Exploring the Business Environment

Exploring the
Business
Environment

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Different type and purpose of organisation: public, private and voluntary sector as well as
their legal structure......................................................................................................................3
P2 Size and Scope of different type of organisation ..................................................................6
TASK 2............................................................................................................................................8
P3 Relation within different organisational function and how they are linked to objective and
structure of company...................................................................................................................8
TASK 3..........................................................................................................................................11
P4 Positive and negative impact macro environment has on operations of business...............11
TASK 4..........................................................................................................................................13
P5 Internal and external analysis for identifying strength as well as weakness of company. .13
P6 Strength and weakness interrelated with external macro factors ........................................16
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18

INTRODUCTION
Business environment is collection of external as well as internal factors which have
impact on working working of a organisation. These factors are customers needs, employee's,
clients, suppliers, supply and demand management, owners, innovation in technology, activities
by government, market trends, economic changes and many more (Hamilton and Webster,
2018). In addition to this, business environment provide assistance in identifying opportunities
for company, assists in planning, improve performance and profitability of business. This report
is based on Tesco which is part of retailing industry founded in 1919 and its founder was Jack
Cohen. Area serving by respective company is UK, Ireland, India, Malaysia, Thailand, Czech
Republic, Poland and many more. Tesco is headquartered at Wlwyn Garden City, Hertfordshire,
England, United Kingdom.
Report will going to conduct discussion on different type of organisation within their
legal structure, size as well as scope. In addition to this, relation within different organisational
function and how they are linked to objectives and structure of company. Moreover, positive and
negative impact of macro environment on operation of company will also going to highlight. In
addition to this, Internal and external analysis of company will going to be conduct for
identifying its strength and weakness. Along with their interrelation through external macro
factors.
TASK 1
P1 Different type and purpose of organisation: public, private and voluntary sector as well as
their legal structure.
Introduction
In this task evaluation of different types and purpose of a companies voluntary, pubic and
private sector along with its legal structure (Prajogo, 2016).
Meaning of Business organisation
Business organisation is considered as entity which aimed is to carry out business
activities by providing quality goods and services to customers according to their need and
demand.
Types of Business organization
Profit organization-

 Private sector- It is privately owned by group or individuals in order to meet customer
requirement and generating profit.
◦ Sole trade
Meaning Importance Purpose Goods and
services
Legal structure
It refers to those
business which is
owned and run by
individual. This
business not have
legal identity
other than its
owner (Deasy and
et. al., 2016).
Example- C&S
wholesale
Grocers.
In this owner of
company is boss.
They keep all
profit margin as
well as it incurred
low start up cost.
The purpose of
C&S wholesale
Grocers is to
provide unique
and specialised
grocery products
according to
customer demand.
Products offer by
C&S wholesale
Grocers are meat,
produce, dairy
products, fresh
and frozen
bakery, health
and beauty, candy
and so on.
It is founded by
Israel cohen and
Abraham Siegel
in 1918. they
started with small
grocery
distribution store
in three story
building on
winter street.
◦ Partnership
Meaning Importance Purpose Goods and
services
Legal structure
It is arrangement
among two or
more parties and
they conduct their
business by under
legal document
and mutual
interest. Example
Balmain and
H&M
Through it both
firm able to
conduct business
under legal power
as well as they
able to share risk.
Purpose of
partnership
among Balmain
and H&M is to
offer unique and
stylish runway
look in real world
price (Eling and
Schaper, 2017).
Both of them in
offer high quality
clothing, footwear
and jewellery
products to
customers.
The legal
structure followed
by both company
in order to grow
business faster by
offering high
fashion.

◦ Private company
Meaning Importance Purpose Goods and
services
Legal structure
Private company
shares are not
offer to public for
sale and they
operate according
to legal
requirement.
Example TESCO
Importance gain
by TESCO are
earn high return
on investment,
lead to economic
growth and so on.
Purpose of
TESCO is to offer
quality services to
customers and
make them
lifetime
customers.
Respective
company
products range
are books,
clothing,
furniture, toys,
software,
financial services,
and so on.
Corporate
governance is the
legal structure of
respective
company.
◦ Public limited company
Meaning Importance Purpose Goods and
services
Legal structure
This types of
companies strictly
regulated under
law developed by
governments
(Gaganis,
Pasiouras and
Voulgari, 2019).
They also have
limited liabilities.
Example
McDonald's
Respective
company generate
employment at
local, national and
international level
as well as it also
help in economic
growth.
Purpose of
McDonald's is to
offer quality fast
food to their
potential
customers.
Products offer by
respective
company are
Burger, French
fries, ice cream
and so on.
The legal
structure of
respective
company is
divisional
because they
operate at
different
locations.
 Public sector
◦ Government only: It refers to those organisation which are totally owned by
government. In this firm operate according to governance guidance and rules.

Non for profit
 Charity organisation: It determined as those companies or firm which conduct their
businesses for social services (Calabrese and et. al., 2018). These organisation are
conducted their business under the guidance of government.
NGO
 Non government organisation: It is also non profit company which offer service and
products through which they can help society and it is not owned by government.
P2 Size and Scope of different type of organisation
Private company - Tesco is part of retailing industry founded in 1919 and its founder
was Jack Cohen. Area serving by respective company is UK, Ireland, India, Malaysia, Thailand,
Czech Republic, Poland and many more. Tesco is headquartered at Wlwyn Garden City,
Hertfordshire, England, United Kingdom.
Size – As per the data of 2019, Tesco have more than 6,800 shops as well as approx.
450,000 staff member's.
Mission – To create value for customers for gaining their lifetime loyalty.
Vision – To broad the scope of business for enable their deliver strong sustainable by
following customer's within large expanded markets at home and new market abroad.
Legal structure -
 Sole trader- It is a person who carries their business by themselves (Gavurova and et. al.,
2017). Sole trader is most simplest form of business as it is totally depended on his
resources as well as funds.
 Partnership – It is an formal agreement in which two or more than that person come
together for managing their business operations. Partnership is the business in which two
or more than that person pool their money, skills, resources and share profit & loss on
agreed term and condition.
Public company – National Health Service is publicly funded healthcare system of UK.
It is made up of four separate system i.e., National health service in England, NHS Scotland,
NHS Wales and Health & Social care in Northern Ireland.
Size – NHS have approx. 106430 doctors, 285893 nurses as well as several health visitors
and they are specialised in several type of services like transportation by including the accidents
and emergency, mental health services, dentist etc. (NHS statistics, facts and figures, 2019).

Scope – NHS is well known for the services within health and care sectors. Aim of NHS
to provide services within one roof in order to gain large market share in effective way.
Mission – To offer quality services to each and every person daily basis.
Vision – NHS Vision is to deliver better health, better care as well as better value.
Voluntary company – Oxfam is voluntary sector organisation which focus on the
alleviation of global poverty. It was founded in 1942 and headquartered at Nairobi Kenya. They
are serving at worldwide level.
Size – Oxfam spend more than 1.27 billion dollar within recent years for reaching over
22.2 million people for providing them best services to enhance living standard of people in
proper manner ( (Top 10 things you need to know about Oxfam, 2019).
Scope – Aim of Oxfam is to eliminate poverty from market area by putting vulnerable
efforts for bringing equality within individual life (Virglerova, Dobes and Vojtovic, 2016). Thus,
respective company mainly working on fair trade, justice, providing education, debt services as
well as gender equality for providing better living standard to people.
Mission – Creating lasting solution to the injustice of poverty. Company will work for
ending poverty locally as well as globally and making this central to public & political life in
Wales.
Vision – Oxfam vision is just world without poverty and people are valued as well as
treated equally.
Legal Structure – Voluntary sector company, organisational structure are as follows :-
 Trust – These are set up for managing money or property for clearly defined purpose. It
establish relation within 3 parties i.e., money donors, trustee and beneficiaries.
 Limited Corporation – This company structure is becoming popular choice for voluntary
organisation and it is suitable when group is going to manage staff, land and huge funds.
A company limited by guarantee is an incorporated organisation which simply means that
it have separate legal entity distinct from their members.
Difference between public, private and voluntary organisation
Public Public sector organisation are those which controlled by government
and offer services and not make profit from it (You and et. al., 2019).
For instance, NHS is public sector company who provide healthcare
related services to patients.

Companies operating in this sector get funds from government which
generate through taxes and fees which citizen pay.
Private Private companies are not controlled by government and they are
working for generating revenue. Tesco is private sector company and
they also working for generating revenue.
Private sector organisation generate revenue by competing against their
competitors. By ensuring that products are valued at better price and
providing right services.
Voluntary Voluntary sector companies focus on assisting and benefiting public
without making profit. Oxfam is voluntary company working for
removing poverty (Jaakkola and et. al., 2016).
Companies operating in voluntary sector is not working for profit. They
generate revenues through charity, trust and so on.
Summary – After going through discussion in this task it has been summarised that, there are
three type of organisation i.e., public, private and Voluntary. These three are totally different
from each other in nature, size, objectives etc..
TASK 2
P3 Relation within different organisational function and how they are linked to objective and
structure of company.
Introduction – This task will going to discuss different organisational structure as well
as interrelation in different function of company.
Organisation structure is the function which outlines that how certain activities in an
organisation are directed for achieving goals of business firm (Saleh and Watson, 2017). These
activities involve roles, rules as well as responsibilities. Moreover, organisational structure
determines that how information flows within different levels of company. There are several type
of organisational structure explanation of these are as follows :-
 Functional – This organisational structure use for organising staff in organisation as they
are grouped on the basis of their skills and knowledge. When company follow functional

organisational structure employees are classified as per their function in structure. It
provide assistance to company in achieving their business objectives.
 Divisional – In this organisational structure activities of company are around market,
geographical or product and service groups. In simple term, organisational structure
group those employees who are responsible for particular product as well as market
service as per the workflow (Okeyo, Gathungu and Peter, 2016). Divisional
organisational structure of business enhance flexibility and also broken down further
within market, geographical structure and market.
 Matrix – It is one of the complicated organisational structure because in matrix structure
staff members of company have dual reporting relation generally to both product as well
as functional manager.
Tesco is following hierarchical organisational structure which have direct chain of command
from top level of organisation to bottom (Tesco Organizational Structure, 2020). Manager of
Tesco make each and every decision which passed down to other employees through subsidiary
level of management.
(Source: Tesco Organisational Structure, 2020)
Illustration 1: Tesco Organisational Structure

Apart from this, there are several type of international organisational structure also
explanation of these are as follows:-
 Global company – These are the companies who invested and present in several nations.
Global companies market their products by using same coordination in every market.
Emphasis on Volume, cost management and efficiency. Global company structure have
advantage for company expansion, enlarge customer base and high profitability ratio.
 Multinational company - MNC facilities their assets in one other country including
their home country also (Benmamoun and et. al., 2016). Multinational companies
generally have their offices in different countries and centralized head office where they
coordinate global management.
 Transnational company - These are highly complexed organisations and they had
invested in foreign operations and having central corporate facility. But they give R&D,
decision making and marketing power to every individual within foreign market.
Advantage of transactional company structure is that their will be less chances of
mistakes in sharing information because for this purpose ERP system will use.
Complexities of international organisational
Global company Multinational company Transnational company
There are several complexities
for global companies are
different culture, taste and
preferences of customer's.
MNC face challenge as thy
have to follow international
company structure, foreign
laws and regulations etc..
Transnational company face
complexities such as market
imperfection, tax competition,
political instability and many
more.
Organisational function is core process as well as set of activities which are carried out
within an division of company. Here, common function are Human resource, Information
technology, finance and marketing. All these are interrelated with each other explanation of
respective function in relation of Tesco are as follows:-
 Human resource and Finance- Human resource is important function of an Tesco
because it help in filling vacant job position, provide training and development session to
employee's (Civelek and et. al., 2016). On the other hand, finance division controlling
working of entire company by allocating funds to each and every division. Function of

human resource and finance are interrelated because without appropriate funds it will be
difficult for HR division to conduct their operations in proper manner.
 Information Technology and marketing – Working of Tesco marketing division is
interrelated with information technology. Because through digital technologies it become
easy for respective retail sector to conduct marketing function and attract large number of
customer's. Moreover, for an business firm it is essential to do marketing without this it
will be difficult for company to enhance their customer base.
 Marketing and production – Marketing division of Tesco gather information related to
current market trends, customer's taste and preferences (Mawejje and Okumu, 2016).
This will provide assistance to production department as they produce goods according to
consumer’s requirement. Thus, marketing and production department of Tesco are
interrelated with each other.
Summary – From discussion in this Task it has been summarised that, for an organisation it is
important to select suitable structure which help them in conducting their activities within more
effective manner. Along with this, several function performed by an company which are
interrelated with each other.
TASK 3
P4 Positive and negative impact macro environment has on operations of business
Introduction – This task will going to conduct discussion macro environment and factors
included in this along with their positive and negative impact.
Business environment is collection of external as well as internal factors which have
impact on working working of a organisation. These factors are customers needs, employee's,
clients, suppliers, supply and demand management, owners, innovation in technology, activities
by government, market trends, economic changes and many more.
Internal factors – It refers to anything which are within the company and can be
controlled. Internal factors include Value system, organisational structure, corporate culture,
Human resource and many more (Rialp-Criado and Komochkova, 2017).
Micro factors – It involve factors which affect business strategy, performance as well as
decision making. Micro environment factor include customers, competitors, employees,
suppliers and many more.

Macro factors – It is the condition which exist within economy as whole instead of
specific region or sector. Macro environment get affected through fiscal policy, GDP, inflation,
consumer spending and many more. There are several macro factors such as Demographic,
Economic, Political, Ecological, Socio-Cultural, and Technological forces. Explanation of macro
factors in relation of Tesco are as follows :-
Political- It include factors such as tax rates, legislations, unemployment rate, economic
condition nation in which company is operating. For instance, On goods import duty can affect
Tesco because they are importing some inventory from outside like China and east Asia.
 Positive – Brexit will have positive impact on Tesco as they can generate more revenue
by adjusting business activities according to climate (Alaloul, Liew and Zawawi, 2017).
 Negative – along with this, Brexit also have negative impact as it reduce disposable
income of consumers that negatively impact business profitability.
Economic- This factor is related with interest rate, pay structure, tax regimes for gaining
potential results. Inflation result in enhancing price of product which affect organisational
activities.
 Positive- Changes in economy result in gaining high profitability as well as sustainability
by moulding products according to consumer choice and preferences.
 Negative- Because of increment in product price result in decreasing purchasing
capability which have negative impact on business.
Social- It is important for organisation to adopt changes which occur in taste and
preferences of consumer’s because it have both positive and negative impact. Tesco bring regular
changes in their offering by identifying customer's taste and preferences.
 Positive- Company will be able to attract large number of customer's by carrying out
necessary modification in their products for gaining sustainability within market area.
 Negative- In some situation organisation get fail in adopting changes randomly because it
occurs too much cost as well as time (Dwyer and Hopwood, 2019).
Technological- Advancement in technology provide assistance to company in
conducting their operations within effective manner.
 Positive- Tesco will able do to fine production with the help of advancement in
technology.

 Negative- It will not easy for company to always adopt latest technology because it may
be expensive and not affordable always.
Environmental- It includes several regulation, ecological condition, CSR activities and
many more which have impact on working of business. Tesco is focusing on reducing wastage
for minimising negative impact on environment.
 Positive- Environmental factors bring loyalty within customer's because it create sense of
belongingness in relation of company (Ansoff And et.al ., 2019).
 Negative- To occupy the environmental factors sometimes impact negatively on the
organisational works and activities negatively as it occurs too much cost.
Legal - It involve laws, legislation and regulation which affect working of business for
gaining desirable outcomes. Tesco have to take important measures for consumer protection,
health and tax, equal opportunities to employee's for conducting their operation in positive
manner.
 Positive- Legal factor have its positive impact for organisation because company will be
able to coordinate properly with changes (Kwilinski and et.al., 2019).
 Negative- When several regulation and policies applied in company it will get difficult to
manage things in proper manner.
Summary – After going through discussion in this task it has been summarised that, macro
environment involves several factor in it which have positive as well as negative both impact on
working of company.
TASK 4
P5 Internal and external analysis for identifying strength as well as weakness of company.
Introduction
In this task SWOT analysis of two companies are conducted in order to determined their
strengths which help them in grabbing opportunities as well as it also help in identifying
weaknesses which lead to threat. It can be also used for conducting comparison with competitor
in potential marketplace (Das, 2019). In this report SWOT analysis of TESCO is conducted and
for the comparison ASDA's SWOT analysis is conducted.
Meaning of SWOT analysis

It is considered as strategic tool which is used by a company in order to analysis internal
environment of firm. Through this a firm able to determined their strengths, weaknesses,
opportunities and threats that are related to business competition or planning of project. By
conducting SWOT analysis TESCO able to gain several advantages such as enhance their
strengths, reverse weaknesses, help in overcoming threat, identify core competencies and many
more.
SWOT analysis of TESCO
Strengths
 Biggest grocery retailer at UK: TESCO is one of the leading retail grocery store as well
as it is number 1 supermarket in United Kingdom (TESCO SWOT Analysis 2019 | SWOT
analysis of TESCO, 2020). This firm have higher revenue and sales as compare to other
competitive supermarket chain at Great Britain.
 Geographically Diversified: Respective company have thriving and wide global
presence with more than 6800 retail stores which offer huge range of products and
services. Along with this they have wide market shares in Asian market apart from the
Europe as well as North America (Kasemsap, 2019).
Illustration 2: SWOT Analysis
(Source: SWOT Analysis, 2020)

 Diversified Stores: TESCO is conducting its business through different supermarket
stores. There are several diversified division of stores which include TESCO Extra,
TESCO Home plus, TESCO Metro, One Stop, TESCO Express and many more.
Weaknesses
 Decrease in operating profits: According to research, in Oct 2018, shares prices of
TESCO fell down with more than 9 percent due to decrease in operating profit. It is
considered as worst performance of an organization after the Brexit referendum.
 Failed in US and Japan: In 2012, TESCO exit from Japanese as well as American
Market. This is so because company failed in exporting operations forces which lead to
closing of store in Japan within 9 years as well as they also failed in US market and close
store after 5 years.
Opportunities
 Expand its Jack's Businesses: TESCO recently introduced Jack store which is a new
discount store that help firm in boosting their businesses (Harmon,2019). This will also
help respective company in gaining competitive advantage in respect of Aldi and Lidl.
 Online shopping: TESCO can enhance their business opportunities by boosting as well
as upgrading their online shopping businesses and home delivery services. This will also
help them in attracting new customers at worldwide level.
Threats
 Competitors: TESCO is conducting its business at the international market due to which
they have huge numbers of competitors which affect their businesses operations such as
ALDI, ASDA, Carrefour and many more.
SOWT analysis of ASDA
Strengths
 Huge product range: ASDA offer wide range of products and services to their
customers such as ASDA Mobile, ASDA money, George Clothing etc. which help in
attracting audiences.
 ToYou Parcel services: Respective company have extensive distribution network and
apart from that they also offer ToYou parcel services which related to home delivery
services.
Weaknesses

 Limited presence: ASDA has very few presence at the global market as compare to its
competitive companies.
Opportunities
 Expand in new domains: Respective company can grow their business into other many
areas such as Pharmacy, Jewellery and so on.
Threats
 Price war with retailers: ASDA faced price war with its existing retailers which is
considered as big threat for the firm.
Conclusion - By conducting analysis of both TESCO and ASDA, SWOT analysis it can be
determined that TESCO have more strengths as compare to ASDA this will also help them in
attaining high competitive advantage at the marketplace.
P6 Strength and weakness interrelated with external macro factors
Introduction - This task will going to analyse strength and weakness of Tesco in relation of
external macro factors.
Political factors Strength: Political factor enables Tesco in building one of best
strategies as well as tactics for gaining required results (Kretovics
and Eckert, 2019).
Weaknesses: Several tax regimes and political condition may create
chaos for company which may create hinders for them.
Economic factors Strength: Brexit have its positive impact on Tesco as several import
policies has been changed for supermarket.
Weaknesses: There is high unemployment level in economy which
may result in reducing demand for goods and also buying.
Social factors Strength: Current trend in British customer's has been found that
they believe in bulk purchasing which have positive impact on sales
of Tesco and they started focusing on non-food items ('Birt and
et.al ., 2019).
Weaknesses: Sometimes it is not easy for Tesco to adopt changes in
taste and preference easily. This result in unsatisfied customer's.
Technological factors Strength: Due to adaptation of advance tools and techniques

organisation should be able to give effective and desirable outcomes
to consumers.
Weaknesses: Technology advancement is costly for business and in
some situation Tesco cannot adopt that which may result in negative
impact on company image.
Legal factors Strength: The major strength that organisation can enhance their
legal regulations in positive manner (You and et.al ., 2019).
Weakness: Several modification take place in legal factor which is
not easy for Tesco to adopt these rules and regulation always.
Because it change their overall working.
Summary – After going through entire discussion it has been summarised that, business
environment is dynamic in nature and result in several positive as well as negative impact on
company. For an organisation it is essential to analyse macro factors along with their strength
and weakness.
CONCLUSION
After going through entire discussion it has been summarised that, business environment
is sum of both internal ans external factors which have wide impact on working of an business
firm. These factors are customers needs, employee's, clients, suppliers, supply and demand
management, owners, innovation in technology, activities by government, market trends,
economic changes and many more. Moreover, there are three type of organisation public, private
and voluntary. Apart from this, for an business firm it is essential to analyse business
environment in effective manner because it help them in analysing their strength and weakness.
Along with this, available opportunity and threats also identified by conducting external analysis.

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