Business and the Business Environment TABLE OF CONTENTS LO 1 3 P1. Different Types of Organizations

Analyzing the positive as well asnegativeeffectof environmental factors on business 6 LO 4 8 P 5Internal and external analysis of Tesco8 P6 Presenting how strength and weaknesses are interrelating with external macro factors 9 CONCLUSION 10 REFERENCES 11 INTRODUCTION Business environment can be defined as sum of internal as well as external variables which have great influence on business.There are basically two types of business environment that is internal as well as external. Study emphasizesonanalyzingthe relationship between

Business and the Business
Environment

TABLE OF CONTENTS
LO 1.................................................................................................................................................3
P1. Different types of organization and their purpose ...............................................................3
P2. Size as well as scope of different types of organisations....................................................4
LO 2.................................................................................................................................................5
P3. Analyzing the relationship between different organizational functions ..............................5
LO 3.................................................................................................................................................6
P4. Analyzing the positive as well as negative effect of macro environmental factors on
business ......................................................................................................................................6
LO 4 ................................................................................................................................................8
P 5 Internal and external analysis of Tesco ..............................................................................8
P6 Presenting how strength and weaknesses are interrelating with external macro factors.......9
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment can be defined as sum of internal as well as external variables
which have great influence on business. There are basically two types of business environment
that is internal as well as external. Changes in both macro and micro business environment has
significant effect on the operations of companies. It also has great influence on business strategy,
plans and decisions. Study of business environment is important in order to address those factors
which might affect the business.
The report will have focus on identifying the different types of organization and their
purpose. Study emphasizes on analyzing the relationship between different business functions
and the way they related to organization objectives as well as structure in context of Tesco. It is
British multinational organization operating business in retail sector. Assignment will include the
demonstration related to the way strength and weakness interrelates with external macro
variables.
LO 1
P1. Different types of organization and their purpose
Organization can be referred to as group of people working together in order to
accomplish desired objectives. It is also defined as the entity established with the purpose of
executing the commercial practices that is selling of products or services in order to cater the
needs of customers. Organization can also have considered to be as structural framework of
duties as well as responsibilities. There are different types of organization which are established
specially for accomplishing specific objectives. The different types of organization are :
Private: It is company which is owned as well as managed by one or more than one
person. Business owner is responsible for profit and losses. Examples of privately owned
organization in UK is Nexor, New Look. Deloitte etc. (Bertram and Chi, 2018). In addition to
this, private firms cannot sell its shares to public. Private limited companies in UK does not
required to have minimum capital requirement. In context of UK, private firms are liable to the
amount due on shares (Yu, Ramanathan and Yang, 2018).
The private companies can be further classified into different form of firms such as: Sole proprietorship: Such types of organizations are mainly owned by single person. In
context of sole proprietor company, an entrepreneur has unlimited liability. These are
basically a small company which are established with the purpose of earning high profit

as well as revenue. The sole proprietor firm in UK is Kurt Gieger which is well known
show brand. Sole trader firm has simple business structure. Investment in business is
made entirely by an entrepreneur. Partnership: It is the type of company which is owned as well as managed by two or
more people. The main objective of such types of enterprise is also to earn high profit as
well as revenue. In context of partnership firm, unlimited personal liability in terms of the
debts incurred by partnership business. Partnership organization can further be classified
into different firm such as general partnership, limited liability and limited partnerships.
For example, John Lewis partnership organization in UK. Such types of organization also
have simple business structure.
 Corporation: The main purpose of such enterprise is to earn profit. Such types of
organization have separate legal identity from its members, it is the type of company
which is owned by one or more people. Corporations consists of boards of directors
which are mainly responsible for monitoring as well as controlling business activities.
For instance, Lloyds, Vodafone etc.
Public : These are the organizations which are generally owned, managed and controlled by
the government. It consists of public corporation , public sector undertaking etc. Purpose of such
firm is to provide the services to people in the country. The different services offered by such
types of enterprise are water supply, electricity, transportation , public education etc. Public
organization is recognized to be as state owned firm. These organizations are generally self-
funded. For instance, child support agency, Tesco etc. In context of public enterprises finances
are separate from the personal finances of their members.
Voluntary organization : It is basically a group of people which are formed with the
purpose of providing the various benefits to the society (Young, 2020). Voluntary organizations
are generally governed by a constitution. For example, national trust UK. British heart
foundation etc.
P2. Size as well as scope of different types of organisations
The size and scope of different types of organization in UK are:
Private limited companies: These are basically a small business. Private limited
companies have only few shareholders that is 50 in context of companies established in UK.
According to the companies act 2013, private enterprises in UK can employees minimum two

members or maximum 200 employees. Private limited firms are not controlled by the
government. Such companies offers varieties of products as well as services to customers. Legal
structure of private organization is that it has separate legal identity from its owners.
John Lewis is a private partnership firm which offers different products as well as
services to customers such as furniture, clothes, food, cosmetics, furniture etc.
Size and scope of John Lewis company :An organization consist of approx. 88900
workers. Business entity has an operating revenue of 11 billion.
Legal structure of firm : It is owned by trust. An organization is operated through
delegated authorities. The chair man in an organization appoints directors.
Public limited companies: In addition to this, size of public enterprises is completely
based the services provided by them. It is compulsory for public limited organization to employ
minimum seven members. Public enterprises can appointed unlimited number of workers. In
addition to this, size and scope of public sector companies is completely based on the vision of
the state. According to the law, public firm needs to have minimum two shareholders. An
organization can issue share to public to a value of minimum £5000. Legal structure of public
limited companies is governed by either state or national government. These organizations are
funded by government institutions. For instance NHS is public limited firm. An organization
offer primary care services to customers.
Size and Scope of Nhs: Business entity has its business operations In united Kingdom.
Nhs consist of approx. 1.4 million workers working at different locations worldwide.
Legal structure of firm : all the functions in NHS are managed as well as controlled by
executive as well as non- executive directors. Cabinet secretary appoints the non -executive
directors.
Voluntary organizations: These type of companies in United Kingdom turnover of multi
million pounds. Voluntary organizations In united Kingdom run large scale business operations.
The legal structure of voluntary organization is that they are governed by code of conduct set by
constitution. For instance, Cancer research in UK is non profit organization. It is the
organization which conduct investigation in order to find new therapies or medicines which can
be used for curing cancer.

Size and scope of enterprise : Cancer research in UK consists of approx. 3964 workers and
forty thousand volunteers. Companies offers services in England, Wales, Northern Ireland and
Scotland.
Legal structure: Cancer research in UK is Non profit organization which is limited by
guarantee. An organization is managed as well as controlled by trustees. In addition to this,
trustees are responsible for ensuring the compliance of laws. Trusses are also liable for making
crucial business decisions on behalf of stakeholders.
LO 2
P3. Analyzing the relationship between different organizational functions
Tesco is basically a leading organization in retail sector. An organization has gained the
recognition as modern retailer. In addition to this business entity label its products itself. Tesco
has introduced different store formats. An organization has functional organizational structure. It
is basically a business structure where each and every department in an enterprise has
responsibilities to perform different functions. In context of Tesco, every functional unit in firm
consist of departmental head which is liable for managing the activities and people working in
specific functional unit. It is the responsibility of departmental head to ensure that all the
activities are performed according to the set standards as well as within budget. IF in case the
expenditures exceed the budget than manager of specific department in Tesco is required to
provide justification for the same (Cao, Duan and El Banna, 2019). The main advantage of
functional organizational structure is that there is clear line of authority. Organizational chart of
Tesco represents its business structure which is in the form of organogram which places every
functional units in box that further denotes their position as well as job in hierarchy. In addition
to this, functional organizational structure enables employees to maintain their concentration of
accomplishing specific mission. Tesco performs different functions for producing as well as
selling goods and services.. The key functions performed by Tesco are:
Human resource : Human resource department in TESCO coordinates with all other
function units within an enterprise. Role of human resource management in Tesco is to identify
the vacant position and to recruit right candidate for right positions. Human resource department
is mainly responsible for ensuring an effective coordination between different divisions which is
very much essential in order to accomplish desired business objectives. There is

interrelationship between Human resource and accounts department. It is the finance department
which helps human resource management in determining the incentives which can be provided
to the employees. Human resource department coordinates with accounts department in order to
ensure that right amount of salaries are being processed and provided to workers. By developing
the incentive schemes with the support of finance department Human resource management
motivates employees to make their significant contribution in accomplishment of business
objectives.
Marketing : Marketing department in Tesco works closely with operational team in an
enterprise in order to ensure that the goods are timely produced as well as delivered to the
customers on time. In addition to this, marketing department in Tesco also have interrelationship
with sales department. Sales department provides the report to the marketing departments which
helps them in analyzing the performance of company. Both sales and marketing department
works closely with each other in order to help an organization in improving financial
performance (Naidoo and Gasparatos, 2018.). Both marketing and sales department in an
organization works together and assist an enterprise in identifying the techniques for increasing
the profit which is main objective of TESCO.
Finance: Finance department In Tesco prepares the budget for different functional units.
There is interrelationship between accounts and finance department. Both the functional
divisional is finance and accounts department assist an enterprise in managing the cash flows and
support an enterprise in reducing the cost.
LO 3
P4. Analyzing the positive as well as negative effect of macro environmental factors on business
Pestle analysis is the technique which can be utilized by manager in Tesco for addressing
those macro environmental factors which can affect the business operations. It is considered to
be as an effective technique which assist an enterprise in developing an appropriate strategy for
providing an appropriate response to changes in external business environment. The different
variables in macro environment which can affect the business operations of TESCO are :
Political factors: It includes political condition in the nation, regulations related to the
industry etc. Changes in political factors have great impact on the routine functioning of an

enterprise. In context of Tesco, political instability in the nation might create problem for
company in context of delivering goods or services. In addition to this, Tesco can expand its
business easily with the support of political parties (Young, Russell and Chintakayala, 2018.).
Economic factors: These macro environmental variables includes changes in economic
situation of the nations, inflation in process of products or services, fluctuations in interest as
well as exchange rates. Changes in economic factors have direct as well as significant influence
on the profitability of organization. In context of Tesco, because of decline in the exchange rate
an organization has able to gain the transitional benefit. Due to the sudden inflation, Tesco is
facing the difficulty in determining the price for its products or services which has great impact
on the sales as well as profitability of an organization.
Social factors: It includes changes in Trends, taste and preference of customers etc.
Changes in social factors have direct as well as significant influence on the operational planning
of company. In context of Tesco, an enterprise due to continuous changes in social factor is
facing the difficulty in maintaining the balance between demand and supply. Increase in the
awareness about health issues such as obesity has led to the decline in the sales of food products
offered by Tesco (Makkonen, Aminoff and Valkokari, 2018). It has been analyzed from the case
study that in Turkish market of more than 80 million consumers was valued at US$ 24 billion
per year. The market attracted Tesco, it had a growing young population with high purchasing
power and growing consumer spending which can help an organization in increasing
profitability.
Technological factors: It includes advancement in technology. Change in technological
factors in macro business environment have positive effect on organization. Tesco has been
successful in bringing improvement in its business process as well as quality with the support of
advance technology. In addition to this, it is advance technology which has bought positive as
well as drastic improvement in the way an enterprise communicates with its customers. At the
same time, the advancement in technology has given rise to intense competition in an industry
due to which Tesco is facing the difficulty in maintaining concentration on core business
activities.
Legal factors : Changes in the legislation has great influence on the business policies of
Tesco.It has greatly influenced the way Tesco operates its business. In context of Tesco, if an
enterprise fails to comply with any of the law then in such case it can have adverse impact on

sustainability of an enterprise. By complying with the norms, Tesco can maintain its
sustainability in global environment. In context of Tesco, an organization have to face legal issue
due to accounting fraud as well as misleading the investors. (Wrigley and Wood, 2018).
Environmental factors: It includes intensity of competition in industry, weather condition
and environmental law. Changes in the environmental law has great effect on the business
practices of Tesco. Intense competition might distracts the attention of company from its key
functions. It also has adverse effect on the quality of products or services.
Illustration 1: PESTLE analysis of TESCO.
Source: (Scanning the Environment: PESTEL Analysis, 2016)

LO 4
P 5 Internal and external analysis of Tesco
Swot analysis is considered to be as an effective technique which can be utilized by the
manager in Tesco for analyzing the internal strength as well as weakness of organization. It is a
framework which can be utilized by manager in Tesco for evaluating the competitive position.
Swot analysis is considered to be as an effective technique as it assists management in
developing appropriate strategic plans. To determine the company's strength and weaknesses,
SWOT analysis is the strategic tool that determine company's capabilities, weaknesses,
opportunities and threats in order to access what TESCO can do in order to going forward with
the business strategy. Therefore, SWOT analysis is as mentioned below:
Strength: TESCO is considering one of the most leading brand in retail sector and it has
also won numerous awards due to its excellence customer service and overall shopping
experience. Further another strength for the quoted firm is to that it occupies one of the most
profitable supermarket and retail format in a world, in which many rival’s competitors are tried
to imitate. Recently, the company also improved the use of technology throughout its overall
operations and also creates greater cost efficiencies and enhance the service experience as well.
Nowadays, the company also introduce variety of personalised things that helps to attract
customers towards it and it also has a long standing history in UK that gives assurance such that
it will continue in order to operate long in its future (Hamilton and Webster, 2018.). Apart from
this, the company also have its global recognition in the terms of its best quality, selection and
excellence customers service.
Weaknesses: One of the biggest weaknesses is that some of the TESCO's subsidiaries are
not operating well in market and as a result, the financial performance of the company got
affected. For instance, It finance profit levels are adversely impacted due to credit crisis and still
not rebound from the global event (Amin and Goddard, 2018). Apart from this, another
weakness is that having a competitive pressure which lead to price wars and that is why the firm
should have to focus on different ways in order to gain high competitive advantage. Moreover,
the company also did not spend the time and resources for developing other market and as a
result, its creates negative impact upon its financial performance.

Opportunities: Having a brand image in market, clearly provides opportunities to
operate in other market and in countries, where the cited firm is underperforming, there could be
opportunities for joint venture so that it helps to improve the performance in those areas. Apart
from this, emerging market also hold variety of opportunities for some retail business in which
TESCO is already offers but if it provides better western goods then it will further help to attract
wide range of customers towards it. Further, by using online shopping, the company also
enhance company's overall financial performance (Johnson, 2018).
Threats: the biggest threat which the company faces is tough competition in retail sector.
Apart from this, company also threaten due to fluctuation in economy of the country because it
leads to raise or decline the product prices. Some government regulation and political landscape
also put the pressure on TESCO in order to adhere new regulation that requires making
significant changes as well. Further, stakeholders pressure related to environment and social
responsibility also creates adverse impact upon TESCO's cost basis.
P6 Presenting how strength and weaknesses are interrelating with external macro factors
TESCO's strength are directly linked with the external macro factor such that as the
company have brand image in the market and also have its global presence that is why the firm
has to keep adhering all the laws and regulation whenever it goes into new market. This shows
the interrelation of strength with legal factor. Apart from this, political support are the main
factor which are necessary for implantation of any business and without the cooperation of the
political and stable economical condition, TESCO will not sustain its brand image in market. It
has been further analyzed that political and economical support makes itself to be a strength of
the company and reverse of it will become a weakness as well. Therefore, a proper working
environment and providing the best customers service will helps to attract wide range of
customers and result in strengthening of the company and without strong customer base, it
becomes the weak point for the firm (Dewitte, Billows and Lecocq, 2018.).
Apart from this, strength and weakness are directly related to social factor as well such
that by analyzing the needs of customers and then produce the same products accordingly will
helps to strengthen up its image and the reverse of it become weakness. Beside this, strength is
also related to technology factor such that by introducing online business will help to creates
positive impact upon the business performance such that the firm should used different activities

which are related to promotion to brand so that it will help to make the revenue for a firm and
also reach at higher altitude. But on the other side, it also creates negative impact upon the
business as well, such that confidentiality may be loss and as a result, data are leaked and it leads
to influence the company in negative way.
In addition to this, the strength of the firm is also interlinked with environmental factor as
well such that if TESCO takes some initiatives for the protection of the environment then it will
helps to influence the company's strength in positive way and on the other side, if it did not
follow the sustainability act then the company's brand image got affected and there may be
chances to ruin the business as well (Rashid and Barnes, 2018.). Therefore, all the analysis with
respect to PESTLE and SWOT are also creates impact upon the business such that the raise in
economic fluctuation of the country will create the negative impact which will ruin the business.
Hence, the relation has to be maintained between different tools so that it will be benefited to the
company and leads to further level of success as well.
CONCLUSION
It has been concluded from the report that changes in both micro and macro
environmental factors have great influence on the business operations. The fact which has been
found during the study is that an organization can achieve the desired objectives by ensuring an
effective relationship as well as coordination between different functional units. From the above
report it has been concluded that the size as well as scope of public limited organization is
completely based on the vision of the state.

REFERENCES
Books and Journals:
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Young, C.W., Russell, S.V., and et.al., 2018. Sustainable retailing–influencing consumer
behaviour on food waste. Business Strategy and the Environment. 27(1). pp.1-15.
Wrigley, N. and Wood, S., 2018. An economic geography of globalizing retail: emergence,
characteristics, contribution.
Amin, A. and Goddard, J., 2018. Technological change, industrial restructuring and regional
development. Routledge.
Johnson, P., 2018. New firms: An economic perspective. Routledge.
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