Business and the Business Environment

This document provides an analysis of the structure, size, and scope of different organizations and explores the complexities of business structures and interrelationships of different organizational functions. It also discusses the purposes and types of diverse organizations and their link to business objectives and product and services offered.

Business and the
business
Environment
1

Table of Contents
Introduction......................................................................................................................................3
TASK 1............................................................................................................................................3
P1 various purpose & type of diverse organizations..............................................................3
P2 : Size and Scope of this types of organisation...................................................................5
M1: analysis of how the structure, size and scope of different organisations link to the
business objectives and product and services offered by the organisation............................8
D1: Complexities of various business structures and interrelationships of different
organisational functions..........................................................................................................8
Task 2...............................................................................................................................................9
P3) Organisational structure and functions............................................................................9
M2) Advantages and disadvantages of inter-relationship between organisational functions11
Task 3.............................................................................................................................................11
P4 Positive and negative impact of macro-environment......................................................11
M3 Explain PESTEL model for macro-environment for an organisation...........................13
TASK 4..........................................................................................................................................14
P5 Internal and external analysis of an organisation............................................................14
P6) Explain how strengths and weaknesses interrelates with external macro factors..........14
M4 Justify how SWOT influence decision making. ...........................................................16
D2) Impact of macro and micro factors have upon business objectives and decision making.16
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................18
2

Introduction
Business environment consist of both macro and micro environment that is affecting the
functioning of a business organisation. It includes the collection of entities, individuals and other
significant internal & external factors that are controlling the overall performance and
productivity of business. Present report is based on TESCO that is a british multinational and a
general merchandise retail brand having its headquarters in England. It is third largest retail
brand of world according to its gross revenues. They are having outlets across Europe and is a
market leader of grocery in UK . The report is based on making an analysis of the different
business structure and interrelationship among various organisational functions. There is study of
sizes, types and scope of organisation that is part of three sectors that is private, public and
voluntary. Further there is analysis of advantages & disadvantages of interrelationships among
different organisational functions and the way it is affecting the structure of organisation. Pestle
analysis is used to make analysis of external environment and SWOT analysis for the purpose of
analysing the way strength and weakness is interrelated with macro environment factors.
TASK 1
P1 various purpose & type of diverse organizations
Organisations are divided in various categories according to their objectives that can be
profitability, social welfare.(Aribawa, D., 2016)
Private Organization :
These organisations are owned by various private entities which can be a person association
partnership or those operating for profits. In this funds have to be arranged from various personal
sources. TESCO is an example of private organisation.
Purpose : the objective of TESCO is to create value for customers in order to maximize the
profitability and enhancement of present market share enhance customer value.
Legal Structure of Private Organization :
Sole Proprietorship :
It is a business type that is owned and controlled by a individual. These are held for all the losses
and liabilities. There is need to focus on compliance in sole proprietorship. (Drucker, P.F., 2017)
Partnerships :
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In this business are managed by two or more than two partners, the decisions related to all
different business transactions are to be made according to the laid partnership deed.
Limited Companies
In these organizations posses separate legal entities than those who are managing the
organsuiation. The capital is procured by issue of shares posses’ limited market share. TESCO is
a private limited company. (Eling, M. and Schaper, P., 2017)
Public organisation : Public limited companies are managed by government the major aim is to
earn higher profitability and also maximisation of social welfare. In the funds are offered by
government from the collected taxes. The main objective is to offer goods & services to enhance
the living standards of people.
Example: British Broadcasting Corporation is an example of public limited organisation.
Purpose : the main objective of British broadcasting company is a service broadcaster that is
oldest national broadcaster. It is funded by the annual television license fee and it is charged to
all British households, organisations and companies using such equipments to record live and rce
the television broadcasts.
Voluntary organization:
Meaning: Voluntary organisations are the ones that are directed and controlled by government.
In this activities have to be managed and volunteered according to the prevailing social scenario.
Features: Voluntary organisation has a vision to enhance the present
Purpose: the main purpose of shelter being a registered charity organisation is to advice and
work towards advocating people to deal with the situation of bad housing by lobbying of
government and local authorities to form new laws.
Example: Shelter is are registered charity organisation that is based on a campaign the need the
situation of homelessness and bad housing across Scotland & England.(Gebauer, H., Haldimann,
M. and Saul, C.J., 2017)It helps people in housing need by providing of the required practical
assistance and are also working towards fighting for better investment in housing sector so that
polices and laws can be further improved for badly housed people.
Legal structure: the legal structure of shelter is based on not for profit. The legal structure of
such organisations are based on the way organisation will be funded, controlling of voting
members, the way organisation has to be incorporated.
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P2 : Size and Scope of this types of organisation
5

Private Public Voluntary
Size TESCO is a private
organisation that is
employing approx
250,000 employees
across UK and they
are having 2365 stores
across different parts
of UK.
BBC is a British
broadcasting
corporation that is a
public service
broadcaster that is
having 22,000 staff
people and among
whom 16000 are part
of public sector
broadcasting. There is
a number of 35,402
staff that includes all
types that is flexible
part time and fixed
contract staff.
Shelter is a register
charity campaign that
has raised funds
approx 60.9 million
pounds in year 16-17.
(Głodowska, A., 2017)
Scope TESCO is working
towards achievement
of their laid mission
and vision in order to
create high value for
their customers. They
have able to acquire a
cost leadership
position in the retail
industry of UK and are
willing to maintain
this throughout
coming time period.
They are operating at
BBC is operating
under royal carer that
is a formed with
secretary of state for
digital, media &
support, culture their
work is funded
principally by an
annual television fee.
The main scope of
BBC lies to act in
public interest by
serving their audiences
by provision of high
The mains cope of
shelter lies for the
objective to handle the
situation of bad
housing across
locations of Scotland
and England. They are
working towards
handling the situation
of badly housing
people so that overall
living conditions of
people can be made
better.
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international level by
having presence across
countries Europe north
America and also in
some of the countries
of Asia.
quality, impartial and
distinctive output &
services to educate,
inform and entertain
the general public.
Purpose The main objective of
TESCO is according
to theory laid mission
and vision that is to
enhance their present
market share so that
overall profitability
levels can be increased
by focussing on the
differentiation feature
of this brand that is
offering products at
low prices.
The objective of BBC
is to be in top leading
public service
broadcaster. In
addition to this, the
company want to
expand its business
that help in attaining
competitive advantage
at marketplace.
(Halbert, T. and
Ingulli, E., 2020)
The purpose of Shelter
is to provide house to
people who are
homeless. It gives
advices, information
and advocacy to needy
people and improves
their lives.
Legal structure TESCO follows
hierarchical
organisational
structure where
structures, positions
and obligations are
divided into many
sub-division. This
ensures that work
should be done
smoothly.
BBC follows
hierarchical
organisational
structures where BBC
Trust evaluates the
performance of
executive board.
Members of trust are
appointed by the
British monarch.
Executive board are in
Here all the trustee
make decisions for the
organisation. These
decisions were taken
to run for public
benefit.
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charge of operation of
the corporation. Apart
from executive boards,
several directors are
part of the executive
teams. And
management boards
have responsibility for
managing the issues of
pan BBC.
M1: analysis of how the structure, size and scope of different organisations link to the business
objectives and product and services offered by the organisation
There is always a link established between the organisational structure and the laid aims
and objectives in an organisation. The vision statement of Tesco reflects that they are willing to
be one of the most highly valued businesses according to the target customers they are serving
and the community in which they are operating. For achievement of this mission and vision
Tesco is working towards creation of a positive brand image so that they are able to work
according to their customer expectation. There is offering of large variety of products and
services at reasonable prices so that they are able to maintain their image of offering low price
products but at higher quality.(Hamilton, L. and Webster, P., 2018)
D1: Complexities of various business structures and interrelationships of different organisational
functions.
Different organisation structure have their own level of complexities such as in case of
hierarchical structure there is high amount of rigidity as there is flow of information just from
one site. In context of Tesco it can be said that at store level typically organisation structure
includes Super Stores, Metro stores and extra format where managers different level are working
to manage the activities in such a manner that there can be achievement of over all functions in a
smooth manner. There is a high amount of interrelationship between various functional
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departments for instance the purchase department is assisting the sales and Finance Department
regarding the present purchases.
There is a close inter relationship between the sales and marketing department where there
is future promotional campaigns formed according to the present sales level. (Hamilton, L. and
Webster, P., 2018.)Divisional structure in Tesco is present where there is division of organisation
based on various product lines. In this case there is interrelationship between different products
as there is sharing of similar functional departments and each of the product so that there is no
overlapping of activities that is taking place across different functional units of each product.
Task 2
P3) Organisational structure and functions
The organisational structure is process of dividing individuals on the basis of their work
and skills, the main function of organisational structure is providing clear picture of chain of
command in an organisation, one of the most common way of organising people is by their skills
of functions. Roles in an organisations include marketing, production, human resource, IT,
finance and so on. In context to TESCO, it is a British multinational corporation, founded in
1919 by Jack Cohen, company deals in retailing and associated activities.(Khajeheian, D.,
Friedrichsen, M. and Mödinger, W., 2018)The company has various departments which are
interrelated with each other, these department helps organisation in achieving desired goals and
objectives. The functions of organisation in relation with other departments is highlighted below:
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Illustration 1: Organisational Structure
(Source: Organizational Structure, 2019)
The organizational structure followed under TESCO is hierarchical. Under this, position
and responsibilities of each and every individual is divided into many parts so as to ensure that
work is done efficiently and effectively, each individual is placed according to the skills and
responsibilities in company. The maximum flow of work, responsibilities and authorities under
TESCO is from top management to bottom level management. TESCO flows a systemic
hierarchy of work, so that goals and objectives of business as well as of all employees can be
achieved.(Kumar, V. and Pradhan, P., 2016)
Human resource & finance department: Human resource department plays an important
role in every organization as this department help in finding right person for the right job. Also
this department helps in improving skills and knowledge of their employees by continuously
providing training and development. In context to TESCO, as human resource involves
recruiting different individual using various platforms which involves huge investments,
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financial department of TESCO provides required funds to human resource department, finance
department ensures availability of funds in effective manner.
Fiance department & operation department: Fiance department play an important role in
an organization, this department involves managing and controlling funds in an organization,
this department is responsible for acquiring required funds for the organization, and providing
funds to the other department as per the requirement. The operation department of TESCO,
makes sure that the funds distributed by the fiance department to different department are used
properly, operations department ensures all the operations in company are done properly.
Marketing & sales department: The main aim of marketing department of any company
is creating product awareness in the market and increasing sales. Marketing department do all the
required market research and promotional strategies to be used to maximize profitability. The
main aim of marketing department is satisfying needs of customer with the help of sales
department. The sales department of TESCO helps marketing department by providing required
information about product, so that they can develop their marketing strategies accordingly that
will result in increasing sales and profitability of products.
Human resource and IT department: Human resource department involves recruiting
individuals using various platforms, IT department of TESCO helps Human resource department
by providing updated software, so that smooth functioning of human resource functions can be
carried out easily. IT department of company provides various HR software to the human
resource department, where information of candidates can be stored also various data of
employees or candidates can be recorded which makes it easy for the human resource department
to track all information as per their requirement.
From the above, it can be seen that the functions of organization in relation with other
department helps company in smooth functioning of work, also in achieving desired goals and
objectives. It also helps company in maximizing profitability and smooth functioning of work.
M2) Advantages and disadvantages of inter-relationship between organisational functions
The various organisational functions in an company are marketing, production, human
resource, IT, finance and so on. Each department helps in achieving the organisational goals and
objectives, inter-relationship between organisational functions is based on the organisational
structure. (Newell and et. al., 2016) The inter-relationship of organisational functions have some
advantages and disadvantages as well.
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Advantages: The inter-relationship between different organisational functions helps in
smooth functioning of work in the company, and maintaining cooperation between employees .
This also helps in improving efficiency of employees, as each department helps each other by
providing required information. Profitability and productivity can be improved by all the
departments with the help of inter-relationship between different organisational functions.
Disadvantages: One of the biggest disadvantage of inter-relationship between different
department is increasing competition among different departments of the organisation, another
disadvantage can be discloser of information among different departments as the department is
working together as well as sharing information, misuse of these information can be a
disadvantage for the company.
Task 3
P4 Positive and negative impact of macro-environment
Tesco is the biggest British multinational retailer company, founded by Jack Cohen in
1919. Its headquarter is in Welwyn Garden City, England, UK. They expand their operations in
many countries across the globe. Both internal and external environment affects the business
environment. Macro-environment analysis is used to identify the opportunities and threats of an
organisation as well as outside of the enterprise. Tesco adopts PESTEL analysis to identify
various external factors that affects the business are mentioned below-
 Political Factor: Political factors includes government policy, foreign trade policy,
labour law and many more which has both positive and negative impact on an
organisation. In reference to Tesco, they are operating its functions in many countries and
if there is any change in policies, it will directs affects the organisational profitability.
Positive impact- UK has a stable political condition which is a positive impact on Tesco
profitability.
Negative impact- Some countries impose duty on goods that Tesco imports from outside UK
which will poses negative impact.
 Economical Factor: Economic factors is important for an organisation as it includes all
the leverage cost which creates an impact on sales as well as profitability. It include
factors such as interest rate, exchange rate, rate of inflation, economic growth and many
more. (Quinlan and et. al., 2019) In reference to Tesco, income of an organisation
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increases because of strong economic position of Uk and this will create more job
opportunities for people.
Positive impact- The economic growth of UK is strong and it helps in bringing out more job
opportunities that will increase their standard of living.
Negative impact- Due to the increased labour costs, it will impact directly in increased labour
turnover ratio and profitability of Tesco.
 Social Factor: This factors involve shared belief and attitudes which includes factors
such as population growth rate, age distribution, lifestyle attitudes and so on. Thses
factors directly impact on relationship between marketer and customer. In context to
company, in related to consumer beliefs, Tesco offers halal meat to Muslim customers in
UK and even it has independent meat counters.
Positive impact- By hiring local people to the organisation, Tesco has generated employment in
various countries.
Negative impact- As there is increasing number of retired people, they tend to eat less than an
average person which will create a disadvantage to Tesco.
 Technological Factor: These factors are attach to the innovation and development in an
organization. They include factors such as technology incentives, R&D activities,
technological changes and technological awareness. Tesco, they developed their own
mobile payment system in which when they pay for their shopping, they automatically
receive reward points on each transaction.
Positive impact- Introduction to self-service checkout points provide customers to easily
checkout from the stores.
Negative impact- Due to investment in advanced technology increases, it creates negative impact
on the profitability and value of the company.
 Environmental Factor: This factor is important due to increasing scarcity of raw
materials. Factors included such as weather, climate, environmental policies which affect
various industries. In context to Tesco, in order to create sustainable society, they have
take initiative to remove and reduce all plastic which are non-recyclable.
Positive impact- People will get more influenced by the initiative taken by Tesco. It will create
impact by minimizing the use of non-recyclable products.
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Negative impact- Setting up of economic friendly technology costs high to the company which
will direct impose in the profitability of the company.
 Legal Factor: Any change in law directly affects the functioning and operation of an
organization. In order to maintain the smooth function, the company must follow local
and international laws. In relation to Tesco, introduction of safety law provides safety and
security of employees. (Russo, I. and Confente, I., 2017)
Positive impact- Laws and legislation create a great impact on the performance of employees in
the organisation.
Negative impact- Some countries have strict laws and if it is violated then it can lead to ban of
products or even the industry.
M3 Explain PESTEL model for macro-environment for an organisation
In the above discussion, PESTEL model helps an organisation to identify external factors
that impact the market. It is useful in company screening and setting criteria initially. This
analysis highlights various elements that impact the business performance. One of the strongest
factor of Tesco uses is social factor, where they are trying their best to provide the products and
services in view of their beliefs and attitudes. They specially provide halal meat to Muslim
consumers and also producing their own labelled halal meat. And on the flip side, due to
advanced technology, the costs of investment on high-tech machines and devices is high which
creates in lowering in profitability of the organisation.
TASK 4
P5 Internal and external analysis of an organisation
SWOT analysis helps organization in stating of internal and external factors. The
organisation uses this analysis for overall business strategy. In context to Tesco, they uses
SWOT analysis for evaluating the overall development and are mentioned below-
 Strength: It refers to the internal factors where the organization excels. It gives the
organisation competitive advantage. In context to Tesco, they are using latest
technological devices and machines in their performing operations and functions with
increasing customer service. Tesco has a thriving global presence with more than 6800
stores in 14 countries. Apart from Europe and North America, it has a huge market share
in Asian markets as well (Saleh, A. and Watson, R., 2017).
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 Weaknesses: They are the characteristics which the organisation needs improvement. In
reference to Tesco, their ability to generate income is below industry average and also
long run growth is impacted because of the high days inventory.
 Opportunities: These are the external factors which helps the growth of the organisation
in future. In context to company, countries where Tesco is not performing well, they can
partnership with local businesses to learn about the taste and preferences of people and
can offer product and services to them.
 Threats: These are the external factors which can harm and also prevent the organisation
to achieve their goals. In reference to Tesco, economic crisis in some countries can
become a serious threat as factors such as government policies and taxation can affect the
performance of the company. With Britain no longer in the European Union, the trade
deals and cost matters have posed a threat for Tesco.
P6) Explain how strengths and weaknesses interrelates with external macro factors.
Basis Political Economical Social
Strength The company follows
all rules and
regulations for smooth
functioning of work.
All the workers of
TESCO are paid fairly
and equally, and are
given all the monetary
benefits as to motivate
them towards
achieving company's
goals.
TESCO invest in
research and
development to
identify the consumers
needs and accordingly
satisfying them
effectively and
efficiency.
Weakness Any change in policies
will effect the overall
functioning of the
TESCO
Increasing wages and
pension can impact
retail margins this can
be a weakness for
company.
As taste and
preference of buyers
continuously changes,
this works as weakness
for the company.
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Technological Legal Environmental
Strength TESCO uses latest
technology and
provides innovative
goods and services in
order to maximise
their profitability and
ensure buyers
satisfaction.
The legal laws and
legislation formed
within the company
helps in improving the
productivity and
performance of each
employees.(Saleh, A.
and Watson, R., 2017)
TESCO provides
positive environment
for smooth functioning
of their activities in all
their departments.
Weakness As use of innovative
products and services
requires huge
investment from
companies side which
can be a weakness for
the company.
Various legal
restrictions imposed
can be a weakness for
the company
Increasing cost of eco
friendly technologies
can be a negative
factor for the
company.
M4 Justify how SWOT influence decision making.
In context of Tesco, with the help of SWOT it can be analysed that how strength,
weakness, opportunities and threats influence decision making process of an organisation.
SWOT analysis helps company in understanding internal and external factors which affect
organisation growth. In terms of company after analysing strength it will improve productivity
and efficiency of company. SWOT analysing helps selected firm in identifying its opportunities
which assist organisation in its future growth and provides competitive advantage. Management
of selected firm make effective strategies and polices after analysing weaknesses for company
and try to convert all these weaknesses into strength. (Seyedghorban, Z., Matanda, M.J. and
LaPlaca, P., 2016)
D2) Impact of macro and micro factors have upon business objectives and decision making.
Both micro and macro environmental factors has direct impact upon objectives and
decision making of the , these factors directly effect the success of business activities. To
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maximize profitability and productivity company should take corrective actions on the basis of
micro and macro environment. In case of favorable micro and macro environment, company
should take favorable decision like setting higher growth strategy which will improve the
productivity of the firm. On the other hand, in case of unfavorable micro and macro
environment, like political instability, restrictive actions by the government should be taken by
the company. Micro and macro environment factors affects the purpose and decision-making
making of firm in both positive and negative manner. Careful consideration of these factors will
help in improving the success of organization as well as building the brand image in the long
run.
CONCLUSION
From the above study, it has been analysed the purpose of public, private and voluntary
sector and legal structures is different from each other. The analysis of different organisation
structure, size and scope with respect to product and services they offered. Also complexities of
different business structures and functions. Various organisations uses PESTEL model for the
analyses of organisation performance. It also focuses on the strength and weaknesses
interrelationship with external macro factors and applying SWOT analysis to gain insights about
an organisation performance. It is analysed that its is significant for an organisation to focus on
maintaining good relationship among all the departments as it help in smooth functioning of
activities that leads to increase in performance and productivity of company. Moreover, it is
determined that both the macro and micro environmental factor has impact on the decision
making and objectives of an organisation.
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