Business and Business Environment: ASDA's Types, Scope, and Analysis

This report provides a comprehensive analysis of ASDA's business environment, covering various aspects of its operations. It begins by examining different types and purposes of organizations, including public, private, and voluntary sectors, along with their legal structures. The report then explains the size and scope of different organizational types, followed by an analysis of the relationship between organizational functions and objectives. It identifies the positive and negative impacts of the macro environment on business operations, supported by specific examples. Furthermore, the report conducts internal and external analyses of ASDA to identify its strengths and weaknesses, and it explores how these interrelate with external macro factors. The analysis includes discussions on market structures, competitive analysis using Porter's Five Forces, and various business models like franchising, joint ventures, and licensing. The report concludes with a summary of findings and references supporting the analysis.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
P1. Different types and purposes of organisations; public, private and voluntary sectors and
legal structures. ..........................................................................................................................1
P2 Explain the size and scope of a range of different types of organisations.............................2
P3. Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.......................................................................................6
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples................................................................................8
P5 Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses..........................................................................................................10
P6 Explain how strengths and weaknesses interrelate with external macro factors.................11
Conclusion.....................................................................................................................................13
REFERENCE ................................................................................................................................15

INTRODUCTION
Business environment is played a important role in the success of each and every
business organisation. Because a firm is affected by two factors which is known as internal and
external factors. Internal factors can be control by a corporation but external factors are beyond
the control for the company. These all factors can very form business structure and its scope in
the market (Al Smadi, 2009). For example, small business unit having less influenced by those
factors and on the other hand international organisation are facing more challenges. This report is
based on the ASDA which operate their business activities in United Kingdom. Company is
supermarket retailer which provide a wide range of product in groceries, merchandise and
financial services. The main objective of this report is to identify and analysis different type and
organisation and its scope. Further, this report also explain macro and micro factors which can
affects a business unit (Al-Debei and Avison, 2010).
P1. Different types and purposes of organisations; public, private and voluntary sectors and legal
structures.
ASDA is one of the leading retail supermarket in United Kingdom which provide a wide
variety of products and services to its customers. The parent organisation of ASDA is Wall-mart
which is one of the large retail brand across the world. The main objective of business unit is to
provide high quality products at the affordable price to its loyal customers (Andersson, Forsgren
and Holm, 2007). There are various business firm with different goals and objectives.
Different types of organisations:
There are different type of organisation which are present in the environment and having the own
objectives and scope:
Sole Proprietorship: Sole proprietorship is an organisation which is controlled and owned by
one person. The main advantage of this business structure is that all decision-making is done by
sole proprietor. The disadvantage of such kind of business is that owner is personally liable for
all losses.
Size and scope of sole proprietorship is quite small as compare to other business organisations.
The legal structure for such business entity is easy to operate according to law of United
Kingdom (Aterido, Hallward-Driemeier and Pagés, 2011). Such kind of business mostly related
to the primary sectors such as fishing, forestry and so on.
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Partnership: This is another form of business which is owned and operated by two or more
person called partners. One of the main advantage of partnership is funding and management of
business activities. The decision-making is done by partners collectively and losses and profits
also shared according to the agreement. It can be a local grocery stores which operate their
business in the United Kingdom.
The size and scope of business is quite large as compare to sole proprietorship. Partnership is
formed according to the partnership act of United Kingdom (Ayyagari, Beck and Demirguc-
Kunt, 2007). The agreements which is written between partners is called partnership deed. Such
kind of business can involved transportation, hospitality and other business.
Private limited company: A private company is owned and controlled by private owners. This
type of business firm can be small and large. The legal structure of private organisation is formed
under act of UK. This corporation can be listed in the London Stock exchange and they requires
minimum two directors. The scope and size is large as compare to partnership and sole
proprietorship (Botha, Kourie and Snyman, 2014). The power and authorities under the hand on
board of directors. The Example of private limited company is Primark which is clothing retail
chain in the United Kingdom.
Pubic company: This type of business firm is quite large as compare to other form of business
entity. There size and scope also large with comparison with private organisations. These
business unit are listed in to the Stock exchange of United kingdom. There business operations
are managed by higher authorities such as board of directors. These firms are formed according
to the company's act of UK. The main purpose of such organisation is to gain profit and social
welfare of the public (Brannon, 2010). The Example of public company is Correo which is
postal service government owned firm in the United Kingdom.
P2 Explain the size and scope of a range of different types of organisations.
Classification of a business unit is depends on the size and scope of an organisation.
Basically there are three types of firm which can be small size, medium size and large size.
There are various elements help in analysed scope and length of company like market-share, firm
profit ratios is also major factor in understanding it. There are various types of company, that are
described as under;
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Small size Business: This kind of business are very small and their operations restricted
in to a small area. According to EU, the number of employees not more than 50 and their
turnover less than 10 million Euro approx. Market share and growth rate is low as compare to
medium and large size organisation (Cantwell, Dunning and Lundan, 2010).
Medium size Business: This is another type of business which is quite large as compare to small
enterprises in terms of size ans scope. Such kind of business unit, the number of employees more
than 50 and less than 250 and its turnover less than 50 million euro approx.
Large size business: These types of organisation are operate their business in large scale
domestically or internationally (Carroll and Shabana, 2010). There market share are too large as
compare to SME sectors. In this kind of business they can use various business model like
Franchising, Joint venture, and licensing.
Differences between franchising, joint ventures and licensing.
Franchising: It is a business model where franchisor allow franchisee to use their brand name to
conduct business activity. This kind of business are under franchising act of United Kingdom.
Franchisee pay a fee to the franchisor for using their brand name. Such kind of model mostly
used by international organisation such as MacDonald, Puma, Starbucks etc. Franchisor having
full control over business operations (Chavis, Klapper and Love, 2011).
Joint ventures: JV is a business arrangement where two or more companies agree to pool their
resources, technology and management to attain their business objectives. Such kind of business
model can be used for a new projects or any other business operations. Each firm is responsible
for their profits and losses associated with their business.
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Strength The ASDA is one of the leading brand which
can provide a wide range of products to its
customer.
140,000 employees working at over 500 stores
innovative culture
Its economies of scale and superior technology.
strong management
Weakness The firm is having ineffective marketing
campaign which can reducing its presence in the
market.
opportunities More and more customers are shopping online
in the UK
ASDA has huge opportunities to grow both in
the UK and abroad.
Threats Growth of independent online retailers is also a
threat
There are large number of competitors in the UK
market which can leads to decrease market share
and profitability.
Licensing: This is another significant business model which can be used by multinational
corporations. In this approach a firm sells their rights to produce their products to another
business entity (Chi, Kilduff and Gargeya, 2009).
Difference between profit and non-profit organisation:
The main aspect in a business firm is the objective of their business operations. There are two
major types of organisation called profit and non profit organisation.
Profit organisation Non-profit organisation
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Profit business entity are legally formed which
operate their business for profit earnings.
On the other hand non-profit firms are legally
formed which provide social welfare to public.
There main objective is gaining profit. Their main objective is to provide service.
These firms can be managed by sole
proprietor, partner and directors.
These unit can be operated by trustee,
government and committee.
Their source of income sale of goods and
services.
Their sources of income donation, government
funds, membership fee etc. (Chow, and
et.al.,2011).
Industrial structures and competitive analysis
There are various industrial structure which having their own characteristics and nature. The
structure of market for goods and services is determined by the competition avail in the market.
These market structure can be:
Perfect competition: In this type of market structure number of buyers and seller are large which
can sell and buy a homogeneous products and services. Any business organisation is free to enter
and exit without any legal barriers. The major objective of the firm in this market structure is to
gain maximum profit form the industry (Commander and Svejnar, 2011).
Monopoly: It is another market structure where only one seller and large number of buyers are in
the market. In this type of structure there are various restrictions which can create problem for e
new firm in the market. The price of the product can be decided by the sellers and he can enjoy
the market through setting price accordingly.
Oligopoly: Oligopoly is a market structure where few sellers can sell a homogeneous or
heterogeneous products. This market structure is a combination of monopoly and monopolistic
competition, where these sellers can affects the price of the products and services. The players in
the market can respect each other and operating their business accordingly (Craig and Campbell,
2012).
Duopoly: In this market structure, there are two firms which can control all markets and have
direct control over the pricing strategies. The business units in the market can compete with each
other and try to sell their products to its customers.
Competitive analysis
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It is important for a company that they can evaluate and analysis firm's competitive
position in the market. There are various tools and techniques which can be used by an
organisation for competitive analysis. Five force approach one of the suitable technique which
can be used by ASDA (Czinkota and et.al., 2010). There are following five forces which can
help to the company for improving competitive position in the market:
Suppliers Power: This force related with suppliers which provide raw material, components and
other important resources to the company. If suppliers are less in the industry which can increase
their bargaining power and they can increase prices of raw materials in the near future.
Therefore, ASDA requires to maintain a sound relationship with their suppliers which can help
to provide raw material on time at the reasonable price (Dimitrov and et.al., 2007).
Buyers Power: This force is related with the customers which can affects price and product
quality. If there are large number of sellers in to the market, it can increase the bargaining power
of customer's. They can easily switch their products due to availability of substitutes products in
the market at the lower price (Dominici, 2009).
Competitive rivalry: This is another force which is related with competition avail in the market.
The number of competitors and capabilities can also affects firms profitability and market share.
Threat of substitution: This force is related with the substitute availability in the market which
can give an option to the customer to switch their products can also affects on firm's earnings and
market share.
Threat of new entry: An attractive market can attract more and more new companies in the
market. Retail industry one of the most attractive sector which can attract large number of local
and multinational organisation (Dyer and Ross, 2008). It can increase the competition in the
market and reducing the market share of the company.
Stakeholder and responsibilities of the organisation:
There are various stakeholder which can influence of business unit directly or indirectly.
ASDA is a private company which having following stakeholder:
Investors: Investors are those people who invest their capital in to the company. These
people played a important role in the success of the business unit. They invest their capital in to
the business for good rate of return. Therefore, it is the responsibilities of management of ASDA
is that they provide sufficient returns to their investors (Gebauer, Paiola and Edvardsson, 2010).
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Employees: Employees are also played a prominent role in the success of an
organisation. Therefore, it is duty ASDA manager is to provide sound working environment at
the workplace which can help to enhance their performance and productivity. Manager requires
that to provide sufficient pay to them which is very essential for them.
Customers: Customer are the actual master of the market, therefore, firm required that to
provide high quality products at the lower price to its customers, it can help to create customer
satisfaction and loyalty towards firm product and services (Hazlina Ahmadand et.al., 2010).
Suppliers: Suppliers are the important stakeholder for any business organisation which
provide raw material at the right time to the firm. ASDA imported their row materials form
various countries like China, India, USA and other part of the world. Therefore, it is the
responsibilities of firms manager is to provide their payments on time (Jenkins, 2009).
P3. Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.
Role of marketing Department : marketing is a process where all functions are working in
a process for implementing. It is a source to maximize the business in research strategy and a
process of marketing organisation. It provides greatest value for the organisation to develop the
framework of marketing function.
Role of finance Department: it provides to a business lowest cost and effective control of the
environment. For forecasting the budget it provides price and market capitalization to consider
their needs (Johanson, and Vahlne 2009). ASDA needs to maintain the reporting documents for
the financing the with the shareholders or outsiders.
Role of human resource Department: the human resource management members suggest that
how to manage people as business resources. The team are working to develop the skills of the
management and employees to adapt the successful environment.
Organisation mission and objectives: business mission puts the vision into words and making the
objectives of a business. This helps to guide the actions and working for a business vision and
objectives. There is number of goals and objectives which needs to follow by the management by
achieving the business targets (Klapper, Lewin and Delgado, 2011).
Organisational structure:
It defines the activities as which need to follow in the organisation for achieving their
objectives. It can be in a different way which has various modes to determine the operations and
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functions. It includes a process where individuals take part in decision-making process to make
the organisation actions.
Pre-bureaucratic structures: This is a type of structure which are used in the organisation for
resolving the easy tasks. The top level manager taking various decisions and communicate with
the working members in a effective way. It is very useful for the optimal uses of resources by
increasing their growth and development (Montgomery, 2009).
Bureaucratic structures: this structure is fully developed with the organisation to compare with
the other organisation. This includes various level of management which has senior managers to
all managers. In an organisation where all levels of management decision-making authority pass
through all layers (Pablo, 2009). Decision are making with an organised process through which
all responsibilities given to all. Managers has command and control by managing the work with
creativity.
Post-bureaucratic: Organisation managers taking decision with the discussion with the managers
rather than by giving command by the authority. It encourages the employees to take part in the
organisation and help to communicate with the consent (Palmer and Hartley, 2008).
Functional structure: There are various companies which can use this structure to make their
operations more effective and efficient. In this structure firms is divide in to small unit on the
basis of their function. Such kind of structure help to overcome misunderstanding and improving
organisational effectiveness. For example, a business unit is divide their in to small segment like
finance department, sales department, customer services department, marketing department and
so on. Each functional department is managed by functional head, they directly report to the
general manager or CEO (Peng and Nunes, 2007). This type of structure help to achieve firms
goals and objectives and goals effectively.
Divisional structure: In this structure is used by large organisations which operate their business
in large geographical area. In this structure firms can divide large geographic market in to small
market and provide them to its own resources so that they can operate their operations
independently and freely (Teece, 2010). Such kind of structure is useful for ASDA, because UK
is large market which cab be divide in to small market such as Wales, Scotland, Ireland and rest
of England. Each division can be controlled and managed by a divisional manager which directly
report to their CEO. Each division having their own sub department like finance, marketing HR,
sales etc.
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Matrix structure: This is one of the modern structure in which departmental relationship is set
according to grid, rather than traditional structure. The advantage of such structure is that
effective and efficient utilization of firms resources. Products can de effectively coordinated
between various departments (Trkman, 2010).
BRICS emerging market:
BRICS is a trading block of five emerging market in the world which can include Brazil, Russia,
India, China and South Africa (Aterido, Hallward-Driemeier and Pagés, 2011). These five
countries are contribute approx 22% GDP of the world. They having 4 trillion US dollars as a
foreign reserve and these countries are fastest growing nation in the world which provide a
golden opportunities for various international companies like ASDA. There are large consumer
market which can help to increase firm's market share and revenue as well. Apart form that
country like India and China labour cost are vary low which can also help to the company to
reducing their production and operational cost.
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.
Macro environment refers to external factors that influence company. It may effect
company's decision-making process, strategies and internal environment. Also it influence
performance of an organisation. Some important factors of macro environment are as follows:
Political factors- It refers to political environment which may be effect an ASDA company
(Weismann, 2009). It define behaviour of political parties towards the company which may
effect ASDA through government policies related to tax, performance, trading related activities
and production activities. Most of the political factors are effect decision-making, strategies, and
internal environment of company. The Tax policies are influence company. New rules and
regulations made by government may effect the company which are ASDA is not able to follow
those rules.
Economic factor- These factors are define as a economic growth of company. Economic factors
are different from one company to another. This factor include economic growth rate, levels
employment and unemployment (Welford, 2013). In ASDA it includes energy, power, dividend
rates and inflation rates. Most of the economic factors may effect an organisation like growth
rate, costs of raw materials etc. If these are reduce below required level then they may effect
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