Unit 1 Business and The Business Environment

Business and the
business
Environment
1

Table of Contents
Introduction......................................................................................................................................3
TASK 1............................................................................................................................................3
P1 Various purpose & type of diverse organizations.............................................................3
P2: Explain the scope and size of organisation......................................................................5
TASK 2............................................................................................................................................8
P3 Interrelationship among different organizational functions..............................................8
TASK 3..........................................................................................................................................14
P4 Pestle analysis of organization along with their negative and positive impact...............14
TASK 4..........................................................................................................................................17
P5 Internal analysis of the organisation................................................................................17
P6 Interrelation of strength & weakness factors...................................................................19
CONCLUSION..............................................................................................................................22
REFERENCES..............................................................................................................................23
2

Introduction
Business environment can be defined as the factors that consist of internal and external
environment it consists of all those elements that are impacting the functions of a business
organisation. There are many different types of functions such as external environment that
consists of stakeholders like governmental policies, customers creditors etc. All are part of the
external environment and internal environment consists of employees top management board of
directors are part of internal functioning (Chasdi, 2017). The present report is discussing about
different business organisations that have been selected in various sectors like private sector
voluntary sector and the public sector. For the private sector Tesco is selected as the organisation
that is one of the biggest retail stores having presence in UK. In public sector NHS is the
organisation that is performing their functions and have a objective towards reduction of poverty
and providing social services. For, the voluntary organisation of Oxfam has been selected as the
organisation that is working towards enhancing living standards of people. There is discussion
about size of purpose of such business organisations and inter relationship with organisation
function for the there is analysis of macro environment that is done with the help of identifying
the impact on various business functions.
TASK 1
P1 Various purpose & type of diverse organizations
Public organization:
Public organisations are those that are control and owned by a government. It is related with
providing services in effective manner of enhancement of brand image (Eling, and Schaper,
2017). In present scenario there is discussion of National Health Services that is providing
Customer services and was established in 1948.
Objective:
The main purpose of National Health Services is to provide free of cost services of help to
people of a country for improvement of their overall health.
3

Legal structure:
All the decisions are taken by government and it consists of state and Central Government.
Stakeholders:
Stakeholders are playing important role for providing all the financial investment and also causes
a impact on the overall working.
Private organisation:
Private organisations are those that consist of agency individuals and partners. In present case
there is a discussion of a private organisation Tesco that is dealing in various grocery items.
Purpose:
Tesco is a organisation which is dealing in various Merchandise and its headquarters are present
in UK and it was founded by jack Cohen (Hamilton,. and Webster, 2018). This organisation is
known for the quality products and the affordable prices that they are offering to their customers.
Legal structure:
Legal structure of Tesco consists of topic Management which is of CEO and the board of
directors. All the major decisions are made only after approval by the top management.
Stakeholders:
There are various different stakeholders that are associated with a business organisation in Tesco
concept of internal stakeholders like employees board of directors and external stakeholders like
customers government.
Voluntary organisation:
Voluntary organisation is told that consists of different set of activities and functions which are
performed by government. Present scenario of different organisation that is working towards
achievement of their objective that is eradication of poverty and it was founded in the year 1942
by Ceicl Jackson.
4

Purpose:
The main purpose of voluntary organisation like Oxfam is to enhance the living standard of
people and also reduction of all the situations of poverty (Kasemsap, 2018). They are willing to
set up equality in the society for all citizens.
Legal structure:
Voluntary organisation has a legal structure that is dependent on top authorities and the trust that
are providing them all the funds so any decision is taken according to the approval made by
search authorities and trustees.
Stakeholders:
There are some major stakeholders that are associated with Oxfam that is helping them in
increasing their overall profitability it consists of the Founder, all the staff members and
beneficiaries.
P2: Explain the scope and size of organisation
In every Organisation all the business activities are performed and it consists of three types such
as public private and voluntary such organisations are discussed below:
Private Public Voluntary
Goal Tesco mission
statement is
based on
creating a better
together and
their vision is
based on to be
most highly
valued
organisation and
become one of
the biggest
Vision statement is
based on creating of a
healthy lifestyle of
people and reduces
health related
problems (Rialp-
Criado and
Komochkova, 2017).
The vision of Oxfam
is based on
creation of a
poverty free
world. They ar e
willing to solve
the issues faced
by lower class
segment of
society and help
people in
dealing with
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retailer across
world in coming
time period of
five years.
issues of
discrimination.
Size and scope Tesco has a very wide
scope in coming
future period of time
as they are willing to
provide high quality
services at reasonable
prices to their
customers
(Viriyasitavat, Da Xu,
and Sapsomboon,
2018)
..
.
NHS is a public sector
organisation that
is having
preferences
towards health
related services
and was started
in year 1948.
Oxfam is voluntary
organization
and it was
started in year
1995 by semi
Government and
it is a
independent
organization
Market share They are having
presence in
Europe & Asia
and also a
market share in
UK, Ireland,
Thailand and
Hungary
NHS is having
presence in
Wales, England,
Scotland &
Northern Ireland
Oxfam is dealing
with movement
of change & also
they are
providing
services for
encouragement
of people for
raising their
voices against
injustice.
6

No of products and
services
There are different
wide ranges of
products for
example: petrol,
telecoms,
furniture,
financial
services, and
electronics &
internet services.
They are also offering
emergency
Medical
Services &
treatments for
people of the
society. They
have a very wide
scope as
working towards
betterment of
people in
society.
Oxfam working
against practises
of a trade
injustice, fair
trade related
services,
education.
Health,
education and
debt for
escalating
positivity in
society.
Stakeholders size 450, 0000 employees
are part of
Tesco.
1.4 million
Employees are
working in
NHS.
7000 volunteers are
working in
Oxfam.
Employees number They are approx 7000
stores in various
parts across
world where
Tesco is offering
their products.
6,500 employees are
associated and
working in their
50 locations that
are present
across England.
300 employees are
working in
Oxfam as a
international
secretariat and
also across
globe. Apart
from this there
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are 10,000
employees &
50,000 working
in Oxfam as
their affiliates.
Profit volume ROI of Tesco, is
approx 300
million pounds
in the year 2019
it was 1.54
billion
2 billion pounds is
estimated
national income
of NHS
408.6 million in year
16-17
Sales/Turnover 63.911 billion pounds
is average
turnover of
Tesco in the
year 2018.
They are offering free
of cost services
and working for
health
improvement of
people.
Sales in Oxfam are
has a sales
structure of
approx 19.3
million pounds
and it has been
hyped by 7
percent in year
2018.
Geographical area There are
approximately
3400 worldwide.
NHS is offering all
services without
any cost.
Oxfam has 1200
outlets across
globe.
TASK 2
P3 Interrelationship among different organizational functions
Organization functions & structure:
8

Figure 1Different functional departments in a organisation
Marketing and sales:
There is always a interrelationship between marketing and sales department. The functional
structure of Organisation like Tesco consists of marketing department, Sales department, HR
department and finance department (Gaganis, Pasiouras, and Voulgari, 2019). In Tesco, there is
high amount of interrelationship between marketing and sales department because sales
department has to be remain updated about the prospective future says and such information is
passed by the marketing department according to the present market scenario.
Research and development & divisional structure:
In divisional structure there is division according to various functions are performed in
organisation according to the product line. In Tesco there is a diversified organisation that is
equipped with various divisional structures and its divisional structure concept of specific
personnel according to specified functions.
Human resources and finance function:
9

Human Resource Department is very important department as it performs all the functions
related with employees in a organisation starting from recruitment of employees till the time they
are in the organisation all the activities related to human resources have to be carried on by the
human resource managers in organisation (Barr. and et. al., 2018). Tesco has to perform all such
functions in relation with management of employees’ amount of interrelationship between
finance and human resource function as finance function helps in providing all the financial
resources that are very important to provide budget to such departments in order to carry out all
this function.
Organisation structure: The structure of organisation basically defines how various functions
and activities have been allocated according to different departments. Tamil actor objective of
organisation structure is related with achievement of various functions and they are providing the
foundation of operating procedures (Shukla, and Pattnaik, 2019). There are different types of
organisation functions that are mentioned below:
1) Functional structure:
Functional structure in environment consists of employees who are working together for
similar task. Concept of different departments likes Human Resource Department Production
department Finance Department human resource and so on.
Figure 2Functional organisation structure
10

2) Divisional structure:
Divisional structure of organisation is based on division according to various product
lines and there is no division based on functions.Concept of Wholesale Department retail
department product based department and major objective of this type of structure is
achievement of higher efficiency in all the division.
Figure 3: Divisional organisation structure
3) Matrix structure:
Matrix structure of organisation consists of both the combination of functional and
divisional organisation structure. In this there is combination of functional departments based on
the specialisation of the workforce and there is also division of project according to lines of
products and services.
11

Figure 4Matrix organisation structure
From the above discuss information it has been analyse that Tesco is organisation that is having
large amount of products and they are also having different functions so they have basically
adopted a matrix organisation structure that consists of combination of both the functional and
divisional department (Saura., Palos-Sanchez. and Correia, 2019). Functional structure is
according to the marketing finance and Human Resource Department on the other hand divisions
are based on the food trading managers not to non food trading managers and the personnel
managers.
12

Figure 5Organisation structure in Tesco
13

TASK 3
P4 Pestle analysis of organization along with their negative and positive impact
PESTLE Analysis:
Pestle analysis consists of major five factors that are part of the external environment and it is
related with developing a detailed understanding of all the Macro environmental factors that is
going to have a direct or indirect impact on the positive and negative manner. Below discuss the
various factors that are affecting Tesco in both positive and negative manner.
Political factors:
Political factors consist of all the factors such as tax rates legislation stability of the economy of
a country and all the decision 70 made by political parties in a country. Search engines are
having impact on the functioning of organisation (Stankovićand Novaković, 2019). Tesco is
having major function spread across UK so all the decisions that are made by the government of
UK has a positive and negative impact on functioning of Tesco.
Positive impact:
The GDP growth and the per capita income of people in Tesco is high and there is always a tax
Liberty that is provided to organisations that is leading to positive contribution to the profitability
ratio of Tesco.
Negative impact:
There are changes in the decisions made by all political parties with time this is leading to lot of
modification that have to be made in policies by Tesco and it leads to high resistance on the part
of employees with impacts the productivity of employees in long run.
Economic factors:
Certain economic factors that are related with the economy of a country consist of leverage cost
prices profitability ratios inflation rate recession time period and the demand taking place in the
economy. All the policies related with foreign exchange are also part of economic legislations of
a country.
Positive impact:
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There is a positive impact as Tesco can take benefit of overall situation of demand and supply
that is part of the markets of Tesco and also they can achieve higher market share the help of
taking benefits of cost profitability ratios by managing the overall profitability ratio and
reduction of cost for their customers.
Negative impact:
There are high amount of changes related with budgeting requirements and also fluctuation that
is part of the overall economic this is leading to a negative impact on the functioning of Tesco.
Social factors:
Social factors related to the changes taking place in the society related with beliefs and values of
customers.
Positive impact:
There are changing trends in the economy of UK that is people are willing to spend more
towards high quality products and this is fulfilled by the quality that has been maintained by
Tesco since its origin. Customers who have been associated with Tesco are not able to make a
switch to any other competitive brand like Morrison’s or Sainsbury’s since Tesco has been able
to provide the high quality products (Allison, 2019).
Negative impact:
There are very high changes that are taking place in the Trends that are flourishing in the society
it leads to very fast shift of people towards products and this this sometimes may have negative
impact on the sales of Tesco when people are preference some other branch because of the
changing expectations.
Technological factors:
All the Technologies and innovations that are part of business are helping in smooth functioning
of a particular organisation. It is also related with development of a competitive advantage with
the help of such changes that have been adopted by many organisations in UK.
Positive impact:
There is a positive impact because of latest technology adoption helps in bringing Innovation and
fulfilment of customer requirement.
Negative impact:
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There is lot of financial investment that has to be made by organisation for adopting any new
technologies such as in case of Tesco for use of Robotics technology in their outlets there is
requirement of a huge amount of investment and there is no surety that it is going to be benefit
for the organisation in long run.
Legal factor:
Legal factor consist of all factors that are related with policies of Government and registrations
and that may have impact on a organisation. If organisation is not able to comply with any such
legal factors and they may face high amount of fines or legal litigations.
Positive impact:
Legal factors help in building up of a brand image as people are able to trusted friend when they
are following all the legal act that have been passed by the government. Such as in case of
equality quality act anti-discrimination act, all such acts lead to higher satisfaction of employees.
Negative impact:
There are very high amount of legislation that has to be organisation and it impacts the flexibility
in overall functioning of an organization.
Environmental factors:
The external environment consists of large number of factors that are completely uncertain are
changing very fast (Eryılmaz, . and Eryılmaz, 2016). It is the responsibility of the management to
ensure that there has to be minimization of the negative impact of all the factors and
maximization of the positive impact.
Positive impact:
Tesco is making efforts to reduce their carbon emissions by 50% that is helping them in building
up of effective brand image.
Negative impact:
Tesco is working towards minimization of wastage for all side policies leading towards high
cost that have to be incurred in order to take measures for sustainable development this is leading
towards impact on the overall profitability ratios and is affecting their long-run revenues.
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TASK 4
P5 Internal analysis of the organisation
SWOT analysis of Tesco:
Strength:
1) Tesco the biggest grocery retailers tools in UK and they have higher season revenue as
compared to other Supermarket change according to annual report of the Year 2018.
2) Tesco has been able to achieve a high Global presence of more than 6800 stores in
approximately 14 countries apart from North America and Europe they have a huge share of
market in Asian market.
3) Tesco has a diversified product range and they have been Europe largest private employer by
providing 743 K job opportunities worldwide (Puurunen, 2020).
4) There is efficient supply chain network of Tesco and they are using optimal Technology
Services RFID technology that is enabling the Barcode system.
Weaknesses:
1) There have been failure of operations in Japan and US in the year 2012.
2) There have been operating profits according to reports in the year 2018 and the share prices of
Tesco fall 49% because of such decline in their profits because of the brexit referendum that took
place.
3) Low cost strategy of Tesco is helping them to become a price leader but it is also leading
towards reduction in their present profit margins.
4) There is poor operational performance and some of the specific markets of Tesco an expert
17

have suggested that Tesco have not been equal to carry out sufficient market research before
entering in these market.
Opportunities:
1) Tesco has introduced a new discount store named as Jack that is showing the significant
growth and it has a future opportunity of Business expansion. They are competing with there low
cost rivals like Lidl and Aldi.
2) Tesco unable to avail the opportunity by upgrading and growing of their online shopping sites
and also started several home delivery services (Gürel, 2017).
3) Tesco has been able to open their store in developing countries and expanding many emerging
countries like Turkey Indonesia and South Korea.
4) There is development of strategic partnership with reputed brands offering an excellent
opportunity for Tesco to offer more products and for attracting both new customers.
Threats:
1) Tesco is facing social media backlash when the launch their Christmas advertisement and
people boycotted the store because of disrespectful acts on part of Tesco.
2) Tesco expressing brexit referendum because Brexit is no longer part of Europe and this has
affected the trade deals and all the cost is leading to high threats for Tesco.
3) There is a rising competition because of existing performance of other competitors like
Walmart and Aldi is leading to be biggest competitors of Tesco.
4) Government regulations and text matters have resulted into high operational efficiency and
performance of Tesco in many critical regions.
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Sainsbury’s SWOT Analysis:
Sainsbury's:
Strength:
1) Sainsbury's have been able to expand themselves according to the expansion of convenience
stores and they are counted amount of major supermarket brands of UK.
2) The business philosophy of scenes buddy is that they are willing to help their customers and
this has helped them in establishing high amount of brand loyaty for the products.
Weakness:
1) Sainsbury's is facing the very high competition because of presence of last number of big
brands in the retail industry. There is also a scenario of brand switching despite of high
promotions and marketing programs.
2) There is the additional cost because of in pleasing procurement cause and this is leading to
reduction in low margin and profitability ratio of Sainsbury's.
Opportunities:
1) Sainsbury's the opportunity to expand themselves into rural areas as there people are not used
to using of branded products.
2) Sainsbury's can make use of digital media and social media as a source of running certain
attractive social media campaigns in order to attract and involve their customers.
Threats:
1) Sainsbury's has to deal with rising prices of raw materials and there is a high threat on their
overall profitability.
2) There is a shortage of skilled workforce the cause of the Global market scenario and the
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present covid-19 effect and this will lead to impact on the overall profitability ratio of
Sainsbury's in long run.
P6 Interrelation of strength & weakness factors.
It is determine that there is interrelationship among strength and weakness with
environmental factors. Analyzing such interrelation help an organization to develop effective
strategy and decline level of threats in an effective manner. The interrelation is given below:
Basis Political Social Economical
Strength It is determined that
higher authorities of
TESCO follows all
rules develop by
government. It assist
organisation to easily
and smoothly carried
out all operations and
activities in an
effective manner
without any
interruptions
(Yashkova, and et. al.,
2016).
TESCO is one of the
leading supermarkets
because it focuses on
fulfilling needs of
people prevailing at
society. It aid
company to develop
positive mid set of
customers towards
brand and strengthen
market position
effectively and
appropriately as well.
It is analysed that
TESCO offers good
wages to its employees
so that they can easily
fulfil their
requirements that
directly leads to
increase in efficiency
of staff members. In
addition to this, the
people of UK has high
buying power, due to
which company earn
higher profits.
Weakness Along with the
strength, interrelation
also consists of
weaknesses. For
example, if the
exchange rate is
TESCO did not offer
organic food products
which is consider as a
weakness of company.
In relation to social
factor, it is determine
Changes in the
economic condition
and decrease in
inflation rate gas
negative impact on
overall revenue and
20

getting high by
government then it has
direct negative impact
on revenue of TESCO.
Because, the company
import most of the raw
materials from outside
the country.
that people living in
society of UK prefer to
consume those
products that are
healthy and fresh.
performance level of
TESCO in a negative
manner.
Basis Technological Environmental Legal
Strength The higher authorities
of company is focuses
on providing
innovative and unique
goods in market as it
is determine that
people in UK like to
consume those goods
and services, which is
new in market.
Adoption of new
technologies helps
company to enhance
its sales and profit
level in an effective
manner.
TESCO is making use
of carbon foot-prints
that help in declining
level of pollution. In
addition to this, its van
drivers collect all the
plastic bottles from the
house of their
customers in order to
recycle them. It helps
company to contribute
towards environment
and develop positive
image in market.
The top level
management of
TESCO follows all the
legal formalities in
order to avoid any
interruptions and
delays as well. In
addition to this, it aid
company to implement
all functions and
activities effectively
and efficiently.
Weakness In today’s world,
technology is changing
in a rapid manner and
impact on buying
behaviour of customer.
At present, TESCO is
bound with some
environmental issues
that affect on its brand
image and decline its
TESCO is bound with
legal formalities that
affect on its brand
image in market. in
addition to this, it
21

In order to retain in
market, it is essential
for company to adopt
new technology as it
occur cost to TESCO
and decline its revenue
level.
performance level as
well.
decline market
position and negatively
impact on its revenue
as well as performance
level.
22

CONCLUSION
It can be concluded that business environment is very important for every organisation to
make a detailed analysis of the entire factor that can possess effect in both positive and negative
manner on the various decision and functions. There is always an interrelationship between
different functional unit of organisation every organisation has a particular type of structure
according to their suitability and flexibility it can be functional divisional or Matrix structure.
Pestle and SWOT analysis are two major tools that are used for organisation for the purpose of
understanding the various factors that can possess a negative impact and positive impact on their
functioning. Further, always there is the interrelationship that is present in different organisation
departments that help Organisation in strengthening of the market position.
23

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Allison, J., 2019. MISSION STATEMENTS AND VISION STATEMENTS: EXAMINING
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