Macro Environmental Influence

This report discusses the different types and purposes of organizations, the size and scope of different types of organizations, the relationship between different organizational functions and their link with organizational objectives and structure, and the positive and negative impact of macro environment on business operations. It also includes a case study on Tesco and NHS.

Macro Environmental
Influence

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1 Different types and purposes of organisations, public, private and voluntary sectors and
legal structure...............................................................................................................................3
P2 Size and Scope of different types of organisation..................................................................5
LO2..................................................................................................................................................6
P3 Relationship between different organisational functions and their link with organisational
objectives and structure...............................................................................................................6
LO3..................................................................................................................................................8
P4 Positive and negative impact Macro environment has upon business operations..................8
LO4................................................................................................................................................10
P5 Internal and External analysis..............................................................................................10
P6 Strengths and weaknesses and their interrelation with external macro factors....................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment refers to all internal and external factors affecting and influencing
functioning and operations of the business organisation (Gaganis, Pasiouras and Voulgari, 2019).
Environment of business has been mainly divided in two parts that is internal environment and
external environment. External environment further has been divided into two parts that is micro
and macro environment. Internal environment of the organisation consists of factors and elements
within a organisation. These factors are controlled by organisation such as organisational culture,
human resources, structure of the organisation. Micro environment consists of customers,
competitors, regulators, these factors are partially controllable. Macro environment consist of
political, social, cultural environment and this environment and its factors are uncontrollable for
environment, organisation requires modifying internal factors to deal with changes in macro
environment. This report will discuss about business environment and different types of
organisation. This report will also discuss about positive and negative impact of macro
environment on business and interrelationship between internal and external environment. The
business has contexualised
LO1
P1 Different types and purposes of organisations, public, private and voluntary sectors and legal
structure
There are different types of organisation and these organisations operate with different
purposes and their legal structure also differs from each other. These organisations also differ on
the basis of their legal structure, this is also known as business ownership structure. Mainly
business are divided in public, private and voluntary organisations.
Public Organisation
Public organisations are those organisations that operate with purpose of providing social
services. These organisations are not-for-profit organisations and seek to deliver governmental
services and public goods. National Health Service is one of the examples of public organisations.

This is publicly funded healthcare system this means that government provide funds to operate
these organisations through the means of general taxation (Sacchetti and Borzaga, 2020).
Concerned with legal structure NHS is owned by and operated and controlled by UK government
through department of health and social care.
Additionally, legal structure of the public organisations, these organisations has ownership
of either local or state or national government. Organisations when have partnership in that 51
percent or more ownership remains with government.
Private Organisation
These organisations are privately owned organisations. These organisations operate with
the motive of earning and increasing profit and also seek to provide valued goods and services to
public with motive of earning profit. These organisations are important contributors in national
economy and its growth. Tesco, British Multinational retail organisation is an important example
of this type of organisation. Different legal structures for private organisations are sole
proprietorship, partnerships, and limited companies. Tesco is public limited company in which
public buy ownership by means of shares and stake in Tesco. In this legal structure anyone who is
over 18 years of age can buy its shares (Kim and Takashima, 2019). Legal structure of private
organisations can further differ on the basis of size and nature of the organisation.
Voluntary Organisation
Voluntary organisations are another type of organisation in which purpose of organisation
is to operate for helping and benefiting public and society and these organisations. There are
different forms in which voluntary organisations operate, these are for profit, not-for-profit and
semi-profit organisations. Profit organisations are those operate with profit and then this profit
again is invested for running and operating organisations. Not-for-profit is those that do not earn
any profit through organisational activities. Semi-profit organisations are those who only earn a
portion of the profit, this means the goods and services to community are provided at
comparatively less prices. Oxfam is example of this kind of organisation.
. Legal structure of voluntary sector also has different types that are based on membership
and mainly there are trusts, unincorporated associations, company limited by guarantee and

charitable incorporated organisations and legal structure also differs on the basis of what kind of
membership organisation have.
These are different types of organisation in which private organisation operates with profit
earning motive, public and voluntary organisations operate with motive to serve public (Jaura,
2019). Legal structure of these organisations also differs on the basis of their nature.
P2 Size and Scope of different types of organisation
Organisations also differentiate on the basis of their size and scope. On the basis of this,
organisations can be divided in micro and small enterprises, medium enterprises and large
enterprises.
Size of organisations
Micro organisations are smallest in terms of their size compared to all other types of
organisations. These organisations employ and engage least people and require low capital
investment. Maximum these organisations can employ 10 people but mainly are operated by
owner of the business.
Small organisations are bigger than micro organisations and maximum people employed
by these kinds of organisations are 50 employees. Capital investment is also higher compared to
micro but still requires low capital investment.
Medium organisations are those that in terms of size these organisations number of
employees in such organisations is up to 250 and their size of investment and profit both is
considerably higher than small and micro businesses. These businesses also strive to increase their
turnover and profit.
Large organisations are biggest in their size, private and public limited companies and
corporations are example of such organisations (Fournier, 2018). Employees in such organisation
are higher than 250 and their investment is also high. These businesses earn significant profit that
is important contributor in economy even when overall existence of such business in an economy
is least. These business provide highest number of employment and turnover is also highest
compared to other businesses.

Scope of organisations
 Micro organisations have least scope in terms of profit and growth. Profit of such
organisation is limited to fulfilling basic requirements of owners and people engaged with
such organisations.
 Small organisations are able to provide sound financial position to its owners and help in
maintaining lifestyle.
 Medium organisations operate with profit motive and they are engaged in increasing their
sale and this increases their profit.
 Large companies operate with their specific objectives and scope of their business
activities and profit is higher.
On the basis of size and scope product and services offered by such organisation also differ. In
this micro and small business organisations provide necessary services and products. These
businesses operate with least risk of lose and are able to maintain a constant limited earning.
Medium organisations’ services and products contribute in maintaining lifestyle. These businesses
have objectives of growth (balanced growth) (Durana and Chlebikova, 2016). Large business
organisations identify requirements of customers and provide services and products accordingly
with an objective of growth or scalable growth.
Size and scope of Public, private and voluntary organisation
Public organisation and their size and scope depend on and get affected by level of
government operating organisation. This means local, state or national government. NHS is
owned and operated by central government and this is why its size and scope extends to UK.
Private organisations and their scope and size depends on the level they are operated at,
this involves small, medium and large level.
Voluntary organisation and their size and scope vary and depends on the basis of their
nature and number of people associated with organisation. This can have size and scope extended
to city or town and can extend to international level.

LO2
P3 Relationship between different organisational functions and their link with organisational
objectives and structure
Business organisation has different functions that collectively contribute in achievement
of organisational objectives. These functions are production, marketing, finance, accounting, HR
etc. In organisations like Tesco these functions are carried out individually but still success of the
function depends on their interrelationship with other functional department. It is important that
functional areas work together in order to achieve organisational objectives. Concerned with
Tesco its organisational structure is highly hierarchical. This is because of nature and size of
organisation. Hierarchical structure facilitates understanding of role and responsibilities of every
individual in organisation. Interrelationship and their advantages and disadvantages are as
follows-
Production and Marketing
Production department in Tesco undertakes producing products that are later sold in retail
stores. Marketing department undertakes different functions of marketing such as research,
promotion. Marketing research plays important role in success of production department in Tesco.
This means that marketing provide knowledge to production department regarding quality and
attributes of products that customers prefer. Products when are developed and produced with right
knowledge they are more likely to succeed. Marketing department also get input from production
department regarding products and their promotions.
Finance and other departments
Finance department is one of the departments that is linked with every other functional
area in organisation. This means that financial department undertakes functions like allocation of
budget and financial reporting and analysis of performance of different functional areas in terms
of finance. Other than this, finance department also advise on better financial performance of
departments individually and help in taking better decisions (Srinivasan and Ramani, 2019). It is
important for all organisational departments to work with financial department in order to achieve
organisational objectives and ensure effective financial performance.

Human resource department and other department
Every organisation requires effective personnel who can carry out their respective
activities and this requirement is fulfilled by human resource department. HR department ensure
that every organisation in Tesco is resources with efficient and talented employees. This involves
qualitative hiring and training and development. Further their compensation, grievances are
solved by HR and this contribute in maintaining their performance. This is important that Tesco
employs right and efficient employees as they are important for achieving organisational
objectives.
IT department and other departments
Information technology is playing centre role in overall operation of Tesco and this is why
IT has become important for ensuring all functional areas are operating without any difficulty.
Marketing function and IT function is highly important because of online promotions and E-
commerce is also successfully is carried out with help of IT department of Tesco.
Interrelationship between organisations mainly affects structure of Tesco. Organisational
Structure is a system that outlines how different activities in organisation are directed towards
achievement of goals and objectives of the organisation. This relationship in functional areas gets
affected by type of organisational structure (Mhlanga, 2019). This also differentiates their role
and system in which they contribute in achievement of organisational goals and objectives.
Advantages of interrelationship of functional departments
 Working together can contribute in bringing effective results for Tesco that can be
difficult when functional departments work independently
 Input and assistance from one functional department can facilitate working for another
functional department
Disadvantages of interrelationship of functional departments
 It can create difficulty for functional areas in realising their individual interest
 Possibility of conflict is also there in interrelationship

LO3
P4 Positive and negative impact Macro environment has upon business operations
Positive and negative impact of macro environment on Tesco and NHS
Macro
Environment
Tesco NHS
Political Impact of Brexit has created
uncertainty for Tesco
Overall political situation is stills
stable for Tesco in its home country
as well as in certain other countries
Financial stability and impact of
political situation in this can affect
functioning of Tesco
Tesco is exposed to political situation
of many countries and this is why
different rates such as import and
export duty, taxes and other
monetary decision of different
countries can affect Tesco.
NHS also got affected by Brexit.
Because of Brexit functional capacity
of NHS have got affected.
It is a public organisation and this is
why different political situations and
ideologies affect successful operations
of NHS.
Financial capacity of NHS and
availability of resources for NHS also
get affected due to this factor.
Economical This involve cost of labour in
different countries
Taxation policies and interest rate is
also involved in this factor
Recession and financial stress also
cause negative effect on Tesco
Economic factors include lack of
resources, economic regulations and
recession along with this created
pressure on NHS to reduce salaries of
staff.
Economic condition of UK directly
and indirectly affect economic factor
of NHS.
Social Changing consumer preference Increasing average age of UK

create difficult in coping with
changes
Changing trends in food products is
another factor that is included in this.
Customers prefer to eat healthy and
organic food. This requires
considering quality of food products.
population is increasing and along
with this health problems also
increase, creates challenge for NHS
(Satalkina and Shpak, 2018).
Increasing chronic diseases such as
cancer and diabetes is also a challenge
for NHS.
With increasing old age population
and number of diseases increase
difficulty for NHS in providing quality
treatment.
Technological Technological advancement brought
new opportunity for Tesco.
Retail organisations are focusing on
improving in-store experience of
customers through Tesco. This can
create difficulty for Tesco.
Technological improvement in
organisation led to improvement in
overall service quality of NHS. This
involves modern machinery for
diagnosis and treatment.
Advancement in technology is
positively influenced medical
education system in NHS.
Legal This factor includes employment
regulations, equality and
discrimination laws.
Food safety standards and
regulations.
Many of the patients who are
unsatisfied with services of NHS have
taken their grievance to legal
platforms.
This cause NHS to face different legal
problems and litigations.
Environmental Increasing concern of government
and different agencies for
environment create difficulties for
Tesco in its functioning (Mhlanga,
2019).
Focusing on sustainable practices can
Due to toxic waste that is released by
medical organisation there is an
increase pressure on medical
organisations to reduce it.
Medical organisations are expected to
treat their waste and resources

provide long term benefits for Tesco carefully and NHS being public
organisation get extra pressure.
Above discussion suggests that macro environment of the Tesco and NHS offers positive
and negative influence in many ways such as technology has made positive impact but
environment and legal factors creating challenge. Social factor also possess some negative
influences on both the organisations.
LO4
P5 Internal and External analysis
Internal and external analysis refers to analysing strengths and weaknesses of the
organisation along with identifying potential opportunities and threats for organisation in its
external environment. This can be done with help of SWOT analysis. SWOT analysis of Tesco
and NHS is as follows-
SWOT Analysis of Tesco
Strengths
 Tesco is Biggest retailer in world
 Leader in market share
 Tesco is geographically diversified
 Tesco is largest private employer
 Technological advancement in
organisation
Opportunities
 Strategic alliances with different
organisations
 Expansion of business operations in
other countries and developing
economies
 Increasing online shopping
 Focusing on changing consumer
preference and needs
 Expansion of Jack’s business
Weaknesses
 Failure of Tesco in US and Japan
 Fraud trial and accounting scandal
Threats
 Intense competition in retail industry
 Challenging economic situations

 Reducing operating profits
 Low cost strategy
 Poor performance in operational
context
because of recession
 Increasing legal regulations and
environment safety and standards
SWOT analysis suggests different strengths and weaknesses that Tesco has along with
potential opportunities and threats that Tesco might experience and need to deal with
(Phadermrod, Crowder and Wills, 2019). Tesco can utilise potential opportunities with help of its
strengths and also reduce impact of threats with its strengths.
SWOT Analysis of NHS
Strengths
 Availability throughout UK
 Effective utilization of technology for
treatment as well as for medical
education
 Continued growth and expansion
 Image associated with public
organizations
 Government support
Opportunities
 Increasing profit through different
marketing activities
 Joint venture and alliances with private
healthcare organisation
Weaknesses
 Difficulty in dealing with increasing
demand of healthcare services
 Difficulty in dealing with changing
demands due to aging population in UK
 High waiting time for patients
 Complaints from patients and their
families leading to legal difficulties
Threats
 Complaints from patients can affect
image and goodwill of NHS
 High turnover of staff can cause of
shortage of skills and competent
employees for NHS
 Increase in healthcare demand

NHS has several strengths and weaknesses however opportunities for NHS are limited
because it is a public organisation and operating to provide healthcare services in UK
(Phadermrod, Crowder and Wills, 2019). Threats of NHS are also limited and with improvement
and changes in policies and more diligence while operating impact of these can be reduced by
NHS.
P6 Strengths and weaknesses and their interrelation with external macro factors
Strengths and weaknesses of organisations are based on its internal capacity and their
operations and performance in market that gets affected by their policies and decisions. Macro
factors are external and cannot be controlled by organisations. This means that internal and
strengths and weaknesses of organisation can be controlled.
Concerned with interrelation of strengths and weaknesses with external macro factors,
organisations with help of its strengths and weaknesses can deal with macro factors. Strengths of
organisations can help them in utilising available opportunities in macro external environment.
Other than this, with help of its strengths organisations can reduce impact of potential threats on
its success. Here an example of Tesco can be taken to explain- Tesco has a threat of intense
competition but with help of its strength as biggest retailer and high market share and strong
financial position it can deal with its competitors. Technology of Tesco can also be utilised to take
competitive advantage.
However, interrelationship of strengths and weaknesses with external macro factors can
also influence organisations negatively. This means potential threats can be escalated by
weaknesses of the organisation (Hogan, Norton and Reynolds, 2018). Here an example of NHS
can be taken- NHS is facing threat due to increase in demand of healthcare services and in such
situation shortage of medical staff can boost impact and influence of threat on NHS and its
operations.
On the basis of above discussion it can be considered that macro environmental; factors
are not in control of the organisations but they can prepare and build strengths to deal with
potential threat and also enable them to utilise available opportunities. Considering this can help
in success and growth of organisation. It is mainly important for organisations seeking to grow
and increase their profit and reduce their cost. Organisations also need to work on their

weaknesses in order to reduce their influence and impact. Utilisation of opportunities can become
difficult for organisation due to weaknesses of the organisation. For example- while seeking for
joint venture and strategic alliances fraud and accounting trials can affect image of Tesco. This
can contribute in losing opportunity and this is why macro environment is significantly related
with strengths and weaknesses of organisation.
CONCLUSION
On the basis of above discussion, it can be concluded that there are different types of
organisations operating in economy and there are several elements and factors that differentiate in
these organisation. Understanding accurate nature of organisation can help in achieving predicted
and expected success. Later this report discussed about interrelationship of organisational
functions was discussed it suggests that no organisational function can operate properly and
successfully without taking assistance from other functional area. Discussion of macro
environment and its impact suggests that there are several ways in which macro environment
affect positively and negatively. Employing right strengths and avoiding impact on weaknesses
can help organisation to get positive influence of macro environment and its factors.

REFERENCES
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Online
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https://www.yourdictionary.com/business-environment#:~:text=The%20definition
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THE MACRO ENVIRONMENT – SIX FORCES IN THE ENVIRONMENT OF A BUSINESS.
2020. [Online]. Available Through: <https://marketing-insider.eu/macro-
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What Are Internal & External Environmental Factors That Affect Business. 2020. [Online].
Available Through: <https://www.mageplaza.com/blog/what-are-internal-external-
environmental-factors-that-affect-business.html>.