Influence of economic environment on business activities

BUSINESS ENVIRONMENT INTRODUCTION 1 TASK 11 P1 Types of two contrasting business, their purpose and ownership. 2 TASK 23 P3 How two contrasting businesses are organised.3 P4 Style of organization helps to fulfil their purpose5 TASK 36 P5 Influence of economic environments on business activities 6 TASK 46 P6 Impact of political, legal and social on business activities and stakeholders 6 CONCLUSION 8 REFERENCES 9 INTRODUCTION Business Environment refers to the collection of various individuals and many

UNIT 1. BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Types of two contrasting business, their purpose and ownership.....................................1
P2 Different stakeholders who influence the purpose of two contrasting businesses............2
TASK 2............................................................................................................................................3
P3 How two contrasting businesses are organised.................................................................3
P4 Style of organization helps to fulfil their purpose ............................................................5
TASK 3............................................................................................................................................6
P5 Influence of economic environments on business activities.............................................6
TASK 4............................................................................................................................................6
P6 Impact of political, legal and social on business activities and stakeholders....................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business Environment refers to the collection of various individuals and many other
factors, which is sometimes controllable or non- controllable but have the power to affect the
performance and growth of the company. It consists of both internal as well as external
environment which have the power to influence the working culture of an organisation. It
includes various factors like employees, customers, competitors, clients, government activities
and many more (Ayios, 2018). In this report, Marks & Spencer along with NHS has been chosen
as the base company. Marks & Spencer is a profit based organisation and on the other hand NHS
is a non-profit based organisation. In the context of present report, it has been discussed about
different types of business, its purpose and ownership of two different organisation. With this, it
also discuss about how business achieve their purpose and the impact of environment on
business entity. At last, how political, social as well as legal factor affect the company has been
discussed in this report.
TASK 1
P1 Types of two contrasting business, their purpose and ownership.
Two business enterprises have been selected which is Marks & Spencer (M&S) as a
profit organisation. In addition to this National Health Services (NHS) has been taken as non-
profit organisation.
Marks & Spencer: It is a British multinational retailer company and a part of tertiary
sector, which operates its business activities at global level. Its headquarter is located in
Westminster, London. M&S deals in middle east Asia and in Europe. It is a public limited
company, which means every individual can by its share and on the other hand limited means it
has limited liability. Part of tertiary sector means that M&S provide various services in the form
of selling clothes, groceries, home products and many more (Brown, 2018).
Purpose: Main purpose behind M&S is to provide products and services to their
customers across the world. It is a profit driven company which ensure that their sales cover all
its running costs. Running cost refers to those cost which an organisation need to spend in order
to make operational activities. Main aim of the company is to provide high quality products to
their customers at very fair cost.
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Ownership: Marks & Spenser is a private company which is owned by the shareholders.
On the other hand, shareholders of the company do not run the business as they hire senior
management team. At present the current chairperson of the company is Steve Rowe who was
appointed in the year 2016. Steve Rowe ensures that all the board meeting run in an effective
way and achieve the ultimate goal of the company (Calabrese and et. al.,2018).
National Health Service: It is a non-profit organisation and is fully owned by the
government. In the year 1948 it was established by labour government and is mainly run by
utilising taxation money. It is a part of tertiary sector which means it provide service to general
people of the country.
Purpose: Purpose behind this organisation is to provide high quality service or care to the
individual person. NHS appoint doctors and other professional and by using funds from taxation
they pay all their running costs. In this context, running cost include medicines, buildings, staff
members and many more.
Ownership: NHS is fully owned by the government as it is a public company. It is a non-
profit organisation with the aim of providing effective care and services to the needy people free
of cost. Department of Health which is guided by the Secretary of State for Health is mainly
responsible for all the activities provided by NHS. From April 1st NHS England and NHS
Improvement join together and act as a single organisation with the main aim to provide better
service and care to their patients (Charter, 2017).
P2 Different stakeholders who influence the purpose of two contrasting businesses.
Stakeholder is a group or individual person who is mainly impacted by the result of a
particular project. There are internal as well as external stakeholders which affects the overall
working of an organisation. Internal stakeholder is someone who is interlinked with the
organisation internally. On the other hand external stakeholders are those who are not the
internal part of the company. There are various types of stakeholders in a profit base organisation
which is discussed as below:
Marks & Spencer: It is a British multinational company founded by Michael Marks and
Thomas Spencer in the year 1884 in Leeds. Company have Approximately 979 stores across
UK. Various stakeholder which influence the purpose of business organisation. Some of them
are as follows:
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 Customers: They are the people who ultimately consumes the products and services
offered by them. Customers are the end user of those products which are offered by M&S
in order to satisfy there needs and wants and in return earn profit. Customers want the
company to produce high quality products. In addition to this, they have the power to
influence the profitability of M&S by deciding whether they continue to buy these
products or not (Edgington, 2018).
 Owners: They are the shareholder of the company who have keen interest in the profit of
the company. They are the most important part for an company as they invest their
money and time to make it successful. Shareholder have the power to take decisions and
to look after the profits, company earn. Positive influence can be they are motivated and
invest more money but on the other hand they can be demotivated if company do not earn
enough profit. As a result they start investing their money in a more successful company.
National Health Service: It is a non-profit, public organisation which is fully owned by
the government. It was established in the year 1948 by labour government. NHS is mainly
operates its functionality by proper utilising the tax amount. There are some stakeholder which
influence the overall purpose of the business entity. Patients: They are the customers for NHS, as they consumes the services provided by
them. Main purpose of NHS is to provide satisfactory services or care to individuals. If a
customer or patient is not satisfied by the services offered by them, they start promoting it
in negative way. As a result, patients can influence the purpose behind establishing the
organisation (Eling and Schaper, 2017).
 Tax-Payer: NHS is a government owned company, operates its activities by utilising the
taxation amount as a fund for better functioning of regular based words. If individual of
the country pays their tax properly and on regular basis, it will aid NHS to provide good
quality services to their patients. As a result, tax-payers can influence the working or
purpose of the organisation.
TASK 2
P3 How two contrasting businesses are organised.
Marks & Spencer's:
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Organisational Structures: Every business organisation have some pre-determined
goals and objectives for which they perform their business operations. Size of the structure of the
organisation depends upon the overall size of the company. M&S is a large scale organisation
which operates its business operations at global level.
Purpose: Main purpose behind organisational structure is to achieve their goals and
objectives in an effective manner (Hamilton and Webster, 2018). It has to be appropriate in order
to attain maximum performance from their employees. There are some elements for which
organisational structure has to be formulated. Division Of work: According to the performance, capabilities and skills of the
employees, work should be divided between various departments. In order to achieve
maximum output, managers of M&S divide roles and responsibilities according to the
employees efficiency.
 Communication: It is one of the crucial as well as important method used by the
managers of the company. Communication is necessary for an organisation in order to
pass any information or decision within the company. In context to M&S, managers of
the company communicate with their employees on regular basis which reduces conflicts
and increase the efficiency of workers.
Types of Structures:
Functional: In an organisation, different departments are divided on the basis of their
qualification, technological knowledge. In M&S, business is divided into various departments
which includes HR, finance, marketing and so on. Company have a clear and efficient structure
which aid them to achieve their objectives and goals. As a result each department formulate
plans and implement them in order to accomplish the overall organisational goal (Hansen, 2018).
Marks & Spencer follows flat organisational structure, as this structure is applied in order
to motivate their employees. Each department aid the company in accomplishing the
organisational goals in an effective and efficient manner.
National Health Services:
Organisational Structures: Business entity have some pre-determined goals for which
they perform different organisational functions. Organisational structure mainly depends upon
the size of the company. NHS is a large scale company who provide various services related to
healthcare, medical facilities and many more.
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Purpose: Major aim or purpose behind organisational structure is to accomplish their
goals. Purpose of NHS is to provide free services to those individuals who are unable to get
treatments, medicines and other medical facilities. Some of the major elements for which
organisational structure has been formulated are as follows. Division Of work: Each and every people should assign according to their performance,
capabilities and skills. In the present context of NHS, duties and responsibilities are given
on the basis of the capabilities of staff members (Huang-Horowitz, 2015).
 Communication: It is one of the most important method used in every organisation in
order to transfer or pass any information or decision within organisation. In context to
NHS, it is the duty of the leader or manager to communicate properly in order to
eliminate any hurdles.
Types of Structures:
Functional: In every organisation whether it is profit based or non-profit based, is
divided in various departments in order to achieve the overall organisational goals. In the present
context, NHS organisation is divided into various different departments which includes primary
care, dentists, opticians and many more.
NHS follows functional organisational structure, as this structure aid to organise staff
members and workers. Each department help in accomplishing organisational goals in an
effective manner.
P4 Style of organization helps to fulfil their purpose
Marks & Spencer's: As per the above details it has been analysed that Marks & Spencer
follows a flat organisational structure. This organisational structure have limited level of
managements as a result this structure encourage staff members to involve more in decision
making process. In addition to this, due to less management levels communication flow becomes
easy between top level managers and employees of the company (Hunter, Saunders and
Constance, 2016). As a result, organisational productivity will be increased and on the other
hand communication barriers can be decreased. In addition to this, it will aid the company in
achieving organisational goals in an effective manner.
Main purpose of M&S is to provide high quality products and services to their customers.
In order to satisfy the requirements of customers, proper organisational structure should follow.
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Using above mention organisational structure in an effective manner company can effectively
achieve their purpose.
National Health Services: As per the above details it has been clear that National Health
Services follows a functional organisational structure. It is a hierarchical organisational structure,
where groups are formed according to their area of specialisation. In addition to this, individuals
are managed and directed by a functional manager along with an expert. Expert utilize the skills
of employees in an effective manner and s a result company can achieve its business purpose.
Each and every department in the business have a departmental head who is responsible for the
performance of that particular department (Jenkins and Williamson, 2015). Also, organisational
productivity will be increased and in addition to this, it will help the organisation in achieving its
goal in an effective manner.
Main purpose of NHS is to provide high quality services which will satisfy the needs of
patients. Main aim of NHS is they provide free services to those who are unable to get treatments
and other medical facilities. By adopting above mention organisational structure in the
organisation in an appropriate or effective manner company can effectively achieve their
purpose.
TASK 3
P5 Influence of economic environments on business activities.
There are ample number of factors under economic environment that basically have
impact on the business activities of Marks & Spencer. Some of the factors influencing the
business activities are described below:-
Interest rate – Interest rate factor put major impact on business operations. If the interest
rate of economy is high than the business have to borrow capital at the increasing rate and
companies will produce products and services at high cost and sell them at higher prices
(Pearson, 2017). Whereas, when the rate of interest is low than companies are able to borrow
capital at cheap rates and produce the products and services at cheap costs. In the context of
Marks & Spencer, if the interest is in higher in Singapore as compared to markets of UK than
the managers of company will conduct its business operations in UK as the production cost will
be less and consumers will get products at low rates.
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Income- This is the most essential factor in the economic environment of customer's. It
shows the purchasing power of customer's for the products being sold by the company. So, the
production should be done according to the spending ability of customers. If the income level of
consumers of UK is more than the consumers of Singapore than managers of Marks & Spencer
will produce the products as per the purchasing power the customer's of the countries. As, it will
help to increase the customer's in the markets of both Singapore and UK (Schaltegger, Lüdeke-
Freund and Hansen, 2016).
Inflation- This is the essential economic indicator for the economy. This term refers to
increase in prices which results in the decrease in the purchasing power of customer's. If there is
low inflation rate than the cost of production for Marks & Spencer will be low and sold at lower
prices Whereas, if there is high inflation rate than the production cost will be increased which
will lead to decrease the purchasing power of customer's of Marks & Spencer. To overcome this
situation the managers of Marks & Spencer should focus on expanding its capabilities and
increase their level of supplies (Sodeyfi, 2016).
Exchange rate- It is important driver towards the performance of the company. Marks &
Spencer should export more products when the exchange rate is weaker than the importing
country. Exchange rate is very important factor, as managers of Marks & Spencer now focus on
locating manufacturing and distribution centres where the exchange rate for currency is less.
TASK 4
P6 Impact of political, legal and social on business activities and stakeholders.
Marks & Spencer's:
Political factor: Political factors involves government intervention like rules, regulation,
various norms and many more. In the present case, political factors affect business environment
of Marks & Spencer. If company wants to expand their business operations, government rules,
regulations should be analysed in order to grab opportunities of different country. Stakeholders
and business activities affect in positive as well as in negative way. If company gain competitive
advantages by adopting regulations of different countries, stakeholders influence to invest their
money in the company (Ketata, Sofka and Grimpe, 2015).
Legal factor: Regarding employee and customer of Marks & Spencer, there are various
laws and legislations faced by a company. Impact of legal factor on business activities and
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stakeholders will be affected in both positive as well as in negative manner. Company gain more
profit if government reduces taxations and on the other hand stakeholders invest more if
company earn more revenue.
Social factor: Social factors includes values, traditions, beliefs and many more. Social
factor play's very important role in demographic sector as changes occur on constant basis. In
context to Marks & Spencer, fashion clothing demand are high which as a result create
opportunities for the company. Changing preference can negatively affect the business activities
but on the other hand if company easily adopt changes then they attract more investors to invest
(Lee and Shin, 2018).
National Health Services:
Political factor:Political factors includes various rules, regulation and many more. In the
present case, political factors affects business environment of NHS. In order to expand voluntary
organisation in different country, government rules, regulations should be examined in order to
grab opportunities. Organisational activities should be affected in positive as well as in negative
manner. If organisation gain advantages from the government of country, more and more NGo's
will be opened in order to develop society, by supporting orphan children (Morrell, 2017).
Legal factor: In context to staff and patients of NHS, there are various laws and
legislations faced by the organisation. Impact of legal factor on its operational activities and
stakeholders will be affected in both positive and negative manner. Organisation gain more funds
if individual start paying tax on time. On the other hand stakeholders invest more if organisation
start adopting legal policies formulated by government. Legal policies such as Health and Social
Care Act 2012, Equality Act, 2010 and many more .
Social factor: Social factors consist of values, traditions, beliefs of an individual. It
play's very important role in demographic sector as changes occur on constant basis (Oriesek and
Schwarz, 2016). In reference to NHS, if company perform in a positive manner and satisfy the
requirements of society, goodwill of NHS will be increased as a result stakeholders invest more
in the organisation.
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CONCLUSION
As per the above mention report, it has been concluded that, different types of business
are there in the external environment. In this report, Marks & Spencer is taken as profit based
company but on the other hand non-profit organisation is NHS. In order to avoid any conflict,
miscommunication in the organisation, managers adopting various organisational structure. In
this report, M&S adopt flat organisation structure and NHS is using functional structure in order
to fulfil all the pre determined purposes. On the other hand, main purpose of the companies is to
satisfy customers needs and requirements and gain competitive advantages. As a result company
get higher profitability and market share. Along with this various factors affects the business
operations of an organisation.
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