Business Environment Analysis and Strategic Planning

This assignment requires analysis of the business environment and its impact on company performance. It involves identifying strengths, weaknesses, opportunities, and threats (SWOT) as well as understanding macro factors that affect a firm's operations. The goal is to develop strategies for effective resource utilization and enhance profitability by considering the interrelation between functional departments and external factors.

Business And Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
P1- Different types, purpose and legal structure of organisation ...............................................1
P2- Size and scope of different type of organisation ................................................................3
P3-Relationship between different organisation functions , objective and structure..................7
P4-Positive and negative impact of macro factors on Sainsbury business.................................9
P5.internal and external analysis of company...........................................................................13
p6. inter-relationship between strength and weaknesses and macro factors.............................16
CONCLUSION .............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Business environment is a part of every business. Internal factors are those factor which can
be control by organisation like (employees ,owners) and external factors are those factor which
can't be control by organisation and external factors( political, economic, social, technology,
competitors ) that are influence to business .
Present report based on Sainsbury company, it is public limited company which is registered
in London stock exchange and FTSE 100. this company founded by John Jains Sainsbury and
headquarter established in London, UK , EC1. Total 186900 employees engaged with this
company.
Further study includes different types, purpose and legal structure, size and scope of public
company, private company, voluntary and small medium company Further mention relationship
between different functional department with objective and structure. This report also includes
that macro factor positive and negative impact on sainsbury company and Analysis internal and
external factor that interrelated with macro factor(Hamilton and Webster, 2018.).
TASK
P1- Different types, purpose and legal structure of organisation
Public company
Public companies are those company which regulated by government(central
government, state government and semi government) and at least 51% of shareholding taken by
government. Public company also called public held company or public traded company
because that company's shares are freely traded on stock exchange.
For example :- centrica public limited company- company is largest supplier of gas and electric
to customer and having turnover 27.1 billion pound in the last year.
Purpose
 Public traded company main purpose is generating employment for people.
 Company focus on improving welfare of people.
 Public company concentrates on increasing shareholder's value through maximization of
profit.
Legal structure
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 public company should have minimum 7 members and no limit on the maximum
members.
 “Public limited company” word use in the end of company's name.
 Public limited company require minimum two directors and one company secretary.
 Before start new public limited Company, must be allotted share to valued of at least
50000 pound.
Private company
private sector company are those company which is not regulated by government. These
company run by private individuals and group of individuals. Private company's shares privately
and publicly traded on stock exchange(Quinlan and et.al.,2019.).
For example :- Arcadia company works in clothing sector and sales are 2682 million pound and
employees 44030 who are engage with this company.
Purpose
 private company main purpose is maximization of profit .
 Private sector purpose to compete with competitors by providing best services and
product at a low price.
Legal structure
 private company must have at least one director or secretary.
 Limited company must issue share to its initial member .
 “Private limited” word must be mention in the end of the private company name.
 Private company should have minimum 2 members and maximum 200 members.
Voluntary organization
voluntary organisation are those organisation where group of individual voluntary enter
into a agreement who run their business for welfare purpose rather than making profit.
For example : wellcome trust is the UK based voluntary organization and expenditure is 728.1
million pound.
Purpose
 voluntary organization aim is wealth creation for society rather than material wealth.
 Provide benefit to community, increase health awareness and promote education
facilities .
Legal structure
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 voluntary organization follows the legal structure as per provisions given for trust ,
unincorporated associations and limited company by guarantee.
 All Liability are in the hand of the voluntary organization owner.
 Memorandum of association must be prepare by company (Teece, 2018. ).
small medium organization
Small medium companies a non subsidiary company where numbers of members less
than required members.
For example: verdant leisure is Uk based small medium company and annual turnover is 31
million pound.
Purpose
 main purpose of small medium organization is increase competition through innovation
and provide better services.
 Small medium organization aim is Increase employment and create opportunities for
rural people.
Legal structure
 In small organization should have less than 50 employees and in medium organization
should have less than 250 employees.
 Small organization having turnover under 10 million pound and in the other side medium
organization turnover should be under 50 million pound,
P2- Size and scope of different type of organisation
Public company Private company Voluntary
company
Small medium
company
Name of the
company
NHS Arcadia company Wellcome trust
company
J rothweham
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Objectives Promote to NHS
brand and
influence to
health services
and generating
commercial
business by
generating
network(Calabres
e, and et.al.,
2018. ) .
The main
objective of this
company is to
create value and to
expand the
business so that
profit can be
maximised.
Main objective of
the company is to
provide welfare
services to
people.
this main
objective is to
create luxury
product by using
stones. For this
achievement they
use advance
technology.
Vision Company vision
is to provide
better health, care
and value to
community.
Arcadia company
main vision is to
promote and
improvement of
services and
provide
specialised
treatment.
To set up the
research centre
for meeting the
world wide
health
challenges.
Main vision is to
generate profit by
providing product
,create
employment and
enhance
innovations and
skills.
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Mission
Company's
mission is to
deliver quality to
care to every
person. This
mission can
achieve by
assessing modern
services.
Company mission
is to be create best
company in the
world by
providing
specialised
deceases treatment
as well as other
treatment.
Mission is to
make agreement
with those
research
institution who
work for lower
and middle class
people and also
provide healthy
care services to
them .
Mission Is to
become leading
company in small
medium sector
and generate
profit through
create innovation
and skills.
revenue NHS generate
annual revenue is
67.1 million
dollar.
Arcadia
company's annual
revenue is 124.5
million dollar.
Wellcome
company is the
third wealthiest
charitable trust
because this
company's total
endowment of
Turnover of this
company is 24
million pound.
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25.9 million
pound.
Organisation
structure
NHS company
follow tall
organisation
structure so that
they can provide
health care
funding across
the world.
This company
follow also tall
structure so that
they can work for
reduce illness and
provide
specialised
treatment to
needed people.
Wellcome trust
follow matrix
structure so that
they can receive
information from
the selected
individuals.
This company
follow that
structure so they
can easily
introduce new
technology into
the stone
company.
Legal structure NHS company
freely transfer his
share to public.
Minimum
member can be 7
but no limit on
the maximum
members.
Arcadia company
are restricted to
transfer his share
and minimum
member can be 2
and maximum can
be 200.
As per provision
voluntary
company follow
legal structure
same as trust and
incorporated
association.
people voluntary
come for welfare
purpose.
Small company
should have less
than 50
employees and
medium company
should have less
than 250
employees.
scope It is the leading
health care
service company
and total 1.4
million
employees
engaged.
Day by day this
company growing
Arcadia company
have more than 25
outlay in UK and
total number of
employees are
22000. This
company recruit
new doctors and
qualified person
This company
have 5056
employees and
this company
located in london
,euston ropad and
NW1. Main
scope of the
company is
This company is
small medium
organisation so
number of
workers are
limited in
company. This
company day by
day provide
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by providing
quality services to
public.
for giving
specialised
treatment to
patient and
continuously
increase locations.
providing
welfare services
to poor people.
innovative and
luxury product
which is made by
stone with
advance
technology.
Stakeholder Employees and
manager are
stakeholder of the
company.
Customers,
employees and
any partnership
firm take stake
holding in
company.
Public , investors
, managers,
customers are
stakeholders of
the trust
company.
Employees,
customers and
manager are
stakeholders.
P3-Relationship between different organisation functions , objective and structure
Sainsbury company follows tall structure in which top management give instruction to
functional department managers after that manager of functional department give instruction to
worker . Sanisbury company should have strong relationship among functional department like
finance, research, human resource department , marketing department and IT department so it
helps in create synergy within all department. Coordination among all functional department
helps in meet out customer demands with high production and maximised profit(Beatty and
et.al., 2018).
Relationship between marketing and finance- Sainsbury's marketing department uses
different marketing techniques which facilitate increase in sales and huge funds are generated in
the company which helps the finance department in managing the inflow and outflow of fund in
a better way. Finance department effectively manage to funds that helps to get to sufficient funds
to marketing department for effective advertisement and achieve sales target . Marketing cost
always vary so finance department analysis market trends and make budget and cost of
marketing decide.
Sainsbury company's interrelationship helps to increase in sales and easily achieve sales
target. Company can maximised the profit that show positive financial position of the company.
Company follow tall structure sometimes it become complex process. sometime Marketing
department not provide information to finance department then finance manager not able to
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estimate cost then it will increase in cash outflow position. In the other side company select
particular member to handle situation so information can be easily provide to finance department
then they able to manage inflow and outflow of funds (Hillary, 2017).
Relationship between human resource department and marketing – Sainsbury company HR
department recruit right people at a right time who helps in effective marketing and convince
people to purchase product. HR is important for effective marketing because HR department
inspire to employees by providing incentives, bonus and salary. Marketing create awareness
among people it will helps in increase selling and generate funds so human resource department
effectively allocated resources among employees. HR department helps in improving individual
and company's performance that will helps in achieve organization goals. HR recruit skill people
to promote product so that is helps increase in sales volume. Resources can be utilised in better
way and build positive image in the market.
Sainsbury's company have hierarchy structure it is very useful for providing information
on time . Marketing department provide information to HR department to recruit required person
then HR of the company recruit suitable person for suitable job that helps to attract customer.
Relationship between research department and marketing- Research department analysis
customer preferences by demand and supply , market trends and market situation so it will help
in marketing department. Sainsbury company have strong research department so company able
to meet out demands on the time and generate profit (Hamilton, and Webster, 2018). On the
other side marketing department analysis target audience that makes easy for the research
department to research on the demand and prospective of the target market. It will increase
customer retention by meet out the demand in the market and also maximised the profit.
Sometimes research and development department can't analysis to market situation that
create miscommunication and effective marketing doesn't take place but in flip side research and
department and marketing department relationship provide information according to area it will
give positive direction to marketing department (Jaakkola, and et.al., 2016).
P4-Positive and negative impact of macro factors on Sainsbury business.
There are some macro and micro factors which affect the Sainsbury business in all way.
Business are directly affected by the external factors which are continuously changing that is
they are dynamic. To exist for long term every business has to match their activities and
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functions with dynamic environment. Without matching with external factors or dynamic
environment no business is able to survive for long run.
Some macro factors are explained below through PESTLE Analysis-
Political factors-
Sainsbury is a retail, company trading in many companies and exposing themselves to
different type of political system risks and political environment. The company must diversify
their political risk in a systematic way to achieve success in all the retail industry crossing
countries .in this political factors there are some other elements also which can affect the
business organisation in long run .
 Political stability and risk of military invasion.
 For enforcement of contract ,the legal framework must be followed.
 Regulation related to trade and tariffs.
 Employee benefits which are mandatory
 tax rates and incentives
 other requirements of retail like product labelling
 Wage legislation which says about the minimum wages which are to be paid. and
overtime criteria.
 Regulations related to pricing
These are some factors which are required to consider while doing political analysis.
Negative impact
Another major impact on Sainsbury's is of Brexit. That is due to this act British and UK
get separated Imports and export become difficult and sever instability in political
environment which somewhere affect the business in very huge way. also the another impact
of Brexit on trade business affect many people as employment of EU citizen in the UK and
vice versa (Laudon and Traver, 2016).
It brings difficulty in transportation and logistics including fulfilment also, risk increases
regarding product safety including packaging, labelling and many.
Positive impact
Political stability in any economy of country may bring many advantages to the
organisation in all way.
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A constant and stable political system will help Sainsbury's to avoid the disrupts of
government in all their transactions.
Business will be able to work smoothly without disrupts. Which will help them to save their
time and energy which result in improving productivity.
Economic factors-
the macro factors of the economy are inflation rates, exchange rates, saving rates,
interest rates, economic cycle, aggregate demand and supply, aggregate investment etc. are
some macro factors which affect the Sainsbury’s. Whereas some micro factors like
competitive advantage ,competition norms etc (Chang, 2016).
Sainsbury can use some macro factors like interest rate, growth rate, spending’s of
consumers etc. forecast the future growth and development of the product so accordingly
they can mange their production and supply in their retail industry includes any type of
economic system of country which is required to be followed by the organisation ,they also
have to maintain the system which is followed by that particular country.
 costs of labour and their productivity in the economy
 stages of business cycle ( prosperity, recession, etc.)
 various growth radiates -economic, discretionary, employment rate interest rate and
inflation rates
Negative impact
The economic factors in relation to Brexit ,slows down The economy and resulting in
high inflation rate which them resulting on low purchasing power bad hence economy of the
country decreases and business goes down. Unemployment rate is also the another important
factor which affects the Sainsbury's business significantly .due to unemployment the
production of Sainsbury's falls down in addition to it because of high inflation rates and non
availability of employees the supply decreases and demand also tend to fall as the price so
food products are high (Laudon and Traver, 2016).
Positive impact
After some long years the condition of UK is increased and low and falling price of food
products help in benefiting the customers as they are able to purchase the food products and
can raise their standard of living.
social factor-
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Due to the Brexit , many people loses their jobs and opportunities which lead to heavy
impact on their living standard. The dramatic change completely brings change in complete
retail industry including food products, clothing ,grocery etc. standard forecast also shows
that spending by customer in superstores is also fallen from £73.7bn to £70.8bn in next 5
years which affects the economy and society also (Kolk, 2016).
Positive impact
Sainsbury try to understand the existing market conditions and market people needs and
wants and try to design the products accordingly after Brexit. as their focus shifts to their
particular market segment. Hence ,it starts helping the people to satisfy their wants and raise
their standard of living.
Negative impact
The population which are earlier the customer of Sainsbury now shifts to their
demographic region after Brexit, which resulted in decreasing demand of their food products
and hence profits margin also falls down,.
4.Technological factors-
Technology has made a drastic change in the entire economy. Through advanced
technology business are able to expand their business and grow their profit margin in long
run e.g.- online orders and food delivery is expanding and providing a business a wide reach
(Charter, 2017).
Positive impact-
Online business service provider by sainsbury is expanding increasingly and the annual
reports also shows that through providing online service sainsbury business is improving in
their services and sales to 25% year after year.
Negative impact
New technology make people to order their demands online which make them unaware
about the product quality and they were not able to know the cost structure which they can
get to know when the purchase is made directly instead of online. This also impact on value
chain structure of customers (Hair Jr, and et.al., 2015).
Environmental factors-
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Different markets have different environmental policies and issue which must be
followed by the b fussinesses .this is the duty of every business to follow the rule sand
policies made for protecting the environment in which they are living.
Positive impact-
After the case of Brexit, the environmental policies got separated for both UK and EU ,
so that businesses can follow their particular rule and regulations and interruptions are being
eliminated which help them to protect the environment and the resources which resulted in
optimum utilisation of environment resources.
Negative impact-
Due to brexit, the attitude of people towards the environmental resources and renewable
energies get reduce which resulted in wastage of the resources .recycling leads to decrease as
the separation of the two bring a greater impact on purchasing power of people as well as on
profit margins of employees.
Legal factors
-every organisation must gain the legal protection of their property through intellectual
rights. organisation must consider the antitrust tin retail industry and in overall country, they
should fulfil the requirements related to health and safety laws, data protection etc.
Positive impact-
Legal factory help Sainsbury's to protect their property by providing intellectual rights
and protecting them from being theft of their organisation's secret sauce.
Negative impact-
Any legislations made by government directly impact the company performance. Hence,
any change in legislative laws directly impact and disrupts the Sainsbury's performance.
For ex. introducing any new tax on the advertisement of highly processed and fatty foods can
directs affect the cost structure of organisation (Quinlan and et.al., 2019).
P5.internal and external analysis of company
INTERNAL ANALYSIS
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(source:What Is Business Environment,2019)
Sainsbury
STRENGTHS Excellent staff- Sainbury company has strong
sales staff with wide knowledge of existing
products.
Good customer relationship- the company
uses different customer relationship
management practises like automate processes,
CRM software etc. so that better
communication can be build between company
and its customers.
Effective internal communication- the
coordination and cooperation between the
internal staff of the Sainsbury is so good that
the task are completed on time with efficiency.
WEAKNESSES Overburdened- presently the organisation is
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struggling to meet its deadlines because too
much work are left on the staff.
High prices- prices of Sainsbury are high as
compared to its competitors so normal income
people will not buy it.
Low investment in research- In the sense of
innovation the company cannot compete with
other players in the business as the research
and development expenses are below than its
competitor which leads to outdated marketing
OPPORTUNITIES New market- Sainsbury can open up for new
market and diverse range of products with
innovation and creativity so that large customer
base can be reached.
Technology advancement- Bringing new
technology in the business can enables the
corporate in achieving the quality and in
meeting the deadlines.
Online marketing- It can use online channels
for widening the market share and sales can be
increased that leads to profit maximisation.
THREATS Competitor- developing new techniques and
demanding products will be a huge threat for
the firm for reaching the competitive position
in today's changing environment.
New regulations- New laws and legislations
for the existing products can create a threat for
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the entity as to implement such regulations
brings complexity.
Increased prices of raw material- if the
prices of the raw material increases then the
profitability of the Sainsbury company lowers
down (Erasmus, and et.al., 2016).
Lack of workforce- if there exist the shortage
of skilled staff and too much work then the
company could not be able to meet the projects
performance on time.
EXTERNAL ANALYSIS-
for external analysis Sainsbury adopts porter's five forces model-
 Threat of new entrants- As it is a leading industry so it attracts other firms and because
of that the profitability and the growth of the Sainsbury company reduces. It causes a
huge threat for the firm in relation to different factors like intellectual right, brand equity,
differentiated product etc (Aydiner and et.al., 2019).
 Threat of substitutes- It has a wide range of substitute which creates a threat for the
company in the sense of switching cost of the customers as customers can easily switch
to its competitors product which leads to steady profits for the company. The substitution
depends on different factors like homogeneous products at low price, ease of switching,
available substitutes etc.
 Buyer's bargaining power- As the available substitute of Sainsbury company is more so
the bargaining power of the buyer increases and they could pressurise the firm to set
prices as per their buying power. The customer has all the right to switch to other brands
which can be a huge loss for the company as it will lose its customers.
 Supplier's bargaining power- for supplying of inputs the organisation is highly
dependent upon its suppliers and suppliers has the power of bargaining as it has the
option of alternatives. Supplier can charge the prices as per their preference so the firm
cannot set excessively high prices for its products (Recica and et.al., 2019).
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 Rivalry- Sainsbury faces a huge competitive rivalry in today's competitive world so it
need to focus on understanding the competitors in a better way so that it could reach the
competitive position in the market. It can use different strategies for getting out of the
rivalry like increase expenses on promotional tools, expenses on technology etc.
P6. inter-relationship between strength and weaknesses and macro factors
Company has a strength of good customer relationship that has a direct link to
environmental and social macro factors as maintaining healthy relations with customers leads to
positive environment and the values and beliefs of the people can be achieved in effective
manner. As the company has effective internal communication it positively inter-related with the
social factors of the work environment as there will be unity among the employees which creates
a better work environment at the workplace.
On the other hand, low investment in research can be counted as big weakness for Sainsbury
in relation to its technological macro factors as if research is not conducted in such an inevitable
environment then the company cannot bring the latest technology and the working of the staff
will not enhance (Aydiner and et.al., 2019). High prices has a direct relation with the economic
factors because high prices lead to inflation in the economy and the purchasing power of the
customers get reduced.
CONCLUSION
Above report summarised that business environment helps the organisation to develop
effective strategy for achieve the goals and compete with competitors. It also concluded that
interrelation between all functional department is important for effective utilisation of resources
and helps to seek more opportunities and achieve target. Internal and external analyses aid in
analysing actual situation and position of firm. By this way company can design its strategies
and can enhance its profitability to great extent. There is significant relationship between
strength, weakness of company and macro factors. This relationship supports in conducting
operations in smooth manner.
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REFERENCES
Books and journals
Aydiner, A.S. and et.al., 2019. Business analytics and firm performance: The mediating role of
business process performance. Journal of Business Research.96.pp.228-237.
Beatty, J.F. and et.al., 2018. Business law and the legal environment. Cengage Learning.
Calabrese, M. and et.al., 2018. From mechanical to cognitive view: The changes of decision
making in business environment. In Social Dynamics in a Systems Perspective (pp. 223-
240). Springer, Cham.
Chang, J.F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
Erasmus, B. and et.al., 2016. Introduction to business management. Oxford University Press
Southern Africa.
Hair Jr, J.F. and et.al., 2015. Essentials of business research methods. Routledge.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Jaakkola, M. and et.al., 2016. Is more capability always beneficial for firm performance? Market
orientation, core business process capabilities and business environment. Journal of
Marketing Management.32(13-14). pp.1359-1385.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business.51(1). pp.23-
34.
Kopnina, H. and Blewitt, J., 2018. Sustainable business: Key issues. Routledge.
Laudon, K.C. and Traver, C.G., 2016. E-commerce: business, technology, society.
Quinlan, C and et.al.,2019. Business research methods. South Western Cengage.
Recica, F. and et.al., 2019. Innovation and the export performance of firms in transition
economies: The relevance of the business environment and the stage of transition.
Teece, D.J., 2018. Business models and dynamic capabilities. Long Range Planning.51(1).
pp.40-49.
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Online
What Is Business Environment. 2019.[online]. Available through
<https://study.com/academy/lesson/what-is-business-environment-definition-factors-
quiz.html>
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