The Business Environment in Asda

BUSINESS AND THE
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types and purposes of organisations structures.......................................................1
P2. Size and Scope of different type of organisation...................................................................2
P3 Relationship between different organisational functions and link to organisational
objectives and structure................................................................................................................3
P4 Examine the positive and negative impacts of macro environment and their impact on
business operations, supported by specific examples..................................................................5
P5 Internal and external analysis of specific organisations in order to identify strengths and
weaknesses...................................................................................................................................6
P6 Strengths and weaknesses that interrelate with external macro factors..................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment is the total of all the factor which influence the working of the business,
factor includes both internal and external factor. Asda is a British supermarket retailer company,
headquarters in Yorkshire with 633 store across UK, founded in year 1949 by founder J.W.
Hindell. These reports highlights the different type of organisation. Further these reports
highlights the size and scope of the organisation. Further it explains the relationship between
organisation function. After that report explains the negative impact of macro environment on
the business. Further it explains the strength and weakness of a specific organisation and the
relation with external factor.
TASK 1
P1 Different types and purposes of organisations structures.
Private Sector
Private sector is the sector which is owned and operated by the private individual or
group of individual, the main purpose of these organisation is to maximise the profit, there is no
control of state or government in it. Asda Stores Ltd is private British supermarket retailer
company, headquarters is based in Leeds, west Yorkshire, Asda stores was founded in the year
1949 by founder J.W. Hindell. Private sector can raise the capital from issuing the shares or
debenture or by raising loan or owners capital. Stock of private sector company are owned and
control by just few private investor in the market. Minimum capital requirement for starting the
business in the Private sector organisation is always high. Area of work for the Private sector
companies are construction, Telecommunication, education, mining etc. Private sector
organisation is require to fill the tax liability to the government on their yearly profit.
Public Sector
Public sector is the sector which is control and operated by the state or government of the
country, the main purpose of the public sector is to serve the public of the country not to
maximise the profit, public sector charges minimal fee for their services (Johnson, 2017).
National Health Service (NHS) is the UK based healths service providing public company
affiliated with the Health and Social care (HSC), NHS was founded in the year 1948 by founder
Aneurin Bevan. Public sector are funded by the government revenue such as Tax, penalty and
several types of duty paid by the people of the country. The stock of Public sector company are
traded on the stock exchange board. Public sector requires a less starting capital as compare to
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the Private sector organisation. Public sector working area Army and Police are only controlled
by the public sector no other sector can operat in that area other than that public sector also
covers the Transportation, education and mining etc. working area. As already mentioned Public
sector is owned by the government itself so they do not require to fill the tax or panality to the
governement.
Voluntary Sector
Voluntary sector is the sector in which organisation works with the motive of serving to the
society, the main purpose of the company working under voluntary sector is to serve the society,
these never charges any thing from their customer against there services. Oxfam is the
organisation which is formed with confederation of 20 parties with the common motive of
reducing the poverty in the country (Van Dooren, 2015). Oxfam was founded in 1942 by the
founder Oxfam international. Funding of Voluntary sector organisation is done by the various
charitable organisation and the donation by the people. As Voluntary sector organisation does
not work for profit there is no stock traded for the Voluntary sector organisation in the market. ,
Voluntary sector organisation requires very less minimum capital in comparison with private and
public sector organisation(Abrams and et.al., 2016). Voluntary sector working area are removing
poverty, removing unemployment and many other economic problem which are faced by the
country. As already mentioned that Voluntary sector does not work for profit making so they do
not require to fill the Tax liablity as the Tax are filled on the profit of the business.
P2. Size and Scope of different type of organisation
Asda is the second largest supermarket retailer chain in the UK after Tesco. Asda offer
the services in total of 633 store all across the UK, with that Asda also provides the services of
online grocery to the customer all across the UK. Asda has more than 165,000 employee
working for them to carry out the business activity (Butler, 2015). Asda has seen a good growth
from last 7 quarter in the market and that's the reason Asda was able to regain the second spot in
the UK market. Asda accounts for 15.4% of market share in the market behind Tesco who's
market share is 28.4%. Asda has contributed significantly in satisfying the employment problem
by creating a job for the economy and also created a opportunity for the supplier to sell the
product and also cuts down the cost for the consumer which has given a positive sign for Asda to
sustain for a long period of time. Asda has a very good scope for growth as Asda is always able
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to understand the problem of the customer and tries to satisfy that through the services at their
store. NHS is one of the most successful public company of the UK.
There are total of 168 hospital of NHS all across the UK. NHS is the primary and leading
healthcare providing organisation all across the UK (Van Dooren, 2015). NHS provide the
treatment at very nominal rate as compare to the other entity in the UK. NHS is the most trusted
healthcare organisation in the UK which proves that NHS is in the market for a very long period
of time. NHS is a loss making organisation as the motive of organization to provide good
healthcare to the citizen at a very low cost and most of the treatment are free to the citizen. NHS
has the good growth from the starting of the organization and also has a good scope for growth in
future as NHS is most trusted organization of the UK.
Oxfam is the leading non profit organisation in the world. Oxfam works in more than 90
countries across the world. Oxfam is a very successful company able to influence the country to
reduce the poverty in the country (Bouckaert, 2016). Oxfam is a non profit making company
funded by the donation and various trust all across the globe with the main purpose of reducing
the poverty in the country (Abrams and et.al., 2016). Oxfam is also able to influence country
government to invest some portion of revenue toward poor people that the result UK government
invest 0.7% of their revenue toward the poorest people of the world. Oxfam is able to gain a
good name which proves that Oxfam is in the market for long period of time (Butler, 2015).
P3 Relationship between different organisational functions and link to organisational objectives
and structure.
Relationship between the different organisational structure:
As the business is depends on many function that operates in an organisation such as marketing,
finance, administration, human resource, research and development and they have the
interrelationship between the various departments.
Organisational Structure : Asda follows the flat organisation structure in the do not having any
interruption of middle management in between the staff and executives. In this structure it
improves the coordination and speed in communication among the employees so the process of
decision making become easier (60.Zacca, Dayan and Ahrens, 2015.). Asda is using the Flat
structure in the organisation and from these the company can easily attain it's objectives because
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it reduces the communication gap an it makes the work easier for both of the organisation an in
this employees are highly empowered, motivated and operated with the great managerial
independence. It reduces type cost that ultimately leads to profit for the organisation
Objectives of the organisation
Asda is dealing in the retail market and it is one of the biggest company in the retail sector. Their
objective is to increase the sales and maximise the profit.
Marketing and finance
These are the two pillars of Asda from which the growth of the organisation is dependant
as both of these department has to integrate from each other as both of the department need to
work together to ensure the growth of an organisation. Marketing department do the
advertisement of the particular product to increase the sales and it leads to increase in profits of
the company at the same the finance department needs to maintain the good cash flow. Finance
department tries to avoid the cost and if the cost is incurred less, than the more amount can be
spend on marketing and it leads to gain profit ultimately(Svensson and Wagner, 2015). Objective
of departments are inter relate to each other.
Administration and Human Resource department
Both of these departments are very closely interrelate to each other as their many function
are being completed by making the coordination from each other such as if the hiring is done by
the human resource department than the other work related to issuance of notepad pen is being
done by admin or even they track the record. Both of these department have to maintain the good
relationship to achieve the organisational objectives.
Marketing and research and development department
Both of these department have closely relation from each other if they both work together
and make the coordination proper than it leads to make the business profitable by increasing the
sale. As the organisation objective is being achieved if the sales increase and that can be done if
both of these department will full fill their duties. Research and development needs to analyse
the market demand of the consumers and make the product that is being desired by the
consumers (60.Zacca, Dayan and Ahrens, 2015.). At the same the marketing department needs
to do the marketing of the product that is being researched by the R&D department an it leads to
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increase in sales and revenue and also increases the profits of an organisation from these the
company can achieve the desired objectives.
P4 Examine the positive and negative impacts of macro environment and their impact on
business operations, supported by specific examples.
PESTLE Analysis of Asda :
Political factors
Positive impact : political factors of the country impact the business organisation and the same
they introduce the risk factor that cause the business to suffer loss or overwhelmed profits. In the
present system of governance this industry is facing the challenges so the Asda has to keep the
close eye on the change in policies and also there has been a little change in armed conflict that
impact positively on the supplements of Asda (Svensson and Wagner, 2015). In fact the local
government plays an integrated role in setting the policies and the regulation in business
environment. Taxation policies is having the positive impact as they lower the taxation policies
throughout the western hemisphere.
Negative impact : As Asda is operating in many countries they have to make the policies based
on leadership and managing style as industry specification and this factor may lead to instability
in the existing market and it is the negative impact for Asda.
Economic factors
Positive impact : It plays the great role as Asda has experience the increased revenue of
customers at the time of rescission as the customers who does expensive shopping with Marks
and Spencer were switch to Asda and it was the positive impact on the company.
Negative impact : There is increase liberalisation in trade policies. The negative impact on Asda
is the great rescission of 2018 and it leads to the increase in inflation and it greatly impact the
organisation (Svensson and Wagner, 2015).
Social Factors
Positive impact : Now the customers are more conscious for the organic food and there is a
increase demand for this food and Asda ensures that the organic food in its offering to meet the
needs of customers that are keen on organic foods.
Negative impact : The negative impact on the Asda is increasing liberalisation towards the health
and safety is lax. So the supplements of Asda needs to away from this attitude as its failure of
cost is too high.
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Technological factors
Positive impact : It is very important factor in these era as everyday new technologies is being
adopted like online retail, e-marketing etc. And it provides the greater access to information and
it leads to generate high profits for an organisation.
Negative impact : Many times latest technology lowers the production and service cost in the
leadership and also manages the people. Asda supplements has to restructure its supply chain in
order to bring the flexibility to meet the customer needs and also maintain the cost.
Legal Factors
Positive impact : As Asda is operating its business in UK. The company must ensure that it
adhere all the rules and regulation that has been imposed by the government so they can easily
operate without the pressure of imposing the fines (Svensson and Wagner, 2015). Many
countries follow the international norms and their resolution will take number of years.
Negative impact : Asda supplements must be carefully consider the average time to resolve the
cases before entering in international market this is the negative impact for an organisation.
Environmental factors
Positive impact : The positive impact of environment on Asda is that the company has adopts the
environmental friendly approach and it has been seen that company is using the recyclable
material in packaging of most products.
Negative impact : Economic factor is very important as there is scarcity in the raw material,
pollution targets and make the business ethical and sustainable.
P5 Internal and external analysis of specific organisations in order to identify strengths and
weaknesses.
SWOT Analysis
Internal Factors of an organisation:
Strength
Strong community in dealership
Asda built the culture among the distributor and dealers there motive is not only to
promote the companies product at the same they do investment in the training of their sales team
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that how they explain the customers and how they will find the maximum benefits from their
products.
Great performance in new market
Asda is having the expertise in entering the new market and make it success. Their
expansion has build the organisation more strong in terms of revenue and at the same diversify
the risk in market.
Weakness
Asda is doing the great amount of research and development in this industry. Even the
company is spending more than the average of industry still it has not been able to compete with
the leading players in the in the industry. Even it has come across to look forward in order to
bring out the products based on tested feature. Asda needs more advancement in the technology
as it needs to invest more money in technology so they can integrate the process. Presently their
investment is not according to the vision of company.
External Factors of an organisation:
Threats
There is no regular supply of new products from the year the company has developed
many products but they are often response to the development by the other players. New
products supply is not regular and it leads to high and low swings in the sales. Asda is having the
shortage in skilled labour workforce in global market that leads to threats for the growth of
profits in the market (Pedersen and Netter, 2015). Even the rise in raw material can be the threats
for the Asda profitability. Asda is operating in many countries it is having the fluctuation in
currency specially in the political climate across the world.
Opportunity
Opening the new market due to the government agreements and the adoption of new
technology standards as the government is providing free trade agreements it is an opportunity to
enter into a new market. There is new trends in the behaviour of consumer to open the new
market in Asda, it gives the new opportunity to the company to generate the high revenue and
also diversify the new categories of products. Even the new policies of taxation can also
significantly impact the way of doing the business and also open the new opportunities for the
organisations like Asda to increase their profits.
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Porter's five Forces of Asda
Bargaining power of supplier: As Asda operates many stores they have the power to buy the
product in bulk that's why they get discount from supplier.
Competition: It is the factor which influenced the Asda as there is tough competition
Bargaining power of buyer: As Asda face huge competition they have to reduce the price of the
product to be competitive.
Threat of new entrant: It is the factor which does not affect as Asda is able earn the goodwill in
the market.
Substitute product: It is the factor which does not affect the Asda as Asda offer variety of the
product.
P6 Strengths and weaknesses that interrelate with external macro factors.
As every company is having its strength that enables them to be in the market and make them the
competitive leader among the other competitors in the industry.
Strength : Asda is having its presence in the wide geographic area in many countries and it is one
of the leading retailers in the market and wants to integrate from many other countries they are
not only efficient in delivering the services to the customers and also helps in managing the
challenges in leadership and manage the people in industry (Doherty, Meehan and Richards,
2015). It is related to the economical factors
that every country is having their economic policies which the company has to adhere and
compile all the rules and regulations of the country, in fact the survival of the company depends
upon how the firm reacts and responds to the government policies. Many countries have complex
procedure to comply and many have simple so these factors were depend on the country own
rules and regulation.
Weakness: every company is having its strength at the same they also posses the weakness that
may become the hurdle for sometimes or the barrier for the company. Asda also having the
weakness that now a days technologies are being replace in very less time and on the rapidly
basis in this situation company has to face many problems such as make the employees to
understand the new technology and become friendly to that so they can lead the market (Dyllick,
2015.). This is related to the technological factor. Due to change in technology it leads to have
difficulty among the staff as they do not want to shift on new technology easily as they become
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comfortable with their regular style of work (6 Important factors of Business Environment and
their Influence on Business, 2019).
CONCLUSION
From the above study it has been analysed the different types of organisation that is private,
public and voluntary and also explains the purpose and its legal structure. This report explains
the size and scope of an organisation and its market share. This report elaborates the relationship
of different department of an organisation and the structure follows by the company. This report
contains the positive and negative impact of the micro environment of an organisation.
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Online
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