Business Environment

This document provides an overview of the business environment, including the types of organizations, such as profit, not for profit, and non-governmental organizations. It also discusses the differences between micro, small, and medium-sized enterprises (SMEs) and the interrelationships of organizational functions. Additionally, it explores the macro environmental analysis using the PESTLE framework and its impact on business operations, with a focus on Sainsbury's case study.

Business Environment
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INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explaining the Differences between types of organisations example profit, not for profit
and non governmental organisations......................................................................................1
P2 Differences between micro, small, and medium-sized enterprises (SMEs)......................3
P3 Critical analysis of the interrelationships of the different organisational functions and how
they link to organisational objectives and structure...............................................................4
TASK 3............................................................................................................................................5
P4 Macro environmental analysis (PESTLE framework) identifying the positive and negative
impacts upon business operations..........................................................................................5
TASK 4............................................................................................................................................8
P5 SWOT analysis of the organisation...................................................................................8
P6 Interrelation among strengths and weaknesses of company with macro factors............10
CONCLUSION................................................................................................................................1
REFERENCES................................................................................................................................2
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INTRODUCTION
Business environment is a combination of internal and external factors which affects the
company and the operations in which it is dealing. The business environment includes number of
factors such as the suppliers of the organisation, clients of the company its competition, the
owners, laws and government, social and economic trends and many other internal and external
factors. Business environment is basically a surrounding of a company in which it is operating in
order to earn profits and sustain in the marketplace. This report is divided into two parts the first
part is an essay in which different types size and scope of organisations are described with the
help of respective examples of different organisations (Sarsby,2016). The three organisations
which are considered in this project is Sainsbury a private company which is profit based. Cancer
research is the second entity which is not for profit organisation and the third company is non-
governmental organisation known as equal rights trust. This essay also covers the
interrelationship between different functional units or departments of company. The second part
of the report is based on the case study of Sainsbury which is a second biggest supermarket chain
of the UK. The company was founded in 1869 by John James Sainsbury and have its
headquarters in London, UK. This part of the report holds the information about micro and
macro factors which are affecting operations of Sainsbury and a present in the surroundings of
the organisation either internal or external.
TASK 1
P1 Explaining the Differences between types of organisations example profit, not for profit and
non governmental organisations.
Organisations are of different types and kinds some are operating for earning profits, few
organisations are are rendering their services to the people with the motive of satisfying their
needs rather than earning profits and few organisations are non governmental which are NGOs
and charitable trusts. The organisations are of three types profitable, not for profit and non
governmental. These three organisations are compared in section below.
Profit organisation
A profitable organisation is that which enters the market in order to business and increase the
sales for higher and higher level of profits. The profit organisation enters the market with the
motive of earning enough to sustain in the market and in the long run it aims towards expanding
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growing and increasing their capital levels so that more and more profits can be earned by it.
Sainsbury is the example of a profitable organisation. It is a UK best entity which is a
supermarket chain sending goods and services to the higher and middle class people of the
society as its pricing policy is according to the segment of the population. The main aim and
motive of such kind of organisation is to increase the sales or revenue on regular basis by
increasing the customer share and market share by rendering best products and services to the
people of economy by which we can earn higher profit. The main source of earning of such
organisation like Sainsbury is by making sales of its goods and services or offerings which helps
in improving the revenue standards and ultimately enables them to attend their predetermined
objectives and goals (Preuss, 2017).
Not for profit organisation
The second type or form of organisation is is not for profit companies. These types of companies
are present in the marketplace with the motive of providing their products and services to the
needy and to the people who are not able to fulfilling their needs on their own. The not for profit
organisations a developed with the motive of rendering best possible and best quality services to
the people who are in need of those services and products. Example of not for profit organisation
which is present in UK is Cancer research. It is organisation which is established for the the
individual suffering from cancer of any type. The business is for bringing them all the resources
which are not affordable by them and helping them to move on with the pain and sufferings.
Main objective of not for profit organisation is entirely serve to the people for whom it is
developed and established. Which type of organisation make available all different types of
goods and services or resources which are required by the people and for which individuals are
in need for. The main source of revenue for this kind of organisation is through donations
charities member subscriptions etc.
Non-governmental
The third form of organisation is non governmental, where entities do not depend on any
governmental policies finances and resources. Non-governmental organisations are self
dependent and works with their own resources and personal connections. Equal rights trust is a
non governmental organisation which is established in UK. the non governmental organisations
are also known as voluntary organisation as these kind of businesses are open by the will and
good intentions of people who has huge amount of money by which the wishes to do welfare
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activities for the people of society. The equal right trust is developed which the motive of
voluntarily serving to the people who are not treated equally by the society such as at their
workplace or in the social environment (Springer, 2017). The main motive of non governmental
organisation is to accomplish their mission and attaining their goals of serving willingly to the
people of the society. The revenue resource of non governmental organisations are the dividend
distributed by government owned organisations and the fee the charge against the provision of
public health services.
P2 Differences between micro, small, and medium-sized enterprises (SMEs)
There are mainly three types of enterprises which are small, micro and medium-sized.
The economy is mostly regulated and kept stable by these three kind of and enterprises. Three
forms of organisations are the building block and back bone open economy which helps it to
enter the higher position in the world’s economies. These are three different types of enterprises
which has a unique structure and legal requirements along with their separate objectives. The
small macro and medium sized enterprises are elaborated and described underneath in the next
section.
Micro Enterprise
First comes the macro business which is the smallest and the very basic kind of business entity.
The macro business is a small organisation which is established by an individual with a unique
innovative idea and to have some please in the market. Micro business just have very few
employees and maximum of 10 employees. This type of business is at the very initial stage
where plants are still being made in order to enter the market effectively. The main motive of
micro business enterprise is to enter the market efficiently and create employment for or larger
population on a very large scale by moving for other in the future. Few examples of micro
business are computer service provider or cleaning house which is rendering cleaning services to
the customers at the time of the needs.
Small business
The second size of business is small scale Enterprise, these are the wholly owned organisation
which are independently established and manage by the owner. The small scale business is
established with the limited resources planning and revenue. It is of very small size and nature
having few employees or sometimes individually operated. The small scale business is is
operated with sustaining in the marketplace by earning enough levels of profits to be in the
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market. The employee level of small business organisation is from 10 to 50 employees (Hillary,
2017). If an entity has more than 50 employees it moves to medium-sized organisation and if it
has less than 10 employees then it is known as macro Enterprise. This form of organisation are
basically operated by the entrepreneurs in which they bring in new innovative goods and services
are make inventions in their ideas and enters the market. Small scale businesses are the pillars of
the economy as it attracts huge population and attention of several different segments of society.
Medium sized Enterprise
The third form of organisation is medium sized organisation, this type of enterprises also
independently owned businesses in which very few increase our acknowledged and employed.
The medium size organisations are independently e managed and operated by the owners and not
a part of any parent company. Medium size organisations have employees between 50 to 250. If
the employee number of medium sized organisation moves above 250 employees then it will be
considered as large scale business organisation. The main motive of medium size organisation is
to to increase their growth and profit levels by serving best quality services and products to the
people and potential buyers along with expanding business operations into new markets where
more and more people can access the offerings of the organisation.
P3 Critical analysis of the interrelationships of the different organisational functions and how
they link to organisational objectives and structure.
Different departments working in an organisation are interrelated and they have to work with
each other for accomplishing the organisational goals and objectives. In context of Sainsbury's,
there are various departments working in effective manner for providing better services and
products to people. Several departments and their interrelationship with other departments is
explained below:
Finance and marketing: Marketing department of Sainsbury's is involved in developing
several plans and strategies to increase sales of company. Strong and effective market research
are organised by Sainsbury in order to attract large number of customers. Along with this,
finance department of Sainsbury creates proper budget for research plan and market plan.
Finance department of company is mainly associated with maintaining total money and funds
related problems of the marketing function. Marketing campaigns of Sainsbury are planned and
designed and the finance department arrange an accurate amount of capital to organise the same.
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Therefore, interrelationship supports company to use proper fund for different market researches
in effective manner (Hamilton and Webster, 2018)
Human resource and marketing: Main role of HR department in companies is recruiting
and selecting knowledgeable people who can work more effectively. In Sainsbury, human
resource manager post vacant job vacancies in various offline and online portals. Marketing
department of Sainsbury have role to increase sales of company. There is interrelationship
between marketing and human resource department of company. Marketing managers of
company give information to human resource department regarding the abilities and knowledge
which must be exist in the candidates. Thus, interrelationship between these departments will be
beneficial for Sainsbury as it help them in achievement of its long term goals and objectives
easily (Hilton and Platt, 2018).
Organisational Structure: Sainsbury follow hierarchical organisational structure because
there is levels of people. This structure helps an organisation by creating clear lines of
communication as it will helps each department of company to communicate accurate
information about the business to each department. Proper floe of information will also support
an enterprise in achievement of its long term objectives and goals within a given time period.
TASK 3
P4 Macro environmental analysis (PESTLE framework) identifying the positive and negative
impacts upon business operations
The macro factors are the external factors which affect the company and are present in the
business environment of an organisation. In order to analyse and evaluate the external business
environment of Sainsbury that is the macro factors PESTLE model is used. This framework has
six elements which covers the broad segments of business environment which affects company
and positive and negative both the manners. The evaluation of macro environment Sainsbury is
as follows.
Political factor is the first and foremost micro factor which has huge impact on the
businesses carrying out in the industry. It incorporates the laws and regulations developed by the
government related to several aspects such as tax laws working laws administrative arrangements
foreign direct investments and many more. At the current situation politically UK is suffering
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because of brexit. Due to Britain exiting from the European Union all the laws and regulations
are changed which is affecting all different kind of industries and businesses operating in them
(Guo-rong, 2018). Positive impact: The governmental policies are paper of organisations as it has open
trade conditions in the UK. This is an opportunity for Sainsbury and opens new dose for
the organisation for conducting its business in the domestic market and international
markets effectively as the governmental policies are in favour of the business. Negative impact: Currently as mentioned above brexit took place which is negatively
affecting the businesses as a draught number of risk in relation with following and
performing all business activities according to the new laws and policies.
Economical factor: this is one of the most influential and affecting facto which present in
macro environment of a company. The economic factor States on the the condition of the
economy in which entity is having its operations. The Economic factor impact the profitability
of Sainsbury and its working structure. Currently due to the spread of deadliest disease named as
Corona virus or COVID19 the world economy are affected and so as of UK. Positive impact: the economy of UK is very strong and holds higher position among the
world’s economy which is a positive factor for Sainsbury as it helps the company to
attain success and move its graph upwards. Negative impact: as known and discussed above the impacts of Coronavirus is all over
the world economy as exports and imports are completely shut down which is affecting
the economy negatively and so as the business of Sainsbury.
Social factor: the spopulation of the economy their taste and preferences. The company
needs to analyse the the social culture of the economy and accordingly offer goods and services
in order to fulfill the needs of the population. In setting of Sainsbury's, social factor can create
both positive or brand image in front of it's consumers. Positive impact : Sainsbury’s can gain competitive advantage in business some other
competitors bye full feeling and addressing all the needs and desires of people in the UK.
 Negative impact : currently due to Corona virus the needs and preferences of individuals
is shifting frequently and the market trend is changing evidently which is affecting the
business negatively as company is not able to analyse and evaluate the market situation
and the place of people.
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Technological factor: this factory refers to the use of digital technologies and advanced
technologies coming in market everyday. Sainsbury multinational whose management is well
aware and in favour of technologies and accordingly upgrade there systems and software’s every
3 years according to the advance elevated technologies. Positive impact: the new and agreed technologies can help company to make its
distribution and other processes effective and faster then other businesses in the
economy. Negative impact: advanced technologies enabled systems and you to employees and in
order to train them the company needs to invest lot of money in training and development
of individuals
Legal factor: this factor is similar to political element, where company makes their rules
and regulations according to the governmental policies in order to operation smoothly and
effectively. Sainsbury management have to to develop their in house rules and regulations
according to the legal laws for keeping the entity away from any kind of penalties all legal cases. Positive impact: legal factors employees positive impacts on the company and its
operations as it keep the organisation safe from any kind of undue charges and legal fee. Negative impact: mostly the legal structure of the country are complicated which is a
negative element as it is becomes very difficult for Sainsbury to follow and satisfy all
legal aspects (Fernandes, 2017).
Environmental factor: the environmental factor refers to the the activities or actions
organisation take in favour of the nature and resources which are used by entity of a particular
society Positive impact: Sainsbury will change its operation in more sustainable and ecological
manner by using biodegradable means of production and rendering the products and
services to the customers it attracts more people towards the company and increase the
customer share.
 Negative impact: Heavy investments of CSR activities would lead company to go
through or generate number of risks of itself.
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TASK 4
P5 SWOT analysis of the organisation
SWOT analysis is a tool to gather information about the internal and external factors which are
affecting the business of organisation. There are four factors which are known as strengths
weaknesses opportunities and threads of organisation. the strengths and weaknesses are the
internal factors which affects the operations and efficiency of Company. On the other hand
opportunities and threats are the external factors which affects operations of an organisation.
SWOT analysis of Sainsbury is conducted in order to know its position in market according to
the internal and external factors.
STRENGTHS WEAKNESS
 It is one of the oldest
supermarket chain in
the UK founded in
London and the
largest in the UK with
around 16% of market
share acquired by it.
 The workforce of the
company is another
strength of it as it has
use number of stores
in the UK and around
the world where it
employees thousands
and lacks of
individuals every year
creating job
opportunities for them
(Chattopadhyay and
Bhawsar, 2017).
 Sainsburys use
organisation dealing
in in various locations
and serving to number
of customers on daily
basis but the prices of
goods and services
which are served by
Sainsbury are
comparatively higher
than other businesses.
This is talking the
lower or middle class
people from visiting
the store and
becoming the
customer of entity
which is the biggest
weakness of century.
 Due to brexit number
of consequences are
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 The company
Sainsbury is a
multinational which is
dealing in number of
geographical locations
with the khol range of
food and grocery
items but the
management of
Sainsbury is
diversifying its
product lines and
move to clothing
finance and energy
segment of the
market.
faced by businesses of
the UK and the retail
industry it is also
affected by it.
Sainsbury has
recorded a used
decline in the profits
due to the impact of
the exit and it is
becoming a weakness
of the company.
OPPORTUNITIES Threats
 Sainsbury has number
of opportunities with
it and one of the
biggest opportunity
for company is to
move its operation
and expand into
international markets.
Likewise company
can also enhance and
expand its operation
in to the UK by using
market development
strategy..
 The biggest threat
which is currently
faced by Sainsbury
and many other
organisation in UK is
the impact of
coronavirus on the
economy and
businesses taking
place.
 On the other hand one
more by which
companies offering is
the impact of brexit
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 Expansion is the
biggest opportunity
which is available to
Sainsbury in the
current scenario and
by using IT company
can move to more
potential markets such
as of China , India,
turkey and many other
potential markets. In
this market places the
company can also
have plenty of labour
at very low cost.
(Johnson, 2015). The
new policies of trade
and legal laws are
uncertain and
irrespective they are
effective and
favourable for the
business or not.
P6 Interrelation among strengths and weaknesses of company with macro factors
Interrelation Strengths Weaknesses
Political factors: The political structure of UK is
stable and strong according to
the other countries. it is
beneficial for Sainsbury and
can become a strength for the
company as it helps in
highlighting all the
opportunities and new
pathways which are available
to the organisation. Along with
The weakness which is created
by the political factor for
Sainsbury is due to the exit of
Britain from European Union
that is brexit. The political
policies and business laws which
were earlier being established
and followed according to
European Union now new laws
and policies are created by the
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that UK political factors and
government favours the
businesses who are domestic
and in house for the economy
automatically creates a strength
for Sainsbury as it is first
established and headquartered
in London UK, also the
business structure of Sainsbury
is developed and practiced
according to the UK laws.
government as it is exempted
from the European Union these
new laws are uncertain in
relation to their benefits for the
organisation.
Economic factor: The economy of UK are
always in favour of the
businesses which are
established and develop for the
welfare of the country. The
four different speculator in UK
are made and in favour of
Sainsbury and helps it to
increase its financial assets
(Chaouk, Pagliari and Moxon,
2020)
In the present time economy of
UK is facing the implications of
brexit which is making the
economy unstable. Along with it
it is known as Corona virus as
also show me the world's
economy including the UK
economy unstable which is
creating a weakness for
Sainsbury in relation to their
operations and efficiency.
Social factor: The company Sainsbury is
operating with the main motive
of earning profits in units and
supporting the economy of
UK. The social factor is in
favour and strength of the
company as the both work in
line the company works for the
In the present times the impacts
of brexit and coronavirus are so
high that the market is unstable
the trends are changing
frequently which is making the
social factor a weakness for
operations of Sainsbury.
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society and the people favours
the company and choose it
before others.
Technological factor: As discussed in the best
framework that the
management of Sainsbury is
proactive and encourages the
digital age. The company use
upgraded and advanced
technologies in their stores for
running their operation and this
is a huge strength of Sainsbury.
The weakness of technologies
and digital tools is it reduces the
the needs of manpower in the
company due to which Sainsbury
had to make reduction in the
staff members which is affecting
the Goodwill of the entity
(HHilto and Platt, 2018). Also
the employees who works with
new system and every
technologies due to it and needs
training in order to work on the
systems effectively. These
training costs are in large amount
and requires great investment.
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CONCLUSION
The above report is based on the business environment in which an organisation works
and operates its business activities. The report concludes that the business and its surroundings
please a very important rule in making it effective and achieving all credit mind objective and
goals. The assignment covers valuation of different types size and scope of organisations which
are operating and the world economy. There are three different types of organisations which are
profit, not for profit and non governmental. These different types of organisation are of different
sizes which are micro, small and medium sized organisations. Moreover, interrelationship
between different functions of an organisation is evaluated as they are dependent on each other
for conducting effective operations and attaining organisational goals. In the end a report is
formed on the basis of macro and micro factors which are impacting the business of an
organisation. This part is covered on the basis of and with the use of PESTLE and SWOT
analysis.
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