Business Environment and Organizational Structure Analysis

This document requires the student to analyze Tesco's business environment, including its external factors such as PEST analysis, and internal factors such as organizational structure. The student must also discuss the company's strengths and weaknesses in terms of its business environment and organizational structure.

BUSINESSES AND
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1. Different types, purposes and legal structure of organisations...........................................3
2. Size and Scope of different organisation............................................................................5
TASK 2 ...........................................................................................................................................9
3. The relationship between different organisation function and their link with organisation
objectives and structure..........................................................................................................9
TASK 3..........................................................................................................................................11
P4. The positive and negative impacts of macro environment upon business operation.....11
TASK 4..........................................................................................................................................13
P5. Internal and external analysis of an organisation to identify strengths and weaknesses13
P6. Interrelation of strengths and weaknesses with external macro factors.........................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Business environment refers to process of collection or sum of internal and external
factors like customers needs as well as expectation, employees, supply, demand, clients, owner,
innovation in technology, social trends, market trends economic changes etc. It helps
organisation in identifying the business opportunities, tapping useful resources, improves overall
performance, assists in planning and profitability (Business Environment. 2019). The KFC is an
American fast food restaurants chain as specialised in fried chicken and also known as Kentucky
Fried Chicken. It is considered as second largest restaurants chain in all overall world. This
report includes the different types of organisation purposes and it's legal structure. The size or
scope of different organisations and to link between objectives and product & services offered by
companies. The relationship between organisations and link with objectives or to structure of a
company. Positive and negative impact of PESTLE analysis on business objectives or decision
making. The SWOT analysis and way through which decision making of organisation is
influence. The interrelate strength and weakness of external factors.
TASK 1
1. Different types, purposes and legal structure of organisations.
There are various types of organisation like public, private and voluntary to run a
successful businesses (Adeoye and Elegunde, 2012). They are different in every aspects like
purpose, size, scope as well as activities offered by organisations. Some are concern with profit
and other are not concern ti run higher profits in company. There are different types of
organisation are:-
 Public organisation:- It refers to organisation which is owned, regulated or operates by
government as it's exist to provide services to citizens. The public sector organisation
don't seek for profits and funds or investments are raised through different methods like
fees, taxes as well as financial transfers from other level of government. HM Revenue
and Custom is the UK's tax, payments and custom authority and formed by the UK
government in 2005.
Purpose:- The main object of this company is to gather the fund which pay pays for the
UK's public services and help families or individuals by targeting financial support.

Legal structure:- It refers to structure as according to which organisation is liable to
work in local area, at state level and national level.
1. Local government:- It refers to law which is formed for public administration in local
areas such as in cities or town (Andersson, Forsgren and Holm, 2015). Operation
management decisions are not impacted at large level. The manufacturing is only effected
by local laws. Strategic decisions of company is not effected local administration.
2. State government:- It refers to unit of government which is specialised in enforces or
making laws for a state. The country is subdivision in a federal form of government as
which shares political power with national or federal government.
3. Central government:- It refers to political authority that governs the entire nation. As
they have a power to make laws for whole country, in contrast with local government.
This kind of authorities are responsible for several policies like national environment
policy which are directed as to make contribution towards sustainable economic
development. These kind of organisations are established by the government to generate
employment and work for the society and earn profit.
 Private organisation:- It refers to organisation which is run by individuals and
companies, rather than by government (Avramenko, 2012). Mostly, private sector
organisation are run to make huge profit. The KFC is a private organisation, as
specialised fried chicken fast food restaurants in all over world. They operates in 123
countries and territories. To form a private company certain legal structure must be
completed are Memorandum of association and article of association.
Purpose:- KFC wants to offer best quality products in time to their customers and wants
to make customers happy.
Legal structure:- The private organisation legal structure are:-
1. Partnership:- It refers to structure where two or more parties are involve or come
together for undertaking a lawful business and agreed to share the profit or loss of
business arise by company. They are agreed to pool their money, resources and skills for
business.
2. Sole trader:- It refers to simple business arrangement, wherein an individuals runs and
owns the entire business. They are self employed in organisation, but they are not the

only worker within the business. It's a common or easiest from of structure for new
business as well as for entrepreneurs.
3. Private limited company:- It refers to company in which owners are legally responsible
for losses only to that extent of money they invested in business. It's a good structure or
flexible for appointing shareholders, tax efficient and employing staff.
 Voluntary organisation:- It refers to organisation whose purpose is to enrich or benefits
society or to have less motive towards profits and without government interventions.
They are separate from government but integrated with them at all levels as to supports
delivery of programs and services in time (Babatunde and Adebisi, 2012). They are run
through charity, donations, community groups etc. Save the children is an international
non-governmental organisation, works to provide reliefs & supports to children in
developing countries and promotes children rights.
Purpose:- Save the children main purpose is to provide better education, economic
opportunities, health care and emergency care aids in wars, conflicts or in natural disasters. They
also wants to improve lives of children through providing better life in every aspects.
Legal structure:- The legal structure of voluntary organisation are:-
1. Unincorporated association:- It refers to organisation which is formed by large group of
people without an intention to earn profits. The money is invested in business is for
society improvement.
2. Trust:- It refers to company that act as an agent, trustee or fiduciary on the behalf of a
person and business for the purpose of administration, eventual transfer of assets to a
beneficial party and management. These organisation are not flexible in nature that's why
changes are not bring so easily in organisation.
2. Size and Scope of different organisation.
There are various types of different organisation as according to their size and scope of
business. The organisation are:-
HM Revenue and Custom:-
 Background details:- Her Majesty's Revenue and Custom is a public organisation which
is developed by the government of UK which is a non-ministerial department of the UK
government. The company is founded in 2005 and the responsibility of this firm is to

make collection of taxes and supported other regulatory regimes including the national
minimum wage.
 Vision and Mission:- The mission of HRMC is that the money is available to fund the
UK's public services. The vision of Her Majesty's Revenue and Custom is to bind up and
remove the tax gap so that customer felt that the tax system is easy for them and it can be
shown as highly professional and efficient enterprise.
 Business objectives:- To facilitate legitimate international trade to protect the UK's fiscal
policy and collect UK trade statistics. By providing help individuals and families with
targeted financial support by payment of tax credit.
 Size and Scope:- In this firm, there are 56,000 people who are working under this firm
and the annual income of is £4.09 billion. There are wide scope of this firm like
maximise revenues due and bear down on avoidance or implement tax and payments to
their customers.
 Product and services:- HMRC provide various services like child benefits, capital
allowance, investments schemes and several other public services which help families by
providing financial support (Babu, 2012).
 Organisational structure:- This company follow hierarchical organisational structure
because the department of this company is organised four operational groups like
personal tax, business tax, benefits & credit and customer compliance or group which is
led by a director general.

Sources:- (Organisation structure. 2019) Stakeholder:- The stakeholder of this firm are government, customer, suppliers,
employees and others.
KFC are:-
 Background details:- It is also known as Kentucky Fried Chicken, American fast food
chain specialised in fried chickens. It is a second largest restaurant chain in all over
world.
 Vision and Mission:- The KFC have same Vision and mission statement which is ' to
sell food in less time, environment must be friendly which appeals to price conscious and
provide healthy products to it's customers.
 Business objectives:- The objectives of KFC is to increase emerging market profit from
48% to 57%. They also wants to increase number of units from 65 to 2,100 in 2020 in
Africa region.
 Size and Scope:- KFC considered as second largest restaurants chain all over world.
They operates in 20,000 locations in 123 countries.
 Product and services:- The products and services of KFC are fried chicken, chicken
sandwiches, wraps, French fries, soft drinks, salads, desserts, krushems and breakfast.
Illustration 1: Tesco organizational structure at store level

 Organisational structure:- The organisation structure which KFC follow is Global
Hierarchical structure as they run series of restaurant chain (Belás and et. al., 2015). The
drawback of this structure is top management employees are liable to make decisions in
organisation. Stakeholder:- The main stakeholder of KFC are CEO, managers, customers, store
employees, suppliers etc.
Save the children:-
 Background details:- It is known for an international non-governmental organisation
which promotes children rights, provide relief for children. It was establish in 1919 to
improves children lives in UK by providing better education and economic opportunities.
 Vision and Mission:- The vision is “ create a world so that every children can attain right
to survive, development, participation and protection. The mission is “ to inspire people
by breakthrough in a way so that world treat children in a better way and long-lasting
changes in their lives.
 Business objectives:- The main objective of save the children is to protect children for
defending their rights and for sensitizing people. It also fight against sex discrimination.
 Size and Scope:- They want to provide healthy life to children of society and size of
organisation is very large as they operates in more than 120 countries all over world.
 Product and services:- They work for improving children lives as well as providing
emergency aids to children in wars, natural disasters and other conflicts (Bocken and et.
al., 2013). They also work for developing countries through supporting children.
 Organisational structure:- The save the children organisation follows network
structure as they operates at global level as it required systematised organisation
structure.
 Stakeholder:- The main stakeholder of save the children are trustees, volunteers,
sponsors etc.
With the help of size and structure of the company, save the children reached more than 157
million children and provide its se5rvices to them. This firm worked in over 120 countries
including UK where it help 683,000 children by providing lifesaving supplies and emotional
support such as food, education, shelter and others.

TASK 2
3. The relationship between different organisation function and their link with organisation
objectives and structure.
KFC Ltd:-
It is known as American fast food restaurants who is specialised in providing fried
chicken to it's customers. It is considered as second largest restaurant chains. They operates in
123 countries at global level (Carroll and Buchholtz, 2014). The relationship between
department of organisation are:-
 Marketing with Human resource:- The marketing is essential function in every
organisation and every organisation must maintain coordination with marketing
department. The potential candidate is hired by organisation when they conduct effective
marketing of company (Boons and Lüdeke-Freund, 2013). When, the marketing
department need some employees or worker for marketing department then HR
department organise recruitment to hire candidates. If potential and talented employees
are hired by organisation then it is very easy to accomplished it's organisation or
objectives in time as well as structured is also followed in organisation. Decision making
is only done by higher authority of an organisation.
 Sales with research & development:- To increase the sales of products and services
offered by organisation must be possible by conducting marketing research. With the
help of research and development demand of a product can be maximised. For example,
if the company want to increase the sales of the company, it need the help of R&D
department so that with the help of it, they can conduct market analysis and find out the
needs and demands of the customers. So that they can make innovation in its products
and satisfy consumers demands. The market analysis is essential to conduct in business
as to maximise the profit by increasing the sales.
Advantages:- If relationship or coordination is maintained in KFC organisation between
departments then objectives are timely accomplished. If research and development is effectively
conducted then demand of products can be increased by making products according to customers
as well as sales of company will also be increased.
Disadvantage:- Advertisement of vacancy in organisation is done properly then it is very
difficult to hire potential employee in organisation.

 Food and beverage with research & development:- The KFC operates at global level
and every region people has it's own taste or preferences towards food. To analysis the
need and preferences of every region or country it's very important to make
coordination with research and development so that food can be offered accordingly to
them. To provide food according customers so that sales can increased in organisation
then analysis of market is important. The objectives to maximise profit is only possible
when organisation provide food according to customer preferences. The decision
making can be taken by top management only. So, that effective decisions are made in
organisation.
Advantage:- If coordination is maintain then food is provided according to customers
need and preferences. The profit as well as sales of organisation can be maximised.
Disadvantage:- If relationship is not maintained then company faced difficulty to offer
products according to customers at global market.
 Finance with marketing:- The relationship between finance and marketing is important
because finance department provide fund to marketing department so that they can
develop products and fulfil consumers needs. Whereas marketing department help the
finance department by gaining profit and generating revenue through the sales of
products and services and enhance the economic condition of the firm (Cohen and
Kietzmann, 2014). It's essential to promote products so that huge amount of funds can be
generated marketing. Objectives are only achieved when huge funds are gathered then
only lives of children can be improved by organisation. The interrelation of these two
functions of company is essential.
Advantage:- To improve the financial condition of the company by increasing sales and
generating revenue.
Disadvantage:- If promotion is not done effectively, then it is very difficult to gather
funds as well as accomplish desired objectives of organisation.

TASK 3
P4. The positive and negative impacts of macro environment upon business operation
Macro environment is the external analysis in which political, economical, social,
technological, environmental and legal factor are included which influenced the business
strategies and decision making of the company. So it is important to analyse these factors and the
PESTEL analysis of KFC is as following:
Political - This factor include tax policies, fiscal policy, price policy, trade tariffs and others that
the government may levy around the fiscal year and it may affect the business environment to a
great extent. For example, KFC follow all the policies of the government in the location where
they run their business. In its price policy, the company formulated it, according to the different
income group of the customers so that they can easily purchase its products and influence its
decision making.
Positive- KFC did not need to make change in its policies cause of government stability
so it focus on improving its business strategy. So that it can achieve its business objectives and
can make positive impact on the decision making of the company.
Negative- KFC operate its business in various countries such as Africa, China, India and
others where political fluctuation is common that negatively impacted the business of the
company and decision making of the management department.
Economical - It include foreign exchange rate, inflation rate and others which may affect the
business operation of a company (Gupta, 2013). For example, UK faced economic recession
which affected the economic landscape of the organisation that restrict businesses like KFC to
improve their financial growth.
Positive- UK Government is trying to provide various opportunities such as low tax rate
over business operation to make improvement in the economic condition of the country which is
a great opportunity for the growth of KFC.
Negative- Cause of economic recession, the buying behaviour and purchasing power of
customers reduced which create negative impact on the current profit rate of KFC. Many
countries have slow economic growth which affects in sales reduction of this company.
Social- This factor includes consumers needs, tastes and preferences, cultural trends, population,
classes etc. KFC targetted all classes; for example, KFC adopted the Pakistani cultures. It is not
only adopted culture but also the religion also and it offer Halal food to the customers.

Positive- KFC targeted all the classes to increase the profit of the company. It provide
good quality and healthy food to its customers which positively influence the sales and
productivity of the company.
Negative- KFC has been the target of an-campaign by the animal rights organisation
PETA. In spite of KFC executives have protested that the Yum chain is unfairly singled out for
criticism (Hillary, 2017). This create negative impact on the business and the decision making of
KFC.
Technological- It is pertains to innovations in technology that may affect the operations of the
industry. This refers to automation, research & development and the amount of technological
awareness. For example, KFC do market market research and identified its target customers and
developed or launched ordering and payment app that make it easy to customers to place their
orders through mobile phones and pay online.
Positive- In UK, people are more active on social site which is a positive factor for KFC
to promote its products and services or provide information about them. It create brand
awareness at low cost and help in increasing the consumer line.
Negative- Now these days various technologies are developed and if KFC will not adopt
them its business will be affected negatively. For example if KFC will not use social media to
promote or advertise its products, it will not create awareness about its products which
negatively impacted its profit and decision making.
Environmental- This factor include climate, weather, geographical location, global change in
climate, environmental offsets, laws and regulations etc. KFC follow all the rules and regulations
of environmental laws and
Positive- In the packaging of the products, KFC use paper material which is a positive
thing for the environment because with this decision the organisation are not harming the
environment and it create positive impact on its business.
Negative- KFC buying this paper material from a company who contributes in
deforestation in order to make paper (Hilton and Platt, 2013). This paper company also employs
underage children to a part of their workforce in order to pay fewer wages to them. This affected
the business of the company in negative manner and
Legal- It include various laws such as employment legislation, consumer law, health and safety
law and several others. For example, KFC follow all these laws and regulations and where it

operate its business, the company provide equal payment to those employees who work under it
and provide security form harassment and discrimination.
Positive- KFC provide all the benefits and compensations such as incentives,
accommodation, insurance etc. to its employees according to discrimination and equal payment
act. This create positive impact on its economic growth because employees will be loyal for it
and do their work with more effectiveness that increase the profit and productivity of the
company.
Negative- KFC recently suffered from a rumour of animal cruelty, it means this company
is not following animal protection act so its influence the decision making and productivity of
the firm.
TASK 4
P5. Internal and external analysis of an organisation to identify strengths and weaknesses
To determine the internal and external analysis of the company, organisation conduct
SWOT analysis. It is a strategic planning techniques which is used by organisations to identify
strengths, weaknesses, opportunities and threats related to its business.
SWOT analysis of KFC
Strengths- KFC has strong brand images and is the world's second largest restaurant chain with
more than 18,000 KFC outlets in 120 countries. This company provide good quality products to
its consumers so have loyal customer base. It offers variety of food or according their regions in
which they operates; for example, in India it offers veg food to vegetarian customers and to non
vegetarian along with chicken (Jennings, 2014). This influence the decision making in positive
manner because this way, the company fulfil the needs of both customers and the economic
condition of the organisation is impacted positively.
Weaknesses- Now these days, people prefer organic food but KFC produces or offer high fat
and high calorie which is not good for health. This company has been criticized for allegedly
causing harm to environment and animals that hurts the brand image of the company. Due to
conflicting operational issues between KFC and its franchises, many of its outlets got closed. All
these issues negatively impacted the decision making of the company cause of these issues, the
firm can reduce its employees and customers also.

Opportunities- KFC can grape various opportunities by exploring new food items in its menu
which are healthy or low in facts and calories. By expanding its business to new geographies, it
can increase their market share and revenue. It create positive impact on the decision making
because by making innovation in its products, KFC can expand its business and fulfil the
demands of its various customers.
Threats- There are various competitor of KFC in the market such as McDonald's, Pizza Hut,
Dominos, Subway, Burger King and others which generate threats for the business of this
company. Changing in consumers tastes and preferences is also a threat for the growth of the
company because now these people prefer healthy food (Savrul, Incekara and Sener, 2014).
Currency fluctuation is an another threat for the firm and its influences the economic condition
and decision making of the company.
SWOT analysis of Tesco
Strengths Weaknesses
 Tesco is one of the largest company
which is primary listing on the London
Stock exchange.
 This company has over 500,000+
employees all over the world and 6500
stores in 14 countries.
 The company faced controversies
which created issues and problems for
its business. This affect the decision
making and sales of the company as
well.
 Tesco has limited presence in emerging
countries to few competitors.
Opportunities Threats
 Cause of digital media, it has various
opportunities to expand its business.
Because it operate its business in
various countries and their is can use
internet and social media which create
positive impact on the decision making
of the firm.
 By making innovation in its products,
Tesco can grape various opportunities
 There are various competitor such as
Walmart, Amazon, Sainsbury and
others which create threats for the
business of Tesco.
 Change in government policies and
taxation rate can affect business
operation of this firm. By using digital
marketing, they can revise their
marketing policies to take in order to

to expand into overseas market that are
growing.
take consideration of any legislation.
P6. Interrelation of strengths and weaknesses with external macro factors
Analysis of macro environmental factor will help an organisation in improving its image
and performance at marketplace by monitoring several opportunities and threats present in
external environment. In order to achieve maximum benefits KFC must determine the strengths
and weaknesses of particular macro environmental factor for formulating strategies accordingly:
Political- KFC operate its business world wide and some of countries make change in its
policies. This political fluctuation create issues for the business of the company. The
management department of the company, formulated the price policy of the company according
to its targetted classes so that they can easily purchase the product. For example, in China the
government make change in its taxation policy that affect the growth of the company but when
this change reduce the rate of tax, it can be show like the strength of the firm.
Economical- In UK, slow economic growth and economic recession generate negative impact
on the business of the firm and occur in the from of weakness for the company (Siewiorek and
et. al., 2012). In UK, the government provide low tax rate to expand the business of KFC and
achieve the growth opportunities. This positively affected the business of the firm and enhance
the economic condition of its. In UK, the government provide low tax rate to expand the business
of the company which can create positive affect on the business of the company.
Social- KFC provide good quality food according to its customers needs and their culture of
religion also. Such as in Pakistan, it offer Halal food to its customers which is the strength of it.
Now these days people prefer organic food with low fat and low calories. But KFC produces
high fat and high calories food products, it negatively influence the decision making of the
company. Now these these days, the tests & preferences of consumers are change and they prefer
digital marketing for purchasing products so by using e-commerce and others the company can
fulfil its customers demands. It also help the company to increasing sales and decision making
also.
Technological- KFC use new technologies and produces its products according them such as
with the help of online order and payment app, it positively influence the sales and profit of the
company (Zeng and Duan, 2012). KFC do not use latest technology such as online training and

others to provide training to its employees so there are low performance and high turnover. By
using digital technology like social media, internet and other channels of promotion the company
can create positive impact on the company by increasing the sales of the firm.
Environmental- The organisation follow the environmental laws such as protection act,
environmental law and its product packaging the management department of the company use
paper material so save the environment. This organisation purchasing this paper material form a
from a company who contributes in deforestation, it generate threats and issues for the company.
By following the environmental, pollution and recycling laws, the company can reduce the
pollution and save the environment and manage the inventory. This create positive impact on the
social as well as organisational environment.
Legal- KFC following all the laws and legislations such as equality law, discrimination law and
health and safety law and provide all the benefits to its employees which are comes under these
laws. So the employees show their loyalty and work with all their efforts or help in achieving the
organisational growth. But now days, this company suffered fro animal cruelty rumour and
according to the data, it is heard about the company that is not following the animal protection
act. Change in laws and regulations affect the business of the company in negative manner such
as in China, the government of that country make change in its laws which affect the business of
the firm.
CONCLUSION
From the above report can be concluded about the different types and purposes of
organisations such as public, private and voluntary sectors and their legal structure. The
Structure, size and scope of these organisations are explained along with their business
objectives or products and services that are offered by the companies. The relationship between
different organisational functions, organisational objectives and structures are defined. PESTEL
model are explained to identify the positive and negative impacts of macro environments upon
business operations. SWOT analysis is described to find out the strengths and weaknesses of
companies and the interrelation of strengths and weaknesses are also defined with the external
macro factors.

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