(Doc) Business & the Business Environment: Assignment

Business & the Business
Environment

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types and purposes of organisations.......................................................................1
P2 Types of organisation on basis of size and scope...................................................................2
P3 Relationship between different organisational functions.......................................................4
TASK 2............................................................................................................................................5
P4 Positive and negative impact of macro environment over business.......................................5
P5 Internal and external analysis of the organisation..................................................................6
P6 Interrelation among the strength and weaknesses with the macro environment....................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment refers to the mix of the internal and the external forces that affects
the business and its working. The report will highlight the different types of organisations like
public, private and voluntary organisation with its purpose and the legal structure. Further the
report will outline the size and scope of different types of the organisation like small, medium
and large scale organisation. Also the report will highlight the interrelationship between the
different types of organisational functions and their link with the organisational objective and
structures. The report will also demonstrate the positive and the negative impact of the macro
environment on the business and its operations through use of PESTLE analysis. After this the
will also focus on the internal and external strengths and weaknesses of the organisation with
help of the SWOT analysis. At last the report will discuss the interrelation between the strengths
and weaknesses of the company with the external macro factors.
TASK 1
P1 Different types and purposes of organisations
Organisation is a group of people who works together in an organised way to accomplish
a pre determined common goal and the objectives. There are many types of different
organisation run by people (Kuratko, Hornsby and Covin, 2014). These organisation can be
divided as follows:
Public organisation: These are types of organisation that are owned and operated by the
government and it provides services to the citizen of the country. It is a part of economy which is
composed of both public services and the public enterprises. Public services are provided by the
government to people living within the reach of the government. The public enterprises are the
business enterprises where the government or state has momentous control either through full or
majority or minority ownership. The public organisation taken in the report is National Health
Service (NHS). It is a publicly funded national healthcare system in the United Kingdom which
provides free or low cost healthcare to all the residents of the UK. The main purpose of NHS is
to provide for good healthcare services to everyone regardless of the wealth. Its another purpose
is to provide high quality care that is safe, effective and focussed on the patient experiences. The
legal structure of NHS starts with regulation by Care and Quality Commission (CQC). These are
statutory NHS bodies responsible for the planning and commissioning of healthcare services.
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The department of health and social care (DHSC) is a ministerial department supported by 23
agencies and public bodies, which is responsible for strategic leadership and funding for both
health care and social care (Gallemore and Labro, 2015).
Private organisation: It is a type of organisation which is run by the individuals or the company
with a motive of earning profits and is not controlled by the government. The sole purpose of this
type of the organisation is to earn more and more profits. The example taken of the private
company is TESCO. It is a British multinational groceries and general merchandise retailer. It is
the third largest retailer in the world measured in terms of gross revenue. It has a revenue of
approximately 5590 crores GBP in 2017. the purpose of TESCO is to create values for customers
to earn their lifetime loyalty. Legally the company is a private company but because the shares
are presented to the general public it comes under the category of the private company held by
the public.
Voluntary organisation: It is a group of individual who enters into an agreement usually as
volunteers to form a body whose purpose is to benefit and enrich a society often without motive
of profit earning and with little or no government intervention. The purpose of this type of
organisation is to create social wealth rather than material wealth. The organisation taken here is
National Trust. It is an organisation dedicated to preserving the cultural heritage of a particular
geographic region. The legal structure of national trust started as not for profit company but later
it was re- incorporated by a private act of parliament, that is the National Trust Act 1907. In
2005, the governance of the trust was substantially changed by the Charity commission. The trust
is governed by a twelve strong board of trustees, appointed by a council of twenty six people.
P2 Types of organisation on basis of size and scope
There are many different types of organisation based on the size and scope. These are
described as following:
Small scale organisation: These are enterprises or organisation in which there are small
number of workers and does not have a high volume of sales. A small business employees fewer
than 100 and has revenue of less then 2 million. The vision of small scale business is to become a
company that best understands and satisfies the customers. The mission of small business is to
to provide high quality goods to the customers (Raziq, and Maulabakhsh, 2015). The objective of
the small scale business is to maximize their profits and growth to expand their current business
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operations. The goal of these organisation is to improve the mobilization of the natural resources
in the country.
Medium scale organisation- This is a type of organisation in which normal sized investment is
required and with that 250 employees an turnover of 5 million. The vision of the medium
companies is to lead the way to the future, enriching lives around the world. The mission of such
companies is to provide superior services (Meiners, Ringleb and Edwards, 2014). The objective
of the medium sized organisation is to create large scale employment in the economy and to
spread industries trade in an economically backward areas.
Large scale organisation- Organisations which requires huge infrastructure and manpower with
an influx of large capital assets are termed as large scale industries. These require huge amount
of investment with number of employees 500 and with around 10 million of turnover. The large
scale business is external growth that is taking over their competitors in the market. The vision of
these types of organisation is to become the global leaders. The mission of such organisation is
to ensure that the products are of outstanding quality, value of money and instil pride of
ownership.
Also there are some other type of organisations which are as follows:
Partnership: It is a type of business in which two or more people work together as partners and
share ownership as well as the responsibility to attain the objectives and goals of the business for
which the partnership firm has been evolved. A minimum of two person and maximum of ten
persons for banking business and twenty for non banking business form of partnership is needed.
Sole proprietorship: It is a type of business form in which it is owned and maintained by a
single or sole person only (Apăvăloaie, 2014). As the business is single handedly run so the
profit earned and loss suffered is all responsibility of the sole trader. He has unlimited liability
and responsibility of the firm. The sole proprietor can run his business in his own name also.
Company: A company is an artificial person created by the law and it has a separate legal
entity . The liabilities of the shareholders is limited to the value of shares held by them. A
company has a separate legal entity from its members which means the company can purchase,
hold and sell properties and enter into contracts in its own name. Being an artificial person the
company can act as a natural person and has a common seal. Common seal is the official
signature of the company. The company provides the shareholders the right to participate in the
profits without any personal liability.
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P3 Relationship between different organisational functions
Organisational functions are the set of activities which are carried out within a
department (Saleem, 2015). These functions include operations, marketing, human resource,
information technology, customer service, finance and many more. The relation among these
factors are as follows:
Marketing with Research and development: there is a close link of marketing and the R&D.
This is so because for marketing a product the company needs to use many sources and
technique. These techniques are researched by the R&D function. Also marketing people gives
R&D new concepts and ideas to research and see the viability of the new ideas.
Production with customer service: The production performs the function of producing the
products and services in the company. Customer service is a function performed for the
customer. Their work is to make sure that customer likes the product and is satisfied by using the
product. The customer service officer conducts the survey after the product is sold to know the
feedback of the customer and whatever feedback is given by the customer it is conveyed to the
production department. The production department then makes changes in the product according
to the specification of the customers.
Technology with production: Technology up gradation takes place very frequently. The
production department is closely related to the technological up gradations. This is because the
production is having complete use of machines and technology. The products are produced
through machines only and if the machines and technology becomes obsolete then the products
manufactured are also obsolete (Huang-Horowitz, 2015). For this technology functions need to
be upgraded and should inform production about all the latest technologies.
Marketing with finance: Finance is the blood of the organisation. Any business cannot run
without the finance. Similarly the marketing function cannot perform its function without money.
Marketing is the most expensive function of the organisation because it includes promoting the
products of the company through various methods like advertising, sales promotion, online
promotions etc. All these methods requires a lot of money and the money is provided by the
financiers of the company.
Human resource with production: Production is the field in which the maximum amount of
employees are required. The recruitment and selection of the employees is dome by the human
resource function. The production people gives the requirement and the number of people
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required in the work of production to the HR. the HR then finds the appropriate peoples and
recruit them for the company.
Lastly, all these organisational functions are connected with the organisational objectives
and the structure. If these functions does not work in synchronization with each other then any
task will not be completed on time. If these tasks are not completed on time then the eventual
goal and objective of the organisation will not be attained. Hence, fulfilment of goals is directly
linked with the proper use of organisational function. For better work and accomplishment of the
organisational goals and objectives it is necessary that all the functions and departments work in
synchronization with each other.
TASK 2
P4 Positive and negative impact of macro environment over business
PESTLE analysis is a framework used by the marketers to analyse and monitor the macro
environmental factors and its impact on the business environment (Umar Farooq PESTLE
analysis).
Political factor: These are about the government intervention in the economy and the business.
It includes governmental policy, labour laws, tax policy and so on. TESCO operates in the 12
different countries and because of this it is exposed to many political factors of different
countries and they affects its operations. For example, import duty on goods is increased then it
will negatively impact TESCO because TESCO imports some inventory from outside UK like
China and East Asia.
Economical factors: These factors have significant impact on the organisation. It includes
interest rates, exchange rates, inflation, economic growth etc. There are many factors that affect
TESCO i.e. price, profit and cost. TESCO must focus on the increasing borrowing cost in UK.
The increase in borrowing cost will lead to increase in the cost and price of products in TESCO
and decrease its profits. It will negatively affect the brand reputation of the TESCO.
Social factors: Also known as socio- cultural factors and involves the shared belief and the
attitudes of the population. Consumer shopping trends are constantly changing overtime. It can
be positively affecting TESCO because it is an opportunity because the demand for goods and
services is related to the consumer beliefs and attitudes. Obesity is another issue in the society
and this can have a positive impact on TESCO as it can use it as an opportunity.
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Technological factors: Technology is a factors which changes very fast and impacts the
organisation. The advancement in technology has brought various new opportunities for TESCO.
Technological up-gradation has impacted TESCO positively because due to technology up
gradation TESCO has developed online shopping with the facility of the home delivery system.
And secondly TESCO has started service checkout points which provides convenience and ease
for the customer and it has positively reduced the labour cost for TESCO.
Legal factors: These factors includes health and safety, consumer rights and laws, product
labelling and product safety. It is necessary for a company to know what is legal and what is not
legal in order to trade successfully. If the organisation trades on global level than it becomes
tricky to be right because every country has its own set of rules and regulations. Government
policies and legislations also impacts the performance of TESCO. For example TESCO faced a
legal action for accounting fraud and misleading the investors and for this TESCO had to pay
GBP 12 million to settle the legal action. Also the TESCO needs to operate in accordance with
the Food Retailing Commission (FCR).
Environmental factors: This factors has become important due to the increasing scarcity of the
raw materials, pollution targets, doing business in an ethical and sustainable way. This factor is
impacts TESCO positively. TESCO is committed to use renewable sources and generate 100%
of its electricity by 2030. the company promises to minimize the carbon footprint up to 50% by
2020. Also the company's van drivers not only use fuel saving routes but also collects unwanted
plastic bags from customers and recycle them. This creates a positive impact on the company's
image in the eyes of the customers.
P5 Internal and external analysis of the organisation
SWOT analysis is designed to facilitate a realistic, data- driven look at the strengths and
weaknesses of an organisation. It is a technique for assessing the performance, competition, risk
and potential of the business (Tesco SWOT Analysis. 2018). The SWOT analysis of TESCO is
as follows:
Strengths: These are the factors in which the organisation excels and these factors separate its
from its competitors. Strengths of TESCO are as follows:
 High level of customer satisfaction- the company with its dedicated customer relationship
management department has able to achieve a high level of customer satisfaction among
present customer and good brand equity among the potential customer.
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 Strong dealer community- It has good relation among distributor and dealers where the
dealer not only promote company's product but also invest in training sales team.
 TESCO has highly skilled workforce because of time to time successful training and
development of the employees.
 Successful track record of developing new products because of product innovation.
 TESCO has built expertise at entering into the new markets and making success out of
them and building new revenue stream and diversify the economic cycle risk.
Weaknesses: it is a factor which stops the organisation in performing to its best level. The
various weakness of the TESCO is discussed below:
 Some of TESCO' s subsidiaries are not operating well and are more vulnerable to certain
external factors.
 Competitive pressures have led to price wars that have eroded some of the retailers profit
margin.
 Financial planning is not done properly and efficiently.
 The profitability ratio and the net contribution% of TESCO is below the industry average.
 Investment in research and development is below the the fastest growing players in the
industry.
 It is not highly successful at integrating the firm with different work culture.
Opportunities: These are the favourable external forces that gives an organisation a competitive
advantage. The opportunities lying in the market for TESCO is -
 There are opportunities for strategic alliance with other brands and admired companies to
offer more products or attract more consumer in certain target markets.
 There is significant opportunity to grow online shopping for TESCO as well as offer its
home delivery service to more areas.
 Decreasing cost of transportation because of lower shipping prices can also bring down
the cost of TESCO product thus providing an opportunity for the company
 The adoption of new technology standard standard and government free trade agreement
has provided an opportunity to enter a new emerging market.
Threats: It refers to those factors which have the potential to harm an organisation. The threats
faced by TESCO are as follows:
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 No regular supply of innovative products and the supply of new products is not regular
thus leading to high and low swings in the sales
 Rising raw material prices can pose a threat for the company.
 New technologies developed by the competitors are a serious threat to the industry.
 Growing strength of local distributors also poses a threat in some markets as the
competition is paying higher margins to the local distributors.
P6 Interrelation among the strength and weaknesses with the macro environment
There is a strong relationship between the strength and weaknesses of the organisation
with its macro environment.
Strength with macro environment
 High level of customer satisfaction- this can be maintained by properly studying the
social factor of PESTLE analysis because it deals with the psychology of the human and
mindset and behaviour of the employees.
 TESCO has highly skilled workforce because of time to time successful training and
development of the employees. This strength can be maintained by proper study of
technological factor and changes in the technology and adapting to those changes.
 Strong dealer community- This factor can be maintained and improvised by focusing on
the social factor because it deals with the behaviour and the psychology of the dealers.
Weaknesses with macro environment
 Some of TESCO' s subsidiaries are not operating well and are more vulnerable to certain
external factors. This weakness can be overcome by the proper analysis of technological
and economical factors. It is so because if the closure is due to the obsolete technology
then with help of study of technology it can be overcome.
 Competitive pressures have led to price wars that have eroded some of the retailers profit
margin. This weakness can be overlooked by the thorough study of the environmental
factors.
CONCLUSION
After the study of the whole report it is concluded that business environment is very
important for the working of the business smoothly. The report outlines the different types of
organisation like public, private and voluntary organisation with its purpose and legal structure.
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Further the report discusses the size and scope of the different types of the organisation. The
report further outlines the relationship among the different organisational functions and their link
with the organisational objectives and the structure. After that the report highlights the positive
and negative impact of the macro environment on the business operations. This is done with
help of PESTLE analysis. Further to know the strengths and weaknesses of the organisation's
internal and external environment SWOT analysis is used to conduct the analysis. At last the
report outlines the interrelationship between the strengths and weakness of the organisation with
the external macro environment.
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REFERENCES
Books and journals
Apăvăloaie, E.I., 2014. The impact of the internet on the business environment. Procedia
Economics and finance. 15. pp.951-958.
Botha, A., Kourie, D. and Snyman, R., 2014. Coping with continuous change in the business
environment: Knowledge management and knowledge management technology.
Elsevier.
Gallemore, J. and Labro, E., 2015. The importance of the internal information environment for
tax avoidance. Journal of Accounting and Economics. 60(1). pp.149-167.
Huang-Horowitz, N.C., 2015. Public relations in the small business environment: Creating
identity and building reputation. Public Relations Review. 41(3). pp.345-353.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Kuratko, D.F., Hornsby, J.S. and Covin, J.G., 2014. Diagnosing a firm's internal environment for
corporate entrepreneurship. Business Horizons. 57(1). pp.37-47.
Meiners, R.E., Ringleb, A.H. and Edwards, F.L., 2014. The legal environment of business.
Cengage Learning.
Raziq, A. and Maulabakhsh, R., 2015. Impact of working environment on job
satisfaction. Procedia Economics and Finance. 23. pp.717-725.
Saleem, S., 2015. BUSINESS ENVIRONMENT, 3/e. Pearson Education India.
Online
Tesco SWOT Analysis. 2018[Online]. Available through:
<https://www.learnmarketing.net/SWOTTesco.html>.
Umar Farooq PESTLE analysis[Online]. Available through:
<https://www.marketingtutor.net/tesco-pestle-analysis/>.
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