Environmental Factors Impacting Business Decision Making

The provided text is an academic assignment that delves into the concept of environmental analysis in a business context. It discusses various external factors such as legal requirements, regulatory frameworks, policies, cultural differences, and technological advancements that affect decision-making processes within organizations. The assignment references multiple sources, including books and journals, to support its arguments. Students are expected to understand how these external factors influence business operations and make informed decisions. This assignment is likely from a business or management course, where students are required to analyze the external environment and develop strategies to address these challenges.

UNIT 1- BUSINESS AND
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Different types of organisation and growth of the International Business Environment............1
Explanation of each organisation in detail..................................................................................2
Functions of organisation and its interrelation with organisational structure.............................4
TASK 2............................................................................................................................................6
PESTLE analysis to identify macro environmental factors and its impacts...............................6
SWOT analysis to identify strength and weakness and comparison with other organisation....8
Critical reflection of key findings and its impact on decision making process........................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
There are various factors available in the business environment that affects the working
of the business and its operations. Factors affecting business are classified into micro and macro
environmental factors. Vauxhall Motors Ltd is an automotive industry and a car brand that was
founded by Alexander Wilson in 1857. The company operates its business in manufacturing
vehicles and also distributes them. This report explains various types of organisation with
detailed information. Different functional areas of organisation and its impact on organisational
structure are explained in the report. PESTLE and SWOT analysis is done to identify various
influencing factors and critical reflection of key findings are given further in this report.
TASK 1
Different types of organisation and growth of the International Business Environment
Growth of International Business Environment
Every business environment gets affected by its internal and external factors and also
with micro and macro factors available in the business environment. Internation environment is
multidimensional that includes exchange risks, political influences, cultural differences,
regulatory frameworks, technological advancements, etc. Business organisation are opting for
global and international markets that brings its international environmental factors as well. For
eg. Vauxhall deals in international markets may lead to bring influences on its operation and gets
affected due to foreign country's political, social and legal factors (Koch,2018). Exchange rates,
economic growth of country, employment rate, availability of raw material, lifestyle of people,
trends and culture followed by people, etc. brings influences on working of the business.
Following are explained different types of organisation and their purposes.
Public Sector
Organisations having control and maintenance in the hands of government are considered
as public company. It is a publicly held organisation or entity. Public sector organisation needs to
offer its share to public and listing shares on Stock Exchange is mandatory. 3 directors are there
for managing business operations and affairs. There is compulsion for public companies to call
Statutory Meetings. Purpose of public company is to serve local public and society. Examples of
Public Sector Organisations are: Sainsbury's, Cardiff University, National Assembly for Wales
and St. Andrew's Healthcare.
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Private Sector
Private sector business are owned and managed by individuals or corporations.
Interference of government and its authorities is less in private sectors. Private company are
restricted to list their shares on Stock Exchange and offer share to local public. Affairs of the
private sectors business are managed by 2 directors. There is no obligation for calling Statutory
Meeting for members in private sector business. Purpose of private sector business is to earn
profits and develop the business. Examples of private sector organisations are: McDonald's,
Vauxhall’s Motors, JCB, Virgin Atlantic and Acromas Holdings.
Voluntary Sector
Voluntary sector organisations are formed by public to provide welfare services to the
society and enrich them. This organisation are set up to work for social or economic
development, promoting or disseminating different culture, art and sports or also to provide help
to local or rural public (Koch,2018). The main aim of voluntary sector business is to provide
services rather than making profits. This organisations are not a part of government or statutory
authority. The purpose of Voluntary sectors organisation is to create and form a social impact
rather than generating profits. Examples of organisations working as a voluntary sectors are:
International Red Cross and Red Crescent, United Way, Guide Star, Habitat for Humanity and
American Heart Association.
Explanation of each organisation in detail
Basis Of
Comparison
Public Sector
Organisation
(Sainsbury's)
Private Sector
Organisation
(Vauxhall Motors
LTD.)
Voluntary Sector
Organisation
(United Way)
Background
Details
The company was founded
in the year 1869 by John
James Sainsbury's in
London.
Vauxhall Motors was
founded in the year 1857
by Alexander Wilson as a
marine engine and pump
manufacturer.
United Way was
founded by religious
leaders in 1887 in
Denver, Colorado.
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Products and
Services
The Sainsbury's is divided
into three divisions such as,
Sainsbury's Bank,
Sainsbury's Argos and
Sainsbury's Supermarkets
Ltd (Phadermrod, Crowde
and Wills, 2019).
The Vauxhall Motors
manufactures car models
including sports cars,
commercial vehicles and
IBC vehicles. Its models
are rolling off since 1903.
United Way raises
funds through the
workplace campaigns
and promote
community services
programs.
Size Minimum 7 members are
required to form a public
company and there is no
limit for maximum number
of members.
Minimum 2 members and
maximum 50 members
are required to form a
private sector
organisation.
Voluntary sector
organisation is group of
people who enter into
agreement and aims at
serving the society.
Scope The scope of Sainsbury's is
to develop its business in
international markets and
increase market share and
productivity of the
company.
Scope of Vauxhall
Motors is to develop and
increase its market share
and profits by entering in
new markets through
globalization.
Voluntary sector
organisations may
operates its business
activities on local,
national and even on
international level.
Vision and
Mission
The mission and vision
statement of Sainsbury's
explains that it aims at to
be first choice of customers
for food and delivering
quality products and
providing great services at
reasonable cost by working
together and faster.
Vauxhall Motors vision
and mission statement is
to bring continuous
improvements, team
work, innovation and
achieve the world leader
rank in transportation
products and its related
services.
The United Way
envisions that to
develop a community
in which every
individual achieve
human potential with
the help of financial
stability, education and
healthy living (Jiang
and et.al., 2018).
Business
Objectives
Providing quality products
and services is the main
The aims and objectives
of Vauxhall Motors is to
Objectives of United
Way is to increase
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motto of Sainsbury's. And
they also aim at providing
highest level of satisfaction
to customers.
increase the sales and
grow the number of retail
companies in UK.
financial stability of
people and also to
make them stay
healthy.
Organisation
al Structure
Sainsbury's organisational
structure is hierarchical as
it consists of different
levels of management who
are provided with different
roles and responsibilities.
Organisational structure
of Vauxhall Motors is
flexible in nature.
Company operates its
business activities on
regional divisional
structure (Beatty,
Samuelson and Abril,
2018).
The voluntary sector
organisation United
Way follows charity
structure in which
board of trustees
develops strategic
directions and also
looks after
management and
administration of the
business.
Legal
Structure
Public companies have
strong intervention of
government authorities and
it is considered as
incorporated business
organisation. It is managed
and administered by by
board of directors of the
company.
Vauxhall’s Motors LTD
is incorporated
corporation which is
controlled by board of
directors of the company
and intervention of
government authorities is
less.
United Way is
registered and
incorporated at
Companies House and
activities are governed
by Articles of
Association.
Key
Stakeholders
The key stakeholders of
Sainsbury's are customers,
employees, suppliers,
investors, local public and
government (Camilleri,
2018).
Key stakeholders for
Vauxhall’s Motors
limited are its customers,
suppliers, shareholders,
workers, employees,
unions, investors and
The stakeholders of
voluntary sector
organisation are local
public or community,
government authorities,
workers, employees,
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researcher. volunteers, etc.
Functions of organisation and its interrelation with organisational structure
Vauxhall Motors operates its business through functional divisional organisation
structure which allows flexibility of different operations and activities (Cantwell, Dunning and
Lundan, 2018). The organisational structure of a company includes arrangements of different
components like various functional departments. Vauxhall Motors targets regional markets
therefore uses regional division structure which facilitate grouping of activities in accordance to
geographical segments. Organisational structure brings impact on the working of the business
organisation. Structure facilitates transfer of information and communication within the
organisation which may bring influences on operations and business activities. Following are
given different functions of Vauxhall Motors and its link with overall objectives of organisation
and structure:
Production: This function aims at transforming raw materials into finished goods and services.
Vauxhall Motors aims at developing its products in a way that it meets needs and wants of
customers. Production function needs to communicate with research and development
department regarding the demands and preferences of target customers. Interlinking of different
function facilitates production of goods and services in a way that meets demands of customers
and overall brings achievement of organisational objectives.
Human Resource Management: This is considered as the most important function of the
organisation as it focuses on motivating and encouraging employees so that they come up with
innovation and creation in business activities and operations (Chernikova And et.al., 2018). This
functional department interlinks with various other departments to know about if there is need of
employees recruitment and selection. Training and development programs are arranged by HRM
that enables and ensures development and improvement in the performance of employees which
facilitates effective achievement of organisational objectives.
Marketing and Sales: This functional department aims at satisfying needs and wants of
customers by delivering them the final products and services of the company. Vauxhall Motors
focuses on effectively using the marketing mix and attracting customers and accomplishing
overall goals and objectives of the organisation. Marketing function interlinks with finance and
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accounts function in order to know about the marketing budget and accordingly selecting the
marketing mix techniques and tools (Daniels, Radebaugh and Sullivan, 2018).
Accounting and Finance: The accounts and finance function plays important role in the
company as it helps in effectively managing the cash-flow. Finance functions aims at managing
inflow and out flow of the cash in Vauxhall Motors so that it can properly operate, monitor and
manage different activities and operations. Accounting and Finance function interlinks with
production department to know about the cost of production. Finance function then further
provides information to sales department regarding selling price of the products so that it can
effectively meet organisational objectives.
Research and Development: This function focuses on identifying needs and wants of target
customers and accordingly making changes and improving process in current products and
services of the company (Hamilton and Webster, 2018). Research and development function
interlinks closely with marketing department in order to ensure if organisation is meeting needs
and demands of customers.
Following are given advantages and disadvantages of interrelationship between different
organisational functions:
Advantages:
 Interrelationship enables easy flow of important information.
 It leads to build trust between different functional departments.
 Brings benefits of effectiveness in business operations and activities.
 Opportunities of improving knowledge and skills.
 Interlinking of functional departments creates synergy within the organisation.
Disadvantages:
 Interlinks of different functions may create conflicts among team members.
 It may also lead to slow down the business operations and activities (Hill, 2008).
 Interlinking of different functional department may create confusion and affect operations
of business.
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TASK 2
PESTLE analysis to identify macro environmental factors and its impacts
Various macro environmental factors brings influences on the working of business
organisation. Vauxhall Motors uses PESTLE analysis to identify influencing factors available in
the macro environment of business. Following is given the analysis of affecting macro
environmental factors and its positive and negative impacts on the business.
Political factors: Every business organisation gets influenced by political factors of the country,
such as rules and regulation provided regarding tax or trade. This also includes political stability
of country, labour laws or environmental policies.
 Positive Impact: Vauxhall Motors focuses on developing its business in international
markets gets benefits due to removal of trade barriers (Jiang and et.al., 2018). This brings
effective results for organisation to increase markets share and profits.
 Negative Impact: If a country is facing political instability, it will bring negative impacts
for the Vauxhall Motors to operate its business and sustain profits.
Economic Factors: This includes employment rate, foreign exchange rates, economic growth of
country, etc. This factors brings great influences on the business organisation.
 Positive Impact: Favourable economic situation of a country may bring effective results
for Vauxhall Motors as it ensures availability of required funds and various other
benefits.
 Negative Impacts: Recession period faced by a country may lead to bring negative
results and impacts on the Vauxhall Motors. The company will not be in a position to
sustain in competitive markets and profits as well.
Social Factors: Demographic factors are also known as social factors that bring influences on
the business organisation (Kim, Rim and Lee, 2018). This includes population rate, lifestyle of
people, trends and culture followed, spending power, etc.
 Positive Impact: Vauxhall Motors aims at satisfying needs and wants of customers and
accordingly adopt to marketing strategies that meets current trends and culture of target
markets and brings effective and positive results.
 Negative Impact: If Vauxhall fails to maintain advertising campaigns with lifestyle
attitudes or culture of target markets, then it may have to face negative impacts.
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Technological Factors: Innovation or up gradation in technologies may brings influences on the
business operations and activities.
 Positive Impact: Vauxhall Motors has established online website for displaying its
products and services that leads to attract customers and also increases sales and market
share.
 Negative Impact: Technological advancements brings negative results in form of
increased expenses of organisation in form of increased products price and operation cost
of the product and also requires training and development programs for employees.
Environmental Factors: This includes Corporate Social Responsibility (CSR), scarcity of raw
materials, decreasing natural resources, carbon footprints target, etc. (Scanning the Environment:
PESTEL Analysis, 2016).
 Positive Impact: Vauxhall Motors develops its car product range by considering various
environmental factors that leads to build trust and loyalty of the customers and also
improves brand image (Koch,2018).
 Negative Impact: Organisations following legal requirements and involving in
environmental practices makes business to shift his motive and mission by which it may
fail to effectively meet the demands of customers.
Legal Factors: Rules and regulatory frameworks applied on business organisation are
considered as legal factors that brings influences on working of business organisation. It includes
discrimination law, consumer protection law, employment law, etc.
 Positive Impact: Vauxhall motors aims at satisfying customers as well as its employees
therefore, it follows various rules and regulations provided under employment law. This
provides motivation and satisfaction to employees and they retain in organisation.
 Negative Impact: African continental countries makes trivial rules and regulations that it
difficult to be followed, and this brings negative impacts for Vauxhall Motors as it can
develop its business in those countries.
SWOT analysis to identify strength and weakness and comparison with other organisation
Vauxhall Motors identifies its internal strength and weakness by using SWOT analysis
(Kopnina and Blewitt, 2018). Following is given the comparison between two companies using
SWOT analysis and its interrelationship with external macro factors.
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Vauxhall Motors Volkswagen
Strengths  It has a strong presence in
markets for passenger cars.
 Company Vauxhall Motors
also contracts with UK police
authorities.
 Vauxhall Motors is the
biggest manufacturer in UK
for commercial vehicles.
 Strong employees base of
approx 4000.
 Its international presence for
premium and luxury branded
cars.
 It has long product portfolio that
leads to increase market share
and profits.
 Increased market share and sales
in Asia Pacific.
 The company focuses on
bringing innovation through
technological advancements.
Weaknesses  This is a less known brand in
emerging economies.
 It is dependent only in
markets of UK.
 Intense competition leads to
limit the market share and
profits.
 Diesel scandal leads to tarnish
reputation and image of the
company.
 Scandal brought many legal and
compliance issues which reduced
operating profits.
 There is less share of
Volkswagen in UK markets.
Opportunities  The electric Car ' Ampera'
can bring effective
opportunities if promoted
effectively.
 Pickup trucks and SUVs are
in demand due to low fuel
prices.
 Growing economies may
bring effective results for
growth and development.
 There is increasing demand for
passenger cars in Asia Pacific.
 Sustainability in technology,
vehicles ans supply chain may
bring many opportunities.
 Increasing demands of
autonomous vehicles
(Phadermrod, Crowde and Wills,
2019).
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Threats  Increasing competition act as
a threat for Vauxhall's Motors
(Popova, 2018).
 Changing choices and
preferences of customers
towards international brands
acts as a threat for Vauxhall's
Motors.
 Japanese automotive
industries are coming up with
innovation and capturing the
markets.
 Government regulations and
economic fluctuations may act as
threat for Volkswagen.
 Legal and regulatory issues and
compliances acts as threat for
organisation.
Interrelationship between macro environmental factors with strength and weakness:
Various external macro environmental factors brings influences on the working of
organisation and its operations (Quinlan and et.al., 2019). Changes in various rules and
regulation laid down by government brings impacts on company to comply and face challenges
therefore it needs to have expert and talented staff who can manage these influences effectively.
Vauxhall Motors having adequate financial resources will not get affected by influences
happening in interest or economic rate in macro business environment. Changing taste and
preferences of customers can bring influences on the effectiveness of the business operations and
activities. Internal business policies and strategies needs to be made in accordance with external
macro environmental factors such as corporate social responsibility.
Critical reflection of key findings and its impact on decision making process
Both internal and external factors of the business environment brings influences on the
decision making process. Therefore, business organisation needs to consider and analyse internal
and external environmental factors and frame business policies and strategies. The above key
findings helps business organisation to properly analysis the internal and external factors that
greatly influences business operations and activities. These factors brings influences on overall
performance of business organisation (Teece, 2018). SWOT and PESTLE analysis is done to
identify influencing factors. This analysis helps organisation to identify own strength and
weakness which can be used to gain available opportunities and overcome threats. Macro
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environmental factors brings both positive and negative impacts on business organisations.
Strength and weakness of organisation also links with external macro environmental factors.
Chnages in external factors affect strength and weakness of company which further brings
influences in decision making process.
CONCLUSION
Different types of business organisation have different purpose and legal structure that
bring influences on the working and operations. Business organisations develops its business
policies and strategies by considering various external environmental factors. Analysis of
internal factors is done to identify strength and weakness of the company. Macro environmental
factors include legal requirements, regulatory frameworks, policies laid down by government,
cultural differences and technological advancements. Both internal and external factors impacts
decision making process of the organisation.
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REFERENCES
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institutional environment. Journal of International Business Studies. 41(4). pp.567-586.
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Koch, S., 2018. Identifying enabling factors of science-policy interaction in a developing country
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Economics. 91. pp.36-45.
Kopnina, H. and Blewitt, J., 2018. Sustainable business: Key issues. Routledge.
Phadermrod, B., Crowder, R. M. and Wills, G. B., 2019. Importance-performance analysis based
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Popova, D. A., 2018. DEVELOPMENT OF AN ALGORITHM FOR MAKING
MANAGEMENT DECISIONS BASED ON SITUATIONAL ANALYSIS. Juvenis
scientia. (12). pp.20-22.
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Quinlan, C. and et.al., 2019. Business research methods. South Western Cengage.
Teece, D. J., 2018. Business models and dynamic capabilities. Long Range Planning. 51(1).
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Online
Scanning the Environment: PESTEL Analysis. 2016. [Online]. Available through:
<https://www.business-to-you.com/scanning-the-environment-pestel-analysis/>
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