Impact of Culture, Environment, and Business Environment on Organizations

This report discusses the impact of culture, environment, and business environment on organizations, with a focus on Unilever. It explores the economic and non-economic factors, as well as the cultural and natural environment, that shape the functioning of organizations. The report also includes a PESTLE analysis of Unilever.

ORGANIZATION AND
BUSINESS
ENVIRONMENT

ABSTRACT
Unilever is a well-established organization which analyses all the internal and external
factors before making decisions in the company. The decisions are made in such a way so that
they can have a better functioning and the performance of the employees is not disturbed so that
the company can have a competitive advantage. Culture nature and environment can make the
functioning or processing of the products in the company get affected which Unilever has to
make decisions for accordingly.

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................1
Impact of culture, environment and business environment on organizations..............................2
Pestle Analysis.............................................................................................................................5
Swot Analysis..............................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment are all internal and external factors which have an influence on
working of organization in market. Factors which affect company are customer’s needs,
employees, innovation in technology, social trends, owners, suppliers, supply and demand, etc.
These factors affect companies directly and indirectly so that organization can make themselves
functions effectively and efficiently. Internal and external factors can also be distributed in
macro and micro factors as stated in business environment. There are five factors which are
included in business environment which are economic and legal, technological, competitive,
competitive, social and global business environment. Business must analyse their external and
internal factors before they make any decisions regarding company so that they can have a
positive impact on company. Improvements have to be made in organizations so that they can
function better but without understanding business environment decisions cannot be taken for
organization otherwise it is more likely to have negative impact on business. Economic
environment of United Kingdom is capitalistic in nature which is making a lot of opportunities
which is creating a lot of start-up's in country and a lot of job opportunities are coming up
because of this factor.
Unilever is a multinational company which is spread across 190 countries and is also a
public limited company. Headquarters are in London, England and number of employees
working in this organization are 155,000 as of 2019. Products which are available in Unilever are
beauty & personal care, cleaning products, refreshers and food products. Unilever is the oldest
multinational company and they own more than 400 brands which has made Unilever get
turnover of 53.7 billion euros as of 2017 (Unilever, 2020). Unilever is a dual listed organization
which consists of Unilever N.V. and Unilever plc, both companies operate with a common board
members as one.
This report discusses internal and external factors which effect organization. Factors like
business culture, business natural and business environment has shaped organization in a
particular manner which helps organization to make decisions and plan strategies and methods
for themselves to function. The report will also discuss SWOT and PESTLE factors of Unilever
to understand business environment of organization better.

Impact of culture, environment and business environment on organizations
There are a lot of factors which are affecting companies functioning in organization
which company has to consider and then make decisions for themselves. Culture, nature and
business environment play most important role in shaping behaviour of organization
(Loosemore, 2016).
Business Environment
Business environment are internal and external factors which have an influence on
business. There are two types of business environment which are economic and non- economic.
 Economic Environment
Economic environment are those factors like economic policies, economic system and
economic conditions of country which will impact on businesses of Unilever. Economy plays a
major role on functioning and behaviour of organization, having a capitalistic economy of
company, there are free and private organizations which are established. There are more
businesses which are starting in country which will affect economy of organization which will
help the country to develop. Due to Brexit there are a lot of changes which are taking place in
Unilever like lowering the investment and technological changes were low. Employment rates in
country are getting better after 2008 recession and they are getting better with time. The demand
of products by customers is also increasing since the customers are having a higher income
which is making an effect the pricing of products which is a very important factor for them.
Measures have been taken by government and changes in policies has taken place in market
which Unilever had to keep in mind when they made strategies for the growth in the future.
Unilever had to invest a lot in marketing for themselves in getting in productive employees in
organization when there was recession in country but now there is a little more stability in the
revenue of the company. Supplies and demands are being managed from time to time and they
are making changes such as having an affective management which will understand the
customers and lead the employees accordingly so that they can make have loyal customers.
While investing and launching new products in market the company has to be even more careful
about the changes they are getting in because they have to price them according so that they can
match the standards living of the people. Leaders have to manage the employees so that the
changes in organization can take place which will be very beneficial for the organization. Too
high pricing of products will be able to work now but before it did not do so because the income

level of customers were low which made the company not have enough revenue. Rates of the
employees is also getting higher as Unilever wants to get professional and productive employees
in organization, costing will be higher and impact the company negatively.
 Non- Economic Environment
Non- economic environment are those factors like demographic factors, technological
development, natural environment, legal framework, etc. which are having an impact on
Unilever. There is a stability in political power in country which is why policies remain same
and due to Brexit there is a growth in country which is making the organization make better
revenue for themselves in market. Technology in country is high which is making Unilever have
a stable growth for themselves in market. Leaders have to make sure that the changes which are
coming in company are being accepted by the leaders and then the leaders are communicating
the changes to the employees accordingly. It is very important to have a better and advanced
employment in organization so that the changes can come in properly which will help the
company have a competitive advantage for the further growth. While recruitment the human
resource of Unilever makes sure that they select the best in minimum wage and provide them
with health and safety so that they can have loyal employees who can be trained for a long run.
Products of Unilever are designed in such a manner that all the ages groups can use them and are
priced in a manner so that the annual income population can also afford them. Management is
hired from different social backgrounds so that they understand the different social factors and
make products which will be accepted by all. Diversity is very much visible in Unilever which
makes the company have a competitive advantage.
Culture Environment
Culture of Unilever can affect business to function in market which has to be considered
when it is required to make decisions and changes for themselves. Leaders and managers of
Unilever work for providing the employees for a positive work culture. Leaders are very flexible
with time and resources which the employees need for making the work get completed from time
to time. It is very important to have motivated employees or work force in organization therefore
business has come out with policies such as rewarding, giving incentives or extra privileges so
that business can have loyal employees and a stronger work force. Feedbacks are taken from the
employees so that the leader and managers can make decisions for them properly so that they can
maintain the working environment.

Flexibility from Unilever for employees is always present so that the working
environment is healthy and there is smooth functioning of organization. Attitude of employees
and business are welcoming the changes which are coming in market so that they can grow as
much as possible and that will be very helpful for the functioning of Unilever. Changes are
required so that competitive advantage can be got by the company in market. Employees of
Unilever are given short term visions so that they can achieve those and make a profit in
organization. While hiring productive employees there is a lot of fairness in that process so that
they can get the right standards of employees which would help in making the organization reach
there objectives and goals faster. Diversity in Unilever is there which is making the company
have a lot of innovations and creativity come in the organization which is satisfying the
customers. Leaders train new employees so that there is a balance in the functioning of the
organization and the productivity is not affected. There is a discipline which the employees must
have which the leaders have to teach the employees so that the company can function in a better
format.
Unilever is growing because there is a stability in market since decisions are taken in
organization after considering the point of view of employees. Business have made this culture
such so that the employees feel that they are the major part of organization and they feel
comfortable working in the organization. Language gap has to be maintained and if not
maintained then there will be miscommunication. Unilever provides translators for those who do
not understand the language so that the productivity in organization can be maintained and the
standards of organization are met. Clarity in organizations is a very important factor for it to
work and get a competitive advantage. Working hours for the employees is being paid for per
hour so that there is no unfair treatment in Unilever so that they can have a stable income and
there is a fairness in environment of organization (Poorrezaei, Pich and Resnick, 2019). There is
a support which is being given to the employees by leaders and managers of Unilever to the
employees so that they understand the changes properly and help them to productively work with
them.
Nature Environment
According to researches the operations and financial performance of business are affect
70% because of the weather (Bertrand and Parnaudeau, 2017). There is a use of renewable
resource which are being used in Unilever which is making the environment for the employees,

customers and the business all together. Resources are very limited therefore utilizing those are
very important factor for the organization and minimizing negative impacts. Unilever is shifting
to products whose resources are easily available for a long term so that the company can make
profit for a long time. The government is also changing policies so that the company can reduce
their carbon footprint, utilize resources in a better way and other policies which are for the
betterment for themselves and long run in market. Clear weather and supporting climate helps
the delivery of suppliers and demands of customers be met easily of Unilever. United Kingdom
is well-connected with other countries and that will give the organization another positive aspect
to do business in other countries which is going to make economic condition of the business
improve.
There has to be a clear strategy for making Unilever have a profit in market by planning
their strategies according to nature environment kept in mind so that there is minimized damage
to of the organization (Katmon and Al Farooque, 2017). Climate is a factor which is not under
control therefore it is very important factor in which the business is running in. Unilever is
focusing on providing the products to the customers in country faster than neighbouring
countries. United Kingdom is having a very good connectivity in making the organization have a
better standards for themselves which is very helpful for them.
Pestle Analysis
It analysis and evaluates various external factors of environment that impact on the
functioning of business and helps it in achieving competitive advantages in the market. Unilever
is a leading company in UK that deals in consumer goods and operates its business worldwide.
Pestle analysis of Unilever helps in identifying all such external factor that impact on smooth
functioning of company and helps in gaining competitive position in the market.
Political Factor: It refers to government rules and regulations that impact on smooth
functioning of organization. Due to Brexit, UK is facing situation of recession that means people
are less interested to make purchase so it decreases sales and profit margin (Mingran and
Alexander, 2017). Political instability has also resulted in high debt rate thus increases cost of
production and decreasing profitability of the company.
Economical Factor: It includes interest rate, employment rate and disposable income of
customers in the country (Liu, and Alexander, 2017). Due to Brexit UK economic is facing

recession and customers are less willing to spend or make purchase thus it has impact on
company sales and profitability. But company is able to survive and grow as it operate business
across various nation. Thus, this factor has impact positively as well as negatively on the
functioning of business and helps in achievement of organizational goals.
Social Factor: Company in order to differentiate itself from other competitors in the
market has satisfied the needs of customers in effective manner. Increase in demand for herbal
and organic products influencing the FMCG industry. (Islam, 2017). Company has already
launch herbal and organic products but it is growing at low pace.
Technological: It refers to level of technology and innovation in technology that helps
company in gaining competitive advantages in the market. Unilever by using higher level of
automation that helps in quickly supply of products in store able to expands its business and
build strong brand image in the market. Thus, technological factor had led to growth and success
of business in the global and local market.
Legal Factor: It refers to laws and regulation of the country that the company has to
abided in order to perform its activities effectively. Unilever is consumer good company that has
wide product portfolio's and approx. 400 brands in food, personal and health care. Legal factor
has impact on company by restricting its function as it has to abide to employment laws and also
patent and copyright to various technology while operating its business (Mukherjee, 2017). Thus,
company in order to perform its function effectively has followed laws, ensure safety of its
customers and employees that helps in building successful brand image of company.
Environmental Factor: As resources available in environment are limited, so they need to
be protected by company for effective operation. It had led to increases sales and build brand
image as company take steps to protect environment. Thus, environmental factor has adversely
impact on the functioning of Unilever.
Swot Analysis
Swot Analysis is done to identify strength and weaknesses of company in order to gain
competitive advantages by using available opportunities.
Strength: Company strength lies in its wide product portfolio, presence in global market
and strong brand image of the company (Weng and Liu, 2018). Strong brand image in consumer
good industry helps company to penetrate market and to effectively competitive with other
competitors in global market.

Weaknesses: Despite strong market position company has limited potential growth and
business diversification as more investment in consumer good. So, it needs to diversify its
business in order to gain competitive advantages in the market.
Opportunities: Company has opportunities to expand and diversify its business due to
well-established brand image of the company (Frolova, 2019). It can expand its businesses by
launching organic food in its product range thus satisfying needs of health conscious customers
and attract existing customers as well as new customers to the company.
Threats: Unilever is facing threat of increasing competition in consumer goods industry and
product imitation by local firms as they can develop same product as Unilever to increase their
sales.
CONCLUSION
From the above report, it can be concluded that cultural and natural environment impact
and shape the behaviour of Unilever. There are various internal and external factors that impact
on the functioning of business in the market in which it operates. Business has to consider such
factor in order to succeed and grow in the industry. Business environment are further divided
into two economic and non-economic environments. Both of these factors impact on the smooth
functioning of businesses in the industry. It can also be concluded that economic environment
such as interest rate, disposable income should be considered for effectively achievement of
organizational goals. UK economic is suffering from situation of recession but the company was
able to grow and survive in the market by expanding its business across the globe. Non–
economy environment such as demographic, technological has to be considered for achievement
of company goals. Company by considering non economical factor such as demographic,
technological factor of various countries is able to build strong brand image and promote its
business across the globe. It can also be concluded from above report that culture environment
also needs to be considered by company to satisfy needs of customers beyond their expectancy.
It crucial for company to recruit right person for right job or to motivate employees to work
effectively for organization. Helps in identifying employment rate, their belief and value thus
helps Unilever in satisfying needs of customers and employees. Thus, culture environment helps
in maintaining and building customers loyalty and satisfaction in the society and promote
repeated sales. It can also be explained that natural environment such as weather and climate also

impact on functioning of business. As the resource are limited so company has to make effective
utilization of available resource to achieve its objectives. It also has to take steps to reduce
carbon footprint to ensure health and safety of people living in the society. Company by taking
incentives regarding protection of environment helps in building strong brand image and
increases sales of the product. From the above analysis, it can also be concluded that various
internal and external factor can be evaluated by company by conducting Pestle and swot
analysis. SWOT Analysis helps Unilever in gaining competitive advantage and various
opportunities available in the industry. It also protects company from various threats by
identifying increasing competition in the market. Pestle Analysis helps in identifying external
factors that impact Unilever such as policies of government, economic condition of the country
and social belief and value of people living in the society. It also identifies technological
advancement and laws of government that impact on the functioning of Unilever. Thus, it can be
concluded that environmental factors impact adversely in functioning of company.

REFERENCES
Books and Journals
Frolova, N. A., 2019, January. Using PEST-and SWOT Analysis for the Strategic Development
of an Enterprise for the Production of Confectionery Products. In International Scientific
Conference" Far East Con"(ISCFEC 2018). Atlantis Press.
Islam, M. A., 2017. SWOT Mix and PESTEL Analysis: Effective Tools of Risk Management of
Leasing Companies. The Millennium University Journal. 2(1). pp.1-18.
Katmon, N. and Al Farooque, O., 2017. Exploring the impact of internal corporate governance
on the relation between disclosure quality and earnings management in the UK listed
companies. Journal of Business Ethics. 142(2). pp.345-367.
Liu, H. and Alexander, P., 2017. Analysis of the impact of advertising and the use of social
media regarding product sales.
Loosemore, M., 2016. Social procurement in UK construction projects. International journal of
project management. 34(2). pp.133-144.
Mingran, B. and Alexander, P., 2017. Analysis of Customer Satisfaction in a Motel.
Mukherjee, M., 2017. Business process analysis methodology. International Journal of
Advanced Engineering and Management. 2(5). pp.113-117.
Poorrezaei, M., Pich, C. and Resnick, S., 2019. Investing the customer journey and the impact of
online and offline touchpoints on brand loyalty in the context of a UK retailer.
Weng, J. and Liu, T., 2018, June. Enterprise Strategy Analysis Based on SWOT Analysis.
In 2018 International Conference on Sports, Arts, Education and Management
Engineering (SAEME 2018). Atlantis Press.
Online
Bertrand. J. L and Parnaudeau. M, 2017. [Online]. Available Through:
<https://hbr.org/2017/09/severe-weather-threatens-businesses-its-time-to-measure-and-
disclose-the-risks>.
Unilever. 2020. [Online]. Available Through: <https://en.wikipedia.org/wiki/Unilever>.