Understanding Business Types and Environments

The assignment explores various aspects of business operations. It delves into three primary business types: private, public, and voluntary, outlining their distinct purposes. The importance of stakeholders and effective decision-making to protect their interests is emphasized. Furthermore, the document analyzes micro and macro environmental factors crucial for informed organizational growth strategies.

Introduction to
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
A. Three types of organisations from the public, private and voluntary sectors ........................1
B. Different groups of stakeholders ............................................................................................2
C. Micro and macro business environment factors .....................................................................3
CONCLUSION:...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business environment is consist of internal & external factors which influence a
corporation's operating situation. It is a dynamic factor and difficult to control by the business
entities and there are various business environment factors such as: economic changes, clients,
technology, supply and demand etc. This project aimed is to provide specific information about
three companies such as: Oxfam, Tesco & NHS. There are various topics are covered in this
report like: to explain about three different types of corporations from the public, private &
voluntary sectors, explain to what extent the business is influenced by the objectives of different
group of stakeholders. Along with this micro & macro factors are also explained in context to the
business decisions.
MAIN BODY
A. Three types of organisations from the public, private and voluntary sectors
There are various types of corporations which are formed for different purposes. Some
companies are emphasis towards profit making and some focuses towards social welfare. But to
sustain in business environment it is require to earn profits so that business can grow & get
success (Safrudin and et. al., 2014). On the basis of purposes there are three types of
organisations such as: private, public and voluntary and these are as mention as below:
Public sector organisation: These type of organisations can trade the securities in the
market and sell their shares to individuals. It have to follow the rules and regulations which are
made by the government. As National Health Services belongs to public sector and it emphasis
to provide medical services to the individuals so that there health related problems can be
resolve. As the main purpose of it is to deliver public services instead of making huge amount of
profit. These types of companies help the government to enforce social control on trade &
industry in context to ensuring equitable distribution of goods & services (Aithal and Kumar,
2015).
Private organisation: These are those organisations which are held under private
ownership. As the article of association restrict the organisation in context to the transferability
of shares to general public. So these type of companies can not issue the shares to the public. As
Tesco is a British multinational groceries & general merchandise retailer and operate its business
in United Kingdom. The main purpose of this company is to earn maximum profits by satisfying
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the needs of consumers. As the corporation has motive to expand its business operations to
different nations across the globe so that it can increase the market share.
Voluntary organisation: These type of organisations are formed by the volunteers who
have common objective or purpose in context to fulfil the requirement of society. As Oxfam is a
voluntary corporation and it is formed for the purpose to alleviation of global poverty & also
provide health care facilities to the people who can not afford the medical treatment. The main
motive of this corporation is to contribute towards the social welfare of people so that they can
benefited. It is emphasis towards the empowerment of society (Bonney, 2013).
B. Different groups of stakeholders
Stakeholders are the people or the group of individuals which are directly or indirectly
related to the business of an organisation. Their interest can be affected by the decision of
company and there are various stakeholders of Tesco are associated with their business and it
involves: employees, suppliers, consumers, investors etc.
Employees: These are the people who work for the company in order to achieve the
organizational goals and objectives. As the staffs of Tesco has emphasis to perform better so that
efficiency and productivity can be maximize and it can generate higher profits. Organisation has
good market image and reputation & it is earning higher profit so that it can take decision to
increase the salary of employees. As a result workers will feel motivated and put maximum
efforts in order to accomplish the targets of business entity. So it can positively affect the
business of Tesco (Schoenberg and Bowman, 2013).
Investors: These are those people who make investment in the business of company and
they emphasis to get higher returns from it. Before taking investment decision it is important to
analyse the business, financial performance with the help of financial statements such as: balance
sheet, income statement and cash flow statement. So that better decisions can be taken by the
investors and they can more returns from their investment.
Consumers: These are the stakeholders which are directly related to the business of an
organisation. As the management takes the decision that they will not compromise with the
quality of products because they want to satisfy the desires of consumers in order to maximize
the sales as well as profits. As consumers are the king of market so it is important to fulfil their
expectations by deliver ling better goods at reasonable rate so that they attract towards the
corporation (Percy and Shortland, 2013).
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Creditors: These are those individuals who provide funds to the company so that it can
carry its business operations. As Tesco take loan from banks and financial institutions and on the
other hand it provide interest on the loan amount. As the management of organisation takes a
decision that they will pay interest within stipulated time frame so that in future they can get
funds easily if the requirement. It is helpful for the corporation to enhance the market image and
reputation which is important for the firm.
Suppliers: These are the persons who supply the raw material to the company so that it
can make finished goods. As the management takes the decision that they will make payment
within stipulated time frame. The suppliers of Tesco provide better quality of products to the
company.
C. Micro and macro business environment factors
Micro business environment refers to the environment which is in direct contact with the
business entities and can influence through the routine activities of business. It involves
suppliers, competitors, consumers etc. and it is require to examine the factors which are
associated with this. For that purpose it is required for Tesco to evaluate the factors which are
related to the micro business environment so that better decisions can be taken for the business
growth and success (Ghezzi, 2013).
Macro environment refers to those factors which are external forces in the corporation's
activities & do not concern the immediate environment. The factors which are associated with it
can indirectly influence working condition & business operations of firm. As macro environment
factors are uncontrollable so for purpose that it is require for Tesco to examine it properly so that
better decisions can be taken for the benefit of firm. There are various models & theories which
are associated with micro and macro business environment and these are as mention as below:
PESTEL analysis: As PESTEL analysis is a strategic tool which is used by the
corporations in order to analyse the macro environment factors. For Tesco it is important to
determine this factor so that its business does not affect.
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Political factor: To examine this factor is important for the business entities for the
growth of business and it involves political instability, unemployment rate, economic condition,
tax rates, legislations etc. Tesco operates its business in more than twelve nations which includes
Europe and Asia and if management take decision that they import some inventory outside
United Kingdom like East Asia & China. In this situation if government will increase the import
duty than the business decisions of organisation will affected because they have pay more duty
as a result their profitability will reduce (Ehret and Wirtz, 2013).
Economic factor: To determine this factor is important for the business growth and
success and it involves: inflation rate, economic growth, exchange rate, unemployment rate etc.
As UK economy is showing positive sign of recovery from the financial crises and higher
economic growth was forecasted & GDP was estimated to be 2.7 percentage than the pre crises
peak. The growth in economy is a positive sign for the Tesco reason being it results in a growth
in supermarket industry.
Social factor: For an organisation it is important to analyse the social need so that its
business of company can sustain for a long run. As the consumer shopping trend is increasing in
the country and for that purpose management of Tesco takes decision that they will provide
home delivery services so that needs of consumers can be satisfy who lives in society. As a result
consumers will satisfy with the organisation and it leads to maximize the sales of firm. So this
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decision will be beneficial for the growth of business entity (Hallward-Driemeier and Pritchett,
2015).
Technological factor: Now a days people are more concern about innovative technology
because it makes the work more easier and smoother. If Tesco emphasis towards this factor than
its sales can be maximize and for that purpsoe management take decision that company will
introduce RFID technology in order to improve in store experience for consumers. It
automatically counts the inventory & remove it after sales. So for the suppliers this information
is very beneficial & replenish when required.
Environmental factor: It is necessary for an organisation to examine the environmental
issues so that its business does not get affected. To protect the environment is the duty of an
organisation and for that purpose management of Tesco takes a decision that they will reduce its
carbon footprint by fifty percentage by 2020. The management is also emphasis to reduce waste
products in context to environment protection and the follows the laws which are related to it so
this decision will positively impact the growth of business.
Legal factor: To perform in the dynamic business environment it is important to follow
laws and regulations which are made by legal bodies and government authorities. As an example,
management of Tesco takes a decision that they will contribute one percentage towards CRS
activities. But the government makes some amendment and give instructions that all companies
have to contribute minimum two percentage towards CSR activities if they are earning profits. In
this case decision of company will affected because they have to spent more money in context to
the corporate social responsibility as a result, profits of firm will reduce (Paul and Cadle, 2014).
Porter's five force analysis: To analyse the competitiveness this model is helpful for
Tesco and on the basis of it better decisions can be taken and there are five elements of it which
are as mention below:
Bargaining power of buyers: As the expectations of buyers are more and they demand
more quality products at minimum prices in order to satisfy their needs. Buyers want different
variety of products so that they choose more better products among them. As Tesco is a well
reputed brand and have good market image and it emphasis to deliver quality products so that
desires of consumers can be fulfilled. The buyers of company are loyal and satisfied as a result
bargaining power of consumers does not high and it can not affect the business operations of
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company. As the management of corporation takes the decision that they will provide more
superior products in order to satisfy the needs of individuals.
Threats of substitutes: For an organisation it is require to analyse the substitutes which
are available in the market and try to provide more better products as compare to them so that
more number of individuals can attract towards the company. As there are very few substitutes
are available in the market as because consumers needs quality products at minimum price which
is not possible for every one. Where as Tesco provide better products at reasonable rate and
focuses to fulfil the expectations of consumers so that threat of substitute is lower for the
company.
Bargaining power of suppliers: There are various suppliers are available in the market
which provide the products to the company. For that purpose there is minimum switching cost
for the supermarket chain like Tesco. So that bargaining power of suppliers is low.
Rivalry among existing competitors: As there is more competition in the market which
is not good for a growth of company. The main competitors of Tesco are: Morrisons, Asda,
Sainsbury's & Waitrose and there are rivalry on the basis of price, products & promotions. So
rivalry among the competitors are fierce which can affect the business operations & profits of
firm (Segatto and Pinheiro Martinelli, 2013).
Threat of new entrants: To operates the business of supermarket it requires huge
investment which is not possible for new entrants. There are various competitors are available in
the market which have more market share and better image. So threat of new entrants is low.
SWOT analysis: With the help of SWOT analysis, Tesco can identify its strength and
weakness and take better decisions for the further improvement.
Strength:
 Tesco is one of the biggest supermarket
in UK and its operating profit has
increased by 28 percentage in the year
2018.
 It has global presence and have more
than 6800 stores in 14 nations which
involves Asia and Europe.
Weakness:
 Due to weak business operations Tesco
have to close stores in Japan & US.
 As company has emphasis towards low
cost strategy which can minimize the
profit margin.
Opportunities: Threat:
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 It has opportunities to expand its
business by online shopping.
 To expand its business in the countries
like Indonesia, South Korea and Turkey
so that its profit can be maximize (Vom
Brocke, and Schmiedel, 2016).
 It is threat from the competitors like:
Asda, Aldi and Carrefour.
 As the government regulations and tax
policies are the threat for the Tesco
because it can change any time as per
the requirement and all nations have
different regulations which are not easy
to understand.
CONCLUSION:
As from the above report, it has been analysed that it is important for an organisation to
analyse the factors which are related to the business environment so that its business operations
of company does not get affected. As there are three types of corporations such as: private,
public and voluntary are discussed and they have formed for the different purposes. There are
various stakeholders which are related to the company and it is require for the firm to take better
decisions and protect their interest. For a firm, it is important to analsye the micro and macro
business environment factors so that effective decisions can be taken for the growth of
organisation.
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REFERENCES
Books And Journals
Aithal, P. S., Shailashree, V. and Kumar, P. M., 2015. A new ABCD technique to analyze
business models & concepts. International Journal of Management, IT and
Engineering. 5(4). pp.409-423.
Bonney, W., 2013. Applicability of business intelligence in electronic health record. Procedia-
Social and Behavioral Sciences.73.pp.257-262.
Cavusgil, S. T. and et. al, 2014. International business. Pearson Australia.
Ehret, M., Kashyap, V. and Wirtz, J., 2013. Business models: Impact on business markets and
opportunities for marketing research. Industrial Marketing Management. 42(5). pp.649-
655.
Ghezzi, A., 2013. Revisiting business strategy under discontinuity. Management Decision. 51(7).
pp.1326-1358.
Hallward-Driemeier, M. and Pritchett, L., 2015. How business is done in the developing world:
Deals versus rules. Journal of Economic Perspectives. 29(3). pp.121-40.
Paul, D., Yeates, D. and Cadle, J. eds., 2014. Business analysis. BCS, The Chartered Institute for
IT.
Percy, S. and Shortland, A., 2013. The business of piracy in Somalia. Journal of Strategic
Studies. 36(4). pp.541-578.
Safrudin, N. and et.al, 2014. A typology of business transformations. The 360º Business
Transformation Journal. 2014(10). pp.24-41.
Schoenberg, R., Collier, N. and Bowman, C., 2013. Strategies for business turnaround and
recovery: a review and synthesis. European Business Review. 25(3). pp.243-262.
Segatto, M., Inês Dallavalle de Pádua, S. and Pinheiro Martinelli, D., 2013. Business process
management: a systemic approach?. Business Process Management Journal. 19(4).
pp.698-714.
Vom Brocke, J., Zelt, S. and Schmiedel, T., 2016. On the role of context in business process
management. International Journal of Information Management. 36(3). pp.486-495.
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