Ways in which business, cultural, natural environment shape the business

This article discusses the ways in which business, cultural, and natural environment shape the working of a company. It explores the impact of economic, social, technological, and legal factors on business operations. The study is carried out using Sainsbury as a case study.

CONTEMPORARY
BUISNESS ENVIORNMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
Ways in which business, cultural, natural environment shape the business...............................4
PESTEL and SWOT...................................................................................................................7
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment is the sum total of all the forces and factors which impact the
working of the company to a great extent. This impact can be both positive and negative on the
business because the business environment changes very fact and frequently and this affects the
working of the company to a great extent (Barr and et.al., 2018). This environment includes all
the internal as well external forces including factors like consumers, their need and expectation,
management of company, rules and regulations of government, suppliers, market trends, social
trends, changes in the economy and many other changes.
The business exists in the environment which is very dynamic and frequently changing
and these changes need to be considered by the company. If the company does not take into
consideration these changes then the company cannot work in effective manner as the consumer
will not like the product and services of the company as it is not according to the latest changes.
The business environment is divided in two different types that is internal and external
environment. The internal environment consists of the changes which are taken place in the
organization itself and the external environment is the environment which exist outside the
business. The changes within the internal environment directly affect the business and its
working but the external environment affect the working of company in indirect manner.
Hence it is very crucial for companies to timely evaluate all the changes taking place in
the environment both internal and external as well. The economy of UK is the sixth largest
economy within the world and the British economy is facing a slow down because of Brexit that
is UK leaving the European Union. The GDP of UK increased by 1.2% only in 2019 as
compared to increase of 1.4% in 2018. The economy of UK was slow in 2019 and is also
expecting to be slow in 2020 because of Brexit only (Country profile United Kingdom, 2016).
Due to Brexit the business investment has decreased and the consumption level has also
weakened and this was because of low income of consumer. All this resulted in slowdown of the
economy of UK as a whole.
The current study will discuss about the fact that how the business is impacted by factors
like culture, nature and environment and other related factors. The study will be carried on with
help of Sainsbury as company. This is a company which is a large chain of supermarket and
retailer founded by John James Sainsbury in the year 1869.

Ways in which business, cultural, natural environment shape the business
The business is operated by people and is operated in the environment which is very
dynamic and changing. Thus, there are many different factors which impact and shape the
behaviour of the company. For this there are many different factors which impacts the working
and operation of company like business culture and environment, economic and non- economic
environment and natural environment (Yassin and Guindy, 2017). All these different factors
affecting the working of Sainsbury are classified as two that is economic and non- economic.
The economic environment includes the factors like economic system, policies and economic
condition of company. On the other hand, non- economic factors are the one which includes
natural, demographic, social, political and other environment. All these different types of
environments affect the working of Sainsbury to a great extent.
Economic factor- These are the factors which are related to the economy of the country
and the decisions taken within the economy of the country. The economic factors affecting and
shaping the working of environment of Sainsbury are as follows-
Economic condition- The economic condition is defined as the status and the level of
working of the economy. The condition of economy can be either inflationary or deflationary.
Thus, this impact the working and profitability level of Sainsbury to a great extent. This is
majorly because of the reason that if the economic condition will be of inflation that is general
price rise then the consumers will not buy more product rather they will just buy their necessities
(Prowle and Lucas, 2016). Thus, this will decrease the income of Sainsbury as the consumer will
not buy unnecessary items. In case of deflation the prices are not much high and this impact the
working of company and business environment because here the price is low and people can
easily afford the product and services of Sainsbury.
Economic policies- These are the policies being created by the government of country in
order to control the influence and control of the whole economy and are monetary and fiscal
policies. These policies decide all the working of the company and the other business within the
economy as a whole (Nikitina and Lapiņa, 2019). Thus, if the economic policies will have more
of the guidelines to be followed then the company has to take more care of all the requirement of
the economy. Thus, for this Sainsbury need to take more care of all the policies. If company will
not consider these requirements, then it will not benefit the company and hence consumer will
not like this.

Economic system- These are the type of economy which is prevailing in the market and
in which the company is operating. There are majorly three type of economy that is social,
capital and mix approach. This economic system also affects the environment and working of
Sainsbury because if there will be social economic system then there will be more government
interference in the working of company (Domanović and Janjić, 2018). This will create
restriction in the working of Sainsbury because of the reason that company will not be able to
work in their manner and has to follow guidelines of government. In other side capital economy
is the one wherein the demand and supply are decided by the private companies only. In this
model of economic system Sainsbury has power to decide and take all decision on their own and
they work in accordance with those directions only.
Here the market economy is much preferred by Sainsbury because this is a system in
which the level of production is decided by the market forces that is demand and supply and
there is not much role of government in it. This is the most effective economic system because of
the reason that here the intervention of government is very low or not at all government
interference. This ensures smooth functioning of the market and the company itself.
Non- economic factors- These are the factors which are not related with the economy of
the country or the any of the related factor.
Organization culture- This refers to as the culture or environment which is prevalent in
the business of Sainsbury. This need to be very effective that is the culture need to be effective
because the employees of Sainsbury work in this environment and if the environment will not be
good and cordial then employees will not be able to work in effective and efficient manner. For
instance, if Sainsbury is having proper flow of direction then this will promote more effective
and efficient working (Susu and Birsan, 2019). This is majorly because of the reason that proper
flow of information creates proper direction to the employees and this make them clear that what
work they have to do. Similarly, if the structure within Sainsbury is not good then nobody will
have clarity of their role and responsibility. Thus, this will impact over the working efficiency of
the employees of Sainsbury. Thus, for effective and profitable working of Sainsbury it is
necessary that company has effective structure.
Natural resources- The company operates in the environment which has very limited and
scarce resources and this need to be taken in to consideration by Sainsbury. This is majorly
because of the reason that if the company will not properly and optimally use the resources then

this will not create a good image of company in the market and among the consumers (Weitzner,
2017). This is pertaining to the fact that if Sainsbury will utilise the resources in proper manner
then this will also save for future consumption. Thus, this will increase the popularity and
goodwill of company because the competition is also high in the market and if Sainsbury will use
the resources in optimum manner then the consumers will like this to a great extent.
Social factors- These are the factors which relates to the beliefs, values attitude of the
people living within the society. It is very necessary for the company to take into consideration
all the trends and belief of the company so that needs and demand of consumer will be fulfilled
in effective manner. For instance, Sainsbury is providing spicy and unhygienic food product but
in the external environment the trend is of consuming healthy and organic food. Then all the
measures and efforts of company will be in vain as the consumer will not like the food as it is not
in accordance with their requirements. Thus, this factor majorly impacts the working of the
company to a great extent because consumers are treated as the king in the market. The major
reason underlying this fact is that all the product and services being provided by Sainsbury is for
the consumers only and if they will not like it then the objective of the company will not be
attained. Hence, this is the most important factor which direct the working in area of satisfaction
of the needs and demand of the consumers. If this will not take place in effective manner, then
the consumers will not purchase the product and services of the company.
Technological factor- In this highly competitive and modern world there are many
different changes taking place in the sector of technology. This is majorly because of the reason
that because of globalization any country can trade with other country. Thus, this integrates
different economies and this brings in different technology in the other countries. This also
impact the working environment of Sainsbury and shape in direction of growth. This is
pertaining to the fact that use of technology limits the human effort and increases the efficiency
of the employees (Ahmed, 2016). Thus, adaption to the latest technology will shape the business
environment of Sainsbury on path of development and growth. But one negative aspect which
can be because of this change is that this increases the total cost of the company. This is majorly
because of the reason that implementation of new technology increases the cost for company as
these are very expensive and also training need to be provided to employees for its operation.
Legal requirements- This is also an important factor in directing and shaping the
business environment of Sainsbury. This is majorly because of the reason that every country has

their own distinct laws and rules and regulations (Amankwah-Amoah and Wang, 2019). Hence,
it is the responsibility of Sainsbury to comply with all the rules and regulations and this will
create a good and effective environment in culture of Sainsbury. Also, the company deals in food
products and it is very necessary for Sainsbury to adhere to all the quality standards and hygiene
factors and regulations. Thus, effective compliance with the rules and regulations will create a
good image of the company among the consumers. This also provides a competitive advantage to
Sainsbury because consumer will prefer the goods and services of Sainsbury over other
competitors because they are following all the rules and regulations and are following all
authentic raw materials.
At last it can be said that for effective working of Sainsbury it is very important they
consider all the factors whether be it internal or external into consideration because the business
exist in environment which is very dynamic and changing.
PESTEL and SWOT
PESTEL analysis- This is used by Sainsbury in analysing the changes taking place in external
environment and impacting the operation of company. Political factor- The major political condition affecting the working of Sainsbury and
providing a threat to the growth of company is Brexit. This is a threat because of the fact
that after Brexit the working of whole economy has slowdown and this resulted in more
political instability which impacted the working of company. Economic factor- This is also decreasing because of the major reason of Brexit because
due to UK leaving the EU all the business has decreased and this resulted in decline in
the value of GBP which again resulted in decrease in earning and income of people. Social factor- This factor provides an opportunity to Sainsbury because the recent trend
of consumers is towards the healthy and organic food and this can be opportunity for
Sainsbury (Belyaeva, 2018). It is so because of the reason that Sainsbury can grab this
opportunity and cater to the need of consumer and this will increase the sales of
company. Technological factor- This is also an opportunity for Sainsbury because there are many
new technology coming in retail sector like of robots, chatbots, data driven analytics,
artificial intelligence, virtual reality and many others (Hamilton and Webster, 2018).

These are opportunity because of the fact that this will increase the efficiency of the
operation of company and will increase the goodwill of company. Environmental factor- This is also an opportunity for Sainsbury if they adhere to all the
possible steps of taking care of environment. For this company can make the packaging
of the products recyclable and reusable along with taking measure for reducing carbon
footprints emitted from the operation or production process. This is an opportunity
because if company will take care of environment then consumer will like it to a great
extent and this will increase the consumer base for company. Legal factor- This can be a threat for the company because there are many different rules
and regulations which the company has to follow. Thus, this is a threat because of the
reason that complying with all the rules and regulation will take a long time and this may
increase the time taken in decision making process as every law need to be checked
whether it is applied in business or not.
SWOT- This is a tool which assist the company in analysing its strengths and weakness which
company is facing and all the opportunities and threats present in the external environment.
Strengths
 The major strength is that company is
having more than 600 supermarkets and
around 800 convenience stores across
UK. This is a strength because of the
fact that it has large market share. Another strength is that the
environment of company is very good
and comfortable and this motivates
employees to work in more effective
manner.
Weakness
 The major weakness of company is that
there is continuous increase in the food
prices all over the world and because of
this the company has to increase its
prices as well.
 Another weakness is that there is low
profit margin within the food business
of the company and competition in it is
very high (Lenart-Gansiniec, ed.,
2018).
Opportunities
 The major opportunity for the
development of company is adapting to
the latest technology prevailing in the
global market.
Threat
 The major threat for the company is the
high competition which is there due to
globalization.
 Another major threat is of impact of

 Another opportunity for company is
that they can enter into the emerging
market with help of joint venture or
strategic alliance.
Brexit over the prices of product.
CONCLUSION
From the above whole study, it was outlined that analysis of business environment is very
necessary for the company to do. This is crucial because of the fact that business exist in
environment which changes very rapidly and all these changes affects the working of business
either in direct or indirect manner. Thus, it is very crucial for companies to analyse each and
every change and its impact over the working and profitability of company. The current report
discussed about the variety of factor which either directly or indirectly affect the productivity and
efficiency of the company to a great extent. The report stated that economic and non- economic
are the factors which affect the working of Sainsbury in both positive and negative way.
Like from the discussion it was outlined that economic condition and economic policies
indirectly impact the working environment of company. This is majorly because of the reason
that these are being changed by the government and of they are being changed then only
company has to implement the changes otherwise not. Similarly, with help of discussion it was
highlighted that some of the factors are such which can have both negative and positive impact
over the environment of Sainsbury. These are like technology, wherein the positive impact is the
increase in the efficiency of the employees and company and the negative point is that this
increases the cost of company. But some factors are such which has positive impact like natural
resources. This is positive impact over the company because optimum utilisation of resources
will help the company in increasing the efficiency of the company and its operations.
Also, with the help of the internal and external environment it was outlined that with help
of PESTEL analysis it was outlined that this is very necessary for the analysis of changes in the
external environment. With this it was concluded that changes in political and economic
environment are threat for Sainsbury and changes in rest of factors is an opportunity for the
company. Also, with the help of internal analysis that is SWOT it was analysed that strength are
the advantages which the company enjoys as advantage over others and these need to maintained
high. The weakness are the points which are low in Sainsbury and good in other competitors.

Also, some opportunity was highlighted like adaption to new technology and entering in new
market. Also, in the end the threats were discussed like high competition and impact of Brexit
over the prices of food products.

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<https://www.nordeatrade.com/en/explore-new-market/united-kingdom/economical-
context>