Types and Purpose of Companies: Sainsbury Case Study

This report examines the different types and purposes of companies, the interrelation between different organizational functions, and the positive and negative impact of macro environmental factors on Sainsbury. It also includes an internal analysis of the company to identify its strengths and weaknesses.

BUSINESS AND BUSINESS
ENVIORNMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
PART 1:...........................................................................................................................................3
Different types and purpose of companies..................................................................................3
Size and scope and Legal structure associated under different types of business organization: 6
Interrelation between different organization function.................................................................6
PART 2............................................................................................................................................8
Positive and negative impact of macro environmental factors over company............................8
Internal analysis of company to identify the strength and weakness of company......................9
Interrelation between strength and weakness with external factors..........................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment refers to the process of collection of all internal and external
factors which affecting the working of the organization. It refers to the individuals, suppliers,
customers, employees, government and other aspects which are linked up with the business. The
sustainability and growth of the business are determined through the managing the internal and
external activities in better way (Blackley, Resnick and Cassidy, 2017). Present report is based
upon the study of the Sainsbury Company which is carries to be the second largest chain of
supermarket in UK. The concept is brought by John James Sainsbury in 1869 which dealing in
wider number of location.
This report covers the matters relating to examining the different types, size and scope of
organization. It also covers the matters relating to examining the interrelationship between the
various function in the organization and their link with the other organization structure. It further
includes the matters relating to examining the macro environment factors affecting the working
of the organization. At last the report ends up with conducting the SWOT analysis and its
interrelationship with the external factors.
PART 1:
Different types and purpose of companies
Factors Profits (Sainsbury) Not for profits (BBC) Non-government
organization
(Oxflam)
Meaning It refers to such
company who offer
shares to the
company with the
motive to earn profits
(Brennan, Canning
and McDowell,
2020). They carry
less strict rules as
comparison to the
It refers to such
company which main
motive is to serve the
best services to the
customer and are
freely traded on the
stock exchange.
It refers to such
company which work
for the concern of the
human and also
reduce the impact of
poverty in the
country.

public company.
Objectives They carry the
objectives in respect
of delivering best
quality services to
the customer and
earn more profits
through expanding
the business.
The business carry
the four major
strategic objectives
such as high quality
services or serving
all the persons,
innovative in the
business or carrying
transparency and
openness.
The objectives of
Oxfam is providing
education to the
children or fair trade
between the parties
which not afford the
lawyers to get fair
decision and also
campaign for public
welfare (Burton,
Yamin and Young,
2016).
Market share They carry the 16.0%
market share through
providing good
discount on certain
products.
They carry the
market share of
around 31.57%
which is increasing
in upcoming year.
The business is deal
with around 19
charitable
organization which
helps in reducing the
poverty in the
country.
Organizational
structure
Sainsbury carry the
hierarchy structure in
which every
department carry the
senior staff to
manage the interest
of employees in
better way.
They also carry the
hierarchy structure in
which they recruited
every senior staff to
manage their staff
(De Boeck and et.al.,
2020).
They carry the flat
organizational
structure in which
employees directly
interact with the
owner and then share
their ideas and
thoughts with them.
Profits share The profits sharing of
the business is higher
but due to not
The profits sharing of
the business is higher
as they not carry the
The profits sharing
results in reducing
the poverty line in

attracting the
customer for longer
way, they fall the
drop in the business
by 92% (Filimonau
and Gherbin, 2017).
motive to earn profits
but maintaining
quality in the
services.
the country and also
people are getting
food and basic
necessity within the
stipulated time
period.
Growth and
sustainability
It is maintained in the
business by reducing
the impact of carbon
footprints and
conducting minute
check of products
quality before
supplying to
customers.
Their main motive is
to work under the set
government norms
and also sustaining
the business in
market for longer
way.
The growth is
maintained in
relation to providing
women and
community, the
adequate security and
also fight against
hunger
(Hadjisolomou,
Newsome and
Cunningham, 2017).
Examining the micro, small, medium sized enterprises.
Micro: It refers to the very small business which is mainly carried by the single person. The
budgets of establishing this budget is very less as €2 million and every such business is carried
by any family members at home only. The business is carried by less than 10 employees. The
objective is to provide quality products to customers.
Small: Such business which are carried at small scale and such business is carried by any person
such as sole trader or in partnership. The business is engaged with around 10 to 50 employees.
The main objectives is to reduce unemployment in the country (Hillary, 2017). Agreement is
made between the parties regarding buying or selling or any goods or services.
Medium sized enterprises: It refers to such business which carry the business at larger scale and
also covered with around 50 to 250 employees. The main objectives of this business is increases
the economy of the country through dealing in wider range of products or services.

Size and scope and Legal structure associated under different types of business organization:
Sole trader: It is also known as the sole proprietor business in which the business is easily
formed by owner itself as it carried less cost to set up the business. In terms of legality, this
business can be set without carrying any prior permission from the government (Hoang, Barnes
and Munroe, 2019). The risk which is attained in the business is faced by the owner itself and
thus can borrow funds from the family members or friends.
Partnership: This is formed when two or more person agree to carry the same business or sign
the partnership deed to carry the single business. In respect of formation of business, it is formed
by the partners by investing equal amount of money in business. To carry the business at large
scale, the business must be registered under the partnership act. The partner enjoy the profits
equally or also share losses in equal way (Johnes, 2019).
Private limited companies: These companies are legally formed if they are registered under the
companies’ house and after getting certification, they carry the business at large scale. The
business is owned and managed by the owners and directors. They can also borrow loan from
banks and also issue share in public through borrowing investment to manage the business.
Interrelation between different organization function
The business includes the different types of function to be performed for the success of
the company. This is necessary because of the fact that if the business will not perform its
business functions in effective and efficient manner. Along with the function of business sit is
very necessary for Sainsbury to manage its organizational structure in effective manner. The
organizational structure is defined as the structure of reporting within the company.
This can also be defined as the chain of command and reporting that is who will
command to whom and which employee will report to which senior. This organizational
structure help Sainsbury in defining that which work will be done by whom and in which time
and with which proficiency (Jones and Comfort, 2020). The structure being used by Sainsbury is
the hierarchical structure. This is a structure in the every department has one subordinate and that
subordinate has further more subordinate and this makes a hierarchy of people.

Figure: hierarchical structure of Sainsbury.
(Source: What is a tall hierarchical structure? 2018)
Now it is clear that it is very necessary for the company to have effective organizational
structure. But along with this it is also necessary that Sainsbury also manages it business
functions and other department of company in effective manner (Lillard and Al-Suqri, 2019).
This is necessary because of the fact that if one business department will not work in effective
manner then this will also have impact over other department as well. This is majorly because of
the reason that the entire business department are interconnected with one another.
Marketing with finance- the finance is the most important thing in success of business.
This is because without money no work can be done in business. On the other side marketing is
the department which deals in promotion of business and this includes high amount of money.
Thus, the marketing department makes an assumed budget of whole marketing activities and
passes on to finance department. The finance department if they feel it good then they approve it
and allocate the money to them.
IT and research and development- this is also important business functions as both are
very important for Sainsbury and its success. This is because in the field of technology there are
many up gradations and research and development is the department which continuously
researches for the latest changes taking place in market (Naidoo and Gasparatos, 2018). Thus,
these are interrelated because the IT department assist research and development department in
using latest techniques for doing the research.

PART 2
Positive and negative impact of macro environmental factors over company
PESTLE is the framework in the organization which used to look at the macro environment of
the organization and used to check the viability of the business on the basis of different external
factor.
 Political Factor: Political factor are very favourable for Sainsbury, as there is good
amount of political stability in the nation this eventually used to help the company in
carrying out the same policy for longer period in the company. At the same time political
decision like brexit in UK has created variety of the issue for the organization. Sainsbury
has to pay more amount of money to perform the trade activity with the neighbouring
country in the nation. As there will be many restriction for organization (Perera, 2017).
 Economic Factor: This factor is moderate for Sainsbury. As UK economy is one of
strongest economy. Interest rate and inflation rate is at favourable side. This eventually
used to help the company in getting better amount of finance very comfortably in the
nation. At the same time rate of petrol and water is very high in the UK this eventually
used to impact the performance of Sainsbury in negative way. As organization has to
invest good amount of money in transportation activity (Nash, 2019). At the same time
higher rate of water in the nation generally used to increase cost of product manufacture
in the organization.
 Social factor: Social factor are not that favourable for organization, as need and
preference of customer in the organization used to change on regular basis. This
eventually used to create the situation in the organization where Sainsbury has to take
variety of the innovation to satisfy need of customer in the organization. At the same time
organization with the help of new technology and market research in the organization is
able to satisfy the need of different needy customer very efficiently in organization. Also
organizations used to offer variety of different variant product in the organization this
eventually help the company in satisfying the need of different customer in the
organization.
 Technology factor: In rapidly changing environment it get very difficult for organization
to understand the best technology which can be used by the organization to carry out
different operation in the organization (Ramanathan and et.al., 2017). This eventually

used to create variety of negative impact on the operation of Sainsbury. At the same time
by understanding the best technology organization always look to offer the new and good
quality of product in the organization (Ramanathan and et.al., 2017). This eventually used
to help the organization in getting competitive advantage in the organization and
eventually used to bring positive impact in the organization.
 Environmental factor: These factors are not that favourable but with the help of different
organizational activity organization is able to defend different environmental factor in the
organization. As defending different environmental factor used to increase the expenses
of company. At the same time to defend different environmental factor in the
organization, Sainsbury used to use different recycled raw material in the organization in
their packaging activity. This eventually used to help the company in satisfying variety of
environmental factor. This used to positively impact the performance of the business as it
used to help the company in building good image of company in front of consumer in the
market (Achinas and et.al., 2019).
 Legal factor: This factor is moderate for the organization. As it has been find out that
Sainsbury generally used to follow variety of legal formality in the organization. This
eventually used to help the organization in presenting good image of the company in
front of other in the market and positively impact the goodwill of the company. At the
same time organization used to follow different legal formality in the organization, this
eventually used to impact the efficiency of the business. As organization has to take
different permission to carry out different operation in the organization.
Internal analysis of company to identify the strength and weakness of company
SWOT is internal framework which is generally used by the organization to understand the
internal position of the business in the market.
Strength
Financial position: This is the biggest strength of the organization. As it has been find
out that with the help of good earning in last decade Sainsbury is able to build a good sort of
financial position in the organization. Also organization is able to maintain a good amount of
financial position in the market.

Product line: Also, Sainsbury is having good sort of product line in the market to satisfy
the need of different customer in the market. This eventually used to help the company in getting
good customer base in the market.
Weakness
Profit margin: This is one of the biggest weaknesses of the organization. As to be
competitive in the market organization has to lower down the profit margin of the product in the
market this eventually used to help the company in sacrificing good amount of profit margin in
the market.
Outdated technique: It has been also seen in the market that organization used to use
outdated technique in the market to carry out variety of the operation of the business. This
eventually used to impact the performance of the business in the long run as organization used to
dealt in heavily competitive market (Gürel and Tat, 2017).
Opportunity
New technology: There is good opportunity in front of the Sainsbury that they used to
adopt new technology in the organization to carry out different activity in the organization. Also
as organization is having good financial position in the market this will eventually help the
company in getting good amount of the money to buy new technology. New technology will also
help the organization in developing good quality of product in the organization.
Threat
Competition: Competition is one of the biggest threats present in front of Sainsbury to carry out
different operation in the market. As organization used to operate in heavily competitive
environment. This eventually is one of the biggest threats for the company as company has to
sacrifice good amount of market share in the market (Phadermrod, Crowder and Wills, 2019).
Interrelation between strength and weakness with external factors
With the analysis of the above tow model it is clear that it is very necessary for Sainsbury
to analyse both the internal as well as external environment. This is majorly because of the
reason that both the internal and external environment is interrelated with one another and this is
very necessary for the success of the company.
For the opportunity of technological advancement can be grabbed with the help of the
strong financial position (Sullivan and Gouldson, 2016). This is majorly because of the reason
that in this highly competitive and globalised world there is much different advancement in

technology. For adapting to this technological advancement there is high requirement of money
and this is the major strength of Sainsbury. Thus, this strength will help company in adapting to
the latest technology which is an external environment.
In the same way the threat are also die to either weakness of company or the points in
which the company is not good (Swaffield, Evans and Welch, 2018). Here the threat is an
external point and weakness of company is internal to the organization and these are
interconnected. The major threat of company is the high competition which the company faces
due to the global business environment. Also, the company is having the weakness of outdated
technology and this weakness restrict the company in overcoming the threat of high competition.
This is majorly because of the reason that because of outdated technology Sainsbury is not able
to manage and face the competition. Thus, this restricts the company in managing the
competition and this places the company in position of high losses.
Hence, in the end it can be said that for getting success it is very necessary for Sainsbury
to manage both the internal and external environment and interlink all the positive and negative
aspect both the different environment (Tidy, Wang and Hall, 2016).
CONCLUSION
In the end it is summarised that analysing the business environment is very important for
the success of the company. This is majorly because of the fact that the companies exist in the
environment which is very dynamic and frequently changing. Hence, it is necessary for company
to manage and accept all changes taking place within the business. The report stated that there
are different types of business like public, private and voluntary and all the companies are
different on basis of legal structure, their formation and all other differentiating points.
Further the interrelation of different organization function like market, sales, finance and
other was discussed. Further the analysis of internal and external environment took place with
help of PESTLE for external and SWOT for internal was done. In the end the discussion took
place over the interrelation between the strength and weakness along with all the opportunities
and threats.

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