The Business Environment

This document discusses the business environment and its impact on organisational structures, supply and demand on prices of goods and services, and more. It includes case studies on different organisational structures, functions of different departments, and the influence of global factors. It also analyses the impact of supply and demand on prices in the market. Get study material and solved assignments on the business environment at Desklib.

The Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT............................................................................................................................1
TASK 2............................................................................................................................................1
Different organisational structure................................................................................................1
Explanation of functions of different departments in organisational structures and their
relationship...................................................................................................................................4
Evaluation of influence of global factors on organisation structures..........................................5
TASK 3............................................................................................................................................6
Analyse of impact of supply and demand on prices of goods and services in markets...............6
Analysing possible planned interventions in market place as well as their impacts on
organisation..................................................................................................................................8
Assessment of response of chosen company to changes in its market........................................9
TASK 4............................................................................................................................................9
Covered in Leaflet........................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment means sum total of elements or factors which impacts and
influence an organisation. Understanding business environment helps organisational managers to
identify opportunities for making first mover competitive advantage, identifying threats as well
as early warning signals, tapping useful resources, coping with speedy changes, improving
performance and forming policies (Khajeheian, Friedrichsen and Mödinger, 2018). For gaining
insights about business environment, Tesco Plc is considered. It is an international leading
retailer which have headquarters in England, UK. The company was established by Jack Cohen
in the year 1919 as group of market stalls. It have more than 400000 employees and serves
cardinal of targetted population each week from its stores and online website.
The assessment is prepared in four tasks. First task covers distinct organisations types and
their purposes. It also analyse responsibilities of organisations. The second task discusses about
different organisational structures and functions of department in different structures addition to
their inter-relationships. It also evaluates influences of international factors on organisational
structures. Task 3 analyse impacts of supply and demand on prices of products and services in
markets and possible planned interventions in marketplace along with their impacts on
organisations. Task 4 includes importance of national entrepreneurial strategy, role of monetary
and fiscal policy as well as possible impacts on organisation and their activities.
TASK 1
Covered in PPT
TASK 2
Different organisational structure
Organisational structures and interrelationship of functions of distinct departments in
structures
Organisational structure refers to a system which clearly outlines the ways certain activities will
be directed for attaining organisational objectives. Such activities engrosses rules,
responsibilities and roles (Roberts, 2018). It influences actions and provides foundation in
which standards related to operating procedures as well as routines rest are defined. Various
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types organisational structures are as evaluated:
Hierarchical organisational structure
The structure that puts authority along with responsibility on tp authorities of entity and
flows down from top to lowest level is said to hierarchical organisational structure. It works as
pyramid as well as centralises all duties with power on employees which stand on peak of
business. In context to Tesco Plc, the managers follows hierarchical organisational structure in
which positions together with obligations are divided in various parts for ensuring that
operations are done in smooth and efficient manner.
Advantages: The advantages of using hierarchical structure are as follows:
 Hierarchical structure establishes authority for operations and department in clear
manner. Superiors or managers have authority as per level of management and powers
for allocating rewards, resources and giving orders to employees.
 The structure creates clear communication lines and establishes relationship among
managers and employees that gives directions in proper manner about communication.
 Hierarchical structure allows managers to divide roles and responsibilities to employees
logically which creates additional efficiency layers resulting in specialisation
(Chatzoglou and Chatzoudes, 2018).
 The structure encourages decision making through proper exchange of ideas and
thoughts among team which takes out pressure from single authority.
Disadvantages: Disadvantages of hierarchical structure are below:
 It centralises authority addition to power at highest levels that are possible which creates
huge problems in making decisions about big picture and other operational practices.
 Departments working in hierarchical structure become distinct towards areas of
concerns as well as develops tunnel vision. Hierarchical structure reduces internal innovation as when ideas of employees are
rejected by direct managers then it discourages them to share ideas further.
Divisional structure
The structure which groups organisational functions into geographical, service and
product divisions is said to divisional structure (Cohen, 2018). Each divisions have necessary
resources, duties, responsibilities and functions in it that influence product line. The structure is
used in companies when decision making are in cluster at divisional level for reacting quickly
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towards local situations. Tesco Plc can use the structure as it have many products, regions
together with market.
Advantages: Advantages of divisional structure:
 All working in the structure are organised and stabilised in proper manner. The structure
benefits Tesco Plc by providing knowledge to employees about their position and jobs
to do.
 Divisional structure makes working easier for superiors to assign responsibilities, duties
and roles for actions together with outcomes. It also works great in markets in which
huge competition exists.
 The structure tends to show faster responses towards local market situations.
Disadvantages:
 The structure prevents companies from attaining most from economies of scale. It is
because individual divisions fails to produce enough for gaining diverse benefits from
among economies of scale (Truant and Broccardo, 2020). The structure creates divisions in organisation. At the time when divisions do not
exchange information among each each then it creates lack of communication among
each each.
Matrix structure
Organisational structure that is combination of diverse types of structure is termed as
matrix structure. In this structure, two command chains exists in which project team members
are accountable to two bosses (Gardiner and Scott, 2018). When Tesco Plc will adopt the
structure then it have to set reporting relationships as grid and matrix. Moreover, individual
employees will have dual relationship, one with product manager and other with functional
manager.
Advantages: Advantages of matrix structure are mentioned below:
 The structure allows multiple divisions to communicate and collaborate in easy manner
for any project which increases communication efficiency within workplace.
 In matrix structure, manpower have huge autonomy addition to inputs in project which
encourages employee contribution together with places higher vales towards view points
of workers.
Disadvantages: Matrix structure have certain disadvantages which are as follows:
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 As matrix structure requires workers to accountable to two managers as well as work on
different project. This creates conflicts among managers and projects (Nußholz, 2018).
 In the structure, an individual is assigned multiple activities in number of project which
may reduce effectiveness of employee and enhances ambiguity within them.
Explanation of functions of different departments in organisational structures and their
relationship
In an organisation structure, different departments work and have inter relationships
with each. Following are the case studies that explains functions of different departments in
organisation structures together with their inter relationships:
Case study 1: Organisation which have Hierarchical structure divides working of its
employees in different department on the basis of its size. As largest retailer, Tesco currently
employs more than 400000 people. With hierarchical structure, entire workforce reports to
Dave Lewis, CEO of Tesco. There are different departments under the structure which have
inter relationships to each other. Some of department and their roles are as follows:
Information technology: The department involves in providing infrastructure for
automation and assistance in operational functionality. In Tesco, function of information
technology department are to manage networks, handling all technologies, application
development, communication etc. Information technology department coordinates its practices
with other departments such as marketing, legal operations and many more. For instance,
marketing department understand customers through significant technology amount that they
takes from IT department. Moreover, IT department helps legal operations to proceed legal
compliance online (El Talla and Et. Al.,2018).
Marketing: The department have role for promoting business as well as driving sales of
offerings. It also perform, research to recognise target customer and potential audience. In
Tesco, function of marketing includes are producing promotional materials, creating campaign
management, producing internal communication, monitoring social media etc. Marketing
department have interrelationship with other departments of company. It coordinates with
Finance department for devising budget and takes help of IT department to devise promotional
content and post them on social media (Feng, Huang and Avgerinos, 2018). At same time, it
also coordinates with legal operations department in order to conduct practices in ethical
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manner.
Case study 2: Organisations that have matrix structure involves common number of
group departments which support each others for enjoying benefits of common areas and work
as per central guidelines. H&M group have matrix structure in which traditional departments
are combined with functional structures with team of project. Following are departments are
their functions as well as inter relationships:
Human resource: The department performs management of employees, overseeing
employment aspects and meeting requirements of other departments for human resources. Key
functions of human resource department in H&M Group are recruitment, selection, training and
development, compensation, performance management, employee relations, labour law
compliance etc. Human resource department manages its relationship with other department in
the structure through arranging required manpower and developing them with effective sessions
(Carter, 2018). For example, HR department of H&M Group provides required number of
employees to marketing department and others. It also set compensation and other required
documents so that overall objectives of business are attained effectively.
Strategy and transformation: The department is responsible to devise strategies and
transform them into reality. In H&M Group, main functions of the department is to assist
departmental managers in setting strategies, making significant changes in existing strategies
and converting ideas into reality (Organisational structure of H&M Group, 2020). Working of
the department are inter related with other departments such as it oversee resource allocation of
HR department and HR department meets needs of employees of the department through
providing rewards and compensation.
Evaluation of influence of global factors on organisation structures
Global factors are factors that are outside the control of individual business and affects
the process, practices, methods and activities of company in great manner. Some of global
factors which influences organisation structures are international trading, market opportunities,
climatic changes, political system, legislations and many more. As per Fegley and Bostaph,
(2018), it has been evaluated that global factors including changes in social preferences
provides insights about lifestyle patterns, behaviour and choices of population that influences
departments to coordinate working and meet their requirements resulting in positive impacts of
hierarchical structure. Moreover, it is also evaluated that environmental changes in United
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Kingdom impact hierarchical structure of Tesco negatively as unpredictable climate directly
affects working of all departments and causes significant disruptions to company. International
competitiveness is another global factor that impacts massively of organisation structure. For
example, If goods and services in UK become quite expensive than other nations, then
businesses such as H&M Group can see decline in sales of product and lack of coordination
between departments to manage situation which results to unfavourable influences on matrix
structure.
TASK 3
Analyse of impact of supply and demand on prices of goods and services in markets
Identification of dealers as well as traders of products and services which are offered in
market are represented by Forces of demand and supply (Johansson and Kriström, 2018).
Demand refers to economic principle that reflects consumer's desire for buying products and
willingness to make payments for particular good or service. Similarly, supply is defined as total
amount of particular commodity which is available to consumers. It is related with amount of
resource which organisations, economic agents and providers are willing as well as able to
provide to market.
Tesco is a large company that offers wide number of products in market at affordable
price. Demand and supply have huge impacts on prices of products and services in the market
wherein it operates. Prices are the payments that are made by customers for get the product
(Kumar, Basu and Avittathur, 2018). These remains consistent with cost of the donors. The
diagram shows impacts of demand and supply on prices of products of the company in market.
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Illustration 1: Changes in demand when prices shifts. 2020
(Source: Changes in demand when prices shifts. 2020)
From the diagram, it is illustrated that equilibrium price as well as quantity are denoted
by P0 and Q0, respectively. Due to surplus, product price falls from P0 to P1 and demand (D0)
of quantity move towards new equilibrium price. The demand curve shift rightwards when
product demand increases and vice versa. It is analysed that demand impacts on prices of product
in the market, for example, when price of products are affordable by customers then the
company attains profits through selling huge number of products at affordable prices. However,
if customers decreases their demand then company have to reduce the prices so to make break
even sales. Moreover, company experiences shift in demand curve in market when supply
remains unchanged (Zhang and Wang, 2018). Right shift results in increasing demand while left
shift results in decrease in demand.
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Illustration 2: Changes in demand and supply when prices shifts. 2020
(Source: Changes in demand and supply when prices shifts. 2020)
From the diagram , it is analysed that shift in demand and supply impact on product
prices in market. For example, when product of Tesco are more in demand then company can
sell them at same prices. However, when demand falls then it impacts negatively on product
prices as managers have to reduce prices of product in order to sell it in the market (Bryson,
2018). Moreover, in context to supply, when prices increases then supply of product also
increases and vice versa.
Analysing possible planned interventions in market place as well as their impacts on organisation
Possible planned interventions are said to carefully planned approaches which impacts on
the company in huge aspects. Some of possible planned interventions in market place along with
the impacts on Tesco are as analysed:
Government intervention: In marketplace, government intervention is one of possible
intervention which is carried out by government and it impacts on overall market economy
addition to organisations that operate within it. In case with Tesco, government intervention
affects the way it operates in the industry. Government of UK intervenes in business process
through establishing regulation, policies etc which impact the company indirectly. For example,
exemption of tax and duty on particular sector generally triggers investment and generation of
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growth of Tesco. However, unstable political system creates complexities for business to
maintain orders and smooth functioning resulting in negative impacts on businesses
(Anguelovski, Irazábal‐Zurita and Connolly, 2019).
Global economic change: It is possible planned intervention in which businesses
experiences shift in structure of economic system. It impacts on everyday workings of
organisations and there sustainability. For example, When economic system of UK have changes
from mixed economic system to centrally planned economic system then it can impact on
operations and workings of the company in drastic manner. In case with Tesco, the possible
planned intervention impact through changing all of its practices and methods resulting in
failures to meet demand as well as restricted expansion
Assessment of response of chosen company to changes in its market
Market is dynamic in nature in which sudden changes occurs. Some of market changes
are intervention of local government, international economic change etc. in these situation,
managers of Tesco respond in calm and effective manner so to deal with complexities and grab
opportunities. Ever changing market forces are continually shaping the aspects in which Tesco
operates. It is assessed from the views that Kumar (2018) managers of the company respond
through understanding the situation and them making effective action so that they are able to
survive in changing market environment. However, to respond towards changing market forces,
business gains information and data from the market, potential customers and many more so that
they contribute actions towards problems. Changing pricing and promotional strategy is also a
option adopted by Tesco managers for responding to changes within the market and gain
favourable outcomes.
TASK 4
Covered in Leaflet
CONCLUSION
From the assessment, it have been concluded that understanding about business
environment benefits an organisation in managing its operations and achieving identified
objectives. Distinct kinds of organisational structures are hierarchical structure, matrix structure
and divisional structure. Different departments works in an organisation structure in which they
perform certain roles and inter relationships to achieve overall business objectives. Price and
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supply impact on prices of products within the market and possible planned interventions are
government interference and global economic system. Companies respond towards changes in
market by adopting effective strategy and resolving issues patiently.
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REFERENCES
Books and Journals:
Anguelovski, I., Irazábal‐Zurita, C. and Connolly, J.J., 2019. Grabbed urban landscapes: Socio‐
spatial tensions in green infrastructure planning in Medellín. International journal of
urban and regional research. 43(1). pp.133-156.
Bryson, J. M., 2018. Strategic planning for public and nonprofit organizations: A guide to
strengthening and sustaining organizational achievement. John Wiley & Sons.
Carter, W. A., 2018. Selective inhibitors of viral functions. CRC Press.
Chatzoglou, P. and Chatzoudes, D., 2018. The role of innovation in building competitive
advantages: an empirical investigation. European Journal of Innovation Management.
Cohen, R. B., 2018. 12 The new international division of labor, multinational corporations and
urban hierarchy. Urbanization and urban planning in capitalist society. 7.
El Talla, S. A., and Et. Al.,2018. Organizational Structure and its Relation to the Prevailing
Pattern of Communication in Palestinian Universities.
Fegley, T. and Bostaph, L. G., 2018. Is bigger better? An analysis of economies of scale and
market power in police departments. Policing: An International Journal.
Feng, T., Huang, Y. and Avgerinos, E., 2018. When marketing and manufacturing departments
integrate: The influences of market newness and competitive intensity. Industrial
Marketing Management. 75. pp.218-231.
Gardiner, S. and Scott, N., 2018. Destination Innovation Matrix: A framework for new tourism
experience and market development. Journal of Destination Marketing & Management.
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Johansson, P. O. and Kriström, B., 2018. Cost–Benefit Analysis. Cambridge University Press.
Khajeheian, D., Friedrichsen, M. and Mödinger, W., 2018. An introduction to competitiveness in
fast changing business environment. In Competitiveness in emerging markets (pp. 3-11).
Springer, Cham.
Kumar, M., Basu, P. and Avittathur, B., 2018. Pricing and sourcing strategies for competing
retailers in supply chains under disruption risk. European Journal of Operational
Research. 265(2). pp.533-543.
Kumar, V., 2018. Transformative marketing: The next 20 years.
Nußholz, J. L., 2018. A circular business model mapping tool for creating value from prolonged
product lifetime and closed material loops. Journal of Cleaner Production. 197. pp.185-
194.
Roberts, J., 2018. Multinational business service firms: development of multinational
organization structures in the UK business service sector. Routledge.
Truant, E. and Broccardo, L., 2020. Innovation strategy and organisational structure: insights
from an Italian family firm. International Journal of Entrepreneurship and Innovation
Management. 24(2-3). pp.172-188.
Zhang, F. and Wang, C., 2018. Dynamic pricing strategy and coordination in a dual-channel
supply chain considering service value. Applied Mathematical Modelling. 54. pp.722-
742.
Online:
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Graham. J. R. 2020. How to determine price when supply or demand curve shift. [Online].
Available through: <https://www.dummies.com/education/economics/how-to-
determine-price-when-supply-or-demand-curves-shift/>
Organisational structure of H&M Group. 2020. [Online]. Available through:
<https://hmgroup.com/about-us/corporate-governance/company-management.html>
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