Impact of Economic and Non-economic Environment on Organizational Behaviour

This report explores the impact of economic and non-economic environment on organizational behaviour. It discusses the influence of economic policies, systems, and conditions on business performance. It also examines how the natural environment, demographics, and culture shape organizational behaviour. Additionally, the report provides insights through a SWOT analysis.

TASK DESCRIPTION-
PROJECT 1

Table of Contents
1. INTRODUCTION.......................................................................................................................3
1.1 Company overview................................................................................................................3
2. LITERATURE REVIEW-...........................................................................................................3
2.1 Economic environment and its impact on organizational behaviour.........................................3
2.1.1 Economic policies...............................................................................................................3
2.1.2 Economic systems...............................................................................................................4
2.1.3 Economic conditions...........................................................................................................5
2.2 Non-economic environment and how its shapes organizational behaviour...............................5
2.2.1 Natural environment...........................................................................................................5
2.2.2 Demographics.....................................................................................................................7
2.2.3 Cultural...............................................................................................................................8
3. Discussion....................................................................................................................................8
3.1 SWOT Analysis.....................................................................................................................8
3.2 PESTLE Analysis..................................................................................................................8
4. CONCLUSION..........................................................................................................................10
REFERENCES..............................................................................................................................11

1. INTRODUCTION
Organizational behaviour (OB) is the study of human performance, their nature and
attitudes, it is considered as study of what individual do in firm and how its behaviour affects
productivity of business (Barry and Wilkinson, 2016). It is learning of group performance and
activities within company, that affect profitability and operational efficiency. In other words,
organization behaviour is included two different terms, organization and behaviour. There are
different aspects of this concept which has to deal with, to know performance of specific firm.
Some fundamental aspects of OB is people, structure, technology and environment. The current
report explain economic environment and its impact on organizational, non-economic
environment that shapes organizational behaviour and also clarified SWOT as well as PESTLE
analysis.
1.1 Company overview
This study is based on Sainsbury company located in UK and known as one of the
biggest supermarket chain in all around the world. They are able to offer great quality of
products to its consumers that help in generating revenue. This firm is founded by John James
Sainsbury, they grow to become one of the biggest food retailers in UK with over 600
supermarkets, nearly 250,000 online orders every week and 800 convenience stores. In 2019,
organization market share sits at 15.3%, this is marginal dip as compared to last years when it
had 15.4% of UK grocery market. The sales of company compared to same period a year earlier
was shrunk by 2.3%. Sainsbury generate revenue more than 29.007 billion and its operating
income is 312 million.
Firm survive in high competitive environment, due to increasing and existing number of
its competitors, who give tough competition to Sainsbury. It includes Asda, Morrisons, Boots,
Tesco, ALDI, Amazon and Debenhams, they all are considered as top 7 competitors of firm.
With 116,400 number of staff, organization sustain in retail market, they had 16.0% share of
supermarket sector.
2. LITERATURE REVIEW-
2.1 Economic environment and its impact on organizational behaviour
2.1.1 Economic policies
According to the Rubio, (2019) economic environment refers to all economic factors that
impact on company performance and its behaviour. Economic policies is the course of action

that intended to control or influence behaviour and functions of firm. Under this, consumer laws
affect organizational behaviour, under this law, customers are entitles to free of charge
replacement, refund or discount by seller, consumers law includes all the statutes and regulations
that seek to create more equitable balance for buyers in marketplace and secure sellers from
using dishonest strategies. It affects positively on organizational behaviour because firms already
coincide with provision of law and offer quality products to its consumers that reduce chances of
any negative complain against business. In UK, consumer law protect people right, and they all
relied on laws that protected consumers of services and products.
On the other hand, Brühl, (2018) highlighted that Brexit regulations is one of the factor
that directly affect organization operations management and business performance negatively.
Brexit refers to the UK leaving EU, it makes changes in trading and transportation regulations
and rules that negatively affect organizational behaviour as profits margin plunge more than past
few years. When UK leaves European Union there are many changes to happened for placing
come products of retails sector on UK and EU markets. It directly impacts on trading and
transportation function of firms. To sell products to consumers in EU companies has to pay high
amount of taxes that impact on their profit margin and operational efficiencies negatively. It
creates the level of uncertainty, and also create difficulty situations for retail industry
organization in UK to how to operate its business in other nation after Brexit.
2.1.2 Economic systems
Discussed by Clayton and Radcliffe, (2018) economic systems are means by which
nations and governments distribute resources and trade services & products. Trade policy is
included in economic system, refer to imposition of import traffics on imports and exports of
certain goods as well as subsides for local producers to aid them against global competition. It
has been pivotal to UK economy, the sum value of exports & imports represents mostly half
nations GDP. But after Brexit the system and rules of trading has been changed which affect
Sainsbury and other firms who are operating in UK retail industry since for so long. In order to
delivery and supply products from other nations, firm has to pay extra amount due to changes in
trading system that decrease current profit margin and increase level of efforts they had to be
done for trading effectively.
Golmohammadi and Hassini, (2020) stated that supply & demand impact on
organizational behaviour negatively. Every firm provides its services and products to consumers

at different locations, according to their demand. But it makes negative affect after Brexit, in
supply system Brexit make changes and it also decreases the rate of demand from consumers in
EU. It affects revenue attainable from Ireland, Denmark, Italy and other countries. It has several
influence on supply and demand of grocery products in and outside UK. For example, Sainsbury
supply their goods out of nation, which impact after Brexit as they cannot be able to manage
supply chain effectively, to do this they had to follow the rules which required a lot of efforts and
time as well.
2.1.3 Economic conditions
Economic conditions refer to the level of macroeconomic variables as well as trends in
UK at point in time. According to Pappas, (2019) Brexit's impact on organizational behaviour
negatively, it makes changes in every aspect of retail firm and increase the cost of managing
different operations within market place. It impacts on Labour supply, about 7% of United
Kingdom workforce is composed of European Union nationals. These are vacancies that UK
people cannot take up because they lack needed skills as well as training. Further more, Brexit
also impact on UK retail sector, it would have serious consequences for Sainsbury among other
English supermarket chain. Leaving EU had made it more difficult for firm to affordably import
goods from abroad. While an increase in cots of foreign goods would likely be passed into end
consumers, this act means that companies will have to push hard to assure consumers continue
spending as much as possible, to increase profitability.
Gibney, (2017) contradict that unemployment rate is invariably lifting in UK, this will
present to be a positive thing for firm as they would non hold every bit much job seeking to
occur workers for their management. But on the other hand it could besides be a job for company
as the labour cost has to be kept on head. Firm has to pay all its workers at least national minimal
pay, for which they have to remain and seek on budget. The current employment rate was
estimated at 3.9 percent lower than last years on quarter rate was 0.1% points higher. It affects
business performance and productivity within market place as well as employment structure of
company.
2.2 Non-economic environment and how its shapes organizational behaviour
2.2.1 Natural environment
In view point of Adeyi and et.al., (2017) natural environment encompasses all non-living
and living things occurring naturally. Climate change increase risk for organizations in retail

sector UK, it shapes organizational behaviour and production process negatively, when firm do
not offer their products according to the climate. For example, Sainsbury offer grocery and other
products to its consumers, but sudden changes in climate effect their existing stock. People buy
goods according to climate, in weather they prefer hot and warm clothes and in summer they
want new summer collection, all it happens due to climate change which impact on existing
collections of Sainsbury supermarket negatively, as they would not be able to sell winter
collection in summer. To gain profit, company had to reduce the cost of products and make some
discount offer on it that decrease its desired profit margin. Agyapong and Ojo, (2018) elucidate
that pollution & traffic congestion disrupt or influence daily operations of business and shape
organizational behaviour positively. For example, land pollution is hazardous to human health as
well as it hurt business, when they do not reduce its carbon footprint. Due to increasing rate of
pollution, government put pressure on existing companies in retail industry to contribute in CSR
and work accordingly. When firms already contributed in corporate social responsibility, they
can sustain for longer and changes help to shape up their production system effectively. For
example, to reduce pollution, Sainsbury pledge to halve plastic packaging, its supermarkets
target packaging waste and pledging to reduce amount of plastic used in their outlets. It shapes
its business behaviour, as focusing more on reducing carbon foot print and used paper packaging
in chain of supermarkets.
Geographical factors-
According to Pauliuk, (2018) in order to retain consumers for longer period,
organizations efforts a lot, they provide quality products and services to target market. But there
are different type of geographical factors available that shapes organizational behaviour and
affect current operational management. For example, prices is the key element can use to drive
people towards purchasing products, that increase profit margin of businesses effectively.
Sainsbury offer goods at affordable and effective pricing structure, that help to provide proper
satisfaction to them, but on the other hand when the prices are higher it impacts negatively on
consumer base. Increased prices usually outcome in reduced demand, which is not suitable for
business growth. When firm raise their prices, it typically believes increase revenues per item
will exceed lost sales that outcome. Those companies who already sell goods in affordable prices
they effectively retain consumers and sustain for longer, for example Sainsbury offering products
with better prices that shape its organizational behaviour positively.

Taras, Steel and Kirkman, (2016) highlighted that culture is considered as geographical
factor, it affects business and shapes organizational behaviour. Influence of cultural factors on
retail companies is extensive, it impacts who workers are best offered their services and products
according to the culture in UK. Culture gives staff a sense of directions and also provide controls
way they behave and interact with consumers. In UK people belong to different culture for
example, Christian, Jewish and other, it impacts on organizational performance and behaviour as
well. Firm according to the culture, serve its services and offer goods to market that help to
increase profitability as it impact positively. For example, Sainsbury offer good and its services
by focusing on culture because it is very essential for them to gain trust of number of people
around the world.
2.2.2 Demographics
Lifestyle changes impact on business performance and contribute to shape organizational
behaviour. According to the trends people chance their lifestyles and adopt new trends that
impact on organization production management and other functions negatively. According to De
Bruin and Walter, (2017) a person's belies, financial status, morale and habits combine to
manifest how they choose to live their life, it identified choices people makes and things they
want to purchase. Changes in lifestyles of consumers put high pressure on Sainsbury and other
firms to offer goods suitable accordant to consumers lifestyles which make them able to sustain
for longer within retail sector. It impacts on company behaviour positively because they always
focus on current trends in market, provide things accordingly that build strong position and set
positive image in mind of its customers.
Whereas, there are some more demographic factors present in market that affect business
negatively or positively. For example, income levels of people impact on pricing structure of
companies and also affect profitability. This factor relates to how people spend money based on
decreases and increased in their income. Increase in income outcomes in demanding more
products and services, thus spending more money. But on the other hand decreasing in income
results in demanding fewer products, as spending less money, which impact negatively on sales
of business. The income level in UK is much better, that impact positively on retail sector and
companies working under it, as people demand new products according to lifestyles they would
have.

2.2.3 Cultural
Discussed by Vermandere, Vangehuchten and Van Herck, (2019) language barrier impact
organizational behaviour negatively, firm operating business in different locations where they
hire more people to enhance productivity, but it impacts negatively because they use another
language which is totally different from the languages of existing workers. It affects
communication process and information sharing as well, due to this barrier organization
productivity and profitability suffers a lot. But with the help of training session and collaborative
work environment, firms overcome this barrier effectively.
3. Discussion
3.1 SWOT Analysis
This model will assist to determine the strength, weakness, opportunities and threats of
the firm. This is as mention below:
Strength: Sainsbury is one of the largest supermarket in UK and provide range of
innovative quality of product and services. Further, quoted firm also have more than 1500
employees and have strong financial performance (Falcone and et.al., 2020). It also have highly
experience leadership team with excellent branding and advertising facilities at global level.
Sainsbury also provide good quality of product at reasonable rates.
Weakness: It is single operating market and face stiff competition within every segment
within retail sector. Sometimes lack of training and communication within their employees also
consider another weakness for the performance of a firm.
Opportunities: It may enter in emerging market using Joint venture which assist to boost
the sales. Providing innovative product in existing product is also consider as an opportunity for
the firm (Tosun and et.al., 2020). Also, use advance technology in their promotional activities
will assist to attract range of customers towards it, which in turn enhance financial performance
of a firm.
Threats: Company face though competition from its rival (international company) and
sudden changes in the customer's preference will also affect the overall performance of the firm.
Sometimes misleading information also consider as a threat in the business.
3.2 PESTLE Analysis
This factor affect external environment of the company and comprises six element which
are as mention below:

Political factor: Unstable government and its policies affect overall business market of
Sainsbury in negative manner (Ofosu-Boateng and Jiping, 2020). Or else, due to Brexit, there is
a suddenly increase in the products' prices and it affect the sales of company in opposite mode.
As a result, due to increase in foreign products' cost is likely to passed into an end order and that
is why, Sainsbury have to push hard to make sure that customer continue their purchase in order
to maximize profits.
Economic Factor: Sudden fluctuation in the economy of UK will affect the overall
business. Such hat due to inflation rates, price of product is also increases and customers did not
spend more money, which affect the financial performance of a firm. Another issue is
unemployment which is major issue in UK but this is a positive sign for Sainsbury, it also make
sure that company pay minimum wages to their employees.
Social factor: Changing customer behaviour is consider a challenge for Sainsbury
success because customer shift towards another brand when they find same quality of product at
low rate (Nandonde 2019). Further, company should make sure that they comply with all ethical
practice and health and safety standards as well that lead to cope up with this factor.
Technological Factor: It creates positive impact upon business such that by using digital
platform for the marketing will lead to attract range of customers towards it. Also use analytic
such that Big Data and Artificial Intelligence principles that allow company to enhance its
operations. Sainsbury may also provide online shopping experience to their customers so that it
increase the sales and reach to range of customers.
Legal Factor: Health & safety workers contracts cover under legal factor, changes in
Health and Safety at work Act 1974, impact upon business as they focus on current contracts and
make changes accordingly. According to contract, firm has to provide training to its existing
workforce to protect themselves in sudden accidental situations, it impacts negatively as for
training purpose management hire experienced person that demand high amount of fee. On the
other hand it impacts positively, because by making changes and provide essential resources to
employees for safety purpose organization retain their skilled people for longer who are able to
contribute in achieving Sainsbury objectives.
Environmental factor: Ban on plastic use affects Sainsbury positively, firm supermarket
chain pay great attention and contribution to plastic waste crisis. By packing products into single
use plastics, company introduce more environmental strain than they can manage, they look for

ways to handle plastic waster or use, such as offering incentives to consumers who buy food
stuffs lose and bring own shopping bags as well as containers.
4. CONCLUSION
From above analysis, it has been defined that consumer laws, trade restrictions, supply
and demand, trading and employment rate after Brexit has been changed that impact on
organizational behaviour and its functions negatively, but by making effective decision and
following the rules of UK government, Sainsbury supermarket chain generate revenues more
than before as it help them to sustain for longer period. Languages barriers impact on
communication process between employee and management and workers and customers that
affect productivity and profitability. Sainsbury to motivate their staff and overcome barriers can
use employee training as the best management tool, because it enhances working practice,
provide chance to communicate and understand each other. After making pestle analysis on
company it has been concluded that they seriously affected by external environment, as
technological advancement, culture and unemployment rates are the three factors. Efficient
initiatives taken by organization against these components are highly appreciated in order to
maintain their growth sustainable.
Furthermore, after making SWOT analysis, it has been summarized that Sainsbury
supermarket chain offer the best quality products, they are able to retain talented applicant and
sustain business within retail sector for longer. They face issues due to high competitive
environment and changes in consumers preferences. However, by making effective decision as
considering the preferences of people, company sell products effectively that increase it sales,
and they can generate more revenue as compare to other firms at international level. Firm get
business growth opportunity by making innovation in their existing product that help to drive
new consumers towards them and retain current one for longer.

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