Business and the Business Environment

This document discusses the various purposes and types of diverse organizations, the scope and size of organizations, and the interrelationship among different organizational functions. It focuses on Tesco as a case study and provides insights into the business environment affecting the functioning of retail organizations.

Business and the
business
Environment
1

Table of Contents
Introduction......................................................................................................................................3
TASK 1............................................................................................................................................3
P1 various purpose & type of diverse organizations..............................................................3
TASK 2............................................................................................................................................7
P3 Interrelationship among different organizational functions..............................................7
TASK 3..........................................................................................................................................11
P4 Pestle analysis of organization along with their negative and positive impact...............11
TASK 4..........................................................................................................................................13
P5 Internal analysis of the organisation................................................................................13
P6 Interrelation of strength and weakness with the external macro factors.........................15
Conclusion.....................................................................................................................................18
REFERENCES..............................................................................................................................19
2

Introduction
Business environment consist of both macro and micro environment that affect the functioning
of a business organisation. Present report is based on Tesco to understand various factors that are
affecting the overall functioning of the retail organisation. It is having presence in UK and was
founded in the year 1934 by jack Cohen. There is discussion about different types of
organisations and their scope and size there is interrelationship between different functions of
organisation and the external environment is understood with the help of pestle analysis and
internal with the help of SWOT analysis (Puurunen, 2020). Further, there is inter-relationship
that is being understood between strength and weakness of each associated factor of macro
environment and on basis of these discussions there is conclusion drawn according to the
business environment affecting functioning of retail organisations.
TASK 1
P1 various purpose & type of diverse organizations
There a different scenario of each business activity according to the type of business like profit
making not for profit making and type of other businesses can be public sector or private sector
and voluntary sector (Yashkova, and et. al., 2016). There is a discussion of this differentiation of
different types of business according to the aspects they possess.
Type of business:
A) Profit making:
These are the type of businesses who are solely working for earning profits and monetary profits
are the major mission and objectives of the business. Examples are Regent College, Ibis hotel,
Tesco supermarket, Mercedes Benz.
B) Not for profit:
These what does resources that are set up as charities or organisations and willing to provide
services to the community according to improving the circumstances for social good. Examples
are Oxfam, British Heart Foundation, save the children, world food program.
3

Types of other business:
A) Private sector:
Private sector or those Enterprises who do not possess any governmental control or interference
and they are solely on by any private entity there are different types of private sector enterprises
as mentioned below.
Sole trader:
Meaning: Sole trader is describing a business that is controlled and owned by a single person
they may employ other workers (Saura., Palos-Sanchez and Correia, 2019)
Features: These organisations there are no separate legal existence according to the law and the
business and the owner or considered same.
Goal: Goal of this organisation is to achieve the lid on business objective by the sole trader.
Purpose: Sole traders are formed for the purpose of earning monetary profit.
Legal features: In this type of business owner is personally liable for all the debts and has to pay
losses to the business out of their own pocket this type of liability is referred to as unlimited
liability.
Examples: services like Columbus photographers there is no differentiation between the
business Example specialist and the owner or considered same and they are liable for all the
losses and profits that are taking place in business.
Partnership:
Meaning: Partnership Act 1890 defines partnership as the basic relation that forms between
persons who are dealing in the similar business with a view of earning profit.
Features: It is formed when there is more than one person involved in a particular type of
business.
Goal: The overall goal in all partnership form of business is to earn profit.
Purpose: Partnership form of business organisations will always formed with a purpose of
sharing the roles and responsibilities in order to achieve their down business objectives.
Objectives: Partnership form of business organisations is to maximize the profits and minimise
the liability according to the partnership deed.
4

Legal features: Partnership Act 2002 has made it legal that there is requirement of sharing skills
and workload among all the partnerships.
Examples: Solicitors doctors are examples of professionals who are always up for partnership
type of business by sharing the expertise they possess.
Private limited company:
Meaning: A private limited company is a business or organisation that is independent retailer in
a particular market. There’s not reading on the stock exchange.
Features: Limited companies are always independent and government not possess any control
on the functioning of these companies.
Goal: The main goal of private limited company is laid down in the mission and vision objective
of the business organisation that they are willing to achieve apart from the monetary profit.
Purpose: Usually large scale Private Limited organisations are form for the purpose of providing
Employment to people and contributing towards the development of economy (Barrand et. al.,
2018).
Objectives: Every Private Limited organisation is to work as a independent retailer and do not
posses liability of all their decisions to be made in the organisation.
Legal features: There are certain legal features that are part of private Enterprises are all the
rules according to memorandum of association that have been formed in these companies and
there are written rules that help in governing the overall functioning.
Examples: Sainsbury and Tesco are retail organisation of UK. The main objective of retail
organisations is to enhance their sales and increase the profitability by offering quality products
to the target market.
B) Public sector
Meaning: A public limited organisation is that in which there is a well known Business and Its
shares are always traded on stock exchange.
Features: Organisations are controlled by government institutions trustees and local authorities.
All the stakeholders can possess a complete influence on overall work in performance and
conditions of public organisation.
5

Goals: The goal of public sector organisation is to maximize the Welfare towards people of the
society and apart from monetary profit to achieve some non-monetary objective.
Objectives: Public sector organisation is to contribute positively towards development of the
society.
Purpose: Main purpose of public sector like NHS organisation is to provide Medical Services to
poor people so that they are able to improve their living standards.
Legal structure: Legal structure of public organisation is related with all activities been in the
control of government. Central government has the power to take the session and they have to
follow proper regulations and rules without any delay. Also, it has a limitation related to
participation of staff members and making some efforts to maximize their contribution
(Viriyasitavat, Da Xu, Bi, and Sapsomboon, 2018).
Example: National Health Services is a public organisation that is having a main objective and
purpose to provide Healthcare services to people who are belonging to the below poverty line.
C) Voluntary organization:
Meaning: Voluntary organization are controlled or directed by government. These are activities
that have to be implemented by volunteers according to improving the social conditions.
Features: Voluntary organisations are made up with a vision to enhance the living standards of
the people were living in society.
Goals: They have a goal to take initiative that can help in improving the conditions of people
living in extreme conditions of poverty.
Objectives: The main objective of voluntary organisations is that they are willing to implement
activity according to Welfare of people.
Purpose: The main purpose for voluntary organisations are from is to make society a better place
to live.
Legal structure: The legal structure of these is managing by top level and there are for the
trustees who are responsible for executing different functions and providing the financial
resources.
Example: Oxfam is a Voluntary organisation that is formed with the objective motor and
purpose to work towards reduction of poverty and helping people who are living below the
poverty line.
6

Summary: There are many different types of organisations like public private and voluntary each
having different purpose objective goals and according to their legal structure have been defined
by the government of every country. All these organisations are helping in smooth running of a
country by helping in economic development providing employment opportunities and helping
in increasing the living standards of people in society (Kasemsap, 2018).
P2 Explain scope & size of organisation
Different types of small, medium and large organisations:
Small Medium Large
Meaning Organisations that are
employing employees
between 10 to 49
employees are
classified as part of
small enterprises.
There are
approximately 5.6
million such
enterprises in UK.
These enterprises are
those that are
involving less than
250 employees.
Large organisations
are employing more
than 250 employees in
an organisation.
Goal These are formed for
purpose of specific
objectives. Example:
Bright star financial
who are engaged in
late life lodging and
residential mortgages.
Smith brothers are a
contracting business
of UK. It was founded
by John smith and
Richard in the year
1999.
Tesco is a large
organisation having a
vision of becoming
biggest retail brand in
coming period of 5
years.
Market share They are having
limited market share
as they are focusing
on specific products
They have presence in
UK and also
expanded their market
share by launch of
They are having
presence in Europe
and Asia along with
this they also have a
7

categories and they
have established only
10 years ago that is in
the year 2011.
new products in their
Irish division in year
2016 and 2017.
market share in
Ireland, UK, Thailand
& Hungary.
No. Of products and
services
They are offering
financial services like
later life lending.
They are offering
several services
related to construction
and renewable energy
sectors.
There is a vast range
of product categories
like clothes, furniture,
internet services and
financial services.
Legal structure They are having a
hierarchical structure.
They are having a top
management and a
team working towards
their specified goals.
They have a matrix
structure.
Stakeholder size Internal stakeholder
size consists of three
founding directors and
approximate strengths
of 100 in total.
Stakeholder size
consists of
approximately 200
employees and
owners, directors.
There is a stakeholder
size of 450, 00000.
Employees Number They are having 50
employees in number.
They are having a
team of approximately
100 multi disciplined
engineers.
7000 employees are
working in Tesco.
Profit volume They have a 71
percent profitability
ratio.
They are having a
high profitability
ratio.
Tesco is having profit
of 300 million in year
2019.
Sales Earnings are more
than 35000 pounds
every year.
40 million pounds
was their turnover in
year 2017-18.
63.911 billion pounds
is turnover of Tesco in
year 2018.
Geographical
location
Presently they only
cater to three specific
sites of UK
They are Elland based
and having a
nationwide client
They are having
presence across 3400
locations worldwide.
8

base.
Above discussed is the classification of small, medium and large enterprises that are
present in UK.
9

Private Public Voluntary
Size Tesco is one of the
largest private
employer of UK. They
are employing
approximately 250,000
staff alone in UK and
367,000 staff across
different parts of the
world in their 2365
stores.
NHS is a public sector
organisation that is
employing
approximately 1.6
million people and
they have a workforce
of 2,165,043 across
UK.
Oxfam is a voluntary
organisation that is a
confederation of 19
independent charitable
organisations that is
having focus on
alleviation of global
poverty and it was
founded in the year
1942. it is a major non
profit group.
Scope Tesco is focusses on
achievement of their
laid down mission that
is to create a value for
their customers and
earning high amount
of loyalty that can help
them in long run
functioning and
earning high
profitability.
NHS has a high scope
as they are able to
cater to requirement of
one million patients in
every 24 hours and
they are having a
objective of bringing
social reforms in four
major locations like
England, Scotland,
Wales and Northern
Ireland.
Oxfam believes that
powerlessness and
poverty are avoidable
situations that can be
eradicated by human
cations. They have a
belied for right to
sustainable livelihood.
They have a major
mission to reduce the
inequalities prevailing
between rich and poor
countries and this is
the major reason they
are having a wide
scope for future
possibilties.
10

TASK 2
P3 Interrelationship among different organizational functions
Different functional units in organisations:
Figure 1Functional organisation structures
Production function:
Production function is related to producing goods and services according to the requirements of
different customer segment in the target market. Production function is perform in Tesco where
there according to the requirements of customers this function is having a strong internal
resistance is with other functional units of organisation as it helps finance function to maximize
the effectiveness of managing inventory and sales department in Planning their future sales target
(Eling and Schaper, 2017).
Finance department:
11

Every business organisation requires financial resources for their functioning. In case of
Tesco also there is finance department that provides finance to all the other functional
departments and help in maintaining the effectiveness in overall functioning. The functional unit
is having relationship with marketing department as it has in smooth running of all the marketing
campaigns. It also helps the research and development department in utilising the available
resources in making detailed research of the primary market.
Human resource department:
Human resource Department is concerned with hiring competent and talented employees in
an organisation. Human resource department of Tesco make efforts to make the competent
individuals apply for various vacant positions so that there can be skilled workforce in the
organisation (Chasdi ,2017) . This department has an interrelationship with all the other
departments as it helps in hiring the individuals according to requirement of specific skills that
and competence for performing the functions specified by these functional organisation.
Marketing and sales department:
Marketing department of every organisation is one of the most crucial as they have the direct
contact with the potential and present customer base of the market. In Tesco, Marketing
department helps in utilising the available competence by running campaigns on social media
platforms and digital media sources so that they are able to attract more customers. There is
always a interrelationship between different functional departments like sales department and
marketing department are highly interrelated as they co-ordinate and help in maximization of
sales and minimization of stock inventories.
Purchase function:
Purchase function is related with extracting raw materials according to the demands of the
sales and production department of organization like Tesco. Department has in relationship with
all other departments like marketing as Marketing department has to convey the information
according to which forecast are made by purchase department for future production activities.
Organization Structure:
12

The structure of organisation is defined by different functions and activities that are
allocated to these departments:
1) Functional structure:
Functional structure is related with providing the organisation according to functions like
Marketing department sales department and Services Department.
Figure 2: Functional organisation structure
2) Divisional structure:
The Divisional structure is related to dividing the organisation of adding two different types of
product line (Eling and Schaper, 2017). The main objective of the Divisional structure is
providing organisation according to the product categories that are being manufactured by
organisation.
13

Figure: 3: Divisional organisation structure
3) Matrix structure:
Matrix structure is combination of Divisional and functional organisation structure. In this
there is use of functional department along with division of products categories.
In present scenario of Tesco, there is use of matrix organisation structure as organisation has
several divisions according to the functions and also according to various product categories that
are being offered by this organisation.
14

Figure 4Matrix organisation structure
TASK 3
P4 Pestle analysis of organization along with their negative and positive impact
Pestle analysis
Pestle Analysis refers to study of external or macro environment of a business and all the
factors in that environment that is having an effect on activities and operations in a business.
Tesco is a British brand and multinational retailer company (Hillary, 2017). It is one of the
largest retailer brands in retail supermarket all around the world. The analysis contains all the
political, legal, social, economic, environmental and technological factors which are affecting
Tesco. Below mentioned is the analysis:
Political factors: There are a number of countries in which Tesco is dealing. There are a number
of different political factors in a number of countries which are affecting operations in the
company. This includes all the tax rates, legislations, and stability in political parties,
economic condition of the countries and so on.
15

Positive effect- There are a number of political factors such as tax benefits, integration of
different economies and good relations with the political parties leading in the countries in
which Tesco deal might be a positive factor and affect the operations of Tesco positively.
Negative effect- however various different taxes and laws such as import duty can affect the
profits of Tesco and negatively affect Tesco as there are some inventory which Tesco imports
from China and East Asia (Khajeheian, Friedrichsen and Mödinger, 2018).
Economic factors: Economic factors refers to all the economic conditions in an economy. This
includes foreign exchange rate, interest rate, gross domestic product of an economy,
inflation and a number of such factors which can have an effect on operations of Tesco.
Positive effect- The increased borrowing cost in United Kingdom has proved to be a profit for
Tesco. This have positively affected Tesco by affecting its cost leadership and also
enhancing its brand reputation.
Negative effect- it has been seen that Tesco uses diversification strategy in order to grow and
expand its business. Still the company depends upon the grocery market of United Kingdom
for most of its profits. This proves that other economies are not beneficial for the company.
Social factor: Social factor refers to various trends and changing behavior pattern of consumers
in the market which are affecting the operations in our company. This also relates to culture
in which the companies dealing.
Positive effect- It has been seen that people are moving towards healthy eating and healthy
living. Company can effectively use this social change and enhance its revenues and profits
by providing health products.
Negative effect-Due to changing needs and demands of customer it is necessary for Tesco to
invest in marketing strategies and also market research. If the company is unable to get the
pattern of consumer behavioral change it might lead company into losses.
Technological factors- Due to all the changes in the technological factors coming at economy
these days it is related to all the companies and every company need to be technologically
advanced in order to work effectively.
Positive effect-Tesco introduced RFID technology in their stores in order to enhance the
experience of customers in their stores which have positively affected the profits of the
company.
16

Negative effect-However there have been a number of technological advancements brought by
company which required huge investment and were not a success in company.
Legal factors: Legal factors related to all the legislations by government which affect the
performance of business and activities in an organization
Positive effect- Tesco can gain profits by effectively using all the laws introduced by food
retailing commission in the legislation.
Negative effect- Tesco has faced a number of legal actions for misleading inventory is,
accounting fraud and so on which required huge investment by companies profit to settle these
legal actions (Salehand Watson, 2017).
Environmental factor: Environmental factors relates to all the factors which an organization
needs to address regarding the environmental issues.
Positive effect- Tesco is using renewable sources for energy and have also minimized its carbon
footprint which is enhancing the brand image of Tesco in the market.
Negative effect- Use of natural resources by Tesco and paper and plastic bags left by Tesco in the
environment has a negative and effect on environment as well as Tesco’s brand image.
TASK 4
P5 Internal analysis of the organisation
Tesco SWOT Analysis:
Strength: Weakness:
1) Tesco is one of the biggest retailers of UK
according to the annual report of year 2018.
2) Tesco has a diversify product ranges and
they are one of the largest private employer of
Europe offering 743 K job opportunities across
1) Tesco is having a low cost strategy to
become the price leader and also working
towards minimization of their cost. The
sometimes lead to negative impact on their
present level of profit margin.
2) Tesco has the poor operational performance
17

different parts of the world.
3) There is a supply chain network of Tesco
and they are making use of optimal
Technology Services like RFID technology
and use of barcode system.
and they are having specific target market.
Opportunities: Threats:
1) Tesco discount store likes Jack and they are
having opportunities of for the Business
expansion.
2) There use of strategic partnership to offer an
excellent opportunity for Tesco to attract new
customers.
1) Tesco faced high backlash because of the
Christmas advertisement and many people
boycotted their store this incident had a
negative impact on the brand image.
2) There is a future possibility of increasing
competition because of the strategies adopted
by other retail markets like ALDI, Wal-Mart
and Morrison that is leading to huge threat on
the present market leadership position of
Tesco.
Sainsbury's SWOT Analysis:
Strength: Weakness:
1) Sainsbury's having a very diverse and
brought product that is helping them in getting
a leadership position according to the diversity
of products.
2) Sainsbury's can work towards attracting
more customers and developed a trained
workforce according to the present scenario.
1) Sainsbury's limitation to different parts in
UK only and comparison with other retail
brands like Tesco and Morrison they are not
able to get a huge market share.
2) Sainsbury's how is not been able to establish
themselves successfully in some of the present
market and this has lead to limited share of
18

market.
Opportunities: Threats:
1) Sainsbury's can make a force to utilise the
available Database from their potential
customer and then use attractive strategies of
marketing like social media campaign.
2) Sainsbury's product development strategy to
expand their portfolio of products.
1) Present spread of covid-19 virus has lead to
negative impact on the sales of all retail
grocery stores and this is going to impact them
in long run.
2) There is requirement to deal with the risk of
investing in new categories of products of
tourism and travel industry enhances their
survival.
Summary:
From the above discussed SWOT analysis of Tesco and Sainsbury it can be said that these are
two brands that have successfully able to established themselves and there are further more
opportunities of expansion that are available for these brands. Further, they have also been able
to utilise the available opportunity that are part of their external macro environment.
P6: Interrelation of strength & weakness with the external macro factors.
The interrelation of strength & weakness with external factors is defined below:
Basis Political Social Economical
Strength Tesco is able to follow
all the rules and
regulations that have
been formed by the
government in the
country which they are
functioning. It helps in
getting a support from
When of Tesco is
concerned towards
maintaining
Expectations and
demands of their
customers this is
something that has
helped them in
Tesco revenue
contributed to 52
billion Pounds and
they are contributing
towards development
of economy of UK.
19

political parties and
government to
smoothly carry all the
functions and
operation.
maintaining a specific
quality of their
products.
Weakness There increase in
policies of tax rates
leading to reduction in
the profits of Tesco.
There is a complete
change that is taking
place in the needs and
demand of prospective
customers in Tesco
that people are having
preferences towards
organic food. For
those Tesco has to
make lot of investment
recently in launching a
new vegan Product
range.
There have been
complete change in the
economic conditions
because of the brexit
referendum that took
place in UK and this
has affected the
functioning of all
detail organisations
including Sainsbury’s,
ALDI, Morrison’s and
Tesco.
Basis Technological Environmental Legal
Strength Tesco believes in
using the latest
technology and
recently they have
adopted the self
checkout system that
is a big innovation as
compared to the
traditional payment
Tesco has made efforts
in using eco friendly
products and they have
also made efforts in
reducing the use of
plastic so that they are
able to make a
contribution towards
sustainable
Tesco is following all
the difference
regulations and legal
laws like equality and
Diversity act, anti
discrimination act that
is helping them in
developing a positive
brand image for their
20

system. development. customers.
Weakness Tesco has to make
large amount of
financial investments
because of rapid
changes that are taking
place in adopting latest
technology this
sometimes leads to
affecting the financial
position of the
organisation
It becomes very
difficult for
organisations like
Tesco to develop a
synchronisation
among their objectives
of maximizing the
profit and leading a
hand towards
sustainable
development. Because
measures of adopting
eco friendly practices
also involves high
amount of cost and
this affects the
objective of earning
higher profitability.
Tesco is bound with
legal formalities that
have to be fulfilled and
it has a negative
impact on organisation
and their employees
sometimes are they
feel that the flexibility
of working is affected.
There are lot of
frequent changes that
are made in the
policies of
organisations and it
leads to higher
resistance from
employees.
21

Conclusion
The above report concludes that it is important for every organisation to make sure that they
conduct a proper analysis of internal as well as external environment in which an organisation is
working. It is necessary to critically analyse these environments including the competitive
factors in the environment so that the business can effectively form strategies and gain all the
external opportunities which are present in business. With the help of this analysis business can
also eliminate the weaknesses and threats in the business. This will help the business in
effectively achieving all the goals and objectives of the business in the stipulated time period.
Businesses can effectively enhance their productivity, profits as well as revenues by analysis of
all these factors.
22

REFERENCES
Books & Journal
Barr, T.L. and et. al., 2018. Development of indigenous enterprise in a contemporary business
environment–the Ngāi Tahu Ahikā approach. Journal of Enterprising Communities:
People and Places in the Global Economy.
Chasdi, R.J., 2017. Corporate Security Crossroads: Responding to Terrorism, Cyberthreats, and
Other Hazards in the Global Business Environment. ABC-CLIO.
Eling, M. and Schaper, P., 2017. Under pressure: how the business environment affects
productivity and efficiency of European life insurance companies. European Journal of
Operational Research, 258(3), pp.1082-1094.
Eling, M. and Schaper, P., 2017. Under pressure: how the business environment affects
productivity and efficiency of European life insurance companies. European Journal of
Operational Research, 258(3), pp.1082-1094.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge
Kasemsap, K., 2018. Mastering business process management and business intelligence in global
business. In Global Business Expansion: Concepts, Methodologies, Tools, and
Applications (pp. 76-96). IGI Global.
Khajeheian, D., Friedrichsen, M. and Mödinger, W., 2018. An introduction to competitiveness in
fast changing business environment. In Competitiveness in emerging markets (pp. 3-11).
Springer, Cham.
Puurunen, 2020. A hybrid SWOT analysis of the neuromodulation process for chronic
pain.British Journal of Neuroscience Nursing,16(2), pp.76-85
Saleh, A. and Watson, R., 2017. Business excellence in a volatile, uncertain, complex and
ambiguous environment (BEVUCA). The TQM Journal.
Saura, J.R., Palos-Sanchez, P.R. and Correia, M.B., 2019. Digital marketing strategies based on
the e-business model: Literature review and future directions. In Organizational Transformation
and Managing Innovation in the Fourth Industrial Revolution (pp. 86-103). IGI Global
Viriyasitavat, W., Da Xu, L., Bi, Z. and Sapsomboon, A., 2018. Blockchain-based business
process management (BPM) framework for service composition in industry 4.0. Journal of
Intelligent Manufacturing, pp.1-12
Yashkova, E. V. and et. al., 2016.Development of Innovative Business Model of Modern
Manager's Qualities.International Journal of Environmental and Science
Education.11(11).pp.4650-4659.
23