Business and the Business Environment

This document provides an analysis of the business environment, including the purposes and types of diverse organizations, interrelationships among different organizational functions, and a PESTLE analysis of a company. It also discusses the positive and negative impacts of external factors on the company's performance.

Business and the
business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 various purpose & type of diverse organizations..............................................................3
P2 : Size and Scope of this types of organization..................................................................4
M1 Analyse how the structure, size and scope of different organisations link to the business
objectives and product and services offered by The organisation.........................................6
TASK 2............................................................................................................................................6
P3 Interrelationship among different organizational functions..............................................6
M2 Analyse the advantages and disadvantages of interrelationships between organisational
functions and the impact that can have upon organisational structure...................................9
D1 Provide a critical analysis of the complexities of different types of business structures and
the interrelationships of the different organisational functions..............................................9
TASK 3..........................................................................................................................................10
P4) PESTLE analysis of company with their negative and positive impact........................10
M3) Apply PESTLE model to undertake a detailed analysis of macro environment within an
organisation..........................................................................................................................12
TASK 4..........................................................................................................................................12
P5) Internal analysis of company.........................................................................................12
P6: Interrelation of strength & weakness with the external macro factors...........................14
M4) Analyse effect of SWOT analysis over decision-making.............................................16
D2) Evaluate the impact of micro and macro environment over business decision-making16
CONCLUSION..............................................................................................................................17
REFERENCES .............................................................................................................................18

INTRODUCTION
Business environment includes both micro and macro environment factors that are posing
a impact on the functioning of a organisations. Present report based on analysis of a private
sector organisation TESCO by consideration of different factors that are posing a impact on the
way external and internal environment posses a impact on the business functioning (Okeyo,
Gathungu and K’Obonyo, 2016). There is analysis of PESTLE analysis, SWOT analysis to
evaluate the relationship with the macro environment so that further conclusions can be drawn.
TASK 1
P1 various purpose & type of diverse organizations
Organisations are classified in different categories according to their overall laid objectives.
Private organisation:
These are the organisations owned by private entities that can be individual, partnerships. Funds
are managed by use of personal resources. TESCO is a example of private organisation
(Gaganis, Pasiourasand Voulgari, 2019).
Purpose : The main objective of these organizations to maximize profitability so that higher
value can be created for organizations according to achievement of high market share.
Legal Structure of Private Organization :
Sole Proprietorship :
It is business set up that is owned and managed by sole proprietor. These are held liable for all
losses and liabilities, they have to comply with regulations (Explain the different types, size and
scope of organizations, 2020).
Partnerships : These are the business that are managed and controlled by one or more than
partners. In the decision are taken by mutual consideration of all the partners and all future
decisions are taken according to the clause that are part of the partnership deed.
Limited Companies : These organizations posses status of separate legal entity from the owners.
The capital is procured by issue of shares and there it is limited according to respective holding.
TESCO is a example of a limited company.

Public organization : Public companies are the ones that are managed by government in order
to maximize the sales and social welfare (Šoltés and Štofková, , 2016). In the organizations
taxes are collected out of the public contribution. Goods and services are offered to work towards
ensuring equality among the people living in society.
Purpose : The main objective of NHS is to offer all the medial services to the underprivileged
section of the society:
Legal structure: The overall legal structure of national health services is based on government
exercising control over all the decisions that are taken ion these organizations.
Example: NHS is a public sector organizations where the main objective is to provide all the
health services at reasonable cost or at negligible cost to all the people who are below te poverty
line.
C) Voluntary organization:
Meaning: Voluntary organization are the ones which may and may not posses a government
control. In this all the activities and functions are carried on by volunteers according to
prevailing social conditions (Batocchio, Ghezzi and Rangone, 2016).
Features: Voluntary organization have a vision to work towards enchaining livings standards of
people or dealing with some of the common social issues that are faced by people in society.
Purpose: The main objective of this organizations is to make society a better place for people.
Legal structure: the overall legal structure has to be managed in such a way that there is
execution of functions according to laid objectives of the organist.
P2 : Size and Scope of this types of organization
Private Public Voluntary
Size TESCO is a private
organisation that is
one of the largest
private employer as it
is having a global
presence and is one of
NHS is a public sector
organisation that has
employed 1.6 million
of people and posses a
workforce of
2,165,043 across UK.
Oxfam is a example of
voluntary organisation
that is a independent
confederation of 19
charitable independent
institutions that posses

the popular
supermarket brand.
They are employing
around 2,50,000
people and have a
workforce of 367,000
staff members in all
their 2365 stores
across UK (Bland and
Osterwalder, 2019).
a focus on poverty
alleviation and it was
started in the year
1942.
Scope TECSO is focussing
on achieving the laid
mission and vision
statement so that they
are able to create a
loyal base of
customers. It will
assist in long run
functioning of the
organisation.
National health
services has a wide
scope as presently they
are able to
successfully cater to
approx a number of
one million patients in
a duration of 24 hours.
In four countries
England, Scotland and
northern Ireland they
have able to achieve a
social reform.
Oxfam has a belief
that the poverty
situation is
unavoidable so there
is need to deal with
human actions. The
main aim is to work
towards sustainable
livelihood and deal
with future
uncertainties.
Purpose The main objective of
TESCO is increase the
market share to earn
higher profitability
ratio. TECSO is
willing to achieve
higher markets hare by
NHS consist of
multiple organisations
where each
organisation has their
own recruitment teams
and vacancy list.
Oxfam has major
objective to work
towards injustice that
is caused because of
inequality that is part
of society where many
people are not able to

achievement of a cost
leadership position.
afford basic health
care services.
Legal structure TESCO has a legal
structure that is
operating as company
arises out of legal
structure. In this they
are also having a
corporate governance
model that is related to
all their functions
(Foss and Saebi,
2018).
NHS is willing to enter
in acute services
contracts to provide all
the hospitality
services. The present
planning of
government health
services is to develop
foundation trust that is
assisting the society
and individuals in
Oxfam trustees are
responsible for
activities and charities
that is the governing
body for Oxfam.
M1 Analyse how the structure, size and scope of different organisations link to the business
objectives and product and services offered by The organisation.
TASK 2
P3 Interrelationship among different organizational functions
Different functional departments:
There are different functional departments that are part of a organization:
Production function: It is a function that is related to production of goods & services according
to specif customer requirements. In TESCO production function has a relationship with the
marketing and the finance department has it provides insights of the quantity of production thatr
is required to be done in the organization. (Saleh and Watson, 2017).
Finance department: In this every business organization requires some of the specified
financial resources for their proper functioning. Finance department has to provide all the
required financial resources so that overall business organization can function in a more effective
manner and there is optimum utilization of resources.
Human resource department:

HR department is responsible for the purpose of hiring candidates so that there can be adequate
talent that is part of the organization. There is requirement of proper coordination among
different departments that I marketing, finance, that assist in preparation of job description in
accordance with different job vacancies.
Marketing and sales department:
Sales and marketing department is very crucial in a organizations as managers posses direct
contact with the customers (Ahmadi, Rahimi and Rezaei, 2018). There is need of proper
interrelationship that is established between such departments and is proving the insights of
future strategies that gas to be according to expectations of customers.
Purchase function:
It is a function that is related to extraction of raw materials according to production
department of TESCO. In this
Organization Structure:
The overall organization structure has to be according to the different activities are
performed in TESCO. There are various functional departments as mentioned below:
Functional structure:
It is structure the that are associated with different functions to be performed by functional
departments such as sales and services departments.
Divisional structure:
The divisional structure is related to dividing the whole organization according to product
lines, the major objective is to divide the functions according to various product categories.

3) Matrix structure:
Matrix structure is combination of division and functional structure, that is applied in
organisation according to different product categories (Yashkova and et. al., 2016). In present
case of TESCO the matrix structure is according to various product categorises that are offered
by organisation.
TESCO is focussing on matrix structure accordance with the categories of product that are
offered by this organisation.

M2 Analyse the advantages and disadvantages of interrelationships between organisational
functions and the impact that can have upon organisational structure
There are many advantages of functional organisation structure such as it leads to higher
socialisation, reduction of workload and there is executive development as functional manager
has better expertise in different fields. In TESCO it leads to improved scope of expansion and
higher efficiency with better control provisions (Hillary, ed., 2017). The major disadvantage
associated with functional organisation structure that it is complicated and not easy to understand
because of higher technical issues that may arise because of dual command. It also leads to delay
in decision making and there is limited perspective which creates succession issues.
D1 Provide a critical analysis of the complexities of different types of business structures and the
interrelationships of the different organisational functions.
Different business structures have their own level of complexities that may affect the
overall functioning of a organisation in negative manner. There is a need to make proper
anticipation of such complexities so that management of TESCO is able to develop some
measures to deal with such complexities (Chasdi, 2017). In TESCO matrix structure sometimes
leads to potential conflict that can arise between projects and managers, authority Confusion and
there reduction of employee effectiveness. Sometimes there is also issue of high management

overhead cost that may arise if there is no proper interrelationship between different functional
departments.
TASK 3
P4) PESTLE analysis of company with their negative and positive impact
PESTLE analysis is a tool which is used with an aim to evaluate the impact of external
factors over business performance (Côrte-Real, Oliveira and Ruivo, 2017). There are several
macro environmental factors such that are related to external environment and significantly
affect overall sales and profit margin of company. In addition, this framework is essential to
prepare appropriate strategies to meet with future uncertainties and grab the opportunities of
growth and success. PESTLE analysis of TESCO is given as under:
Political factors: It is analysed that TESCO is working in several countries across the
globe thus highly affected with political condition of respective country. Brexit has bring
numerous changes in the existing policies of UK which need to be abide by company. In
addition, US and China trade war has also put a major impact on overall performance of entity.
Further, change in existing tax policies and regimes among the countries in which organisation is
operating business will also affect its sales and profit margin.
Positive impact: It makes entity enable to meet with the changes in existing policies such
as tax, foreign trade and more that is helpful to sustain in market for longer run.
Negative impact: These factors also negatively affect sales and profit margin of
organisation. With higher rate of tax rates and duties TESCO have to pay significant amount of
its profit to higher authorities.
Economic factors: There are several changes is taking place in the economy of different
countries (Dave, 2017). It is analysed that most of the of TESCO is operating in UK thus
managers need to analyse current economic environment of country and modify their strategy
accordingly.
Positive impact: Here, government also provides grants to explore business operations of
company that will further enhance its sales and profit margin.

Negative impact: It is analysed that Brexit brings several uncertainties for company and
also reduce down the buying capacity of customers which has direct impact on sales and
profitability of entity.
Social factors: In this, TESCO is operating in diversify culture of different countries. To
meet with the evolve needs and wants of consumers it has adopted digital techniques that will
enhance its presence in global market.
Positive impact: With extensive market research now managers are providing a range of
organic food to customers. It will help to attract more number of buyers thus provide an edge to
entity.
Negative impact: Here, sometimes organisation is unable to meet with the needs and
wants of customers so that TESCO has to witness extensive slow down in sales.
Technological factors: As per the current market trend, TESCO adopts new and
innovative approaches to promote products at wide level. With this, it is enable to provide better
and enhanced shopping experience to customers.
Positive impact: In this, company is using effective digital marketing practices to
promote products among international as well as domestic audience. It will further help
managers to attain predefined goals.
Negative impact: To use evolve techniques and methods organisation have to invest huge
amount that may reduce down its profit margin (Dellermann, Fliaster and Kolloch, 2017). Here,
company is looking forward to use automation that will reduce down the requirement of
manpower.
Legal factors: There are several rules and regulations which have been formulated by
government of different countries to manage business operations in an efficient manner. For
instance, Food Retailing Commissions has imposed several legislation & compliances that will
also affect business performance of entity. In addition, there are several other.
Positive impact: There are numerous laws related to employability , consumer protection
and more that will further help organisation to avoid any legal disputes that may arise in future.
Negative impact: Here, numerous challenges faced by company while applying
predefined rules and regulations in organisation ( Leischnig, Woelfl and Ivens, 2016). In
addition, it also witnessed several disputes that negatively affect the brand value of TESCO at
market place.

Environmental factor: IN this, TESCO adopt effective practices in order to protect
environment. For this, organisation applies appropriate techniques to control emissions and
manage waste generate through production process in effective manner.
Positive impact: Here, organisation is using approaches of recycling and reusing that will
further improve its brand image among customers.
Negative impact: However, it will help to protect environment but company need to
invest huge amount to apply effective approaches of environmental protection. This will further r
M3) Apply PESTLE model to undertake a detailed analysis of macro environment within an
organisation
There are several factors which are related to external environment and put a significant
impact on overall performance of an organisation (Miller, 2016). There is a model called
PESTLE is undertake to conduct external analysis. It comprises several factors such as Political,
economical, social, technological and more which are related to macro environment and can not
be control by managers. Here, it is essential to analyse the impact of these elements over
business performance in order to take necessary measure for further improvements.
TASK 4
P5) Internal analysis of company
Internal analysis is also an important factor and need to monitor on regular basis. There
are certain tools are used by organisation to undertake internal analysis. SWOT as a tool of
internal analysis is discussed as under:
SWOT analysis of TESCO
Strength Weaknesses

TESCO uses diversified product mix in order
to grab the attention of buyers. It provides a
range of groceries, general items and also
financial services to get higher competitive
advantage (Schaltegger and Burritt, 2018).
Here, company acquires higher market share in
retail industry of country with large number of
outlets at prime locations.
It is analysed that TESCO has faced several
frauds and financial scandles that will affect its
position at market place.
Recently, there is huge changes has been
witnessed in the management of company as
its CEO is going to resign which will affect its
share price and also image at market place.
Opportunities Threat
There are several opportunities are available
for company as it may expand business in
more countries to earn higher sales and
profitability.
In addition, TESCO can also use new and
evolve techniques to enhance in number of
international as well as domestic buyers.
There are several competitors such as
Sainsbury, ASDA are present at market place
that are using effective marketing and
promotional strategies to sustain for longer
period of time.
In addition, change in current trend, buying
habits of customers is also a threat for
organisation and will affect its current
performance.
SWOT analysis of NHS
Strength Weaknesses
NHS is working at large level and provide
effective health care services to nearly 1
million patients within country.
Here, it also import necessary equipments from
other countries which will further help to
provide better services to patients.
Here, because of alliance with integrated care
partnership NHS is facing difficulty to operate
functions effectively.
In addition, it emphasis to provide better
services at lower cost that minimize profit
margin of organisation.
Opportunities Threats
NHS can associated with local partners,
bodies, volunteers to enhance its reach and
There is higher threat to organisation form
local health services providers and volunteers

provide better medical facilities to individuals
within country (Schlesinger and Rahman,
2016).
In addition, organisation can explore its
operations at different locations of countries
that will provide exponential opportunities of
growth and success.
who provide effective healthcare services at
lower price.
Use of higher level technology in the field of
health care is also creating higher threats for
entity.
P6: Interrelation of strength & weakness with the external macro factors.
Basis Political Social Economical
Strength TESCO is a retail
organisation that is
complying with all the
legal regulations that
is leading to support of
different political
parties.
In Case of TESCO the
major focus of
organisation is to
launch products and
form policies
according to specific
customer expectations.
TESCO is willing to
occupy a leadership
position by offering
wide range of products
TESCO is making a
significant contribution
towards economic
development of the
countries to which they
belong by making
contribution towards
enhancement of GDP
share.

with established
quality criteria and
reasonable price
structure.
Weakness With the changes in
tax rates there is affect
in the present revenue
ratio and cost
leadership position of
TESCO.
The fast changes that
are taking place in the
demands of society
requires lot of
adjustments that have
to be made by TESCO
to survive in relation
with their competitors
such as Morrisons,
ASDA. Such as
TESCO has to launch
a complete new range
of began products on
accordance with the
changing preferences
of people towards
healthy living.
There are lot of
changes that are part of
the external
environment such as
situations of BREXIT,
COVID pandemic are
affecting the present
situation of UK and
there is negative
impact because of
changing economic
conditions.
Basis Technological Environmental Legal
Strength TESCO is having
focus on use of latest
technologies such as
they have adopted self
checkout system and
are continuously
TESCO is making
efforts for use of eco
friendly products so
that they can minimize
the usage of plastic
and contribute towards
TESCO is making
proper adherence to all
legal laws that includes
diversity act, equality
act that is assisting
them in management

making investment in
latest technology
measures.
sustainable
development.
of their workforce
without any type ODF
discrimination
practises.
Weakness With COVID
pandemic there has
been a negative impact
on present sales of
TESCO and they have
to cope up with the
increasing financial
expenses to be done on
adoption of latest
technology measures.
There is difficulty for
TESCO to have a
proper synchronicity
as the main focus is on
sustainable measures
which might impact
their future
functioning.
TESCO has to comply
with all legal
formalities so that
overall negative impact
arising out of frequent
Changes in legal
framework can be
minimized.
M4) Analyse effect of SWOT analysis over decision-making
It is analysed that internal analysis is essential to carry out in order to prepare effective
strategies and policies for future growth. SWOT analysis is a tool that is used to assess internal
resources, capabilities of company that will further help managers to take effective decisions.
Here, managers get to know about the weak points of company which need to be improved in
order to sustain at market place for longer run (Teece and Leih, 2016). By this way, managers are
able to prepare effective strategies that are essential to enlarge business. In addition, it also
provide necessary information regarding opportunities available at market place and can be used
by organisation for further growth. With this, SWOT analysis assist managers to take better
decisions in order to ensure long term sustainability of business.
D2) Evaluate the impact of micro and macro environment over business decision-making
Micro environment refers to the internal environment of organisation that includes
several resources, capabilities of company which distinguish it from others. Whereas Macro
environment is related to the external factors that can not be controlled by managers. Here,
different tools are used to asses the impact of macro as well as micro environment (Zhang and
Wen, 2017). PESTLE analysis is a framework which is carry out in order to monitor the

influence of macro environment over business. On another side, SWOT framework is carry out
for internal analysis. These tools provide extensive information to managers regarding internal as
well as external environment which will further guide managers to take effective decisions.

CONCLUSION
It can be summarized from above discussed aspects that it is crucial for transportation to
make a detailed evaluation of the various internal and external factors that are posing the impact
on their long run functioning. There is need to lay emphasis on the way future strategy
formulation can be done to overcome the weakness. Business organisations can effectively
enhance their productivity by making a detailed evaluation of the external factors and the internal
factors that constitute the overall business environment.

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