Understanding Business Strategies and Environment

This assignment requires students to analyze the interplay between business strategies and environmental factors. It prompts them to examine how different business strategies influence environmental impacts, drawing upon case studies for illustration. Students are also expected to discuss the importance of sustainable business practices in contemporary contexts.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
P1.................................................................................................................................................1
P2.................................................................................................................................................2
P3.................................................................................................................................................3
m1................................................................................................................................................5
M2...............................................................................................................................................6
P5.................................................................................................................................................8
P6.................................................................................................................................................9
M3 ............................................................................................................................................10
M4.............................................................................................................................................11
D2..............................................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment is a mixture of macro and micro environmental factors which are
necessarily be evaluated. It helps the organization to analyse the internal and external factors so
that effective decision making can be done. The micro factors of the business consist of
competitors, suppliers, customers and the employees. Whereas, macro factor includes economic,
demographic, natural and cultural forces. For the betterment of the business operations, it is
crucial to evaluate the two factors. This will assist the organization to make strategies and plan
for the effectiveness of the business (Alshamaila, Papagiannidis and Li, 2013). The present
report is based on a scenario in which three organizations are taken into consideration. They are
HSBC bank, Lyreco UK and British red cross. All the three stated organizations work for
different purposes and have legal structure. This document is prepared with a purpose to to
enlighten the structure and types of organizations. In context to this, size and scope of the three
are also going to consider in this report.
P1
A business organisation means individual or group of individual who commercially
works together to achieve certain task or goals. An organisation can be broadly classified in two
that is profit making and non profit organisation. The main types of organisation in business
organisation in UK are private organisation, public organisation and voluntary organisations.
Private organisation
An organisation who is owned by private individuals and they have all control and
management of a company. There main objective is earning profit. Now- a days such
organisation have a faster growth compare to public organisation. As per the case study “lyreco
UK Ltd.” is a private organisation who raises money by issuing shares and debentures of
company in market (Amran, Ooi and Devi, 2015). The main objective of such organisation is
earning profit, increasing their market share, sales maximisation and overall growth of an
organisation. It can get financed by government grants, issuance of shares or bank loans.
Public organisation
An organisation who is completely owned and controlled by government of country that
is central state or local government. As per case study, HSBC bank is a public organisation, who
has a main motto of helping citizen of country and fulfil their dreams. They raises money from
1

public revenues and savings or government grants. There are various advantages to employees
like security of job plus retirement benefits etc. they are funded by individual and corporate
investors.
Voluntary organisation
An organisation whose ownership is with voluntary groups. Voluntary group is a group
of people who decides to work together to bring out task and decides there part of responsibility
and obligations mutually and therefore, legal form is being an issue when the rules and
regulations are written (Bartolomei and et.al., 2012). As per case study, British Red cross is a
voluntary organisation in which same as other organisation, group chooses the legal structure
which is most suitable to them. An organisation has no separate legal existence. The main
purpose of such organisation is to help certain types of people.
P2
On the basis of size and scope the three chosen organizations are purely different form
each other. The size and scope of the stated organizations are given below.
Public organization: Public organization is the one which is managed and controlled by the
government. As per the scenario, HSBC bank is taken into consideration which is one of the
renowned financial institution of UK. HSBC bank is one of the world's largest banking and
financial service organisations. It was founded in year 1865 with the help of Thomas Jackson.
They serving 45 million customers globally. (Beringer, Jonas and Georg Gemünden, 2012) They
are serving majorly four services which includes banking commercially as well as globally, also
global private banking and retail banking. Organisation have listed shares on four stock
exchanges. In terms of size, the organization has 266273 employees with huge hierarchical
structure. The organization is has around 6000 offices in different countries around the world.
The scope and purpose of this bank is to provide financial services to the customers in order to
attain their ambitions.
Private organization: Private organization works with an aim to render quality services with the
motive to raise the profitability of the company. Here, Lyreco is taken which is the worldwide
distributor of workplace suppliers. lyreco UK limited is a private organisation who offers variety
of office furniture and technology around 10000 stocked products. A team consist of 9000
employees active in 42 countries also on 4 continents. Organisation has a vision of providing all
2

products required at work. Company earns a revenue of $ 341.524 million and a net income of
$20.226. The organization provides furnitures, technology products and all the tools and
equipments that are used in the business The scope of this organization is to provided the
requisite services as per the needs of the customers. But the main motive of this firm is to earn
good profits with the attainment of customers satisfaction level.
Voluntary organization: These are the organizations which are formed with the group of people
without any motive of monetary compensations. However, British red cross is adopted as per the
case study. It is a UK body running a Red Crescent movement for neutral and impartial
humanitarian network (Butler and et.al., 2013). It was founded in year 1870. It is a group of
32500 volunteers and 3500 staff. The group helps people, being neutral to everyone that is no
discrimination related to origin, nationality, religion or political beliefs. Its charity income
reaches to ₤261.8 million for year ending 2014 and voluntary income of ₤140.5 million. The
stated organization helps the people in crises such as disasters, first aid providence etc. The
scope of this organization is to render social service to the needy people. The size of the
organization is small with small hierarchical structure. The organization has no profit motive but
they focus on humanitarian aid. They avoid all the discriminations among the people but they
help them in best possible manner. The organization has less employees but their operations are
managed.
P3
As per the scenario, public organization is opted whose relationship between the
organizational functions is explained. The operations of HSBC bank is distributed in different
departments such as marketing,human resource, finance etc. With the help of these departments
the organization is able to manage its tasks and operations. The human resource department of
this bank focuses on the recruitment and selection of the skilled and talented candidates in the
company (Doeksen and Symes, 2015). The organization has large number of employees which
are got selected with the help of this department. In addition to this, the training and development
of the employees are also based on this firm. In addition to this, the marketing department of the
company also plays an essential roles in the success of this organization. This section performs
the promotional and marketing activities in the company. With the help of this department the
financial services are reached to the end customers. In addition to this, the stated department
3

helps the organization to raise the value of their product with the consideration of effective
marketing techniques.
In context to above, the finance department of this company helps in allocating the
financial resources to different departments. This department also watch over the financial
requirements of the company. There is one more department called customers services in which
the main focus is on fulfilling the needs and demands of the customers (García, Gómez and
Molina, 2012). Being a bank, it is important for the company to render the requisite financial
services to the consumers. This department required making sure of giving positive respond to
the customers issues and queries. In addition to this, the company also consist of an IT
department. This section make sure of the issues related with computer and other technical
issues. In this competitive era, all the task and operations are being performed in a digitized way.
However, the management of all these operations are done with the help of this department. The
effective working of all these departments helps the company to attain its goals and objectives in
an appropriate manner.
The objective of this bank is to render quality financial services to the customers. Being a
public organization, their motive is to achieve the satisfaction level of the consumers. They make
sure the financial needs of the customers are ascertained and achieved by the company.
However, the different department of the firm are interrelated with each other. The organisation
adopts the functional structure in which different functions are being performed by the sections.
This structure has made the bank to be connected with each other for attain the objective of this
company. (Gonzalez-Padron, Hult and Ferrell, 2016) There are different departments are there
in the organization which are interrelated with each other. For an instance, the finance
department of the company is responsible for the allotment of financial resources. If the funds
are not allotted effectively then this can leave an impact on the operations of the company. If the
marketing practices are not properly adopted then it can affect the products and services of the
company. The human resources department of this organization is responsible for the human
resources in the company.
4

m1
Organisation structure is refers to the activities such as task allocation, coordination and
supervision which are directed toward the achievement of the organisational aims. Business
structure determines that how the role, powers and responsibility are assigned, controlled and
coordinated and how information flows between the different levels of the management. A
structure depends on the organisation objective and strategy. On the other hand organisation size
can be defined as a structural property or a contextual variable. It s a property at the interface
between internal structure and the environment. (Grünig and Kühn, 2015) Organisation scope is
a project management term for the combined objective and requirement necessary to complete a
project. Organisational scope document will be used to assist illustrate and track any changes in
the business boundaries that may occurs as part of ingoing business operations, or as a result of
executing the projects Implemented plan. In the context of Lyreco UK Ltd, the major objective
of this organisation is earn the maximum profitability and market share. If organisation have the
well managed structure under which all the department are connected with each other in an
effective manner so it become easy to delegate the authority, allotment of assignments and utilise
the resources. On the other hand size and scope of business organisation also very important
aspect because if corporation have effective scope then it became easy to determine the future
profit and uncertainty.
As per the previous discussion it has been ascertained that HSBC is the one of the world's largest
banking and financial service organisations. It was founded in year 1865 with the help of
Thomas Jackson. They serving 45 million customers globally. They are serving major four
services which includes banking commercially as well as globally, also global private banking
and retail banking. (Hill and et.al., 2014) So it can be said that it have a well designed structure
and size of business. Its hierarchical structure can control the each department of employees so
as they can effectively perform their job. The scope of this bank provide financial services to
customers so it can be said that by provide effective financial services bank gain achieve its
objective.
5

M2
As per the discussion in the previous answer it has been ascertained that HSBC bank are
divided into the various deportment that is human resources, marketing, finance, administration,
production etc. With assistance of these mentioned department corporation can manage its
business activities and function. It has been also ascertained that there have strong relationship
between these department because all they have the common objective to achieve the
organisation goal. Therefore these all department combine perform their own roles and
responsibility. HSBC have major objective to deliver excellent banking services to customers
and acquire the large numbers of market share. So each department perform their responsibility
and coordinate with each other to attain the b company objective. Following are some advantage
of interrelationship between all these department in the bank-
 Effective productivity- In the HSBC Bank there have effective relationship between the
various department such as human resource, finance, information technology etc.This
will assist in increasing the productivity. All this department have connected with each
other so its effective relation will assist in increasing effective outcomes of organisation.
 Healthy working environment-The organization has large number of employees which
are performed their own duty and responsibility (Houdet, Trommetter and Weber,
2012). All these department are interconnected with each other. There effective
relationship will develop an health working environment in the HSBC bank.
 Attain target on time- In the HSBC bank, if all department perform their roles and
responsibility in an effective manner and collectively work together then it will assist in
manage in the large numbers of assignment within a specific time period. There effective
relationship will assist in achieving the company target within a desired time.
However, there are some disadvantage of the Interrelationship between these all mentioned
department Which are as follows-
 Arise conflicts situation- In the HSBC bank, if these all mentioned department work
together then it will definitely some kinds of conflicts will arise at the workplace.
 Different views and opinion-In the various department of HSBC bank have various kinds
of employees whose culture, region, ;language, age, gender, perceptions, attitude are
6

different. Sometime different cultural and regional people have different views and
opinion related to the particular aspect. It will create the problem in management.
D1
As per the above discussion it has been ascertained that HSBC bank have various
function such as human resource management, finance, marketing etc. These all department are
interconnected with each other. In order to collectively attain the task of business there may rise
the lots of complexity and issues at workplace. As per the discussion it has been founded that
HSBC bank have the hierarchical structured under which employees are ranked at various levels
within the organisation, each level is one above the other (Jaber. and et.al., 2015). At each stage
in the chain, one person has a number of workers directly under them, within their spam of
control. A hierarchy is typically visualized as a pyramid, where the height of the ranking or
person depicts their power status an the width of that level relative to the whole. A major
complexity in the hierarchical structure of business is that it doe s not encourage people to
collaborate and share information across the reporting structure.
P4
As per the previous discussion it has been ascertained that HSBC nbank have largely
affected by the macro environmental factor such as political , legal, economicval;, social,
technological. All these major factor,can affect the business operation and activity in the largely
manner. For example political factor fafect HSBC bank because being operated in different
countries such as USA, Europe and China and hence governed in different laws, rules,
regulations and policies. These helps in successful operation n Financial management. However
this factor impact the business ioperation in negative manner because Bank can not change any
policies and rules in internal basis, it have to follow the rules of government and charge the
interest which government has decided. (Kernbach, Eppler and Bresciani, 2015) On the other
hand according to the economical factor, Growth of banking industry is based upon this factors
as it includes foreign exchange rate, GDP per capita. HSBC has survived under Financial crisis
of the 2008 reason being international expansion of HSBC. However, changing rate of interest
and inflation may affect the operation of bank. On the other hand, technological factor beneficial
for bank because sharing of information and online banking may increase by use of technology.
However, bank has to update is management and information technological system according to
the change in technology development.
7

P5
There are various environmental factors that can affect business which can be classified
in two, internal and external analysis . Internal means within the organisation like change in
management such as change in hierarchy structure or change in policies and external
environment includes external forces which can not be controlled by management such as legal
or political factors. Swot analysis is a planning tool used by management for decision making
that is to identify pros and cons of changes in internal and external factors. Strength and
weakness is based on internal factors and opportunity and threats are due to external factors.
 Strength
- strength and diversification of organisations
- 6th largest company traded publicly
- 89 million customers with total asset of $2.671
trillion.
- being MNC, other organisation get qualified
through for international business.
 Weakness
- fewer resources than others
- last 5 years US has slow and downfall in
market.
- customer satisfaction is low
- weaker compared to other competitors in
banking area
 Opportunity
-HSBC was unaffected during financial crisis
and do not required any government grant
during Europe LIBOR scandal. This become an
opportunity to HSBC to gain market share from
affected banks.
-They have room for expansion in large
countries.
-portfolio diversification for customers
-as expansion in banking industry, HSBC gains
 Threat
-economic factors such as recession, depression
can harm business significantly.
-Government Regulations
Scams like email viruses etc increases threat of
insecurity and this causes a increase in expenses.
- as a high growth sector in today's scenario
leads to increase in competition.
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advantage.
P6
Factors used to understand macro economic factors are called PESTLE analysis. As per case
study given, PESTLE Analysis for HSBC includes following factors, such as political,
economical, social, technological, legal and environmental factors. To deal with external threats
and taking an advantage of external opportunity it is essential to analyse micro factors using
other framework such as porter's model or SWOT analysis that is already being done above for
HSBC.
 POLITICAL : HSBC is an MNC organisation, being operated in different countries
such as USA, Europe and China and hence governed in different laws, rules, regulations
and policies. These helps in successful operation n Financial management. HSBC have a
strategy for protection against restriction and limitations by government (Leitner,
Meissner and Martyna-David, 2015).
 ECONOMICAL : Growth of banking industry is based upon this factors as it includes
foreign exchange rate, GDP per capita. HSBC has survived under Financial crisis of the
2008 reason being international expansion of HSBC. It can be said that HSBC has a
successful economic strength, a good management team as well as serve a shield of
employment opportunity in nation.
 SOCIAL: HSBC is dealing with a significant issues like change in climate, crime like
money laundering.
Few social factors that are affecting banking sectors-
- people wants to have luxurious life on credit
- encouragement to SME's by government
- growth in Islamic community.
 TECHNOLOGICAL: It refers to a question, how organisation is sharing information or
communicating. HSBC is using latest technology which help them for getting secured
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against cyber crimes. Due to negligence HSBC was not able to protect confidential data
of present along with past year data from losing. This leads to loss of customers to
competitors. This was an operational mistake by HSBC but not affected functionality of
an organisation.
 LEGAL: every business is required to run as per rules and regulations, and so applied for
HSBC. As due to lots of rules and regulation heavy capital investment required and it
consumes time as well. HSBC has adopted FCA act to handle their payment protection
insurance claims
 ENVIRONMENTAL : It is becoming difficult for organisation to sustain due to
increasing pollution, global warming , scarcity of goods etc. customers also demands eco
friendly products for sustainable development of nature. There is also no fixed guidelines
are issued by government for this concern (Mathur, Mathur and Kenyon, 2012). HSBC
also participates for environmental welfare by reducing carbon emission by employees
through few points-water reduction, efficient use of energy, reduction in wastage,
programmes for low carbon energy, paperless banking and green building programmes
etc.
M3
PESTEL analysis is the very effective tool to measure the business environment impact on the
business activity and function. In order to survive in the competitive environment company have
to analyse its business environmental factors which are as follows-
Political This factor includes governmental rules,
regulation, code of conduct, tax policies,
legislation etc.HSBC bank is a MNC firm
which have to analyse the governmental
impact on the business activity.
economical In this factor includes the economic condition
of the country further inflation, recession and
pricing policy. HSBC bank have to analyse the
country economic condition at the operation of
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business.
Social and cultural This factor largely affect the business
operation because in this includes people taste,
choice , preferences , cultural etc. Company
have to consider this factor and according to
then people wants credit and insurance will
provide to them. (Mitchell and et.al., 2016)
technological HSBC bank has to consider this factor beaus
in the communication and sharing of
information, it uses the large amount of
technology. Changing the development of
technology will largely affect the business
operation.
environmental HSBC have considerer this factor at the time of
business operation. In this includes natural
resources of environment such as raw material,
water, air etc.
M4
As per the above discussion it has been ascertained that HSBC bank have certain strength
weakness, opportunity and threats. HSBC have strength of \diversification and its is being a 6
largest company so the decision of new product development will be beneficial for company
because it have already an effective brand image in the market so customer will attract toward
business because of its effective and excellent financial services. On the other hand it have
weakness related to the fewer resources (Turner and Zolin, 2012.). This weakness will affect the
business decision related to new product development. In order to introduce the new product in
the make company have to increase its internal resources and raw materials.
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D2
Micro environment factors includes those forces that includes company itself. It includes
company, supplier , marketing intermediaries, customers, competitors and public.
Various departments collectively build a company like sales department, production department,
distribution department etc. and these gives impact on marketing department of a company.
 Suppliers is an important factor of micro environmental factors as they create a link
between company and customer. A organisation should have a backup or precautionary
measures on suppliers.
 Customers: They are the person who buy goods and services from organisation and there
satisfaction is the main goal of an organisation. As taste and preferences keeps on
changing and cut throat competition in market it is essential for organisation to keep on
updating and bringing new technology in market such as customers gets satisfied and this
can leads to maximisation of sales.
 Competitors significantly gives a major impact on business environment, they are the
persons who are running same business and in same industry. A company is called
successful when they provide better product or services to customers as compared to their
competitors and have higher market share. (Wesseling, Niesten and Hekkert, 2015)
 Public is a group of individuals who have interest on an organisation. And can impact on
achievement of goals and objectives effectively as well as efficiently. It includes media,
government, financial, internal and general public.
Macro environment factors are uncontrollable factors and they also create impact on
business strategies and decision making. This includes demographic, economic, natural,
technological,political, and cultural factors.
 Demographic factors means human population like gender, age, income level etc.
 economic factors impacts on customer buying power for eg. inflation in country.
 Natural factors impacts on production as availability of inputs. (Yu and Ramanathan,
2012)
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 Technological factors have greater impact on decision making of customer as it is rapidly
changing so competitors can take advantage so requires good research and development
team to lead.
 Political factors includes actions by government so this can give a significant impact on
business on local, regional, state or international level.
 Cultural factors varies with areas as every area has different community of people with
different culture religion and beliefs. So it impacts on type of product introduction.
CONCLUSION
Business environment is a mixture of macro and micro environmental factors which are
necessarily be evaluated. On the basis of size and scope the organizations are purely different
form each other. From this project report it has been ascertained that HSBC bank is an MNC
organisation, being operated in different countries such as USA, Europe and China and hence
governed in different laws, rules, regulations and policies. This organisation have effectively
consider the all environmental factor in the order to survive in the competitive environment.
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Online
What is Business Environment? Explain its types .2016.[online].Available
through:<http://www.mbaofficial.com/>.[Accessed on 23 october2016].
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