Business and Business Environments

This document provides an in-depth analysis of different types of organizations, their purpose, and legal structure. It also explores the relationship between different functions of an organization and their link with objectives and structure. Additionally, it identifies the positive and negative impact of the macro environment on business operations and conducts an internal and external analysis of the organization.

Business and Business
Environments
1

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Explain different types of organisation along with its purpose and legal structure...............3
Size and Scope of different types of organisation.................................................................5
TASK2.............................................................................................................................................7
Determine the relationship between different functions of organisation and their link with
objectives and structure of organisation.................................................................................7
TASK 3 ...........................................................................................................................................8
Identify the positive and negative impact on the macro environment....................................8
TASK 4 .........................................................................................................................................10
Conduct the internal and external analysis of the organisation............................................10
Explain the inter-relation between internal and external factors..........................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
2

INTRODUCTION
Business Environment is the most crucial factor of any business. It helps in identifying
and understanding opportunities for business, analyse useful resources, assists in strategic
planning and improves the performance and profitability of the business (Aribawa, 2016). The
organisation taken for this report is ASDA Group Ltd. The company is functioning as one of the
large food retailer chain in United Kingdom and has included wide range of variety such as
housewares, music , videos and books. The company was established in year 1949 by Asquith
and Stockdale families in Yorkshire. Asda is leading retail brand in Britain and has now
expanded the business in living stores and petrol filling stations across the UK. The report covers
following topics that are different types of organisations along with its purpose and legal
structure, the size and scope of a range of different type of organisations, the interrelationship of
the various functions within the organisation, positive and negative impact of macro environment
on the functioning of organisation, impact of strengths and weaknesses on the organisation and
how these strengths and weaknesses relates to external macro factors.
TASK 1
Explain different types of organisation along with its purpose and legal structure.
Business refers to the changeable process of skills and resources according to the request
and requirements of customer's (Fleming, Lynch and Kelliher, 2016). Organisation is one of the
major operations of management where it helps in establishing authorities, responsibilities,
assigning task and dividing work among members. The types of organisations are as follow-
Private Sector Organisations
The private sector organisation is defined as the type of organisation which is establish
and function by individuals with the motive of earning profit and is not directed by government.
For example: ASDA is an private sector organisation founded by Asquith and Stockdale families
with the motive of earning profit.
Purpose
The purpose of ASDA is to become most trusted retailer in UK with motive of fulfilling
customer needs and satisfying them.
Product & Services
3

Company deals in food, clothing, petrol filling stations, home electronics, home wares,
health and beauty products. The company provides services such as car insurance, credit cards
and travel money bureaux (Gandhi, 2017).
The type of private sector organisations in UK
 Sole Traders- Sole trader refers to one person organisation who operates on their savings
and size of firm is usually small.
 Partnership- The organisation formed with the contribution of two or more people but
not more than 20 people refer to Partnership organisation.
 Private limited company- The company formed with limited liabilities and ownership is
equally divided among the formers.
Legal Structure
ASDA fall in the category of subsidiary company with the motive of becoming largest
and biggest company in retail sector in UK.
Public Sector Organisations
Public sector organisation refers to those organisations which are formed and run by
government where main motive is to provide benefit to the community. For example:
NHS( National Health Service) is organisation in UK which is operated by government for
providing medical and health care services to public (Lim, 2018).
Purpose
The purpose of NHS organisation is to focus on health and well-being of public with
improvement in tools and technology being used.
Product and Services
The organisation provide health and medical services and facilities to the people of UK.
The type of public sector Organisations in UK
 Public corporations and nationalised- It is a type of public sector organisation which
operates for the interest of public and funded by government.
 State services- These are public sector entity performing commercial activities for
government and are incorporated by government.
 Local Authority Undertakings- These are those organisations which are directly or
indirectly influenced by public authorities.
Legal Stricture
4

NHS is a Public corporations operating for the interest of public and regulated by
government.
Voluntary Sector Organisations
These organisations operate for helping society and providing them required facilities and
not for earning profit. For example: Wellcome trust is a independent Trust which performs
research-charity to improve human and animal health (Osmonbekov and Johnston, 2018).
Purpose
The purpose of Wellcome trust is to implement improvements in heaths of human and
animal by supporting the initiators.
Product and Service
The organisation provides health care facilities and services to humans and animals.
Types of Voluntary sector organisation
 Unincorporated Association- It consist of a small group of people who operate together
for a particular purpose.
 Trust- A trust is founded for the benefit of large community with a motive to promote
public welfare.
 Industrial and Provident Society- These organisations are established to provide
benefits to its employees or to society at wider scale.
Legal Structure
Wellcome trust operates for health welfare and provides support to those who are in need.
Size and Scope of different types of organisation
On the bases of structure of organisations its functionality and sustainability differs that is
objectives, profit margin, size and scope.
ASDA
 Mission- Mission of the company is to become the trusted retailer in marketplace.
 Vision- Vision of the company is to provide best value products and services to the
customers.
 Objective- The objective of company is to provide best quality goods and services at
affordable prices to public.
 Size- The company includes supercentres, superstores and supermarkets with more than
one lakh employee force.
5

 Scope- The company is one of the largest retailing giant in UK with the focus to become
more sustainable and competitive in the UK market.
 Stakeholders- The internal stakeholders are executive board(CEO, CFO, SVP),
employees and managers where as external stakeholders are customers, suppliers,
creditors and government.
NHS
 Mission- The mission of the organisation to provide quality health care services to the
general public (Rishi and Sharma, 2017).
 Vision- The vision is to deliver value to the people who are in need and creating an
healthy environment.
 Objective- The objective of organisation is to build a healthy environment with less
percent of health issues worlwide.
 Size- The organisation is functioning at global level with biggest employees size of more
than 1.3 million.
 Scope- The scope of NHS is to improve the health of public and provide care to needy.
 Stakeholders- The stakeholders of NHS are community, hospitals and mental health
services, and government.
Wellcome Trust
 Mission- The mission of organisation is to provide quality research on health issues and
formulating of solutions for problems.
 Vision- Vision of organisation is health promotion and providing support to students and
researchers.
 Objective- The objective of organisation is to establish relationship and partnership with
research institutes in order to provide strong solutions to health research.
 Size- The organisation is operating in UK with small size of employee force less than
2000.
 Scope- The scope of organisation is to improve the research and development of the
health and care of UK population.
 Stakeholders- The major stakeholders of organisation are BBSRC, environment
department of UK and medical research council.
6

TASK2
Determine the relationship between different functions of organisation and their link with
objectives and structure of organisation.
ASDA is following formal hierarchical functional structure as it is one of the largest retail
chain in UK where it has quite a big number of employees working in various departments. They
are following this structure because it has more layers of management which is convenient for
the staff members to operate (Rittenburg, Gladney and Stephenson, 2016).
Human Resource and Finance Department- The function of human resource
department in every organisation is to provide human resources for the effective and efficient
management of work within company to achieve the objectives and goals. In Asda human
resource department functions with all the departments and provides training to the new and
needed employees and also responsible for recruiting the key peoples for the different
departments and areas. Whereas finance department in every organisation is responsible for
formulating and managing the budgets and money flow. The finance department in Asda
regulates and manages the payrolls, invoices, profit & loss accounts and balance sheets. Both the
functions are related as finance team report about is business providing value to the rest of the
company departments. Finance department is responsible for formulating and assigning budgets
according to the resources available where as human resource team is responsible for hiring and
allocating staff members according to their capabilities and potentials. The functioning of these
departments provide support to company in meeting the objectives of regulating and maintaining
the stable balance between resources and budgets.
Marketing and Sales- Marketing department performs the investigation work in
company that is understanding and analysing the market environment and identifying the
customer preferences and taste. In Asda the marketing team analyse and identifies needs and
requirements of target audience and accordingly develop or change the existing strategy they are
using. Where as Sales department is operating in order to convenes the customers to buy the
products and services that company is offering. They are using selling strategy such as telephone
sales and online sales. Both the functions are interrelated and works in coordination as on the
bases of sales team experience with customers, the marketing team make improvements in
methods and techniques to increase the sales volume. The functioning of these departments has
7

helped the company in accomplishing its objectives of increase in profit margins, as the focus of
both the departments is to increase the sales volume.
TASK 3
Identify the positive and negative impact on the macro environment
To understand the impact of the dynamic environment on business operations of ASDA,
it is important to evaluate the external factors which impacts their operations and long term
business of the company as they want to have a sustainable environment.
POLITICAL FACTORS
For businesses to operate globally, it is important for them to have a stable business
environment. Their expansion to various political boundaries becomes easy for them if they
know the dynamics of those market.
 Positive impact- The national and international policy of government always favoured
the decision making of ASDA in terms of employment, consumer rights, taxes, etc.
 Negative impact- Corruption, foreign trade policy, labour law restrictions has affected
the business of ASDA (Sharafutdinova and Steinbuks, 2017).
ECONOMIC FACTORS
These factors for any organisation affects the pricing strategy as they include the taxation
policy and various direct and indirect cost for the company.
 Positive impact- These factors have always helped ASDA in making the decision
regarding the pay level, supply and demand of the human resources and credit periods.
 Negative impact- Economic growth and employment rate of the organisations effects the
decisions of ASDA, largely affecting its budgeting decision.
SOCIAL FACTORS
The country's demographics majorly affects the business operations. They constitutes the
employment rate, age distribution, disposable income, etc. (Katz and Green, 2018).
 Positive impact- ASDA has successfully identified all the cultural barriers of the
countries they operate in and targeting those customers who are focussed towards their
health and lifestyle needs.
 Negative impact- ASDA has to alter the segmentation everytime before introducing a
new product as per social needs of various countries.
8

TECHNOLOGICAL FACTORS
In an ever increasing technological market, companies in retail industry are trying to
make technology in their favour as the use of it is making the competitor's irrelevant in the
market.
 Positive impact- It improved the quality of the services provided by ASDA. With the
advent of click and pick model in retail, strong internet and various other technological
advancement, the business of ASDA grew.
 Negative impact- Competition for ASDA has grown as the customers are informed and
choose to prefer the deals which support their needs.
ENVIRONMENTAL FACTORS
Companies are producing waste which is hazardous for the health. There is a pressure on
the organisations to products good which are environmental friendly.
 Positive impact- ASDA is demonstrating itself as an eco-friendly company by focussing
on making the economies pollution free. They are trying to reduce the quantity of carbon
footprint (Raziq and Maulabakhsh, 2015).
 Negative impact- ASDA has to follow the environmental protection laws which impacts
their working environment.
LEGAL FACTORS
There are set rules and regulations, the companies should abide these in order to operate
in those countries.
 Positive impact- ASDA abides the law of each country in order to facilitate its
operations. It has a strong consumer protection law.
 Negative impact- It is difficult for ASDA to change its operations as per the rules and
regulations of countries which have a different culture, so moving to their market is a
barrier to them.
9

TASK 4
Conduct the internal and external analysis of the organisation.
For companies to stay in the business for long term, it is important that they analyse the
business environment. To find the internal position, Businesses use the SWOT analysis. It is a
framework which helps in analysing the internal operations of the business and helps to do
situational analysis of the organisation (Trad, 2015).
STRENGTH
The strengths of the companies defines the factors which make it strong the market. They
explains where the company should and focus of its expansion.
 Extensive product line- They serve a wide range of products like Asda money, mobile,
Chosen by you, etc. Apart from these products, Asda also provides To-you parcel
services and has acquired various brands to reduce competition.
 Sustainability- Asda focuses on reducing the impact on the environment because of its
operations. They are avoiding the use of hazardous goods.
 Customer-centric- They maintain the long term relation with its customers by
connecting with them on various social media and addressing their doubts and
complaints.
WEAKNESS
10
Illustration 1: PESTEL analysis
Sources: What is a PESTEL Analysis? 2020

They help the companies in identifying the areas of improvement. It helps the companies
in reshaping their strategies.
 High attrition rate- ASDA has to focus on the employees problem also. There is no
policy towards employees concerns which in turn making them not trust the company.
They should focus on employee training and development.
 Research and development- ASDA has not been able to provide considerable
innovation in the retails industry which in turn implies that they need to invest more in
R&D.
 Restricted entry- ASDA faces competition from not just big retailers like Tesco but also
local vendors as they use the policy of lowest price on everything which is creating a
threat to them as they are not able to deliver at the same price.
OPPORTUNITY
There are multiple options in the market, the company which traps the opportunity first
gets the first mover advantage (Hair Jr, Page and Brunsveld, 2019).
 Expansion into new markets- There are multiple options available for ASDA to grow
like online marketing, health care, jewellery, etc. It will open up new opportunities for
them.
 Environmental friendly- Their long term goal of ASDA is to provide recycled goods
which are sustainable and reduction in wastage of food.
 Acquisition- ASDA is focussing on acquiring small brands so that they can reduce the
competition and also their business is expanding.
THREATS
The factors which puts businesses at risk and can directly or indirecting affects the
company's business and long term profitability.
 Legal regulations- Alteration in government rules and regulations are affecting the
business of ASDA and creates a threat to the business (PESTEL analysis of ASDA, 2025).
 Competition- There is always a price war going on between ASDA and its competitors.
It makes it difficult for them sustain in the market as they have cut the price of their
products.
 Multiple platforms- There is a tough competition faced by ASDA both online and in
offline stores. They need to make the strategies keeping it in line with the industry.
11

Explain the inter-relation between internal and external factors.
Both internal and external factors are important for the businesses to sustain (Bitkowska,
2015). Organisations should monitor these factors as they create an impact on their business.
There is an inter-relation between them as an organisation is surrounded by many factors which
help them to achieve the business goal.
POLITICAL FACTORS
 Strength- Strong foreign trade policy and a better understanding of business in various
political environment helped ASDA in growing the business.
 Weakness- Corruption and political instability affected the business of ASDA in many
regions and hampered their operations.
ECONOMIC FACTORS
 Strength- ASDA has always focussed more on customers and they consider their
disposable income as an important factor to provide the quality of assortment.
 Weakness- Their low cost operations model is making them focus their strategies in
reducing the cost which makes them earn less profit.
SOCIAL FACTORS
 Strength- ASDA is targeting the right market as they are focussed towards their
customers by identifying all the cultural factors which can affect their business.
 Weakness- Their markets are in different countries and they have to understand different
mind set of those people which makes the operations differ for ASDA in many regions.
TECHNOLOGICAL FACTORS
 Strength- ASDA is maintaining their assortment of multiple product line and aligning
them with the technology in order to maintain the level of service.
 Weakness- In comparison to other retailers, ASDA is not adaptive to technology and still
there are processes which are handled manually.
ENVIRONMENTAL FACTORS
 Strength- Use of the sustainable business operation is helping ASDA in reducing cost
and making the environment a better place (Morecroft, 2015).
 Weakness- ASDA is not able to adapt to the dynamic environment as compared to its
competitors like TESCO, which is the biggest supermarket of UK.
LEGAL FACTORS
12

 Strength- The laws which ASDA follows are making it a strength for the company as
they are able to strongly impact their business. Their consumer protection law is making
the customers build trust towards them.
 Weakness- There are alteration in the rules and regulations by government and these
alterations are affecting the business of ASDA as they have to form strategies.
CONCLUSION
From the above report it has been summarized that the understanding of Business
Environment is crucial for the operations of businesses in the dynamic environment as industry
dynamics are improving and making the businesses unsafe to operate on its own. It is always
important to align company's external and internal business environment as the size and scope of
the big organisation like ASDA is not independent and its market is global which makes it
important for them to relate all the factors affecting their business. Asda has been successful over
the period because it acted well with its environment.
13

REFERENCES
Books & Journals
Aribawa, D., 2016. E-commerce strategic business environment analysis in Indonesia.
International Journal of Economics and Financial Issues. 6(6S).
Bitkowska, A., 2015. The orientation of business process management toward the creation of
knowledge in enterprises. Human Factors and Ergonomics in Manufacturing & Service
Industries. 25(1). pp.43-57.
Fleming, D., Lynch, P. and Kelliher, F., 2016. The process of evaluating business to business
relationships facing dissolution: An SME owner manager perspective. Industrial
Marketing Management. 58. pp.83-93.
Gandhi, L., 2017. Human resource challenges in VUCA and SMAC business environment.
ASBM Journal of Management. 10(1). p.1.
Hair Jr, J.F., Page, M. and Brunsveld, N., 2019. Essentials of business research methods.
Routledge.
Katz, J.A. and Green, R.P., 2018. Entrepreneurial small business. McGraw-Hill Education,.
Krajnakova, E., Navickas, V. and Kontautiene, R., 2018. Effect of macroeconomic business
environment on the development of corporate social responsibility in Baltic Countries
and Slovakia. Oeconomia Copernicana. 9(3). pp.477-492.
Lim, W. M., 2018. What will business-to-business marketers learn from neuro-marketing?
Insights for business marketing practice. Journal of Business-to-Business Marketing.
25(3). pp.251-259.
Morecroft, J.D., 2015. Strategic modelling and business dynamics: A feedback systems
approach. John Wiley & Sons.
Osmonbekov, T. and Johnston, W. J., 2018. Adoption of the Internet of Things technologies in
business procurement: impact on organizational buying behavior. Journal of Business &
Industrial Marketing.
Raziq, A. and Maulabakhsh, R., 2015. Impact of working environment on job satisfaction.
Procedia Economics and Finance. 23. pp.717-725.
Rishi, O. P. and Sharma, A. eds., 2017. Maximizing Business Performance and Efficiency
through Intelligent Systems. IGI Global.
Rittenburg, T. L., Gladney, G. A. and Stephenson, T., 2016. The effects of euphemism usage in
business contexts. Journal of Business Ethics. 137(2). pp.315-320.
Sharafutdinova, G. and Steinbuks, J., 2017. Governors matter: A comparative study of state–
business relations in Russia's regions. Economics of transition. 25(3). pp.471-493.
Trad, A., 2015. A Transformation Framework Proposal for Managers in Business Innovation and
Business Transformation Projects-Intelligent atomic building block architecture.
Procedia Computer Science. 64. pp.214-223.
Online
PESTEL analysis of ASDA, 2025. [Online]. Available through:<https://howandwhat.net/pestel-
analysis-of-asda/>.
What is a PESTEL Analysis? 2020. [Online]. Available
through:<https://corporatefinanceinstitute.com/resources/knowledge/strategy/pestel-
analysis/>.
14