earned.
 Market Share: TESCO has largest market share with a consistent share over 25% within
market. This is among one of the best supermarkets across the world (Saleh, 2017).
 Strong performance during pandemic: At the time of COVID pandemic also, Tesco was
able to work efficiently and attained appreciable profits.
Weaknesses:
 Quality control: It boosts meticulous quality control measures and low customer
satisfaction level. It has low category participation in health and beauty (Saura, 2019).
 Shortage of products: TESCO is conserving a few of its items to prevent shortages of
products. This creates dissatisfaction among customers.
 Food safety issues: Given the scope of food products, TESCO sells fault in reference to
food safety. TESCO contains milk which is not mentioned on the label. This means
product is possible health risk for anyone with an allergy to milk or its constituents.
Opportunities:
 High unemployment rates: There was a massive fall in employment numbers of people
aged 16-24 years. Supermarkets being one place where people could still find jobs or can
get employment.
 Social Supermarket: It accumulate unsold inventory that is within its use-by date.
Supermarket sells inventory at very affordable rates, conserving wastage and food
scarcity.
 Growth of online grocery sale: Remedies to prevent the spread of COVID-19, prevents
people from stepping out as much as they used to. It leads to buy groceries online and
results in online sale.
Threats:
 Economic Recession: Fall in purchasing power results in economic recession. Rising
unemployment is another main reason for concern and due to this the economy goes
slowdown (Stransky, 2019).
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 Competition: Within industries, there are major players playing their roles to increase
their sale. More competitors lead to increase in competition to make their sale effective.
 Controversy: Sometimes TESCO has to face controversy while marketing its products in
the market and there were negative impacts also as it delayed paying money knowingly to
suppliers in order to improve its own financial position.
P6 Interrelation of strengths and weaknesses with external macro factors
The PESTEL analysis is used by companies for evaluating different external macro factors
that have impact upon company’s operations (Trad, 2017). There is need for managing
challenges that occur within a company while expanding business into other foreign markets.
The factors like political, Economic, Social, Technological, Environmental and Legal factors
impacting upon operations of business -
Political Factors - Strengths: Within Tesco, decisions provided by European government have provided
permission for free trade. This helped this organisation for managing the flow of
operations in European countries.
 Weaknesses: There are lot of competitors of Tesco within market. These companies work
in a more prominent manner.
Economic Factors – Strengths: Tesco operates in countries where the economic conditions are good. This
enables to manage profit and sales of company.
 Weaknesses: There are few economic conditions where operations are not possible. Tesco
has faced several problems while managing operations where economic conditions are
not good.
Social Factors – Strengths: Tesco has provided products and services to customer as per their preference
and choice. All social factors which have to be present while providing products and
services to customers is followed by Tesco.
 Weaknesses: It is very difficult for Tesco people to manage and develop customer
preferences while adopting all social factors.
Technological Factors –
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 Strengths: The implementation of technological advancement tools and techniques within
Tesco have helped Tesco to gain competitive advantage within market. It has enabled
Tesco for managing sustainability and growth opportunities. Weaknesses: The main weakness for Tesco in adopting technological advancement is
that it is risky and breach of privacy.
Environmental Factors – Strengths: The strength of Tesco in developing sustainability starts with involving into
environmental programs and not harming it in any manner. This helps to build
competitive advantage.
 Weaknesses: It is very difficult for Tesco to manage the implementation of
environmental programs.
Legal Factors –
 Strengths: Tesco has adopted different legal rules and regulations for operating in market
as these will help to manage different operational activities properly. These regulations
provide a proper guidance for implementing business tasks and activities and provide
high standard products and services (Uribe‐Bohorquez, 2019).
 Weaknesses: Different countries have their own legal structures which they keep on
updating. So, Tesco cannot make a particular plan for implementing business activities.
CONCLUSION
From the above report, it is concluded that for any organisation it is very essential to
evaluate external and internal elements that impact upon business operations and activities. By It
is evaluated from the above discussion that in a business environment there are three types of
organisations including private, voluntary and public. There is different size, scope and structure
of these organisations and their operating way is also different. Effective decision making is very
important within organisations and this is done by using different models like SWOT and
PESTLE. While implementing operations in market, a company must know how to tackle
difficulties associated with running a successful business. Business environment is dynamic and
hence it is very important to cope up with the present situations for overcoming all problems.
Different companies evaluate economic, political, demographic, legal and social factors that
impact upon their operations.
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