Business Operations and Environment Interrelation

This assignment assesses the interrelatedness of business operations and environmental factors. It discusses how different types of enterprises (e.g., SMEs, large corporations) manage their environments to achieve sustainability in the market. The analysis covers the impact of internal and external environment on business operations, as well as the strategic fit between innovation strategies and business environment.

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1 Different types and purposes of organisation with their purpose..........................................1
P2 Size and Scope of different types of organisations................................................................3
LO2..................................................................................................................................................4
P3 Relationship between various organisational functions and their link with organisation
structuring and objectives...........................................................................................................4
LO4 .................................................................................................................................................5
P4. Positive and negative impact of macro environment on business........................................5
P5. Swot analysis of Sainsbury...................................................................................................7
LO4..................................................................................................................................................8
P6 Interrelation of strength and weakness with external factors of retail industry in UK..........8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business is the activity of generating revenue by producing and selling the goods or
services. It can be termed as a process of manufacturing, marketing and selling of products to
earn revenue. The surroundings in which the organisation or trade operates is an important
attribute that affects the execution of activities on a higher scale. A supporting environment
assist the firm to perform their operations in an effective way. The present assignment covers the
details of business conditions in UK based retail entity, Sainsbury. It is headquartered in London
and is third largest retail service provider. Besides this, it also offers banking and agriculture
based products. Report is going to cover the information about types and purposes of
organisation with their size and scope. The relationship of different organisational functions and
their link to structuring and objective is evaluated. With addition to this, the positive and
negative impact of macro environment is analysed. Internal and external assessment for
identifying weakness and strengths is provided with their interrelation with macro factors.
LO1
P1 Different types and purposes of organisation with their purpose
In a market a range of enterprises operates which affects extent of business operation to a
greater level. They perform a variety of operations as per their scalability and size and this
affects the organisation on a greater scale. Each entity has a purpose and thus, operates
accordingly to it. The firms operates in various sectors or industries and has the operations and
functionality as per their customer base (Virglerová, Dobeš and Vojtovič, 2016). The major
typology of of different firms with their legal structuring and purpose is as follows:
Public sector firm: This are the organisation or service providers firms which are owned and
operated by the government and offers facilities to citizens or public. Most of the enterprises in
public sector do not target for profitability. As they are owned by national authorities, it is
funded through unconventional methods like taxations, fees or provincial transfers by local
government. The federal level corporations provide the services which are widely used by
people. Followed by the Great Recession in 2009, the public sector firms have seen a great
decrease in UK. They operates in many sectors like education, medical and health care,
electricity, infrastructure development, law enforcing, public transportation, gas and oil etc. The
major purpose of federal sector is to serve people and provide them with basic amenities and
facilities. Their main aim is to ensure the well being and contentment of citizens of country.
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They sometimes operates with the private sector firms in collaboration making them
hybrid enterprises. This supports them to provide more quality based and efficient services to
their customers. It assists in improving their scales and ability to cater more and more customers
in an effective way. The legal structure of organisations in this sectors is Public Limited
Company (PLC). They have a Board of Directors (BOD) and can offer their shares at stock
exchange. Example of public sector company in UK are British Broadcasting Corporation
(BBC).
Private Sector firm: This are the enterprises which are an essential part of a nation's economy
and are owned privately by an individual or group of people. It is established by forming a new
company or privatising an existing public sector entity. They are established with the intention of
profit making. They uses the personal assets or loans from banks and resources from share
holders or investors as the source of funding to run their operations. They are an important part
of free economies. As they make more profits compared to public sector firm, they employs
more workers to sustain the profitability. Their major purpose or aim is to manufacture high
quality products or services and generate a decent amount of revenue (Keating and et.al., 2015).
It consists of sole proprietors, partnerships, SME's and trade unions and large MNC's.
They might have two types of legal structure based on scalability of operation and sectors
they operate, separate legal entity (SLE) or Limited liability corporation (LLC). They share their
profit with stake holders or investors in form of dividends at end of a financial year. The example
of private sector firm are like Hilton Group, Apple Inc., Sainsbury etc.
Voluntary sector firm: These are the enterprises which works for the welfare and benefit of
society and operates with or without the motive of profit generation. They can have a
governmental support but mostly perform as a non governmental organisation (NGO). They aims
to give back to the society and their purpose is to focus on creation of social wealth rather than
money. Firms in this sector runs many integrated programs and activities for the welfare and
benefit of people. They mostly comprises of charities, community centres, faith based
organisations and social welfare foundations. They may vary in size and scope and are owned
and run by volunteers (Hedger, 2016).
The Example of Voluntary sector firm is British Red Cross Society, Bill and Melinda
Gates Foundation etc. They have a legal structuring of Trust or Limited by Guarantee or Shares.
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P2 Size and Scope of different types of organisations
A range of enterprises varied in size and scope operates in market. This affects the extent
and level of operations which they will perform and hence, affects the operations that they
operates to a greater extent. Looking at their scalability and effectiveness of performing business
operations, the size and scope of firms in all the three sectors that are discussed above. The
difference of organisations that are operating in all the three operational sectors are:
Public(BBC) Private(Sainsbury) Voluntary(British
Red cross society)
Description British Broadcasting
Corporation is a public
broadcaster and is one
of the oldest
broadcasting
enterprise in world. It
is a government
regulated firm.
Sainsbury is a
privately owned retail
organisation. It is a
public traded entity
that provides the
services related to
supermarket, banking
and agriculture based
products (Nohria,
2017).
Formerly known as the
British national
Society of Medical aid
for Wounded and Sick,
it is a voluntary firm
that provides
humanitarian services.
It was founded in
1870.
Number of employees It is worlds largest
media employer with a
worker strength of
20,916 actively
operating employees.
It has a employee
strength of 186,900
individuals.
The UK branch has a
staff of 3,500 with
about 32,000
volunteers around the
world.
Location and branches The headquarter is
located London, UK
and its operates all
round the globe.
Its head quarter is in
London, UK and it
provides the services
and facilities majorly
in European countries.
With 1400 stores.
The headquarters is in
London, UK. However
, firm provides the
medical care services
in many countries.
Market share/ Size It is a large scale It is third largest retail It is one of the leading
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organisation with a
Net operating income
of £129.1 million in
year 2017.
enterprise in UK in
year 2019.
humanitarian service
provider firm in world.
Profit The net revenue of the
organisation by year
2017 was £4.9 billion.
The profit earned by
organisation in 2018
was £28.4 billion.
The Approx. funding
received by firm in
2017 was £249.4
million.
Growth and
sustainability
Being the major
broadcaster in world, it
has an accessibility to
all major countries
around the world.
Being one of the
leading retailer, it has
a great scope of
growth.
Looking at the
scalability this can be
said that as the amount
of funding increases, I
will have a higher
chances of expansion.
LO2
P3 Relationship between various organisational functions and their link with organisation
structuring and objectives
Organisations functions have a deep influence on the structuring and objectives of an
business entity. Sainsbury follows the flat structuring of enterprise and has a objective of having
higher sales by providing good quality products and services (Wheelen and et.al., 2017). The
interrelationship between different organisational activities with their structure and objectives is
as follows:
Marketing and Finance: The marketing and finance department of Sainsbury will look
after their operations with a greater effectiveness. The flat structure followed by firm facilitates
smooth communication which allows marketing department to convey their monetary needs to
finance for the execution of their promotional campaign. Reciprocating to this request, the
economic department will sanction budget and resources for advertising activities. This will help
in increasing awareness of buyers towards high quality products of firm and have a good extent
of sales. It also supports in improving performance of Sainsbury with a long term sustainability.
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Besides this, the marketing catalyses the sales and supports Finance department to get a cash
flow and more revenue.
R&D and Production: Similarly, the research and development department of Sainsbury
will also have a deep relation with the manufacturing or production measures with the firm ( Bah
and Fang, 2015). Following of the Flat structure by organisation helps the department to perform
researches in order to identify their customers needs or requirements and design or develop
innovative and high quality products or services. It aids in handling communication with the
production department for manufacturing goods. This will help the enterprise to achieve their
objectives of having higher sales by offering superior products to their consumers. On the other
hand, as the consistent production of high quality goods is observed, it saves the time and
resources of R&D department.
HR and Customer service: The human resource department will also have a good
interaction with public relation and customer service of Sainsbury. They identify the need of
skilled labour within the Flat structure of organisation in order to perform different operations at
work place and recruit skilled workers. This will support a good interaction process and
facilitates a suitable management of their consumer feedback (J Sainsbury PLC (SBRY.L), 2019).
Measures related to customer help and post sells services are looked after by organisation. The
Flat organisational framework will facilitate recruiting of well skilled labour force within the
firm to handle the customer needs and requirements, rectifying their doubts and provide them
appropriate solutions. It aids to improvement in product or service quality, enhancing buyers
satisfaction level and increase the sales of firm.
LO4
P4. Positive and negative impact of macro environment on business
Pestle analysis can be defined as the framework that is used to analyse and monitor the
macro-environmental factor that can affect performance of company. These factors can also have
positive and negative impact on firm’s efficiency.
Political factor- It includes factors such as savings rate, exchange rate, government rules
and regulations that can affect working of Sainsbury.
Positive impact- As over the period of time, financial instability has increased, government has
motivated retailers by their rules and regulations to provide more job opportunities. Sainsbury is
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engaged in doing this, which has helped them in increasing the demand for their goods and
diversifies their workforce (Chang, 2016).
Negative impact- Brexit has caused high inflation rate and devaluation of pound in the country.
This has led to decrease in purchasing power of consumer, that has negatively impacted
Sainsbury. It has also caused wage growth depression and sluggish economy.
Economical factor- Economic factors that can affect company can include inflation rate,
fiscal policy, labour rate and many other.
Positive impact- Economic laws implemented by government like diversification and
internationalization has assisted Sainsbury in achieving success. It has helped firm in growing
and increasing its global presence (Quinlan and et.al., 2019).
Negative impact- Increased in labour cost has also affected Sainsbury negatively. In year 2018,
the wage rate in UK has been raised by 4.4% for 25 years old and onwards. This increase in price
has cost Sainsbury a million of pounds in company. Increase in food price inflation has made
consumer conscious which has modified their shopping habits had negatively affected retail
market like Sainsbury.
Social factor- These factors include attitude, belief, thoughts which are followed by
consumers in a particular country. It also includes consumer taste and preferences which needs to
be taken care of by the firm.
Positive impact- Sainsbury is engaged in providing goods and services according to needs and
demands of customers. They also take care that values and custom of consumers do not get hurt
because of them. This has helped company in establishing their goodwill in market.
Negative impact- It has been analysed that in UK there has been a drastic shift in consumer
spending habit. They are now more preferring local stores and discounted internet shopping. So
this change in taste and preference of customer has negatively impacted Sainsbury.
Technological factor- Digital revaluation and advancing technology has been a trend in
the market which is followed by many organizations. It is one of the most important aspect that
needs to be followed by firm in order to grow (Kljucnikov and et.al., 2016).
Positive impact- Sainsbury has engaged in providing services to consumers like they can shop
food online from their website. They can also click and collect orders where consumers placed
from their online shopping. It has been marked that company’s online retail shopping has
increased by 80% that has led to 20% rise in profit.
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Negative impact- If Sainsbury is not engaged in making use of advancing technology, then
consumer can shift to another retail stores. It can also lead to reduce in profit of company.
Legal factor- It includes laws, rules and regulations implemented by government that
enterprises need to follow.
Positive impact- Various laws like health and safety given by government has led Sainsbury to
provide safe working condition to employees that has helped them in creating employee loyalty
and belongingness (Hair Jr and et.al., 2015).
Negative impact- New “sugar tax” levy introduced by UK government aims to reduce content in
sugary drinks by 20% by 2020 will impact supermarket own brand products. This will affect
Sainsbury sales negatively.
Environmental factor- Consumers are becoming more ethical and environmental
conscious now-a days, so company needs to take care of it.
Positive impact- Sainsbury is engaged in following the new environmental law that emphasize
that supermarket should produce zero waste as wastage of food is one of the biggest
environmental challenge. This act by company has helped them in maintain their value in
market.
Negative impact- Company if is engaged in producing large amount carbon emission then it can
lay negative impact on image of Sainsbury. This can also hamper their goodwill in market and
can also reduce their profitability.
P5. Swot analysis of Sainsbury
SWOT analysis can help company in identifying internal strength and weakness. Also it
supports firm in identifying external opportunities and threats (Charter, 2017).
Strength- Sainsbury is one of the oldest supermarket in UK. It has been marked as third
largest super market chain with 15.8% of market share. Company has more than 1400 grocery
stores in country which employees over more than 150,000 employees in country. Sainsbury also
provides high quality products and lays keen emphasis on the consumer satisfaction. They have
also invested in other core ranges like food, energy and clothing. Company is also making use of
advancing technology that has led to high consumer satisfaction. It has helped them in growing.
Weakness- Sainsbury has high price than its competitors that is acting as a weakness for
them. Profit of firm has also been declined in recent years. Firm is also facing a lot of
competitor’s pressure leading to decrease in profitability aspect of them. Also they are creating
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huge amount of carbon emission due to which reputation of firm has also been hampered. There
subsidiary is also not performing well due to impact of external factors on firm (Deasy and et.al.,
2016).
Opportunities- Sainsbury has an opportunity to with other brands in order to grow.
Company can also go for joint venture with local firms in particular country, so that they have an
idea of consumer needs, demands, taste and preference over there. They can expand their market
in new market like Brazil, China, India and many more.
Threats- They have a huge threat of competitors. There are many players in market Like
Tesco, Marks and Spencer that is giving tough competition to it. So firm needs to make strategies
accordingly so that they can overcome threats of competitors. This can help them in growing.
LO4
P6 Interrelation of strength and weakness with external factors of retail industry in UK
The strength and weaknesses of Sainsbury or overall retail industry in UK is effectively
related with the external environmental factors. This affects the operations and overall
functionality of a retail organisation. The strengths and weak factors that are identified will
significantly associate with the macro factors of organisation as well as the retail industry
(Hillary, 2017).
The strengths of Sainsbury indicates that being one of the oldest retail firm and having a
good market share of about 15% allows the company to cater needs of a wider range of
customers. Being one of the industrial leaders provides the firm with a good idea about pattern of
customer needs and changes in it. On the other hand, operating in many countries in Europe
allows the organisation to tackle fluctuations in the economic viability in market. The
multinational operations approach allows the organisation to compensate loss of revenue in one
country from the profitability in another country. Also, the following of various governmental
policies and legal trade obligations like employment laws, Equality laws, maintaining the
taxation and tariffs rates will help in improving the quality of product or services which are
carried out by firm (Prajogo, 2016).
However, the extensive and rigorous competition in retail industry and decline in
profitability from their subsidiaries and few outlets have been a serious concern for the economic
environment of organisation. Besides this, the absence of proper technological advancement to
monitor and handle the operation and high carbon emission rate has adversely affected the
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operations of organisation on a greater scale. The firm is required to look after the effective
management of this issues in order to obtain a sustainability in market.
CONCLUSION
Based on the in depth assessment that is been performed, this can be said that business
operation and environment are closely interrelated to each other. The details related to various
types of enterprises with their purposes and legal structure plays a very important role in
execution of business operations. Their size and scope is evaluated with interrelation of
organisational functions and their operational structure and objective. The positive and negative
impact of business operation with evaluation of internal and external environment. In addition to
this, their interrelatedness is also presented.
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REFERENCES
Books and Journals
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Chang, J.F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
Deasy, S., and et.al., VMware Inc, 2016. Controlling use of a business environment on a mobile
device. U.S. Patent 9,247,042.
Hair Jr, J.F., and et.al., 2015. Essentials of business research methods. Routledge.
Hedger, J.A., 2016. Sainsbury and Tye Fail to Solve Frege’s Puzzle. Linguistic and
Philosophical Investigations. (15). pp.32-41.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Keating, S.E., and et.al., 2015. Effect of aerobic exercise training dose on liver fat and visceral
adiposity. Journal of hepatology. 63(1). pp.174-182.
Kljucnikov, A., and et.al., 2016. The entreprenurial perception of SME business environment
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Review. 9. p.10.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics. 171.
pp.241-249.
Quinlan, C., and et.al., 2019. Business research methods. South Western Cengage.
Virglerová, Z., Dobeš, K. and Vojtovič, S., 2016. The perception of the state’s influence on its
business environment in the SMEs from Czech Republic. Administratie si Management
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Wheelen, T.L., and et.al., 2017. Strategic management and business policy. (p. 55). Boston:
pearson.
Online
J Sainsbury PLC (SBRY.L). 2019. [ONLINE]. Available
through:<https://in.reuters.com/finance/stocks/company-profile/SBRY.L>
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