Impact of Economic and Non-Economic Environment on Organisational Behaviour

This document discusses the impact of economic and non-economic environment on organisational behaviour and its effect on the performance of the company. It includes a literature review on economic systems, economic conditions, and economic policies, as well as non-economic factors such as natural environment, demographics, and organisational culture. The document also includes a discussion on the SWOT analysis of Sainsbury's and recommendations for the company.

Assignment 1
Organization and Business
Environment
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Student Name:
Date of Submission: 30.03.2020
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Table of Contents
1.
INTRODUCTION......................................................................................................................1
1.1 Company background………………………………………………………………………
2
2. Literature review...................................................................................................................2
2.1 The impact of economic environment on organisational behaviour ..............................2
2.1.1 Economic systems........................................................................................................2
2.1.2 Economic conditions....................................................................................................2
2.1.3 Economic policies.........................................................................................................2
2.2 Non-economic environment and its impact on organisational behaviour.......................3
2.2.1 Natural environment.....................................................................................................2
2.2.2 Demographics...............................................................................................................2
2.2.3 Organization culture.....................................................................................................2
3. Discussion and analysis..........................................................................................................5
3.1 SWOT ANALYSIS of Sainsbury's and impact on organisational behaviour.................5
3.2 PESTLE ANALYSIS of Sainsbury's ..............................................................................6
4. Recommendation....................................................................................................................5
5. CONCLUSION......................................................................................................................7
6. REFERENCES.......................................................................................................................8

Abstract
There will be discussion on the what is business environment and how it effect the
business operations of the chosen organisation. There are various economic as well as non -
economic environment which have impact on the performance of the company in their target
segment. The economic factors involved factors such as economic culture, policies and
various another things whereas the non-economic includes factors such as demographic and
organisation culture which have different various impact on the performance of the company.
Further there is discussion on the strength and weakness of the company and their
opportunities and threats present in the work environment. The chosen organisation needs to
have a proper PESTLE analyse for the company to have clear ideas about the factors which
influence the business operations activity of the company in the long run. The chosen
company for this report is Sainsbury’s which operates in the UK market and serving the
large number of audience by providing the various different types of product and services to
the target market. The company also uses tools and technique to examine their internal as
well as external factors which have impact on the productivity of the company in the longer
period of time. The Sainsbury’s evaluate the various another factors which have direct
impact the performance of the company in different international location so that all the
activities are do in effective manner. The company tries to take completive advantages in the
market by giving the best facilities to its customer and build a strong image in the market so
that more customer can be attract to the company and stay for longer period of time in the
target market also able to expand their business at international market. (Aswathappa, Kchen
(1994)

1. INTRODUCTION
The business environment is refers to all the factors which are present in the work
environment such as internal and external factors which have a impact on their productivity and
growth in longer period of time. It includes various things such as employees and customer needs
and expectation from the company and demand and supply of product and services in the target
market segment, the government policies and legal laws, changes in innovation, technology and
social trends and economic influences in the production of the company. (Jone and English,
(2004)
1.1 Company background
Under this report, the Sainsbury’s is chosen which is a second largest supermarket in the
UK market and at the international levels. There will be discussion on the economy in which
company operates and factors that affects the production methods and distribution channel of
goods and services. Discussed as various environment such as business, culture and natural have
impact on their productivity of the company. There are various factors which need to be taken
cared about to have smooth functions in the company, where economic environment include
system, policies and condition and non-economic environment include factors such as natural,
demographic, techniques, social background, legal requirement. Such factors are to be examine
in the favour of the Sainsbury’s, as it is founded by the John James Sainsbury’s in the London
market in the 1869. The company become the largest retailer of the groceries stores by the 1922
years in the market. The company operates under three divisions such as supermarket, bank and
Argos in the target market. It has a largest overall shareholder in the target market which holds
around 30% in the market share and it is also listed on the London stock exchange and earn
around 29.007 billion by the end of the 2019 years with the 116,400 employees in different
stores. In the 2019, the company are able to provide various different product and services to its
customers, goods include different things such as fashionable clothes to home-ware and
electrical devices in the market and various different groceries items. The company have
different subsidiaries which helps in enhancing the production of the company to next level and
expand their business activities in the coming few years. The main aim of the company is to
provide good product and services to its customer to retain the existing customer as well as
attract more customer for the company in the long period of time. (Zapalska et al, 2003)
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2. Literature review
2.1 The impact of economic environment on organisational behaviour
The economic environment in which company operates its business activities play is a
important role for the growth of the company at different location. The Sainsbury’s work under
economic as well as non- economic environment which have a impact on their working condition
and the productivity of the overall company is affected by the factors. Some of the economic
environment factors are as follows: (Domanović, 2013)
2.1.1 Economic system
The United Kingdom is know to have a mixed economy based on the capitalist system and
global economic. The capitalist economic is one defined by the free market and absence of the
government engagement in the economy. The UK market make various different decision by the
company performance. There are various policies such as foreign currency, inflation rates and
taxes rates, which affect the manufacturing the goods and services of the company and
distribution channel of the such product in the target market. Capitalism market allow the
company to have free enterprise business and market forces and make sure that the best use is
made of the available human resources and environment resources to make best for the company
to increase the profit for the company. The company revenues are re-invested into labour and
capital to increase the productivity of the company in the market and grow their business to next
levels. The changes in the foreign currency rates have a impact on the Sainsbury’s performance
in the market as the company operates from different country locations which are different rates
for the currency and if the inflation rates are high in the economic then the purchasing power of
the customer are reduces in the market. (Halinen et al, 2005)
2.1.2 Economic conditions
The UK economy is vase in its approaches to have effective stability of various company
at the market place. Under such factors, it include various things like impact of tourism, travel,
education system involving the international students and trading and manufacturing methods
have a impact on the Sainsbury’s profits and business operations activities. The Brexit is a refers
for the “British exit” from the European union, the UK left the EU on the January 2020 to have a
new trade agreement to have the tariffs and cause inflation. (Khan and Khalique (2014)The
education system also need impressive policies so that large number of customer can be reach
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out for the basic education and have growth in their respective careers. Another point to be taken
into considerations is that travel and tourism segment have impact on the behaviour of the
Sainsbury’s, as the more tourist will increase the revenue for the UK economy and build the
good image in the market place. The UK market are a great place to attract the more number of
customer as there are good places to visit and know about the culture and their traditional beliefs.
The market is know for having good stability of the companies and expand their business
operations activates. The company are also get benefit from the manufacturing the goods and
services as there are available resources present in the work environment. (Buğra et al, 2012)
2.1.3 Economic policies
The company operates with different policies such as legal laws, regulations and having
effective prices for the product and services so that profit can be increase in present and coming
years. The Sainsbury’s also follows general data protection regulation as it is a legal framework
for collecting and processing the personal information from the individual to have basic details
about the customer in the market. The UK government also make laws which are related to the
consumer right and awareness, so that customer are charged affordable prices for the product and
services so that customer stay loyal to the organisation and aware the new customer by
advertising their product in the target market. The economy polices also make effective strategies
to improve the production operations at different locations so that productivity can be gain by the
company in long period of time. (Olsen et al, 2014)
2.2 Non-economic environment and its impact on organisational behaviour
There are various different non-economic factors which have a impact on the behaviour
of the company and the customer and affect the productivity of the organisation in longer period
of time. Such factors include are demographic things, natural and culture factors and have
different impact on the performance of the company and behaviour of the customer towards the
product and services of the company. Some of non-economic factors are stated as follows:
2.2.1 Natural environment
Under this factors, the company uses the available resources in best possible manner. The
natural resources are limited to certain level which are getting use very fast in the market so
company have to follows certain laws and regulation so that natural resources can be safe in long
period of time. The company can make use of resources to have production task in the effect
manner, factors such as climate and weather also affect the production activity of the company as
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some product are their only season and company have to choose side business to safe their
market share in the market. The product like fruits, food are perishable in nature which are to
taken care like storing in cold storages and provide business for shorter time period. The
agriculture is a good business for the UK market as revenue generated from this field is holds the
larger position in the market place. Under this factors, the economy have limited resources for
the company to produce the goods and services and government also make policies to plant the
more tress and save the natural resources for the next generation. (Salmenniemi et al, 2011)
2.2.2 Demographics
Under this factors, there are various things which are included in the discussing the non-
economic factors, it involved the gender, age of the customers, their beliefs system and mother
language are small things which have a great impact on the behaviour of the customer and
company. Demographic is a vast factors which are made of various belongings such as
population of the country having the birth and death rates. There is balance in the birth and death
rates of the UK market which leads to having good skills and knowledgeable employees which
further help in improving operations activities at different levels and this advance the increase in
the profitability of the organisation in the coming years. Under this factors, it also include
purchasing power of the customer in the market place, as there are different income group in UK
economy which can affect the purchasing power of customer to produce the goods and services.
The education is one of the strong point of the economy as it provide educated and well trained
people as they can chose different occupation according to their education, which also help them
to build strong and positive beliefs about the human kind and to understand the market with
analytical skills and reasoning abilities. (Waldeck et al, 2012)
2.2.3 Organisation culture
Under this point, the main focus of the manager is to provide a proper culture which needs
the various beliefs of the employees, their assumption and different region and different point of
view due to different origin, the Sainsbury’s organisation operates at the various international
levels having employees from the different location so that culture is mixed of variety of people
who have work together to achieve the common goals and objectives in the time period. Here,
employees shares their view on various issues and tries to arrives at common objectives so that
task can be completed within the time and in the impressive manners.(Leggio, ed., 2000)
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3. Discussion and analysis
3.1 SWOT ANALYSIS of Sainsbury's and impact on organisational behaviour
The internal factors refers to those things such are present in the organisation as well as in
the external work environment. This type of examining help in analysing the strength and
weakness of the company and compare with the opportunities present in the environment to
make best use of available resources and if any threats are find and manger will tries to minimize
the impact on the production. Swot is used as tool to analysis various different factors which
influence the behaviours of the people of the organisation. (Cliffe et al, 2005)
 Strength
Under this conditions, it include positive or strength of the Sainsbury’s organisation such
as good quality of product and services which are provided by the company to its customer from
time to time and the leader so gives goods at the reasonable prices and sometimes also at the
discount in the target market places. The manager of Sainsbury’s, make great marketing
strategies to place its product and services at right place and in right time. The company also
have effective organisation structure which make better productivity of the business operations.
 Weaknesses
The manager of the Sainsbury’s tries to reduce the weakness in the company such as lack
of training among the team members, lack of skills in the employees and ineffective approaches
and leadership style of the leader which lead to lack of innovation at the work place. The
employees need good working environment and health & safety at the work place and tries to
have better production of goods and services.(.Palmer, (2002).
 Opportunities
Under this factors, the company are looking for the opportunities which are present in the
environment such as international trades and relationship with the different countries to make
best use of resources and convert such opportunities into strength of the organisation. (Meyer et
al, 2007)
 Threats
Here those factors are stated which are threats to the Sainsbury’s organisation and affect
the productivity of the company in the long run. Threats can be poor management in the team
and lack of communication in the company which delay the performance of the task in the
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effective manner. There is lack of teamwork and trust among the employees and among the
employers and employees.
3.2 PESTLE ANALYSIS of Sainsbury's
PESTLE is a external factors which have a impact on the production of goods and
services of the company in present and in longer period of time. There are environment factors
which have a effect on the organisation directly or indirectly. Such factors are discussed as
follows:
 Political factors
Under this factors, it include various things such as government laws, foreign trade
policies and various another restrictions which have a impact on the performance of the company
and affect the productivity of overall organisation. As in the UK market there is a Scenario of
Brexit, where British exist from the European union to have great impact on the production.
( Popescu, (2013)
 Economic factors
Under this factor, there are various things such as wages and labours rates and different
income group of the customer, taxation rates and interest rates which have a impact on
performance of the company and if there is inflation in the economy then there is less purchasing
power of the customer.
 Social factors
Here the customer culture and beliefs play a important part of the organisation such as
their lifestyle and attitudes towards the work. Now days customer chooses their product and
services according to the brand image in the marketplace. The company also tries to advertised
the goods though various different means to attach the customer and make brand image in the
market and provide goods and services according to taste and preferences of the customer.
(Schonenberg, Russell, N., Mulyar, N. and 2008)
 Technological factors
Under this factors, the advance technology is used to have better communication at the
management level, production of good and services is done by using advance technology to
enhance the productivity at the operations levels.
 Legal factor
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Here all the activities relating to legal are included by the government which needs to be
followed by the organisation to have a smooth functioning at the management level. They are
some activities which are bans in the market such as plastic as its can't be recycle in nature so
government have bans such activities in the marketplace.
 Environment factors
Under this factors, the factors like pollution and weather & climates of work environment
are include which can impact the performance of the organisation in the long period of time. The
company have to follow such legal laws so that all the task are performed under the laws of the
economy. (Small and Dickie, (1999)
4. Recommendation
The recommendation for the company can be that, it’s has a huge and vast opportunities
in terms to expand its business at the international levels. The organisation has a various type of
product and services which are needed to the customer and can earn profits in lieu of giving the
services to the target market. The Brexit conditions, the UK market wants to have British to
extend their market so that they can save their business in the longer run. The various economic
factors are also taken into consideration to have effective price of the product and services in the
market. The company can make use of advance technology to improve their operations activities
and attach more customer to the company and retaining the existing customer in the audience.
(Song, Hale . and Rao, (2005)
5. Conclusion
According to the above discussion, it can be stated that business environment are very
essentials part of the any organisation as the company has to be performance their activities in
the economy which gets affect by the economic and non-economic factors present in the
environment. The economic factors can be policies, system, conditions and non-economic factors
include factors demographic, natural factors, which have a impact on the production activities
and influences the behaviours of the employees at the organisation. There is also done SWOT
and PESTLE analysis to examine the internal as well as external factors of the company and
make effective marketing strategies to make best use of resource and reduces the negativity
impact on the performance of the organisation.
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6. References
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(Aswathappa, Kchen (1994)(Jone and English, (2004)(Khan and Khalique (2014)(Leggio, ed.,
2000)(.Palmer, (2002).( Popescu, (2013))(Schonenberg, Russell, N., Mulyar, N. and
van der Aalst, (2008)(Small and Dickie, (1999)(Song, Hale . and Rao, (2005)
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