Business Environment in Zara

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK1.............................................................................................................................................1
P1 Types and Purpose of organisation........................................................................................1
P2 Size and scope of range of different types of organisations..................................................3
TASK2.............................................................................................................................................5
P3. Organisational functions and its objectives..........................................................................5
TASK 3 ...........................................................................................................................................7
P4 Impact of macro environment on business operation. ..........................................................7
TASK 4..........................................................................................................................................10
P5 Internal and external analysis of organisation.....................................................................10
P6 Strength and weakness of external macro environment factors...........................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
In general, business environment is defined as the combination of internal and external
factors which have a strong influence on the business operation performed in a company. There
number of factor such as external factor like, clients, supplier competition, government activity
etc. where as the internal factor includes improvement in technology, social and economic trends
(Weiss, 2014). To understand the importance of business environment various companies big
and small such as Zara are taken in the context.
In this project report, various type and purpose of organisation with the size and scope of
these are shown. Report also shows relationship between different organisation function and
their link to various department of company. Positive and negative impact of macro environment
on business operation is being discussed with example. In this report the strength and
weaknesses interrelate with external macro factors is focused.
TASK1
P1 Types and Purpose of organisation.
Introduction: In the business world, there are various types of organisation such as
scalar, functional, staff, committee organisation. An the main purpose of these organisation is to
carry out different activity in order to achieve its predefined goals. In business environment there
are basically various types of organisation like partnership firm, PLC, sole trader, private Ltd,
Global, MNC etc. that are explained below:
(Types of business organisation, 2017)
Partnership firm: It is described as the business that is run by two or more people those
are responsible to contribute their capital for running business. Partnership means that each

partner make right decision and distribute profit and losses according to the capital invested. For
example cherry London is on of the partnership organisation in UK.
PLC: These type of companies are owned by government and have a basic aim to supply
product and services to people in order to improve there living standard that result in the
upliftment of economy (Prins and Cybercrime, 2011). For example, NHS is a type of public
sector enterprises that provide health services to the needed people and improve the standard of
health in UK.
Sole proprietorship- In this type of organisation only one person is responsible to carry
overall business activity to attain desired result. The main purpose of this company is to generate
more profit to fulfil their needs and wants. For instance, Blue sky formation is a sole
proprietorship that produces general product and distribute in various part of UK.
Private limited: In this company the liabilities of owner are approx and these are small
entity with approx 50 shareholders. For example, Airdri is the private sector company that deals
with luxury clothes and accessories and supply in different part of world.
Global organisation: This type of organisation are those that operate there business in
different type of world. For example Tesco, is one of the largest supermarket company of UK
and has its chain in almost every part of world.
Transactional company: These type of organisation is are those that have their business
in one or more country, speciality about these company that they do not consider any country to
be their home country. For example Vodafone is famous transactional company in UK.
Cooperatives: In business world the word cooperative stand for those companies that
have same idea of living and working together. For example, the phone co-operate company that
deals with telecommunication industry that provide services like, telephone, landlines, internet
etc. in different part of United kingdom.
Summary: From the above discourse it has been concluded that different type of
organisation are important in business environment (Ullah and Lai, 2011). They all are
responsible to perform different task but with the same motive to provide services to customer
and earn profit.
P2 Size and scope of range of different types of organisations
Introduction

Business organisations are the legal entities which operate to fulfil their organisational
objectives. In this task, various types of organisations are selected in order to build an
understanding about their structure. These entities are sole proprietorship, partnership,
companies and many more.
Sole trader:
Sole trader is the simplest form of business entity. Blue sky is a sole trade firm which
operates in manufacturing industry, this entity has a background of producing general utility
products and distributing them in retail market. As this firm is a small scale entity, size of this
firm is comparatively small. Scope of this organisation is limited to only United Kingdom.
Vision and mission of this firm is to attain maximisation profitability in order to fulfil their sole
goal of growth and development. Organisational structure of this firm is line structure as this is
the most non complex design of organisational hierarchy.
Partnership:
Cheery London is a partnership firm which has established itself in UK market by
building an background of a marketing agency. This firm provides services of public relations
to their clients. Main aim and vision of this organisation is to earn reliable profits by providing
satisfactory services to their clients. Size of this organisation is comparatively small as they
operate only inside the boundaries of United Kingdom (Wheelen and et.al., 2017). This company
has a limited scope in marketing and public relations industry. As this firm is a partnership
entity, there are only few stakeholder for all the profits and earnings. Organisational
structure of this firm is line and staff structure as this is the most non complex design of
organisational hierarchy.
Private company:
Airdri is a private company which has a background of manufacturing industry in UK
market. This organisation manufactures hand dryers which is included in their product range
and sells them in retail and wholesale market. Vision and mission of this company is to increase
their sales volume and enhance their brand equity. This company is small in size and has scope
in general utility industry and electronic industry. In order to effectively manufacture their
products, this company has an organisational structure of divisional, in which they classified
all their functions in various departments.
PLC (Public limited company):

NHS is one the public company that provide health care services for people living in UK.
It has a background in UK with 211 clinical commissioning group and wad developed in 1948.
This main aim and vision of company is to give health services and improve the living standard
of people so that country can grow. It is one of the leading health care company of UK and has a
scope of expanding its services to other part of UK as well with the same motive. The internal
stakeholder of this company are employee, where as the external stakeholder are one those
invest in company in order to attain profit.
Global companies:
Tesco, has it background since 1919 and has global organised its services in 1992. It is
one of the largest multinational groceries and general commodity with its supermarket chain. The
main aim of company is to provide goods worldwide such as general groceries product,
electronic, furniture etc. (Janita and Miranda, 2013). It is one of the Big company in UK with
more than 6553 shops worldwide. It is one of the leading health care company of UK and has a
scope of expanding its services to other part of UK as well with the same motive. The structure
of Tesco has a unique international division organisational structure. Tesco, has the main
mission to create values of their product and make them different from the competitive world.
Transactional company
Vodafone has a background as it deals with telecommunication product and services at
national level and has various product like telephone, mobile phone etc. The size of company is
very big has it has approx 111556 employee working as per recorded in 2018 data. Its main
vision to be one of the leading telecommunication company in world and with key Objective to
maximise profit. Company has number of stakeholder such as investor, employee, buyer and
they follow divisional structure of organisation (Vitale, 2011).
Cooperative firms:
Phone co-op has a background by controlling its business services in different part of
UK. Company provide broadband, voice over IP etc. product to customer and have the vision to
became fastest customer services provider all over the world. Manager of company have the
primary objective to expand its business in every part of UK and other country and mission to
fulfil buyer needs and make them feel comfortable. This company follow Hybrid structure of
organisation and have number of stakeholder like owner, stockholder, creditor etc.

Summary: From the above discussed task, it has been concluded that each company
needs a proper structure to run its business activity. They have their own task, size, scope, vision,
mission etc. for better performance and expand their business worldwide.
TASK2
P3. Organisational functions and its objectives
Organisational functions are those which are needed to be performed to achieve the goals
and objectors and the company. In order to produce and sell its products organisation need to
undertake many functions such as follows: Research and development, purchasing, finance,
marketing, logistic, sales and support (Werbach and Hunter, 2012).
Research and development department:
Research and development function help the company to introduce innovation,
improvement and introduction of its procedure and products. Zara has its own research and
development department who done market research for the organisation so that it can introduce
unique and different things in the market. Research can be done according to the demand and
exceptions of the consumer so that company can satisfy its consumers and achieve its objects
that is profit maximization. Zara has big organisational structure so that it is necessary to do
R&D works as per the necessity of its structure.
Purchasing departments:
Purchasing department of company is responsible for the purchasing. Zara has its own
purchase department in the organisation who purchase the raw material for the production of
goods. It is necessary for the company to meets its objectives so that company can produce the
units as per demand in the market.
Financing department:
In companies there is a finance department who provides the finance to purchase raw
material and investment. Zara has its own department of it, who provide funds to company for
short term and long term financial needs so that operational activities can perform efficiently to
achieve the organisational objectives. According to the structure of the company have to take
financial decision (Ballard and et.al., 2012S).
Marketing department:

Marketing department is responsible for doing promotion and other promotional activity
in market related to the product and services produced within company. In company Zara, the
market division organise different for classifying current trends and taste of buyer in respect to
their wants and needs. They use to manage the production process and manufacture activity as,
they maintain the record of finished goods that is useful for selling department.
Operating and production departments:
This departments is related to generating new product with the raw material as it is the
main motive of companies to produce product and sell them in respect to generate profit. In Zara,
this department plays an important role as they first check the quality of raw material and
approve them for producing product.
Summary: In the above task, it has been concluded that it is very important for every
organisation to have several department. Because it help them in proper utilization of resources
available within company and they are interlinked that make a company to operate its function
properly (chaltegger, Lüdeke-Freund and Hansen, 2012).
TASK 3
P4 Impact of macro environment on business operation.
Introduction: Macro environment factor are described as the external factor that can
impact the business operation. These impact may be either positive or negative on the business
activity of Zara. The main purpose of this report is to show PESTEL analysis to figure out
impact on operation of business.
(PESTEL, 2018.)
PESTEL: This tool is related to determining macro economic factors that have positive
and negative impact on the performance of company. These factors are described below with
respect to Zara operation:
Political Factors: This is related to government policies that are comprise legal and
economic aspects. These political factor have wide impact on the operation of company that is
discussed:

Positive: Governmental factor of European Union modify rarely and enlargement in such
country is good for Zara. It will give positive impact on operations and helps to maximise profit.
Negative: Zara thought to increase there concern roots in several other countries also in
this dynamic government policies of other country impact operation of respective organisation in
negative manner.
Economic factors: It is related to the modification in taxation policies, growth in
economy, change in exchange rate as well as interest rate (Bharadwaj and et.al., 2013).
Positive: These factors have positive impact by obtaining intensity of the people as, it is
related to the purchasing power of customer and accessibility of products.
Negative: It has negative effect on economy as its is related to in view of question with
little retailers in view of gigantic accessibility of items due to effect of money in UK.
Social factors: These factors are related to the change in the taste and trends of customer
and they prefer those goods that satisfy them most that might have positive and negative effect
on company performance.
Positive: The key factor have positive impact on the operation of Zara as it help to
connect with the buyer that assist to develop local and worldwide connection with them.
Negative: It uninterrupted dynamic trends give negative impact on operations of Zara as,
they have to make new clothes and subsidiary as per the actual responsibility of customers.
Technological factors: This is related to the introduction of new technology that might
have positive as well as negative effect functioning of Zara.
Positive: With the promotion of new technology Zara innovate their online shopping App
that result in negative way so that customers stop visiting stores.
Negative: This also have negative impact as these new technology are expensive and not
easy for company to implements (Berg and Kilambi, 2014).
Legal factors: These are related to rules and legislation as well as judicial operation that
Zara has to undergo. Alteration on these factors provide broad contact on business activity.
Positive: it is related to the legal factors that help company to expand its business in
different part of UK as well as other nations.
Negative: It is nor easy for company to grow their business as each country have different
set of rules and regulation.

Environmental factors: these factors are those that are related to external environment
such as global warming, green house effect and other calamities etc.
Positive: In nations where population is quickly increasing needs clothes according to
atmosphere which result in increasing sales and generating profit for Zara.
Negative: Natural calamities gives negative impact on working of the Zara. For instance,
earthquake in Japan affect supply chain and sales of respective organisation.
Summary: In the above task it has been concluded that macro environmental elements
have impact on working of company.
TASK 4
P5 Internal and external analysis of organisation.
Introduction: it is very important to have external and internal analysis as it help to
figure out the opportunities, threats, weaknesses and strength. These can be done through SWOT
analysis in Zara. As strength and weakness are internal part of company, whereas opportunities
and threats are external. That are described below:
Strength Weakness
 They substance unique design to their
customers that is easily capture eyes.
 Zara have strong existence because
they have spread out their business
around the worldwide.
 They also launches approx. 1000 of
fresh design all year in the industry
which is its major strength.
 They major weakness of Zara have
deficiency of advertising because it
may be costly for company.
 Zara is not differentiated in anything
this is the chief ground that tailored
alteration to their competitors.
Opportunity Threats
 Online E-commerce, could be the
opportunity as, they offer their
products on only on their stores as
well as on E-commerce sites also.
 Market enlargement can also be
 Zara have to addition their
advertisement ability because for them
it became threat.
 There are lots of competitors for Zara
such as M&S, H&M, Mango and so

opportunity for Zara because new
competition always gives new
concern and profit (Hilton and Platt,
2013).
on.
Summary: From the above task, it has been concluded that SWOT analysis is the most
efficient tool for determining the internal and external factors for chosen company. This help
them in making strategies to run their business and remove any uncertainty.
P6 Strength and weakness of external macro environment factors.
Introduction: It can be said that external factors have various strength and weakness on
the performance of Zara. For the development manager of company focus on these factors as
they helps them to perform business activity in effective way.
Political factor:
Strength: In UK, government have made sudden changes in the policies which help in
improving business operation and production process that are benefited for the growth of
companies like Zara.
Weakness: Alteration in political policies and process, affect negatively on business
dealing of Zara while they preparation to grow their business on new findings.
Economic factors:
Strength: The main strength is that people improver the standard of living due to the
accessibility of product.
Weakness: In UK, there are different negative economic factor that have impact on the
performance of company such as, reduction in the exchange rate, lower value of currency etc.
Social factors:
Strength: Because of these factors customer are highly motivated and are intended to buy
product and services produced by Zara. As a result it help in improving the standard of living.
Weakness: Sudden changes in customer's demand, way and fashion can be a weak point
for Zara because its is difficult to follow these alteration rarely.
Technology factors:
Strength: It is very important for company to apply new set of technology in their
business activity as it will increase the potential of machine as well as attract more customer with
new design.

Weakness: These factors may weak the production process of as new techniques and
technologies are not easy to implements.
CONCLUSION
From the above report it has been concluded that, for development and growth each
organisation have to follow certain type of structure design, adopt new technology and know the
weakness and strength. Furthermore, external factors are on the far side the control of single and
provide positive as well as negative impact on functioning of the company. Whereas, internal
factors are in the control and can be managed by the owner of the business. For identification of
internal factors an enterprise can do SWOT analysis. On the other hand, for external factors
PESTEL can be conducted.

REFERENCES
Books and Journals:
Hilton, R. W. and Platt, D. E., 2013. Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
Bharadwaj, A. and et.al., 2013. Digital business strategy: toward a next generation of insights.
Berg, E. and Kilambi, K., Siebel Systems Inc, 2014. Method and apparatus to facilitate
development of a customer-specific business process model. U.S. Patent 8,639,542.
Schaltegger, S., Lüdeke-Freund, F. and Hansen, E.G., 2012. Business cases for sustainability: the
role of business model innovation for corporate sustainability. International Journal of
Innovation and Sustainable Development. 6(2). Pp,95-119.
Ballard, C. and et.al., 2012. Dimensional Modeling: In a Business Intelligence Environment.
IBM Redbooks.
Werbach, K. and Hunter, D., 2012. For the win: How game thinking can revolutionize your
business. Wharton Digital Press.
Vitale, R. P., 2011. Business to business marketing. Pearson Education India.
Janita, M.S. and Miranda, F.J., 2013. The antecedents of client loyalty in business-to-business
(B2B) electronic marketplaces. Industrial Marketing Management. 42(5). Pp,814-823.
Wheelen, T. L. and et.al., 2017. Strategic management and business policy. pearson.
Ullah, A. and Lai, R., 2011. Modeling business goal for business/it alignment using requirements
engineering. Journal of Computer Information Systems. 51(3). Pp,21-28.
Prins, J. R. and Cybercrime, B. U., 2011. Diginotar certificate authority breach’operation black
tulip’. Fox-IT, November.
Weiss, J. W., 2014. Business ethics: A stakeholder and issues management approach. Berrett-
Koehler Publishers.
Online
Types of business organisation. 2017. [Online] Available through:
<https://es.123rf.com/photo_38844231_concepto-de-estrategia-de-negocio-ilustraci
%C3%B3n-diagrama-de-infograf%C3%ADa-de-las-organizaciones-
empresariales-.html>
PESTEL. 2018. [Online] available through:
<https://blog.oxfordcollegeofmarketing.com/2016/06/30/pestel-analysis/>