Unit 1 Business and The Business Environment.

Unit 1 Business and
The Business
Environment

Table of Content
Unit 1
a. Private sector – explanation
b. Public sector – explanation
c. Voluntary sector – explanation
d. Description of organisational functions and relations to organisational objectives
and structure
Unit 2
Market research and promotion
a. Explanation
b. Relationship to organisational objectives
c. Relationship to organisational structure
d. Analysis of relationship
Unit 3
a. Macro environment that influences businesses
b. Positive and negative impacts of macro environment
Unit 4
a. Internal and external analysis by involving SWOT analysis
b. Strength and weakness of macro environmental factors
1

INTRODUCTION
Different aspects are occurring in business organisation which is important for business
concern to focuses on them and make a right decision to continue the activities. The environment
of business is consider as total of some internal and external factors that arises in business
organisation. Organisation who are running business need to focuses on their activities and
factors that can affected (Peltola and et.al., 2016). The manager of companies are playing an
important role who identify needs and wants then deliver products that make satisfied customers.
This report is based on types of ventures and their different purpose that support to perform all
activities. This report insights on types and purpose of organisation, impacts of macro
environment on business operations, interrelationship between various functions. Moreover, this
involves internal strength and weakness of specific corporation by stating interrelationship.
Task 1
P1 Types and purposes of organisation public, private and voluntary sectors
The business environment is segmented in to various sectors that is organising and
managing by different people and legislations for getting activities and productivity. The types of
business sectors are public, private and voluntary that are as defined:
Public (NHS) – The meaning of such sectors is organisation which are fully controlled and
operated in the supervision of government that support to run the business and satisfied the
customers. These are also called non profit making company who only focuses on how to
provide satisfaction to customers. For example, NHS that is UK based National Health service
organisation providing health services to people and running business in the consideration of non
profit.
Purposes: The purpose of public sector is to improve the life of people by offering them
best services. Purpose of NHS is to bring improvements in the health of patients and give them
new life (Velychko and Liudmyla, 2017).
Legal structure:
Local government: This means when business is established at local areas and small
level for the purpose of running business and providing services to local people then managed by
local government.
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State government: This means all state have legislation assembly which is formed to
solve the state people’s problems and allows them to operate the business (Ramanathan and
et.al., 2017).
Central government: When business activities are managed and controlled by larger
range of assembly under various rules and regulation that can affect the positively.
NHS is broad size organisation that is selling the activities by operating business. This
organisation is following central government rules as it is operating business by providing health
services to people.
Private (John Lewis) – This means activities which owned by number of people, solely,
collectively and others in a definite ratio is private organisation. This mainly focuses on profit
making and make strategies to increase the organisational productivity. Profit maximization is
the aim of private sector who bring new ideas and innovation in order to increase the activities.
for example, John Lewis is high brand department store that is providing different types of
products and services to its customers which helps to increase the sale and profitability (Jin and
Hurd, 2018).
Purposes: To increase sales and satisfy the customers through creating job opportunities
for people. To introduce new products and services for retaining customers and increasing sales
in competitive business environment.
Legal structure:
Sole trader – This is single business concern who is arranging capital and resources to
run the business and making the profits. The aim is to understand needs and provide the kind of
products.
Partnership: This means when organisations is running and managing by two and more
than two people for the running and managing the activities. This helps to increase the business
performance by delivering product and services.
Pvt Ltd company – Such companies are mainly owned by private organisation who are
operating business by number of people and managing the activities.
Public Ltd company – This means organisation which are controlling by superiors and
management who have authority to make decision and forming a Public Ltd company.
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John Lewis is following the Partnership legal structure that can help to increase the
business activities and maintaining higher profits. Management are focusing on needs and wants
of customers then provide products accordingly (Awadid and Nurcan, 2016).
Voluntary (Oxfam): This means a sector by covering range of activities from cultural
and social environment. The operation of such sector is required to attain the business goals and
increase the organisational profitability. The manager of organisation is liable to pay the amount
and running business for social welfare is voluntary sector. For Example, Oxfam that is large
organisation is running the activities by operating business by managing all functions. This helps
to increase the business performance and improve living standard of people (Szczepańska-
Woszczyna and Kurowska-Pysz, 2016).
Purposes: The purpose of Oxfam is to improve the living standard of people and
removing the poverty of people. To provide the resource and opportunities to people so they can
live their life properly.
Legal structure:
Trust – This means when collection of people are decided to work for social welfare by
providing services.
Charitable organisation – These are non profit organisation that focuses on goals on
philanthropic nature such as charitable educational and religious intention.
Unincorporated corporation – This type of organisation involves un incorporation that
helps to increase the living standard of people.
Oxfam is running business under charitable legal structure which is operating by number
of people helps poor people to provide them benefits. This organisation take places while
providing social welfare to customers.
P2 Size and scope of range of business organisations.
Types of organisation on the bases of size that are as defined:
Micro – This means a business enterprises which is operating at very small places for
running business and increasing activities. In micro business, less number of employees are
working with low investment (Lüdeke-Freund and et.al., 2017).
Small – This means, a business which is started at small level and local areas with
limited number of employees in order to increase the fill the customer needs and wants. This
helps to increase the level of customers and retain the customers.
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Medium – This means a business which is started with the number of up to more than
250 employees for the purpose of providing products and services. The management of
organisation are running business by understanding products and services in order to increase
productivity. It is medium in size which is operating business and making plans to increase
activities (Crowley and Jordan, 2017).
Large – This means a organisation which is operating at more than one area and country
for increasing activities and profits. The person who is managing activities and functions by
arranging capital and funds for making higher profits. For example, John Lewis that is larger size
organisation by collecting funds and managing activities effectively. Thus helps to increase the
number of customers by providing variety of products.
The size and scope of business venture are as defined:
Basis Small /Micro Medium Large
Size and scope Micro and small
organisation such as
beauty salon, general
store etc. are small in
size and scope that is
operating business by
providing products in
small range.
This type of
organisation is running
business at medium
size and operating
activities continuously
by managing
functions.
John Lewis is larger size
organisation that has
number of store at
different places who are
operating business
successfully and
increasing the
organisational
productivity.
Goal To fill the customers
needs.
To grow the small
business, filling
customers demand,
providing variety of
products and services.
To increase sales, facing
competition, expansion
of business and increase
organisational profits by
running the activities
continuously.
Objective To live their daily life
by earning small
amounts and prices.
To make plans for
growing and
expansion of business.
To capture market share
up to 50%, profitability
60% and brand image.
Market share Less number in small 10- 20% gaining in 45-50% market share as
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areas. market share. it is providing better
quality of products and
services.
Number of
products
Single line products and
needed products.
Products and services
are provided according
to customer demand.
Variety of products such
as mens wear, women
wear and kids that
attracts customers.
Stake holder
size
Only owners are
managing activities.
Small number of stake
holder who participate
in business activities.
Number of stakeholders
are contributing in John
Lewis company who
provide investment to
run the activities.
Geographical
areas
Local areas Regional and state
level
National level where
business are operating at
different stores.
Profit volume No profit Limited profits which
depends on selling
activities.
Higher level of profits
can be earn by
organisation.
M1 Structure, size and scope of different organisation
The business organisation are different such private, public and voluntary that are
operating business by managing activities. Private organisation are profit making, public are not
profits making and voluntary’s purpose of providing social benefits by operating business
successfully. John Lewis is private organisation that is operating business for the purpose of
making higher profits. The size of such organisation are different which are running at number of
location and helps to attain the business goals.
Task 2
P3 Relationship between organisational function and linked to objectives and structure
Different types of functions and activities are managed by management of organisation who
analysis the needs and develop the market where customers identify their need and make
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decision to buy the products and services. All functions are important in companies who plays
important role and control the activities. For instance John Lewis is private organisation which is
selling the different products and services with the help of all department . This helps to increase
the business performance by organisation, direct and controlling them. This helps to attain the
business goals by adopting a appropriate organisational structure.
Functional structure – In this structure, all functions are managed by their department by
focusing on them and making plans that helps to increase the business performance
(Szczepańska-Woszczyna and Kurowska-Pysz, 2016).
Matrix structure – This is a structure which uses by organisation in traditional ways that
helps to related with functional and production manager that can help to operate the business and
increase performance effectively.
Division structure – In this structure, the roles and responsibilities of employees are
divided according to their abilities and capacity which helps to perform well and manage the
brand.
Functional structure is following by John Lewis that operating the functions and activities in
defined form and managing the activities effectively. This helps to attain the business goals as
employees share problems which they are facing and running the business effectively. Once,
management has decided then functions are managed properly (Lüdeke-Freund and et.al., 2017).
The interrelation between functions are as defined:
HRM with marketing – Marketing department uses different sources to attract the
customers as they have specific skills and talent that increases sales. In such activities HR
department plays important role as it recruit employees according to demand in specific
department. Both department and functions are interrelated as HRM department recruit
employees for marketing and attracts employees to complete the target (Ifinedo, Pyke and
Anwar, 2018).
IT with distribution department – All organisation wants to increase their selling
activities so they adopt new technology for the purpose of improving distribution channel and
increasing the business performance. By using new technology companies can bring changes in
their distribution process which can help to maintain the good performance. In context to John
Lewis, IT managers and employees are interrelated with distribution department as they helps to
provide the cars to the potential customer by bringing innovation in their process.
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Marketing with sales department – For fashion industry marketing is important which is
performed by marketing manager by analysing the market and get people needs regarding trend
which increases sale by providing products and services. John Lewis is following functional
structure that helps to manage the functions and activities effectively. The marketing department
is interlinked with sales as it uses social media, print media, newspapers etc. that attracts
customers and helps to increase the sale (Gohar and Indulska, 2016).
Account and finance function – Accounting is related to maintaining all accounts and
financial information in relation to business income and expenses that helps to maintain the
productivity and profitability. Finance is needed to fill all functions and activities which are
important for organisation and maintaining the performance. In context to John Lewis, accounts
and finance functions are interrelated such as all budgets and accounts which are prepared by
account managers all informed to finance manager so all funds can be provided by finance
department that can help to increase the activities and attain the business goals.
Research with Human resource function – Research is defined as finding the needs and
wants of their customers and organisation so all activities can be run effectively. Human resource
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function is main department which recruits research manager and employees which can help to
manage the accounts and increase productivity by operating business successfully.
M2 Advantages and disadvantages of interrelation between organisational functions
Functions are important for business organisation which are running by management by
focusing on all activities and organisational structure in order to achieve objectives. John Lewis’s
objectives is become leading organisation in fashion industry so it is following functional
structure which helps to operate activities. All function such as HRM, marketing, sales and IT
department are performing by management that helps complete the targets and attain the
business goals by managing all activities and making plans.
Task 3
P4 Positive and negative impacts of macro environment
Macro environment – The business is controlled under the internal and external factors
that arises at the time of running business. When businesses are operated by business concern
then needs to ensure that proper analysis is done and factor will not affect negatively. Different
types of factors arises in business activities where management are required to focuses on factor
and make proper plans which can help to run the business and increase the activities. In context
to John Lewis company, managers are playing crucial role as they analysis the environment and
get insights which factor has affected the business and how it can be managed.
PESTLE analysis – This means an analysis which is required to run a business and
increasing the organisational productivities by performing actions. This is important for
managers to analysis the factors that arises in industry and difficult to control. The knowledge is
increasing by managing the activities and following the factors. PESTLE analysis of John Lewis
are as defined:
Political factor – This factor consist governmental rules, tax rates, stability, Brexit
effects etc. that are related to business and affected the organisation operation and development.
Positive Impacts: In UK, the political stability is increasing business activities as Brexit
has support the John Lewis to operate its business and increase selling activities by managing the
demand and products that helps in operation and development of business.
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Negative impacts: On the other hand, if tax rate has increased due to changing
government regulation that can affected business as it has to pay the tax amount on products and
services that reduces productivity (Leonidou and et.al., 2017).
Economical factor – This element consider GDP rates, inflation, interest rate, changing
currency etc. that can attracts customers to spend their money on buying behaviour.
Positive Impacts: In UK, GDP rates stable and interest rates are low which helps to
operate the business and increase the profitability that affected positively John Lewis business.
Negative impacts: In other side, increase in inflation rate can affected business
negatively as consumer buying power can be limits. The business activities of organisation and
selling can be reduced.
Social factor – The social factor involves demand, lifestyle, changing needs, social
behaviour that can impacts on operation of business. For organisation it is important that to
focuses on people demand, what is going on trend and how customers can attracts towards
products and services so products and services are provided accordingly.
Positive Impacts: John Lewis is larger size organisation that is focusing on customer
trend and life style then introduce products accordingly which helps to operate the business
successfully and increase the business performance in competitive business environment.
Negative impacts: On the opposite ways, changing trend and lifestyle divert the people
mind of buy the products and services from other brand who are providing stylish products that
reduces the number of customers and create challenges for organisation to operate business.
Technological factors – This factor is containing technology and innovation in their
business activities so a business can be operated effectively and manage the brand image.
Positive Impacts: The management and business concern are responsible in John Lewis
to bring new products and innovation in their delivering process that can attracts range areas of
customers and also increase the sale of branded wear. Moreover, the leader of such organisation
are providing training and development programme to employees that can help to accept the
challenges and operate business successfully.
Negative impacts: In case of adopting new technology it can be difficult for organisation
to spend the money and recruit a experienced person which make understand to employees how
to work in new method that reduces organisational profitability as lot of amount needs to be
invest in such activities (ATWA, IBRAHIM and SALEH, 2017).
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Legal factor – This factor states that for running business and increasing production
there is requirement of following some legislation that are important to run and keep the
activities continue.
Positive Impacts: John Lewis’s HR manager is aware of all rules such as employment
law, equal pay, data protection, healthy and safety, fair standard act etc. that are increasing trust
of customers and employees to offering best quality of products and services which helps to
manage the operation and business performance in competitive environment.
Negative impacts: This may affected as not following equal wages act that may create
the conflicts between employees and they make decision to leave the organisation. Therefore,
functions and activities become difficult to operate and creating challenges to hire new
employees for running activities.
Environmental factor – This means organisation should follow some environmental rules
and regulations that are important to run business and manage the function.
Positive Impacts: John Lewis is department store that is reducing the wastage, carbon
emission, environment protection etc. that can help to operate the business.
Negative impacts: It can be challenge for chosen organisation to follow all environmental
regulation otherwise it business cannot be operate a business.
M3 PESTLE model support detailed analysis to macro environment
PESTLE analysis is considering political, social, economical, technological and
environmental factor that are affecting the business. Increasing population, changing life style,
following legal term and using new technology by John Lewis is supporting the macro
environment and business that helps to operate the business and face the competition. From the
analysis it has defined that there are many factors which has affected negative so it should have
knowledge to managing business performance (Peltola and et.al., 2016).
Task 4
P5 Internal and external analysis of business corporations
It is important for business to know the internal strength and weakness at the time of
running and operating business. The managers are responsible to analysis the internal
environment and make decision by completing task. This can help to increase the organisational
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productivity and profitability in competitive business environment. The SWOT analysis of John
Lewis are explained below:
Strength : This is leading organisation who is selling the products according to customers
demand. In John Lewis management are managing a strong online presence in business. To
maintain the good relation with employer and employees they share information and make
efforts to complete task. Extensive product range that attracts customers and increase their
buying behaviour.
Weakness: There is absence of international business experience that create challenge for
organisation. The organisation is not applying effective marketing strategies and also having less
number of skilled person who does not work properly. John Lewis is having competition in
business market which can reduce the organisational productivity (Velychko and Liudmyla,
2017). Moreover, Recent slump in profits due to weakness which affected the business
negatively.
Opportunities : All activities are managed and run by talented person that us an
opportunity for business organisation and increases the performance. Uses of new technology
and innovation such as online booking increases sales and performance in changing
environment. Formation of strategic partnership in global market and range of products for men,
women, kids and others become a major opportunity that taken by John Lewis to continue their
business. Development of new unique selling proposition is another opportunity which attracts
customers and make higher profits.
Threats : Not managing cash flow properly and increases in debts is major threat for
John Lewis which reduced sales. Lack of customer demand and emergence of new competitor
can be threat that affected profitability.
SWOT analysis of NHS
Strength : This organisation is providing good health care services to people that
increases living rate and performance. This increases the satisfaction level of customers and
patients who gets health care services. The selected organisation also involves area of expertise
across a range of service. Moreover, Strong history of research and development is maintain by
NHS.
Weakness: The weakness of NHS is high cost in agency staffing that increases cost of
organisation and reduced the services. Vacancy in nursing and AHP workforce that is required in
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organisation and affected services negatively as they are lack. Financial deficit is facing by NHS
which is required to be solved.
Theatres productivity
Opportunities : Uses of new technology and continue research is an good opportunity
which can help to bring new services for people. This involves System wide sustainability and
transformation plan which increases satisfaction level of people. Community and social care is
delivered to patients that increases pleasure and maintain good performance. NHS increases
service user, public involvement and career which increases brand image and improve business.
Income opportunities from private patients can be taken which can help to operate regularly.
Threats : Non delivery of CCG planned which can stop to provide good health care
services to people. Loss of market to alternative providers that create a heavy loss in
organisation. Higher requirement of foreign sources and medical technology that is difficult for
NHS and reduced services. New ownership in NHS which can be challenge for people accept
new regulation and environment for working.
P6 Strength and weakness that interrelated with macro environmental factors
Basis of interrelation Strength Weakness
Political factor Reduction in tax rates and
government stability helps to
increase the strength of John
Lewis as it can operate business
successfully (Ramanathan and
et.al., 2017).
The government regulation are
not stable and it is charging
high interest on transportation
that may be weak point for
organisation and affects
business negatively.
Economical factor After Brexit, inflation rate are
reduced that become beneficial
for Jown Lewis and customers to
buy products and increase the
sale of organisation.
Increase in interest rate can be
challenge for organisation to
operate the business because
need of high investment and
paying interest charges.
Social factor The management of organisation
are focusing on people needs and
fashion then provide cloth wear
to customer accordingly which
This can be challenge for John
Lewis to provide the products
as per people fashion as need
are changing day by day that
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helps to improve the business
effectiveness and productivity.
can be difficult to operate the
business.
Technological factor Chosen organisation is
increasing strength and
opportunities by adopting new
technology and improving
distribution channel that helps to
manage the activities effectively.
Lack of skilled and technical
workers is weakness for
organisation that is linked with
technology and become
difficult to get competition (Jin
and Hurd, 2018).
M4 Apply SWOT and justification on decisions
SWOT analysis is a framework which uses by business concern to know the strength and
weakness which helps to increase the business activities. In John Lewis it influence decision
making such as managers analysis the environment and get weak point that make efforts to
convert them in to strength and opportunities. This helps to increase the performance and get
higher production in environment (Awadid and Nurcan, 2016).
CONCLUSION
From the report it can be concluded that business environment is considering internal and
external factors that has affected the business. Type of business organisation such as public,
private and voluntary that helps to operate the business by managing activities. PESTLE analysis
is uses to analyse the external environment that helps to run and facing the challenges. SWOT
analysis is uses to state the strength and weakness.
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