Impact of Business Environment on Micro-Firms

This assignment explores how various elements of the business environment influence the success of micro-firms. Students are tasked with examining the specific challenges and opportunities faced by these small businesses in areas such as regulation, competition, resource availability, and market dynamics. The analysis draws upon relevant academic literature and theories to provide a comprehensive understanding of the interplay between the business environment and micro-firm management practices.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................4
P3 Organisational functions helps in to achieve targets.........................................................7
C) Difference and complexities between business structures..............................................10
PART 2..........................................................................................................................................12
P4 Positive and negative impact of macro environmental factors.......................................12
P5 Internal analysis...............................................................................................................13
P6 Strength and weaknesses of the company which are linked with macro environment factors
..............................................................................................................................................13
M3 PESTLE Analysis .........................................................................................................14
M4 SWOT Analysis.............................................................................................................15
b.) Reflective statement........................................................................................................16
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18

INTRODUCTION
Factors which is having a direct and indirect impact on business activity, employees,
supply and demands can be stated as business environment(Wu, 2009). Environmental changes
makes a direct influence on the business entity. So organisations have to make adjustments
according to these changes. Business environment can be divided in two parts internal and
external. External have several factors like; political, social, environmental, technological etc.,
companies have to make their business activities according to these factors. Governments are
having a set of rules and regulations for each types of organisation like; profit, non profit, private
and public, they have to follow government's guidelines. The UK government is having several
types of laws e.g. employment laws, discrimination act which dominates internal environment of
the organisation. This present report is having focus on TESCO and PRIMARK which is public
and private organisations. These companies are having a huge differences in purpose, scope and

structure. These companies are working in retail sector and they are having large supermarket
chain in the UK(Wild, Wild and Han, 2014). Macro and micro environmental analysis helps
them to analyse about market conditions and internal condition of cited firm. Business entities
have to use SWOT analysis to know about their present report and available opportunities for
them. These assignment contains a brief about types organisation, their structure, interrelations
between their functions, impact of environment, SWOT and PESTLE analysis.
PART 1

P3 Organisational functions helps in to achieve targets
Objectives of public sector organisation; Each organisation have a set of objectives which have
to be attain in a pre decided time period and public sector companies are focus to achieve their
targets because they have public pressure. TESCO is a manufacturer company which is having
their own supermarkets to sale their products in the whole UK (Ullah and Lai, 2011). Here are
objectives of TESCO;
 The company is having the main aim to provide services in a competitive prices to
customers. They are working general grocery products which is the common in daily use
for a consumer, these are the basic needs of a human being.
 Public sector companies are focus to deliver qualitative work in competitive prices, the
TESCO is also has this objective. They want to make products which is having
satisfactory elements for their customers.
 The company wants to meet the needs of their customers and provide the best products
which can fulfil their needs. They want to keep a cost effective price in merchandise and grocery products with in
high quality in the UK markets.
Organisational structure; TESCO is having adopted hierarchical structure in their organisation,
this is having different management levels and each one connected with vertical chain (Trkman,
2010). TESCO is having four layer management in their big sized store to manage their
activities. Higher authority and management leads their subordinates, board of directors of the
company is making strategies and plans and employees have to follow these. Several managers is
leads after the board of directors, these managers are responsible to manage activities in their
departments as per the instructions of their higher level. Manager are having assistant managers
which supports them in the work and manage their undertaken employees. So this is a vertical
chain management which supports to the TESCO to attain their targets. Company can manage
their production as per the demands by their customers.
Organisational functions; The organisation has several functions which helps them to attain
their targets, these are divided in several departments. TESCO is having different departments
for this like; research and developments, marketing, accounts, supply, purchasing, production
and sales, these all divisions are making collective efforts to achieve the same objectives (Teece,
2010). There are several activities which helps to the company to attain their organisational

objectives. Here is a brief of important actions of the companies which are helping them to
achieve their targets in the times;
Research and development departments; It is a separate departments in TESCO to know about
customers needs and demands which they can apply in their products to make them more better
according to them. The company is having trained staff which takes informations and feedback
from their customers and their targeted market. It has a direct connection form manufacturing
department. If the research and development team feels a need of changes in their products, they
has to inform their senior managers regarding to that particular modifications which has to be
applied.
Manufacturing department; They have a large manufacturing line for different types of products
and they are making productions as per the requirements of their retail supermarket stores(Ruff,
2006). They have trained and experienced employees which have a potential to make more
production if they have demand in markets. TESCO is using latest techniques in manufacturing
line and they are having chain to manufacture products. Company has arranged separate
manufacturing lines for distinct type of products which makes their products more fine and error
less. So these all are efforts are helpful to manage a quality in their production.
Marketing team; It has a most important role product development, sales promotions and to find
new market opportunities for the company(Moutinho, 2011). The marketing team is making their
efforts to find out new markets for company, this department is having connected with other
teams like; manufacturing and research and development teams for product development.
Promotions is a need to communicate with targeted customers and they are using effective
medium to convey their informations in public domain, they are using print media
advertisements and as well as electronic media. Marketing is a need to increase sales and product
developments.
Accounts department; It has a responsibility to manage expenditure and sales related details of
the company in their accounts. This department is also helps in to make budgets for other teams
which instructed by the board of directors and departmental managers. So accounts team is
having large responsibility to manage costs of each and every team and it is also supportive to
manage cost effective productions which is an objective of the company(Monks and Minow,
2008).

Purchasing Team; As the company is working in two sectors like, manufacturing and sales,
production line is having consistent demand of raw material to manage a regular production for
supply. This purchasing department is having interrelation with the manufacturing team and
accounts department. These departments are having coordination to manage a regularity in their
production. As they are having a lot of products to manufacture they are having regular needs of
different types of raw materials so the manufacturing team convey their list which is having type
of material and quantity.
Sales teams; Company is having different sales teams which are working in different geographic
in the UK. These teams are having their own targets which is having their own time limit to
perform their activity, these teams are helpful to attain organisational objectives(Klapper, Lewin
and Delgado, 2011). As the company wants to enlarge their market by making more customer
who have a need of cost effective products.
Supply department; This department is having single object to make and mange supply in their
retail stores. The company is using a single process of supply, if a supermarket is having need of
products, they direct send a demand list which is having detailed informations of types of
products and quantity. The supply teams approved their demands and make an immediate supply
of their products.
So above mentioned functions are helpful to attain organisational objectives and as well as
organisational structure of the company(Kelliher and Reinl, 2009). These functional teams are
having a same level, it is helping them to manage activities and convey their informations to
each other.
Advantages and disadvantages of interconnectivity between the functional teams
Advantages;
 Interconnection is helpful factor to attain organisational targets, as the company wants to
enlarge their market by providing cost effective products to those peoples which are
having a need so they have to make proper connection in their teams.
 These functional teams can manage better coordination by making better
interconnections; they have to make communication which is required to achieve their
targets. They can make adjustments in their supply and demands by making interconnection in
between the teams.

Disadvantages;
 Management can loose their control if their undertaking employees is having a bonding,
it can make a situation where employees can refuse orders of seniors.
 Employees can make union which is not good for organisational objectives. Interconnection between the departments can make possibility of time consume in
production chain, because these team members can use their time for informal
conversations.
Interrelationship impacts on organisational functions of structures
Interrelationships is making coordination which helps to manage activities and functions in the
company (Kelliher and Bernadette Henderson, 2006). Company can make better productions by
this and they can achieve their targets in their give time period. It impacts on the structure of the
company;
 Hierarchical structures is having a need of interconnectivity in the teams and TESCO is
having proper bonding in their teams which is making strong organisational structure
which can work in any type of market conditions.
 Interconnectivity established by proper communication in the teams which is making
manager and employees communicative to transmit their informations as per the
requirements(Kang and Han, 2008).
 It is making a positive work environment and healthy working conditions in the company
to make more productive organisation as per objectives.
C) Difference and complexities between business structures
An organisation operates in a pre decided manner and changes according to the
expansion of the firm. The structure it opts for operating depends on it's functionality. A
company can opt for either functional structure or divisional structure, as both provide different
purposes.
Functional structure is based on the functions or departments in the organisation such as
sales, marketing, finance, etc. In an organisation operating on functional structure information
related to that function regarding any product will be provided in the department.
Divisional structure is based on the different products in an organisation. Therefore, in
this structure the information regarding sales, expense, marketing, etc. for a product is handled
by that very division only.

Tesco operates on the divisional business structure. It has six different departments today
operating over the world. The divisions are divided according to the products and services
provided by the company. It has ventures in superstores, banking, telecom, etc. and they all have
their own functional departments in separate divisions. It makes it easy to have access to all the
information regarding a particular sector but making the comparison difficult with the other
products.
Primark having the same line of business operates in the functional structure. It has functional
departments in the organisation dealing with all the product line and services. It makes it tedious
to collect all the information for a product but the overall performance of the company can be
calculated at the end as every department has access to all the products data.
Interconnection between organisational functions
An organisation has different operational functions, be it functional structure or divisional
structure. As in both the structures the operations are headed by the managers in all the functions.
Every department has a manager to be reported to. These departments are inter connected in
every organisation to run smoothly. Finance department has to interact with the department of
sales, marketing, production, R&D, etc. to collect all the data regarding the income and expenses
of the company to make budget and comparative charts. Similarly, marketing has to deal with
sales, finance, and others to collect the data to make strategies for any product.
In Tesco and Primark, instead of having different organisational structures the functional
departments are inter connected. In Tesco, every product or service division has different
functional departments, making it important for all functions to connect with each other to
operate the division effectively. While Primark, as it has functional structure it has experts in
every department dealing with the operations related to every product. It makes the function
more authentic and reliable as the specialized managers makes the working fast and more
accurate. In this structure also it is very important for all the departments to inter connect
properly as any kind of disruption even in one department will hamper the process of all the
products in that functional department.
For instance, if communication between sales and finance department is not proper then it
will disrupt the selling process of all the products as proper transfer of information is not done.
The company can even loose its potential clients due to this and finance department will not be

able to project an accurate estimate of current and future operations. Thus, it the basic need of a
company of any structure to have inter connected functional departments.
PART 2
P4 Positive and negative impact of macro environmental factors
Macro environment factors are related to the surroundings where an organisation exist,
here some factors described about negative and positive impact;
Technological; TESCO is having huge impact of technological factors because it is a
manufacturing company which required latest technology to develop better production. TESCO
is using latest techniques and technology which is new and effective in the market. This is
having positive impact on their production as they want to make cost effective products, these
new technology helps them to attain their targets(Johnson, Lenartowicz and Apud, 2006). But
sometimes it has negative impact on the company because it haves large investments which is
not easy every times.
Social; TESCO is a public sector company which is making their services to provide customer
satisfaction by their products. Demands arise in festive seasons and company have to make
regular supply to fulfil their customers demands. Traditions and trends are having large impact
on products so company have to make these types of products which contains these features.
This is a human nature, customer wants a regular changes in their buying products so it is
essential for the company to make changes. As the company wants to provide satisfactory
elements by their products, they are making regular update their products(Johanson and Vahlne,
2009). Which is a positive impact for the company to make better products and manage a
standard in the market. But sometimes it is not easy to make regular changes and it also increase
the cost of products which is not profitable for the company to attain their targets.
Above mentioned all factors describes about the negative and positive impacts of macro
environmental factors on the company.
P5 Internal analysis
Employee, machinery, management includes in internal environment, each and every
company have to manage proper working conditions and prosperous environment to work for
employees(Gardner and Laskin, 2011). Internal environment can be controlled by the
management and higher authorities, they have to make their efforts to manage it. TESCO is

concern about this so they are having healthy work environment which supports them to generate
better activities by their staff. Management have to aware about strength and weakness of the
company, here is some strength and weakness present to give a brief about actual conditions of
the TESCO;
Strength;
 Experienced employees; Company is having experienced faculty because they have
healthy work environment so employees does not want to move for further company. So
they are having experienced employees which is having a potential to make qualitative
work in their production. Organisational structure; TESCO is having hierarchical structure which gives a strength
to perform their activities as per the requirements.
Weakness;
 Company is having large product range and they have to make regularity in the demands
which is not done properly(Ferreira and et. al., 2009). So they have to work on it and they
have to manage production line more better way to increase their potential of
manufacturing.
 As they are having a large product range they have to make error less supply, sometimes
their stores are having complaints that they are having wrong supply against to their
demands. So this is a part where company have to work, supply manager have to
investigate on it and they have to make better process to reduce these errors in supplies.
P6 Strength and weaknesses of the company which are linked with macro environment factors
These strength and weakness are having a relation with the macro environmental factors,
as the company is having experienced staff just because they are using latest technology in their
production line. New technology is having a feature which is less human efforts, TESCO is using
auto sense technology to make their production which gives a relax to employees. This is an
automatic technology which is making automated production (Enshassi, Al-Hallaq and
Mohamed, 2006). Social environmental factor is linked with the weakness, as the company is
facing problem to manage demands just because customers demands changes in their products.
Customers are having a direct affect of latest trends which they demands in their products. So
company's strength and weakness is linked with the external environment.

M3 PESTLE Analysis
External environment is having huge impact on the business activities and companies has
to make adjustments according to the macro environmental factors. PESTLE is a tool which
helps to analyse about macro environment of the TESCO;
Political; Tax rates, trade policies, fiscal policies are made by the government which is having
direct impact on the sale and production. UK government is having some trade policies for the
retailer companies which they have to follow. Tax rates has a regular change in every financial
year so they have add this all taxes in their cost and after it they have to decide a selling price for
their products(Dong, Wu and Hou, 2009). As UK government is having a great impact of
BREXIT, they have several changes in their rules and regulations for those companies who are
taking services of employees which becomes from the EU nations.
Economical; As TESCO is working for cost effective products they have to aware about inflation
rates and economic growth rates of the UK. Whenever company is making their investment in
their plants they have to choose a particular time when inflation rates are positive for them. It can
helps them to maintain economic level of company. They have to concern about purchasing
power of their customers and they have to make their production according to this.
Social; It is a factor which have to adopt by the company in their products. Customers wants a
change in their products as per the latest trends. Company have to make changes in their
products. As UK is having different demographics which are having huge difference in the
trends and demands (Dollinger, 2008). TESCO have to provide differentiation in their products
for different demographics.
Technological; Manufacturing line needs a lot of technological uses and company have to allow
them to use it. Technology is getting updated by everyday so this is making a crucial conditions
for those companies which are not adopting the latest technology to make their production.
Another thing is that TESCO is having several departments which is having a need of
technology(Chi, Kilduff and Gargeya, 2009). These all departments are having connected by
internet and telecommunication so technology is a need of the company to manage their
activities as per the need to make better organisation.
Legal; UK government is having different types of laws which have to be follow by the
company. Employment laws, labour laws, consumer laws which have to be follow by the
company. Company is having focus on work safety and they are following all the guidelines

which are prescribed and mentioned labour safety laws. TESCO have to make their production
more fine which can help them to reduce consumer affairs and they have to make fair
advertisements of their products which is also a part consumer law(Chesbrough, Vanhaverbeke
and West, 2006).
Environmental; The company is having a lot functions which have to performed by their
employees. They are having a huge demands which are completed by the supply departments so
they have to use environment friendly transportation to reduce impact on the environment.
Another is company have to make their products more better which can be used in any types of
environmental conditions. UK is having cold climate and they have to make regular production
in any type of conditions so they have to make proper facilities for employees to work in cold
climate. Company have to provide them proper resources which can help them to perform any
type of environmental conditions.
M4 SWOT Analysis
Strength;
 Skilled employees is a positive strength for the company which can work for the
company in any type of market conditions(Cantwell, Dunning and Lundan, 2010). Technology which is used in the company have a potential to make cost effective
products.
Weaknesses; Company is having not having consistency in their supply of different products. They
have to manage regularity in it.
Opportunities; As the company is having a large product range they can make sale their products in
different demographics which is having a need.
Threats;
 Available market competition is making a risk of decreasing market position of the
company(Beck and Demirguc-Kunt, 2006). PRIMARK is making high risk factor for the
company because they are decreasing market share of TESCO.
b.) Reflective statement
Being a business analyst I identified that business environment is an effective concept
where different types of factors are available and plays major role. In context to this there are

internal as well as external elements affects to the overall business such as Primark and Tesco in
order to run the firm in smooth way. Further I identified that it influences to the management for
taking business decisions as well as formulate the business strategies. Each and every
organisation has appropriate and particular business objective behind operating in the industry
such as retail segment. I concluded that the company Tesco is affected by the business
environment elements. There are various external factors such as political, environmental,
economical, technological, social as well as legal factors which highly influence to the TESCO
Plc in order to earn profit in the retail industry where it operates. The respective business
enterprise is operates as well as offer its goods and services across the world due to which able to
earn higher market share in the retail industry.
In my opinion being a business analyst the Tesco is affected from various macro
environment factors which lead to affect business decisions. Further, the as per the legal factors I
analysed that the company must provide equal opportunities to each and every business
employee who are doing work on same designation. Apart from this TESCO is following all the
legal rules which are incurred extra cost as well as the company provide training and
development program by which it is beneficial. As per the legal factors company must follow
taxation policies which lead to hamper level of profitability in the retail industry. I analysed that
technological factors are always affected to the TESCO in positive manner because it is updating
and come up with innovations. It leads to produce the products and services with better quality
by which more number of consumers will attract and sales increase of the TESCO. Further,
political factors such as numerous rules and regulations as well as taxation policies impact to the
business environment of TESCO in negative manner. Higher the taxes on profit lead to reduce
net profit ratio of the firm.
Moreover, as a business analyst I concluded that the economical elements are affect to
the business due to depends on the UK economy. In the current scenario growth rate of UK
economy is very low that is 1.9% due to this profitability of the firm is highly affects in negative
manner. Furthermore, interest rate as well as exchange rates are also highly influence to the
TESCO company due to operating worldwide. As per the social factor of macro environment in
UK ageing population is more in comparison to young people. Hence, I identified that this
situation is too much affect to the company because the aged people are rigid for particular
product. Apart from this, testes and preferences of the customers are changes which lead to

change overall products as well as production process of the firm in order to fulfil consumer's
requirements.
CONCLUSION
The above concluded report is having focus on the business environment of TESCO,
which is having a huge competition with the PRIMARK. The company is having huge impact on
external environment which have to adopt by the company. This report contains about PESTLE
analysis which is helpful to know about the external factors. SWOT analysis is helping tool to
know about the strength and weakness of the companies. This also helps to know about market
opportunities and risks for the companies, they have to aware about it.

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