Introduction to Business: Types of Businesses, PESTLE and Porter's Five Forces Analysis

This report discusses the different types of businesses, business structure, and analyses the macro and micro environment of a food start-up in the UK using PESTLE and Porter's Five Forces frameworks. It also highlights the impact of these factors on the business and provides recommendations for growth.

Introduction to
Business

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Different types of Businesses.................................................................................................1
Business Structure..................................................................................................................2
Macro environment analysis by using PESTLE framework..................................................3
Micro environment analysis by the use of Porter’s Five Forces Framework.........................4
Impact on your business.........................................................................................................5
CONCLUSION................................................................................................................................5
Recommendations..................................................................................................................5
References:.......................................................................................................................................7

INTRODUCTION
Business is defined as an organisation or entity under which an individual or a group of
people are engaged in performing the activities related to the profession, industrial or
commercial activities for the purpose of earning profit. Majorly, the business organisations
perform the functions of providing goods and services of good quality to their customers so that
they can earn huge amount of profit. Business organisations are of two types i.e. profit and non-
profit organisation (Du, J., 2021). This report is based on a start-up of food having the feature of
mobile business which is going to be opened in the market of United Kingdom. This business
organisation has been owned by three partners i.e. Laurentiu, Bogdan and Kearan. Laurentiu is
responsible for managing the accounts & administration along with taking the bookings of
functions & events. Sourcing of stock and advertising function of business organisation have
been also managed by Laurentiu. Bogdan is going to take the responsibility of ensuring the
standard of cooked food along with pre-ordering of stock. Kearen is majorly performing the
function of dealing with customers by taking order from them and handling the cash. In addition
to this, he is also responsible for other day to day activities such as ensuring the availability of
enough stock for each and every day along with ensuring the correct location of Van according
to time. These three partners work for offering cooked food in the market with not a fixed
location. They are going to provide food through their van. This report is going to highlight
several types of business along with analysis of both business environment i.e. internal and
external through the use of proper framework in the context of food business. Furthermore, it
also includes the impact of micro and macro factors on several activities of business.
Recommendations have been given in relation to the growth of the respective business
organisation.
TASK 1
Different types of Businesses
Business is defined as the activities related to the generating money which include buying
and selling of goods and services in the exchange of money. It has been found that there are
several types of businesses with different features. Some of them are explained below:
1

 Sole Proprietorship Business: Individual entrepreneurship and sole trader are another
name of sole proprietorship. It is defined as the business which is owned and managed by
a single individual. The owner of such business organisation is the only person for
enjoying the benefits related to earning profits along with bearing losses. It has been
found that there is no any separate legal entity of such businesses (Goi, C.L., 2021). The
liability of owner of sole trader is also unlimited as the entire business is managed by the
owner itself. The owner is permitted to use any trade name or business name which may
be different from their legal name. Partnership Business: It is defined as the business organisation under which two or more
than two individuals perform some business activities together and agree to share the
profit and losses in a pre-decided ratio. All the individuals involved in such businesses
are consider as the partners. It is necessary for the partners to prepare a partnership deed
which include all the decided conditions among the partners. Partnership deed is defined
as a legal agreement among the partners which include several information and
conditions among the partners which include roles and responsibilities of partners, profit
sharing ratios, capital investment and many more. It has been also analysed hat the
liability of partners is unlimited as they have to pay all the debts of business organisation
collectively.
 Corporations: This is also a type of business under which the business has its own legal
entity which is totally different from its owner. Shareholders of the company are
considered as the owner of company. Board of directors are being hired by the
shareholders for the purpose of overseeing the several activities of business (Yaşlıoğlu,
D.T., 2021). It has been also analysed that the liability of shareholders of corporation is
limited up to the value of their shares. As the company have its own legal entity,
shareholders are not liable for paying its debts.
Business Structure
The start-up taken in this report is food business which is a small partnership business
including three partners named as Laurentiu, Bogdan and Kearan. These three partners make a
partnership agreement between them which state that all the partners share profit and losses
2

equally. Along with this, they also divided their roles and responsibilities in the business
organisation.
Macro environment analysis by using PESTLE framework
PESTLE Analysis:
It is defined as a marketing tool which is being used by the business organisations for the
purpose of analysing the macro business environment. By the use of this analysis tool, a business
organisation is able to know about the impact of these external factors on the business
operations. Below mentioned is the macro environmental analysis in the context of food business
by the application of PESTLE tool: Political Factors: It include all those factors which state the influence of business
organisation through the government of particular country. Majorly it includes tariffs
policies, government stability, tax policies and may more. It is necessary for the food
business to follow all the rules and regulations formed by the government of UK.
 Economic Factors: It has been found that all the business functions get effected by the
condition of economy of a particular country. Several factors which influence the
economy include interest rate, unemployment rate, inflation, growth rate, wages and
many more (Giragosian, N., 2021). In order to performing the business functions in a
smooth manner, it is necessary for food business to focus on the variable rates of interest. Social Factors: This factor comprises of values, buying behaviour, age distribution,
safety, health of customers. It states that the change in any social factor may result in the
change in the demand of customers. While making strategies of marketing, it is necessary
for the business organisations to focus on these factors. This new start-up of food is
majorly providing non-veg food items as it has been observed that most of people of UK
do not prefer Veg food items.
 Technological factors: It is related to the involvement of technology while performing
business operations. The application of new technology in business result in the
innovation and smooth functioning of business operations (Jaim, J., 2021). This food
start-up is required to adopt new and advance technology which bring effectiveness and
efficiency in business operations and help them in achieving the organisational goals and
objectives.
3

 Legal factors: It include several rules and regulations which have been developed by the
government of country for the purpose of the welfare of employees and the members of
society. The government also develop the laws related to the quality standard of food.
The food business is required to develop the quality of food as per the described standard.
 Environmental Factors: It is defined as the factor which is related to the security of the
environment along with the influence of ecological aspects. In the context of food
business, the management have to focus on the packaging of food products. They are
required to adopt such methods of packing which do not harm the environment or
society.
Micro environment analysis by the use of Porter’s Five Forces Framework
Porter’s Five Force:
It is defined as the framework or model which plays an important role in analysing the
strength and weakness of a business organisation with in the market through the use of five
competitive forces. This framework helps the business in providing them an effective shape and
forming the effective strategies related to the competition. Below mentioned is the brief
discussion on the micro environmental analysis with the application of Porter’s Five Forces
model in the context of food business:
 Competition in the industry: It is related to the number of competitors available in the
market which are doing business in the same industry. It has been analysed that the
competition in the food industry is too High because of availability of well established
companies in the food sector such as McDonald’s, Starbucks and many more
(Yilmazkuday, H., 2021). This food business is required to provide good quality of food
products at low prices as compared to their competitors. It is the best way for acquiring
the huge market base with the loyal customers and beating the high competition. Threat of new entrants: It has been identified that the entry of any new firm or
business in the market effect the power of existing business. Due to the lack of hurdles
in opening the food business, the threat of new entrants is High. It also requires a small
amount of capital to start such business.
4

 Threats of substitutes: It means that the consumer can consume the substitute food
products at the place of food products of particular business. High amount of threat has
been faced by the company in relation to the substitution of goods. Power of buyer: It comprises of capability of customers which initiate the prices of
goods lower. It has been analysed that the bargaining power of customers is Moderate
because of moderate number of businesses providing Shawarma.
 Power of suppliers: It define how the suppliers of raw material easily drive up the cost
of raw material (Finn, D.K., 2021). In the context of food business, the bargaining
power of suppliers is low because the raw material which is being used in making
Shawarma is easily available in the local market.
Impact on your business
It has been found that analysing the internal along with the external factors of business
environment is necessary for the food business. The business is not required to brig regular
changes in their strategies because of the political stability of UK government. The management
also have to keep an eye on the inflation rate as it leads to the purchasing power of customers
which directly effect the demand of food items. They are also required to provide quality food
products as per the standard decided by the laws of UK government. If the business do not
follow the rules and regulations set by council of nations, the business have to face the situation
of shutdown.
CONCLUSION
It has been concluded from the above report that analysing the internal and external factors of
environment is necessary for the management of business. There are several types of businesses
having several features. The internal as well as the external environment has been concluded in
context to food business through the use of Porters Five Forces model and PESTLE analysis
respectively. This report also concluded the impact of these factor on the business and afterword
recommendation has been give.
5

Recommendations
It is recommended to the food business to use the online application for accepting the orders
from the customers as it result in the expansion of their business operations. Along with his, they
can expand their business by providing more food items to the customers. They have opportunity
to provide veg and nutritious food items as well because now a day people are focusing on the
healthy lifestyle.
6

References:
Books and Journals
Du, J., 2021. Business model innovation. In Transformative Strategies (pp. 65-81). Routledge.
Cartwright, S., Davies, I. and Archer-Brown, C., 2021. Managing relationships on social media
in business-to-business organisations. Journal of Business Research, 125, pp.120-134.
Goi, C.L., 2021. Business Simulation Games: A Direction in the New Era of Teaching and
Learning. In Handbook of Research on Analyzing IT Opportunities for Inclusive Digital
Learning (pp. 65-76). IGI Global.
Yaşlıoğlu, D.T., 2021. New Economy, E-Commerce Businesses, and E-Businesses: Types,
Similarities, and Differences. In Research Anthology on E-Commerce Adoption,
Models, and Applications for Modern Business (pp. 1-18). IGI Global.
Giragosian, N., 2021. Successful product and business development. CRC Press.
Yilmazkuday, H., 2021. Introduction to the special issue on COVID-19: Economic and financial
effects. Journal of Economics and Business.
Finn, D.K., 2021. Business Ethics and Catholic Social Thought. Georgetown University Press.
Jaim, J., 2021. Bank loans access for women business-owners in Bangladesh: Obstacles and
dependence on husbands. Journal of Small Business Management, 59(sup1), pp.S16-
S41.
7