Macro Environmental Influence on Business Operations

This document discusses the types and purposes of different organizations, the size and scope of various organizations, the relationship between different organizational functions and their link to the organizational structure, and the positive and negative impacts of the macro environment on business operations.

UNIT 1 Macro
Environmental Influence

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
P1 Explanation of types and purposes of different organisations................................................1
P2 Explanation of size and scope of a range of different types of organisations........................3
Task 2...............................................................................................................................................5
P3 Determination of relationship between different organisational functions and their link to
organisational structure................................................................................................................5
Task 3...............................................................................................................................................7
P4 Identification of the positive and negative impacts the macro environment has upon
business operations......................................................................................................................7
Task 4 .............................................................................................................................................9
P5 Conduct internal and external analysis of specific organisations for identifying strengths
and weaknesses............................................................................................................................9
SWOT analysis of Wellcome Trust ..........................................................................................11
P6 Explain how strengths and weaknesses interrelate with external macro factors..................11
CONCLUSON...............................................................................................................................12
REFERENCE ................................................................................................................................13

INTRODUCTION
The sum and total of internal and external factors that are related to Business
environment mainly involves employees, customers, supply and demand, management and
clients is defined as business environment. Whenever someone plans to establish their own
business then they are required to follow some regulations which are made by government and
companies act in order to operate the business (Thompson, Strickland and Gamble, 2015). The
types of business sector are public, private and voluntary that are operated for the different
purpose and manages the activities. It is important for management to analysis the needs of
people and make plans accordingly so kind of products and services can be provided to
customers. The basis of report is River Island that is based on high street fashion brand in
London, UK. This organisation set up in 1948, by Bernard Lewis and its brother. This report
will help to understand how organisation are operating their business in different sector and how
they manages. The topics are covered in project are size, types and scope of organisation,
interrelationship of various function within organisation, positive and negative influence macro
environment and internal strength and weakness of specific businesses by showing
interrelationship.
Task 1
P1 Explanation of types and purposes of different organisations
The environment is the combination of different organisation who contributes in different
manner and organise all the activities. For starting any business there is required to analysis the
purpose, regulations and demographic level that can help to establish a business effectively and
complete the task. The types of organisation sector combining with purpose and legal structure
are as defined:
Public sector (Science and Technology Facilities Council): This means a corporation
whose ownership is distributed among general public shareholders by using free trade of shares.
This can be said government company where all decision are taken for welfare of public and
operated under the government regulation. This is funded by government so that people can get
good products and services (Wood and Logsdon, 2017).
Purpose: The purpose of public company is to understand needs of people who are living
in a society and provide them products and services. The purpose of STFC is to support
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university based research, innovation and skills development in particle physics, space science
and astronomy. The another purpose is to work with partners to build National Science and
Innovation campuses.
Legal structure: The legal structure of public company is defined as:
Central government: This means a government who has controlling power over a
unitary state and having distinct power to make decision. In this, all power is holding by central
government that give permission to regulate and operate a government money with the purpose
of public welfare.
State government: This government have some level of political autonomy that allows
businesses to operate the business (Bernstein, 2015). Such structure is adopted by those company
who have decided to run business in particular state of country.
Local government: This reforms as public administration which helps to operate the
business within given state. When business is operate at local level with the permssion of local
government is considered as local government.
Science and Technology Facilities Council is following the central government legal
structure as it is operated under the supervision of central government where it conduct many
research in relation to science and engineering that can help to operate the business effectively.
The liability of organisation under this legal structure is to conducts research and support the
people in introducing different types of ideas which can be useful to develop the country.
Private sector (River Island): The meaning of private sector is to operate the business
by single and number of partner after deciding ratio. These business are not operated and
managed by government because it follows companies regulation that can help to establish a
business (Clarke, 2013).
Purpose: The purpose of private sector companies is to get the competitive advantages
by increasing the sales that can help to increase the brand image. The River Island aims to bring
new and original fashion near by customers and provide the better quality of products.
Legal structure: The legal structure of private sector is defined below:
Sole proprietorship: When business is organised and managed by single person then it
is defined sole proprietorship. This structure is adopted by those people who are single and
managing their own business effectively.
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Partnership: When two and more than two people are working collectively at a defined
ration is signified as partnership. There is need to enter in to partnership deed by following all
regulations and acts in relation to partnership which can help to increase the business
performance.
Limited company: When business is operated and established under the companies act is
defined private Ltd. Company. This is a type of structure whereby a company considered as
legally different body and maintain the activities.
River Island is following limited company structure in which number of people are
working and operating their activities appropriately. This can help to increase the organisational
performance and profitability by selling products and services. By following this structure,
management are operating and controlling their activities in relation to a business and increase
the organisational profitability.
Voluntary sector (Wellcome Trust): When business is operated for social welfare by
collecting the people who helps them to collect fund and spend them beneficial activities that can
help to make feel good. This is willing doing work where people who wants to contribute for
social welfare can give their participation (Yeh, Lee and Pai, 2015) .
Purpose: The purpose of Wellcome trust is to conduct the proper research and activities
in order to fill customer's desire and biomedical research services that can make feel good to
people.
Legal structure: The legal structure of voluntary companies are as defined:
Trust: In this, number of people are working for social welfare and provide the good
services to public (Davies, 2016).
Unincorporated association: This can be defined as group of people who comes
together for common purpose and bind legally by creating relationship between themselves.
Wellcome Trust is following the trust legal structure that understand needs in particular
country and make efforts in filling them by using research. In this, all trustees works willingly
and collectively which can help to provide better services.
P2 Explanation of size and scope of a range of different types of organisations
The size and scope of different sector of organisation are as defined:
Basis Science and Technology River Island Wellcome Trust
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Facilities Council
Sector This is public sector
company that is funded
by government for
research and bring new
innovation for people
welfare (Storey, 2016).
This defined as private
sector organisation that is
operated by BOD in order
to provide the different
design and fashion of
products.
This consider as
voluntary sector that
mainly focuses
Biomedical research
which helps to make feel
good.
Objectives To complete the research
in innovation and skills
development that related
to astronomy, particle
physics and space
science.
The objective is to increase
the number of customers
and shareholders by
expanding business at
different places.
To improve the health of
people and animal by
using research that
provides new ways of
treating them.
Size and
scope
The size of STFC is
medium that operate
functional activities in
UK and other places.
And scope is wider
which provides more
future opportunities
(Edgington, 2018).
The size of River Island is
higher as it is maintaining
good brand by serving its
fashionable products at
different countries and
attaining the competitive
advantages. Moreover, this
has wider scope to operate
business.
The size is smaller where
it operate business in UK
and managing the growth
opportunities.
Growth The growth of such
organisation is 30-40%
as it is public sector
organization that works
only for providing good
services to customers.
Growth of such private
organization is 70-80% as it
understand the new trend of
customers and bring the
innovation in their products
and services.
This involves smaller
growth percentage which
runs for the purpose of
social benefits.
Size and Scope of organization -
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Public organisation
Science and Technology Facilities Council - This involves around 1700 in particle
physics, and astronomy including space science that works more than 50 universities and
research institutes in the UK. Hence, size and scope of such organisation is wider.
Private Organisation
River Island – This is selected private organisation that is large size organization in UK,
3,353 full time and 5,530 part time employees are working that supports to increase the business
productivity and profitability.
Voluntary organisation
Welcome Trust – The size of such organisation is medium as it is operating by less
number of people who wants to work for benefits of people or society. The people who are
working manages all activities and function to provide the benefits to society.
Task 2
P3 Determination of relationship between different organisational functions and their link to
organisational structure
In organisation number of functions are needed to operate that should be properly
organised and managed. The types of organisation are having different organisational structure
that are as follows:
Hierarchical: this is common type organisational structure where chain of command
goes from top and down. This can help to define the level of authority and responsibility in better
way and motivates employees with clear career path and promotion so they work effectively
(Gansky, 2010).
Matrix: This look like a grid and show relationship between cross functional team which
is formed for special purpose. This may allows employees to choose employees for the need of
project, give more dynamic view of organisation, and encourages employees to use their skills
and talent for completing the assigned work. Mainly it is adopted by larger size organisation in
order to increase profitability.
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Divisional structure: This kind of structure is followed by companies which is suitable
to small and medium size organisation helps to increase the business performance. In this, role
and activities of employees of organisation is divided between employees so they can perform
their task and responsibilities effectively. This can be adopted by River Island in which
management assign the role and responsibilities between employees as per their skills which
supports to attain the business objectives.
Matrix organisational structure is following by River Island that can help to assign the
role and responsibilities of employees for particular project and maintain the activities properly.
This also give more dynamic view of company by encouraging employees to use their skills and
capabilities in workings (The matrix organisational structure, 2020). By following this structure
management are attaining their business objectives as particular project is given to employees
along with time period that can help to operate and manage the business activities.
Illustration 1: The matrix organisational structure, 2020.
Source: The matrix organisational structure. 2020.
The interrelation between organisational function that related to matrix structure
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Finance with IT: Information technology is the way of expanding business and
introducing new products and services so customer will happy and make decision to buy. In
context to River Island IT function is uses to bring something innovative in products and service
so it get connected with finance department because it is one who maintain all records of cash
transaction. The finance function of chosen organisation is operating by management of finance
department in which roles and task allocated between employees and complete the workings
effectively. Herein, finance function provide finance to IT department for conducting research
and bring new products and services that can help to operate and manage the functional units
(Hilton and Platt, 2013). The all functions in relation to finance and IT are interlink with matrix
structure as it helps to allocate the roles and responsibilities in different employees who are able
to do and manage the activities that leads in attaining the organizational objectives effectively.
Marketing with sales department: The aim of organisation is to generate higher profits
and improve the brand image. The River Island aims to expand business by increasing sales and
improving brand image where marketing function of such organisation are playing their roles
and responsibilities effectively and influence customers to buy buy the products. In this
management of chosen organization focuses on customers demand and share with sales team
which can help to provide the products and services accordingly and maintain higher
profitability. Under Matrix culture both functions are operating their activities in well organised
manner and solve the problems that increases sales, resulting attainment of business objectives
(Khilji, 2012).
Therefore, it has explained that functions of River Island such as IT, finance, sales and
marketing are interrelated with matrix structure as it allows resources to maximize activities by
allocating work between employees. This also boost the morale of employees by motivating
them and managing the talent which helps to attain the business objectives.
Task 3
P4 Identification of the positive and negative impacts the macro environment has upon business
operations
Macro environment is saying as external environment which involves many factors in
relation to a business can be arise while running business and has impacts on activities. For
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business concern important thing is to analysis the business environment before establishing a
business and making any decisions. Therefore, macro environment analysis in context to River
Island organisation are as explained;
Political factor: As name suggest this factor is related to government that has ability to
encourage companies to operate the business and improve the economy. River Island is top
branded organisation that is managing and operating the business worldwide by maintaining their
shipping and transportation services that are provided by government.
Positive impacts: The Tax and VAT rate in UK are stable due to stable political
government that has impacted good on River Island to operate and increase the selling activities
(Kopnina and Blewitt, 2018).
Negative impacts: After Brexit the selling activities of River Island have been reduced
because it manufactured its clothes in different countries of world and after Brexit war it became
difficult for company to shipping with Europe and other countries where it had store so,
production activities have been stopped which affected business negatively.
Economical factor: This is considering economy related activities such as recession,
currency changes, demonetisation, population growth, and others (Lilien and Grewal, eds.,
2012). In UK, impacts of such factor on River Island as defined:
Positive impacts: The population of UK is increasing that are demanding different types
of products and services as having high employment rates which is opportunity for River Island
to operate their business.
Negative impacts: Constant strong changes in pound that is UK's currency will affect the
River Island as tourist who comes to visit UK will shop less as such products will be more
expensive for them.
Social factor: This showing the societal related changes that need to be consider by
organisation while operating a business. River Island is focusing on lifestyle, work, attitude,
fashion hype, education, and working experience that may affected business (Nair and Paulose,
2014).
Positive impacts: River Island is focusing on changing life style and mass production
that can help to shipping the product in great quantity by saving extra transaction cost, time and
taxes. Therefore, it will be good chance for chosen organisation to run business.
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Negative impacts: This is larger brand but still people are not aware because it do not
have a face that make easier for customers to forget the brand and they select other brand which
directly reduces the sales (Brown, 2018) .
Technology factor: In changing environment people have some expectation to increaser
their sales and profitability so they make efforts in research and conducting the new process for
introducing products. This involves innovation and creativity that can help to operate the
business such as:
Positive impacts: The increasing technology is a good opportunity for River Island as it
bring automation in producing clothes and speed up selling that helps to get more clothing in the
store effectively. This also increases sales and profitability by maintaining sales (Palo and
Tähtinen, 2013).
Negative impacts: As now people believes in online shopping for saving their time and
extra transportation cost so they uses internet. If internet would be crash or each country has
started to provide their own internet then River Island has to face major problem in relation to
sale decrease.
Legal factor: This factor stating that organisation should follow all rules and regulation
which are made by government. The management of such organisation is focusing on various
legislations that are as explained:
Positive impacts: The famous fashion retailer River Island maintaining workers rights,
providing employment opportunities and treating equally to all employees etc. that impacted
positive on business performance.
Negative impacts: As world is facing the Pandemic that is Covid-19 due to which all
business have been stopped in lock down, that has created unemployment rates. So, River Island
facing the problems in sales and running business.
Environmental factor: This factor stating the relation with environment that means
activities should be beneficial for environment not to harm them. As in manufacturing clothes,
designs and other activities are increasing wastages that can be challenge for organisation
(Shenkar, Luo and Chi, 2014).
Positive impacts: The management of River Island take care all environmental
regulation, reduces wastes by providing mostly cotton made clothes, uses Lean management
process etc. that supports their business.
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Negative impacts: Due to Covid-19, people became more health consciousness so, they
are not buying products online and offline because of spreading virus that directly affected
selling activities resulting negative performance.
Task 4
P5 Conduct internal and external analysis of specific organisations for identifying strengths and
weaknesses.
Internal analysis: This defined as framework which uses by organisation to know what
are their strength and weakness. If it is facing the problem then how it can be overcome so this,
analysis is also helpful for River Island to focus on SWOT and manages the activities.
SWOT analysis of River Island
Strength Weakness
 To improve working condition in the
countries long term plan is prepared in
the company (Stacey, 2016) .
 It is the top most brand expanding
internationally having long term
experience in retailing.
 It has a wide range of collection with
unique designs in ethnic wear and in
western trend.
 It does not allow festive discount to
their customers like their competitors.
 It only provides wide variety of
children and women wear but men wear
is not available under this brand.
 They not to offer changes in their
collection in short period of time so
new fashion is not available at every
point of time.
Opportunities Threats
 As it attracts large number of customers
due to their unique designs and good
collection it needs to expand their
business in various location in different
countries.
 It has great opportunity to boost their
sales if they provide huge range of
variety in night dress and allow
 Increase in the minimum wage rate
affects negatively on the profit of the
company due to this reduction in the
staff is needed to maintain their profit
margin.
 There is always a threat of natural
calamities and recession faced by
company as it effect sales in the market.
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discounts in children wear so that
people tempted to spent money in the
brand.
 To make available other accessories
and beauty items along with clothing
stock they can easily increase their
turnover as it is best opportunity to
attract large number of customers
because all the items are available
under one roof so it save time of
customers.
 Threat regarding taxation policy is
increased as government can raise the
percentage of tax at any time that
effects the company most (Lloyd-Jones
and Lewis, 2017) .
SWOT analysis of Wellcome Trust
Strength Weakness
 This mainly focuses on research based
activities that can help to operate the
business.
 Biomedical research is main focal
point.
 Beneficial for people and animals.
 Operates in UK that means small
organisation.
 Changes in business regulations.
 Lack of funds and capital to bring new
process.
Opportunities Threats
 The trustees of organisation are
organising all activities.
 Uses of new technology and instrument
in conducting research.
 Having skilled and talented researchers.
 Rises of natural problem.
 Increasing rates of currency rates.
 Improper utilisation of resources.
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P6 Explain how strengths and weaknesses interrelate with external macro factors.
Macro factors are related to business that should be consider in running activities and
providing products effectively. The management of River Island is operating a business in
fashion brand by managing all activities and functions effectively. The strength and weakness of
macro factors are given below:
Factors Strength Weakness
Political Stability in governmental
regulation such as tax rates, VAT
and government of UK helps
River Island to increase their sales
and profitability.
Brexit, became a weak point for
River Island as it available stores in
Europe have been closed because of
not following regulation of Europe
trade that reduced sales.
Economical Increasing population is
increasing sales of River Island as
it offer variety of products design
and influence customers (Tukker
and Tischner, eds., 2017).
Currency changes is major challenge
for River Island as it reduces the
spending capacity tourists and other
person who comes in UK from other
country.
Social By focusing on market trend and
changing customer demand is
become strength for River Island
to attain the competitive
advantages by selling the products
according to new trend.
Continuously changes in social
activities and people culture going to
more difficult for River Island to
operate their business and earning
higher profits.
Technological Bringing automation in
manufacturing and producing
clothes is good opportunity for
River Island to increases sales and
shipment that supports in
generating profits.
Occurrence problem in innovation
and crashing internet become
challenge for organisation to
continue the activities.
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Therefore, it has been evaluated that by management of River Island as they analysis the
market and focuses on factors that affect their business. This brings changes in their formulation
that supports in operation and managing the activities.
CONCLUSON
From the above report it can be concluded that the number of factors are involves in
business environment that need to be consider while operation. Types of organisation are public,
private and voluntary that are having different size and purpose to manage the business. PESTLE
analysis is required to be done for establish a business and knowing the impacts in relation to
business. SWOT analysis states the strength and weakness that suggest how it can be improved.
The strength and weakness of macro factors should also be considered while managing and
delivering the services.
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