Understanding the Business Environment

This assignment delves into the crucial aspects shaping the business environment. Students are tasked with examining various frameworks such as PESTLE, Porter's Five Forces, and the impact of technological advancements, globalization, and regulatory changes on businesses. The analysis requires critical thinking and application of concepts to understand how these factors influence organizational strategies and success.

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Covered in PPT......................................................................................................................1
P2 Covered in PPT......................................................................................................................1
P3: Explain the relationship between different organisational functions and how they link to
organisational objectives and structure. ...................................................................................1
TASK 2............................................................................................................................................3
P4 The positive and negative impacts the macro environment has upon business operations. .3
P5 Internal and external analysis of specific organisations in order to identify strengths and
weaknesses..................................................................................................................................5
P6 How strengths and weaknesses interrelate with external macro factors ...............................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment played a prominent role in the success of any business unit. There
are micro and macro factors which affects the business operations of an organisation. It aslo
influence company structure and its culture in the long run. These factors can be economical,
technological, legal and so on. Micro factors can be control by a business unit but macro element
are beyond the control (Acs and Mueller, 2008). The evaluation and analyses of a business
environment can reducing its impact and make their business successful. This report is based on
Morrisons which is a retail super market chain in United Kingdom. The company is having
approx. 500 stores across the country which can provide competitive advantage over others. The
purpose of this report is to understanding internal and external business-environment and make
its marketing strategies in the context of Morrisons, so that they can attain their long term goals
and objective (Carroll and Shabana, 2010).
TASK 1
P1 Covered in PPT
P2 Covered in PPT
M1 Structure,size and scope of a different company would effect the business objective and
product and service offered by Morrison in many ways because the size of other organization
would have a positive impact on their production and services offered by them against Morrison
but on the other hand if the company is small then this would be an easy challenge for Morrison
to compete with them.
D1 Different type of business structures are formed by considering the environment of their work
place but while the company is doing their business on a global level they have to set a standard
business structure which would be accepted worldwide .Morrison has it's own standard as they
have to compete on the global basis

P3: Explain the relationship between different organisational functions and
how they link to organisational objectives and structure.
This is significant for each and every business unit to make an
effective interrelationship among all departments of the company. There are
various departments such as production, marketing, finance, HR and so on.
Each department having its own target and resources which can help to
attain these objectives (Chavis, Klapper and Love, 2011). But the overall goals of
all functional department of the organisation is to achieve long term goals
and objectives.
Production department: This is one of the significant functional department of the
company, because it can produce high quality goods for their customers. Morrisons which is a
well known retail brand in UK, is required to produce qualitative goods which can satisfy their
customers needs. It is important for the company to make communication with various
department specially for marketing. Because, marketing department can provide various relevant
informations to the production department. So that they can produce firm's products according to
customer needs. It can increase customer satisfaction which can leads to customer loyalty.

Human resource department: HR is one of the valuable and unique resources of each
company which can help to attain organisational goals and objectives. There are various function
which performed by this department such as workforce planning, recruitment and selection,
training and development, induction, performance appraisal etc (Chen, Chiang and Storey,
2012). Toady HR department is a part of strategic planning of Morrisons, because it can provide
competitive advantage over rival companies. It is required to HR manager is that to interrelate
with other department in order to attain organisational goals and objectives. For example, if HR
department is planning to recruit employees for the sales. For this, they should communicate
with sales department and ask for their requirements which can help to recruit talented staff for
the company.
Marketing department: This is another important department which is related with the
promotional strategies of the company. There are various functions such as market research,
segmentation, target, positioning, marketing mix and other strategies which can help to create
awareness and promote organisation brand and products. They are responsible to understand the
current and changing needs of the customers and provide significant information share to other
department (Craig and Campbell, 2012). Marketing manager also determines the suitable and
appropriate distribution channels which for their product. For example, Morrisons wants to
launch a marketing campaign for their new products, for this they can communicate with sales
department for the success of their products. Because, sales department is know the exact choice
of their customer, these suggestion can support their promotional and marketing campaign and
help to achieve their goals effectively.
Sales department: This is another department which can focused on the sales target and
revenue of the company. It can fill the gape between potential customers demands and product
which are offered by the organisation which can satisfy these needs and demand. This
department having various function such as direct dealing with customers, provide goods at the
right time, and which can provide business growth for the long run. They can also provide the
customer feedback about company's product and brand, so that firm's can improve these products
in near future (Giesen ,Riddleberger, Christner and Bell, 2010).
Information technology department: Information technology is one of the department
which having two important segment. First is internal communication system within the
organisation and another one is online portal. Inter-department communication is essential in
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order to maintain coordination between various functional department and provide technical
support to them. In the present era, internal having a great significance in the sales of the
company. Therefore, Morrisons is more concentrate on the online shopping which can help to
increase sales and revenue of the organisation which is a core objective for each and every
business unit.
Finance department: There are wide range of activities which are performed by this
department. It is duty of finance department is that to prepare budget before allocating money to
any department (Hamilton and Webster, 2015). The main objective of such division is to cost
reduction without compromising with the quality of products. Therefore, there are various tools
and techniques which can be used by the finance manager in order to reducing overall cost of the
company. Morrisons is required to make a sound communication for this department with other
functional division of business unit. So that they have to attain their target such as cost
minimization and increase profitability of the firm.
These all functional departments are integral part of Morrisons and they are making their
collective efforts in order to attain firm's goals and objectives. Company' objective is to increase
market share and expand their business in to other part of the world (Klapper and Love, 2011).
These departments are set their own target which can directly support to the firm's long term
objectives.
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TASK 2
P4 The positive and negative impacts the macro environment has upon
business operations
There are many factors that may influence the operations of the business organization so
Morrisons can use Pestle analysis in order to identify all the external factors. Through this, they
will be able to identify the opportunities and they can improve their growth in the market. Some
of these factors are political, economical, social, legal, environment and technological factors
and these are:
Political factors: These are related to the trade barriers, tax policy, government laws,
trade barriers and so on. When business organization provide their products and services at the
global level then they have to follow all the laws that are made by the state government. There
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are some positive and negative points are attached with this factor (Muhammad, at.al. 2010). For
example, if the state government made any law related to the tax then it will affect the revenue
system of the retail industry. Political stability also having a great significance in the growth and
development of Morrisons. Because if there is governmental instability in the country it can
increase the uncertainty in the demand of the company which is not good for them. Apart from
that government policies such as tax structure, trade barrios etc. are also impact on business
operations. If these factors are favourable for the company it can leads to increase sales and
revenue of the organisation.
Positive impact: This is essential for Morrisons is to follow government rules and regulations
which can build a sound image of the company in public.
Negative impact: There are various regulation which can adverse impact on the grwth and
development business plan of the organisation.
Economical factors: These factors are related to the interest rate, exchange rate, inflation
rate, disposable income and so on. When inflation rate get increased in the firm then it will affect
the performance of the business organization so due to this they have to change their pricing
strategies so that they can fulfil the demand of their customers (Palmer and Hartley, 2008).
Through this, the firm will be able to increase their revenues when inflation rate get decreased.
Along with this, when Recession is occur in the country then employment rate is get reduced and
this will affect the disposable income of the people. For example, if government can increase
interest rate it can leads to decrease disposable income of the consumer which can reducing the
sales and demand of firm's product and services.
Positive impact: These factors also influenced Morrisons and provide consistent growth in the
near future.
Negative impact: There are various factors such as inflation, recession having negative impact on
the business.
Social factors: Social factors are related to the culture, demands, expectations, growth
rate. For example, Morrisons have to make products and services as per the need of the consumer
so that level of satisfaction can be increased among customers (Trkman, 2010). The Positive
point of this approach is that through this the manager of the enterprise will be able to identify
the demand of the people and current trend in the market. The negative point is this that the firm
have to bear some cost and it is time consuming approach.
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Positive impact: By understanding the social factor company can focus on customer satisfaction
and company can form policy and strategies considering the social factors.
Negative impact: The company can face severe loss by the competition as they can also replicate
the strategies followed by the company.
Technological factors: Innovation in product can lead the firm towards success and
people can fulfil their demand. For example, Morrisons can use the research and development
activities so that they can fulfil the demand of their customers in an efficient manner. Through
this the retail industry will be able to attract number of customers towards the companies
services. The manager have to spend their time in this field so that they can understand the
concept of technology. Apart from that firm's also use various social media platforms in order to
promote company's product such as Facebook, You Tube, Instagram and so on. These methods
are cost effective and attract large number of customer (Wiklund, Patzel and Shepherd, 2009).
They can also use online platform for selling organisation's product directly to the customers. It
can reducing the cost of operations and increase revenue and profitability of business unit.
Positive impact: Use of new and innovative technology can help to reduced its operational cost
and increase in the profit and revenue.
Negative impact: To upgrade the whole system of the company requires lot of time and it will
difficult for the employees to accept such technological changes.
Legal factors: This is related to the legislative laws that are made by the government and
all the organizations have to follow these rules. Some of the acts are employment act, consumer
protection act, health and safety act and so on. When Morrisons follow these regulations then
they have to change their policies so that they can provide a peaceful environment to their
employees. Change in the various laws and legislation can affects company's marketing and
other strategies which can overcome its efficiency (Zikmund, Babin, Carr and Griffin, 2013).
Positive impact: Government can make various policies and legislation which can overcome
trade barriers and promote ease of doing business which can positively influenced Morrisons.
Negative impact: Due to change in the government rules may affects company performance.
Environmental factors: These factors are related to the environment and in order to make
the environment safe organizations have to follow some acts so that their overall performance
can be improved. For example, the enterprise can use an effective packaging so that a safe and
healthy environment can be created. There are various rules and regulation which
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make by the EU, so that each and every business of United Kingdom have to
follow which can also impact on the decision making.
Positive impact: Environmental factors can provide relevant data to draft suitable strategy in
correlation with company and industry
Negative impact: Sometimes environmental changes can make the
operation of company difficult.
M2 The biggest advantage of the interrelationship of the organizational
function is that each department could coordinate easily with each other
which would result in better flow of information And the disadvantage is
that the information can be repeated more times even after the work is
done.
M3 PESTLE analysis of the company:-
Political force- political bodies support the company and they are in the
facour of organizational
Economical factor is that the company is big and have a good market
image .
Social factor says that the organization produces products which have value
for the money.
Technology factor needs to be updated but company can sustain with the
current technology also.
Environmental impact is that company has a lack of natural resources which
they outsource.
D2 Effect on macro factors on the organization is more as they are into
retail market so there in a big impact of macro factors on the organization .
Currently they have a positive impact on the organization.
Micro factors are important but do not have much affect on the
organization function but in the case of Morrisons there is a negative
impact on the organization
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P5 Internal and external analysis of specific organisations in order to identify
strengths and weaknesses
Internal and external analyses is having a great significance in the growth and
development of a business unit (Zott, Amit and Massa, 2011). There are various factors such as
micro and macro which can affects business activities of the company. To understand these
factors company can know about its strength and weaknesses and market opportunities and
threats.
Internal analyses: There are various factors which can affects internally of the company.
These factors can be customer, suppliers, employees, organisation structure, culture, and
policies. There are SWOT analyses of Morrisons as given below:
Strength: Company having large supply chain and distribution network across United
Kingdom which can provide edge over its rival firm's. Business unit is provide a wide range of
products at lower cost. It is one of the leading brand among big four supermarket in the country.
They have approx. 500 plus stores in different part of the country such as Wales, Scotland,
Ireland etc. which can provide a competitive advantage (Acs and Mueller, 2008). Company also
increase their expenditure on the advertisement and promotional activities such as direct sales,
public relation and other tools. It can help to aware firm's product to their customer and create a
demand for their product. Company also focused on market research, so that it can increase sales
and revenue which can leads to increase profitability of the firm. Internal and external analyses is
help to use their strength and exploit the available opportunities in the market.
Weaknesses: Morrisons is operating their business operation in United Kingdom which
is one of the competitive market in the world. It can increase the competition and reducing
company' market share and revenue. Company after sale services is not up to the mark which can
increase the customer dissatisfaction level. Therefore, business unit is required to focused on the
the after sale services which can increase the customer loyalty (Carroll and Shabana, 2010).
Thus, organisation required that to evaluate internal and external analyses which can overcome
firm's weakness in the near future.
Opportunities: Retail industry is one of growing sector in the world which can provide
golden opportunities for the company. Increase in the demand of organic feeds also one of the
important element for the organisation. There are various emerging market such as India, China
which can provide large market, so that firm's can maintain its market share. They can also open
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online store which can also increase their sales in regional countries such as Germany, France,
Netherlands, Denmark and other European countries. There are various market opportunities
such and expanding their operation in to emerging market such as India, China, etc. Internal and
external help to use these opportunities effectively.
Threat: It is one of the attractive sector which in attract new companies which can
increase the competition level and reducing market share (Chavis, Klapper and Love, 2011). Due
to uncertainty in the global market it can also affects long term goals of business unit. Change in
the minimum wage rate and increase in the tax liabilities it can reducing the profitability of the
company. To sustain in market firm's can use various pricing strategies such as economic pricing
and penetration pricing which can provide competitive superiority over its rival companies.
External and internal environmental scanning help to eliminating overcoming threats on the
business organisation.
P6 How strengths and weaknesses interrelate with external macro factors
External analyses: External factors can not control by Morrison
which can create a challenges for the company. These factors includes
political, technological, economical, legal, environmental and social.
Political component: Political element is related with the political
stability and governmental policies regarding the business. For example,
reducing trade barriers, tax policies, and other factors which can favour
business environment, it can increase potential of growth and development
in the business activities (Chen, Chiang and Storey, 2012). Government instability
also having a great impact on the business. There are various countries in
Europe and middle east which are facing political unrest which having an
indirect impact on the operations. It can also affects the decision making of
the company. For example, to management wants to open a new chain in
another country, but due to increase the civilian unrest, they can extend
their decision for the future.
Economical component: There are various policies regarding
growth and development of the country such as monetary and fiscal
policies. These polices can be influence positively and negatively impact on
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the business. Monetary policies are make by the central bank of the country
in order to maintain money supply in the economy and create a sound
environment for the business. Fiscal policies are make by the government
which are related with the growth, inflation and employment rate in the
country (Craig and Campbell, 2012). Economic factors also influence the decision
making of the company. For example, company wants to expand their
business in China, but increase in the tax rate from international firm can
affect their decisions.
Social component: Customer needs such as taste, preferences, style
etc. are change over period of time which requires to change company's
product accordingly. If Morrisons have a sound market research they can
easily identify market needs and change their products accordingly. To
identify these needs Morrisons required to conduct market research so that
they can know about the exact needs of their customers. Apart from that
they can also take feedback from its customers which can improve their
product performance and satisfy customer needs. Firm's can also use social
media platform which can help to promote company's product. Company
providing superior quality product and better service to the client to satisfy
their need (Giesen ,Riddleberger, Christner and Bell, 2010). Corporation use better
methods to conduct the feedback from the consumer to continuously
improvement in nature of offering goods to provide higher level of
satisfaction.
Technological component: In present era, technology played a
prominent role in the success of each and every business organisation.
Company is focused on the innovation, therefore they are using new
technology in their production process, it can increase output and reducing
operational cost. Apart from that, business unit also use online platform for
sell their product. It can help to increase sales and market share which
leads to increase in revenue. For example, Morrisons can use the research
and development activities so that they can fulfil the demand of their
customers in an efficient manner.
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Environmental component: Today customer is more aware towards
environmental issues and climate change. Therefore, all companies are
focused on these issues and try to overcome environmental effects.
Morrisons is also concentrate on these issues, so that they can open green
supermarket and provide organic food which can less harmful to the
environment (Hamilton and Webster, 2015). It can create a sound and ideal image
of the company in public. There are various rules and regulation which
make by the EU, so that each and every business of United Kingdom have to
follow which can also impact on the decision making (Klapper and Love, 2011).
For example, new environmental policy which focused on the reducing
carbon footprints also affect Morrisons output.
Legal component: There are various laws and legislation which
should followed by the corporation. For example, change in labour laws or
environmental policies can affects firm's long term business plan and
strategies. Therefore, an effective marketing research can provide a idea
about these policies, so that company can overcome potential risk.
M4
CONCLUSION
As per the above given report it has been concluded that there are different types of
business organisation having their own objectives according to its size and scope and legal
structure. This report is having factors which is elaborating different types of organisation like;
public, private, partnership, cooperative and legal. It has been identified that how various
organisational functions are interrelated with each and other help to achieve company goals and
objectives. This report also explained that how internal and external environment can affects a
firm's operations and its growth the development in the near future.
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REFERENCES
Books and Journals
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Carroll, A.B. and Shabana, K.M., 2010. The business case for corporate social responsibility: A
review of concepts, research and practice. International journal of management reviews,
12(1), pp.85-105.
Chavis, L.W., Klapper, L.F. and Love, I., 2011. The impact of the business environment on
young firm financing. The world bank economic review, 25(3), pp.486-507.
Chen, H., Chiang, R.H. and Storey, V.C., 2012. Business Intelligence and Analytics: From Big
Data to Big Impact. MIS quarterly, 36(4), pp.1165-1188.
Craig, T and Campbell, D., 2012. Organisations and the Business Environment. Routledge.
Giesen, E., Riddleberger, E., Christner, R. and Bell, R., 2010. When and how to innovate your
business model. Strategy & Leadership, 38(4), pp.17-26.
Hamilton, L and Webster, P., 2015. The International Business Environment. Oxford University
Press
Klapper, L.F. and Love, I., 2010. The impact of business environment reforms on new firm
registration. World Bank policy research working paper, (5493).
Muhammad, M.Z., at.al., 2010. Small and medium enterprises (SMEs) competing in the global
business environment: A case of Malaysia. International Business Research, 3(1), p.66.
Palmer, A. and Hartley, B., 2008. The business environment. McGraw-Hill.
Teece, D.J., 2010. Business models, business strategy and innovation. Long range planning,
43(2), pp.172-194.
Trkman, P., 2010. The critical success factors of business process management. International
journal of information management, 30(2), pp.125-134.
Wiklund, J., Patzelt, H. and Shepherd, D.A., 2009. Building an integrative model of small
business growth. Small Business Economics, 32(4), pp.351-374.
Zikmund, W.G., Babin, B.J., Carr, J.C. and Griffin, M., 2013. Business research methods.
Cengage Learning.
Zott, C., Amit, R. and Massa, L., 2011. The business model: recent developments and future
research. Journal of management, 37(4), pp.1019-1042.
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