Business Environment Report

This report analyzes the business environment of three organizations: Aldi (private), NHS (public), and British Heart Foundation (voluntary). It examines their types, purpose, size, scope, and interrelation of organizational functions with business objectives. The report also includes a PESTLE analysis and SWOT analysis for McDonald's, demonstrating the impact of macro-environmental factors on organizational strengths and weaknesses. The report concludes that the business environment is complex and can impact business activities in both positive and negative ways.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Types and Purpose of different Organisations......................................................................1
P2. Size and scope of different organisation:..............................................................................3
TASK 2............................................................................................................................................5
P3 Relationship between different organisational functions and their interrelation with
business objectives and structure. ..............................................................................................5
TASK 3............................................................................................................................................6
P4. Positive and Negative impact of Macro Environment Factor over Business Operations.....6
TASK 4............................................................................................................................................8
P5. Internal and external analysis:..............................................................................................8
P6: Interrelation of macro-environmental factors with organisational strength and weaknesses
.....................................................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment is refer as an integral and effective part of business management. It
is a combination of external and internal factors that highly effects on operating system of
company (Aithal, 2016). The business environment can cover some factors such as suppliers and
clients, laws and government activities, improvements in technology, social and economic
trends. All these factors are influence on business operations and activities in a direct manner.
This report is based on different three organisation such as private, public and voluntary such as
Aldi, NHS, British Heart foundation. This study is divided into different tasks which covers
different size, scope and types of organisation, Interrelationship between different departments of
company. At last, PESTLE and SWOT analysis and interrelation between both are also
determined in this project which influence of decision making process of business organisation.
TASK 1
P1. Types and Purpose of different Organisations
Business environment refers to all the internal and external factors of an environment that
affects business activities. Basically, there are three types of organisations: private, public and
voluntary. Explanation of these are as follows:-
Private organisation
Private organisation is a part of country's economy which is run by an individual or
partners. These are non government agencies which are established by an entrepreneur.
McDonald's is a private firm in UK which deals in fast food restaurant. It has head quarter in
Chicago, United State (Avramenko, 2012).
Purpose
The main purpose of McDonald's is to earn maximum profit. They choose a correct
organisation structure as an enterprise, partnership etc. There is no restrictions of government
imposed on private companies so they improve work culture and environment in an organisation.
Legal structure
common legal structure of private organisation are as follows:- Partnership- When two or more persons are agreed to start a business for a common
purpose is called partnership. Partners are agrees to share profit and loss and burden of
ownership.
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 Sole proprietorship- It is a simple business structure under which a single person can
operate a business. Owner need register their name and secure licence and then ready for
start a business.
 Limited company- It is a form of incorporation that control the amount of liability
undertaken by the company for investment.
McDonald's is the company which has organisational structure of private limited
company and they have aim of earning good profits.
Public Organisation
Those firms which are under controlled by government are called public organisations. It
raises money from public revenue like tax, penalty etc. For example- NHS. It is a public
organisation which has national health care facilities for UK. This is the largest health care
organisation all over globe.
Purpose
Basic objective of public organisation is to serve the citizen of the country. They
distribute income and wealth for improving the people's living of standard residing in society
(Cavalcante, Kesting and Ulhøi, 2011). It is a main source of capital formation for NHS to
setting up a new firm to build a strong socio economic infrastructure.
Legal structure
Legal structure of public organisation are as follows:- State government- A unit of government that makes laws for state is known as state
government. These are responsible for admire the problems and local needs of a
particular state. Central Government- it is a political authority that governs whole nation. All the powers
regarding to delegate power and authorities have central government. The most common
responsibility of this structure is to maintain national security and international
diplomacy.
 Local Government- It is an administrative body of a small geographical area like town,
city etc. Local government have no right to pass a law that affect a large area.
Central government plays important role in running operations of NHS. His is the
company which is aided and funded by central government and its subsidiaries.
Voluntary organisation
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It is a group of individuals that are enter into a voluntary agreement to accomplish an
objective (Chavis, Klapper and Love, 2011). British Heart Foundation is voluntary organisation
located in UK. It is concerned about the heart break and circulatory diseases. It conduct research
and find the causes and treatment of diseases.
Purpose
The main objectives of voluntary organisation is social welfare and to resolve the
problems arises in society.
Legal structure Trust- This is a traditional structure for charity which is usually established by a union
that does not require a membership. It also have all the powers and duties covered under
Trustee act.
 Association- It is a group people who are agreed for a common purpose other than profit.
British Heart Foundation has registered charitable trust. They get funds for the purpose of
social welfare and deposited in reserve funds.
Any firm can expand their business in global market by analysing the environment of
international business (Commander and Svejnar, 2011). Organisations has to analyse the purpose
and legal structure of foreign countries and then they can enhance they business.
P2. Size and scope of different organisation:
Private company-
McDonald's– It is fast food business of America, McDonald's founded in 1940 by
Maurice and Richard McDonald's. They call their business as a hamburger stand and later, many
franchise is open in different countries. McDonald's is a largest chain of restaurant by revenue
(Helms and Nixon, 2010).
Vision & mission: “Its mission is to be our consumers.” They want to achieve 5P's
product, price, place, people and promotion. Its vision is to become best fast service restaurant
experience in world (Mission statement of McDonald's, 2018).
Size: This company have number of employees 1,800,000. Number of location- 34000
restaurants(2017). Its revenue is 27.56 billion.
Scope: In Britain ,Rutland is the only country where McDonald's dose not provide their
services.
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Objectives: McDonald's main objective is provide great quality and valuable foods to the
customers. And make clear objectives with marketing strategy for effective promotional action.
McDonald's is about employees , franchisees and suppliers working together (Iskanius, Page and
Anbuudayasankar, 2010).
Public company:
NHS: NHS is the largest government sector organisation. This organisation was
primarily funded by general taxation system. It provides services to residents free of cost. This
organisation was established on 5 July 1948 and have head quarter in London, England.
Mission and vision: Mission of NHS is to improve health of people which they serve
and building healthier future. Vision of NHS is to be come excellent service provider in health
care sector at home, community and in hospital.
Size: Parent department of NHS is Department of Health. There are around 1.4 million
employees
Scope: Scope of NHS is very vast because they provide services all over UK.
Objectives: Main objective of NHS: to become voice of health providers and farming
health policies at national and international level. They also works in order to exchange
information in order to develop capabilities of individual.
Voluntary organisation- British heart foundation:
It is a charity and foundation organisation in United kingdom. It help people to beat
heartbreaks. British heart foundation researches on cures and treatments for diseases of heart and
their risk factors.
Mission and vision: Its main mission is end or beat circulatory diseases and heartbreak
from heart. Their vision is world without circulatory and heart diseases. And raise money for
research on treatments and cures (Karagiorgos, Drogalas and Giovanis, 2011).
Size and scope: There are around 950 BHF professionals which serves patients all over
UK. In 2013, British heart Foundation has gross income of £133m. This organisation provides
services all over UK. Due to heart attacks, 188,000 hospitals visit every year. 7 million people
living with heart disease (Facts and figures of British Heart Foundation, 2018).
Objectives: Its main objective is improved techniques of diagnosis, treatments and
prevention.
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TASK 2
P3 Relationship between different organisational functions and their interrelation with business
objectives and structure.
McDonald's is an American organisation and world's biggest chain of food restaurant. In
the organisation, there are different number of departments that has purpose of accomplishing
long term goals and objectives for company. Some departments such as human resource,
marketing, finance, operation and production (Macintosh and Quattrone, 2010). All these
departments are work for attaining basic targets and objectives of McDonald's within
predetermined time period. Beside this, upper level management such as CEO, Board of director
and shareholders of the company are responsible to formulate polices and plans for all
departments so that better results will be acquire automatically. A multinational restaurant such
as McDonald's require to know the role and significance of their each and every departments
about improvement in business sales and profitability.
Illustration 1: Organisational Chart of Company
(Source: Organisational Chart of Company, 2013)
Human resource department: HR department of the McDonald's has to perform various
functions including performance appraisal, workforce planning, determination of remuneration,
training and development etc. For this, human resource manager is responsible to hire
knowledgeable and talented people with the help of marketing division. Along with this,
marketing manager support the HR manager in way of giving information about vacant position
through advertisement and many other channels of promotion (Osterwalder and Pigneur, 2010).
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Therefore, company can get proper support and help from their HR department in accomplishing
wanted objectives and goals. For example: In order to recruiting candidates who have proper
knowledge and understanding about marketing tools and techniques that assist an enterprise in
reaching its services and products to the more number of targeted audience.
Finance department: This department is liable for maintaining financial stability of
McDonald's via raising capitals from different sources including banks, peers-to peers, cloud
funding and many other financial institutions. It will support many other departments to perform
their duties in efficient and effective way (Aithal, 2016). For instance: Marketing department
need accurate budget for applying promotional tools such as Newspapers, TV, Radio and so on.
It support marketing manager to attain its wanted sales target within allotted time duration which
directly maximise revenue of McDonald's.
Production department: In McDonald's, such department is liable to produce quality
services and products to the customers through advanced technology. Beside this, production
manager need accurate amount of capital for implementing new technology at workplace. Thus,
it prove as finance department and production department are interrelated with each other and
have purpose to achieving better results and objectives within predetermined time duration
(Avramenko, 2012). For example: production activities is mainly based on demands and
requirements of target audience which can be get via organising research program by marketing
department. Thus, it support McDonald's in attaining desired objectives and targets in given time
duration.
Marketing department: It is another department in McDonald's that has different role in
making strong reputation of company at large scale. For this. Company needed sufficient amount
of capital for adoption of certain promotional techniques such as TV, newspapers and so on.
Thus, it needs support and help from finance manager for collecting information about
availability of accurate capital.
TASK 3
P4. Positive and Negative impact of Macro Environment Factor over Business Operations
Macro environment means external surroundings of an organisation which affect directly
or indirectly of business activities. There are following macro factors (PESTEL) which make
positive and negative impact on McDonald's:-
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Political
Political factor effect the execution of any brand name. It includes government policies,
rules and regulations, taxation system etc. Government policies make a deep impact on the
performance of McDonald's. Because there are many policies made by government regarding
health and safety for food industries. Positive- McDonald's follows the rules and regulations imposed by government and pay
tax timely by which there is a less influence of government on McDonald's.
 Negative- It feels government pressure because of high amount of sodium and sugar
includes in their menu which are causes of health diseases.
Economical
The economy of every country make a great impact on the business activities of
McDonald's. It includes national income, GDP, inflation and deflation etc. Positive- If there is a deflation in country then prices of goods and services are low and
consumer buy more products then automatically consumption of McDonald's increases
and higher revenue is availed.
 Negative- In case of increment in loans rates, then this affects business growth because
external source of finance such as loan become expensive. This affects profit rate of
McDonald's.
Social
It refers to the culture and climate of society that affect business operations of
McDonald's. It is an important factor for a business for achieving success. Positive- Main source of earning for McDonald's is customers. So, they have to identify
the taste and preference of customers and satisfy their need with determining their norms
and culture.
 Negative- In some cases, McDonald's menu doesn’t follow the demand of consumers
who are health conscious which make them less desirable.
Technological
Technologies are necessary to improve productivity of the employees of McDonald's and
helps to make a strong communication among them. Positive- McDonald's has upgraded menu on television screens and also use their website
to show nutritional information. Customers can also order food online.
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 Negative- If McDonald's doesn't use upgrade technology then it create negative impact in
the growth of their activities and affect their sustainability as well.
Environmental
This factor includes the social responsibility of any firm to save natural resources and
optimum utilisation of available resources because it make great impact on business activities. Positive- McDonald's use Ozone-friendly packaging for their food by using recycling
technique and participate in saving energy by switching off electricity for an hour every
year.
 Negative- Providing unhealthy food by accusing mistreating animals and underpaying
employees.
Legal
Legal aspects includes laws and regulations which should be followed by every
organisation like consumer protection act, health and safety act, employment law etc. Positive- If McDonald's follow all the laws and duties then it give a positive result on the
growth and success of McDonald's. For example- the chicken that they use should be
healthy as per health and safety act.
 Negative- If company does not pay minimum wages that mentioned in minimum wages
act then it create negative impact for McDonald's success.
TASK 4
P5. Internal and external analysis:
McDonald's SWOT analysis show that how the least successful fast-food unit
organisation uses its competitive benefit to all time. It identifies the company's strengths,
weakness, opportunities and threats. McDonald's SWOT analysis mentioned below:
Internal factors: In this include company's strength and weakness.
Strengths: Strengths show that what a business separates and excels it from the
competition: loyal consumer base, unique technology, a powerful balance sheet and strong
brand. McDonald's main strength is moderate market diversification, standardized processes and
strong brand image. They all are makes the organisation competitively strong. This SWOT
analysis show the aspect of McDonald's that the business has the capacity to maintain effective
decision making.
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Weakness: Its weakness are linked to the organization process, market focus and product.
McDonald's weakness are as follows: low-level product diversification, limited procedure
flexibility and vulnerability to western industry decline. Company's standardization reduce the
business flexibility in react to market fluctuation (Cavalcante, Kesting and Ulhøi, 2011). This
company earn mostly from US and western economy that is weakness of the company. This
analysis shows that organisation needs to improve flexibility, globally expand and increase its
product mix so they can use most suitable decision making process for eliminate its weakness.
(Source: SWOT ANALYSIS, 2017)
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Illustration 2: SWOT ANALYSIS

External factors: In this include opportunity and threats of the company.
Opportunities: Its opportunities are related with its global worth and product mix. This
analysis about external factors of strategy that help in business growth. McDonald's main
opportunities are: market growth in the centre east, enlargement in developing countries and
product diversification. Its has the opportunity to expand and grow in developing countries for
this they use market improvement strategy. It also has opportunities to come in new industries
and develop brand-new products. It influence the decision-making process of expanding the
business on global level so they can earn more revenue from other countries.
Threats: McDonald's threats are based on sociocultural trends and competitive rivalry.
McDonald's main threats are as follows: healthy lifestyle trend, aggressive competition and
GMO regulation and trend. Aggressive challenger threaten McDonald's position as the industry
leader. McDonald's have the potential to bound its products because GMO regulations are a main
threat and this company does not have broad policy on GMO. Its affect the decision making
process in policy term (Chavis, Klapper and Love, 2011). Because McDonald's does not have
GMO policy who is set the limit of products.
P6: Interrelation of macro-environmental factors with organisational strength and weaknesses
Macro environment is an effective factor that covers PEST analysis such as political,
economical, social and technology. All these are effect on decision-making process of company
about expanding their business operations at large scale.
Political factors: It is introduce as a political conditions which can impact the operation
and functions of McDonald's. Company operates their functions in various nations. Beside this
they needed to emphasis on variation in political dynamics including import-export, taxation and
so on. Positive influence is that brings effective import or export policies by the government of
UK in making favourable effect on McDonald's sustainability. Political factor is also related with
the weakness such as: High taxation rate maximise the product price and decrease purchasing
power of client that highly effect on profitability of McDonald's.
Social factors
These factors includes buying behaviour of customers and society as a whole. It affects
the gross sales and revenue of McDonald's.
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 Strength- Strength is that it Increases demand of food products like Hamburger, soft-
drink, French fries etc. are increasing profitability and sustainability of long term
existence (Iskanius, Page and Anbuudayasankar, 2010).
 Weakness- Weakness of social factor is that customers are now more hrealth conscous, s
they do not prefer junk food such as burger, French Fries, etc. Thus, it affects the sales
target of McDonald's.
Technological factors
It is related with technological advancement which makes simple for McDonald's to run
its business activities much faster and smoother. Strength- It is a strength for McDonald's to sale its products through internet and e-
commerce that helps company to achieving huge customer support.
 Weakness- It Usage of outdated techniques due to less investment in technology then is
cause of weakness for McDonald's because it increases the cost of different business
activities.
Environmental factors
It includes those activities which are execute to protect environment. McDonald's has
involved in CSR activities which improve their brand image in marketplace in optimistic manner
and become the strength of a company. Strength- McDonald's uses environmental friendly equipments that helps in minimising
the wastage and helps to protect environment.
 Weakness- If McDonald's is not following environment related regulation such as Water
(Prevention and Control of Pollution) Act, 1974 then it may create existence of an
organisation into danger (Helms and Nixon, 2010).
Legal factors
These factors are related with laws and legislation made by government for the company
in which they are operating their business activities. Strength- It is the strength for McDonald's to follow different acts such as equal right act,
data protection act etc. because it helps in achieving great sustainability with more profit.
 Weakness- It is a weakness for McDonald's to Non-compliance of acts that may affect
their profitability in inauspicious manner.
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Economical factors refers to the fluctuations in economical conditions of McDonald's
make alteration in their active plans and policies because directs management of this company.
Positive effect is that Formulation of analysis document helps to collecting knowledge in respect
different income levels and inflation rates. Negative effect is that Inflation condition causes
increase in price of commodities which leads the chances of shifting and loose loyal consumers
towards substituent commodity.
CONCLUSION
From the above report it is concluded that business organisation various income levels
criteria is full of complexities due to having external and internal component which can impact
business activities of enterprise in either positive or negative manner. Organisations includes
public, voluntary and private which are performed to accomplish various objectives and aims.
SWOT and PESTLE analysis are also necessary to be contribute in order to analyse internal and
external respectively.
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REFERENCES
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Cavalcante, S., Kesting, P. and Ulhøi, J., 2011. Business model dynamics and innovation:(re)
establishing the missing linkages. Management Decision. 49(8). pp.1327-1342.
Chavis, L. W., Klapper, L. F. and Love, I., 2011. The impact of the business environment on
young firm financing. The world bank economic review. 25(3). pp.486-507.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Helms, M. M. and Nixon, J., 2010. Exploring SWOT analysis–where are we now? A review of
academic research from the last decade. Journal of strategy and management. 3(3). pp.
215-251.
Iskanius, P., Page, T. and Anbuudayasankar, S. P., 2010. The traditional industry sector in the
changing business environment–a case study of the Finnish steel product industry.
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414.
Karagiorgos, T., Drogalas, G. and Giovanis, N., 2011. Evaluation of the effectiveness of internal
audit in Greek Hotel Business.
Macintosh, N. B. and Quattrone, P., 2010. Management accounting and control systems: An
organizational and sociological approach. John Wiley & Sons.
Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries,
game changers, and challengers. John Wiley & Sons.
Online:
Mission statement of McDonald's. 2018. [Online]. Available
through:<https://www.strategicmanagementinsight.com/mission-statements/
McDonald'ss-mission-statement.html>
Facts and figures of British Heart Foundation. 2018. [Online]. Available
through:<https://www.bhf.org.uk/for-professionals/press-centre/facts-and-figures>
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