Business and Business Environment: A Case Study of The Body Shop

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BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION.......................................................................................................................................3
TYPES OF ORGANIZATIONS.............................................................................................................4
STRUCTURES OF AN ORGANIZATIONS..........................................................................................6
SIZE AND SCOPE OF ORGANIZATIONS.........................................................................................10
INTRODUCTION OF THE BODY SHOP...............................................................................................12
THE PESTLE ANALYSIS OF BODY SHOP......................................................................................12
SWOT ANALYSIS OF BODY SHOP..................................................................................................13
CONCLUSION.........................................................................................................................................17
REFERENCES..........................................................................................................................................18

INTRODUCTION
All the activities and affairs done in the market for the purpose of offering good and services to
the public with consideration is known as business. If the corporation is carrying out any primary
or mercantile activity by itself then it qualifies as a business activity. Business environment is a
very important aspect of any business, it is a group or assembly of all the internal and external
factors such as customers’ needs and expectations, employees, supply and demand, activities by
government, owners, clients, suppliers, management, social trends, market trends, innovation in
technology, economic changes, etc. (Hilton et al., 2013). These are factors which influence the
functions of the company and how business organization uses these factors for its benefits or it
gets affected by these situations created by these factors.
Basically, the business environment helps in identifying the chances or opportunities, spilling
useful resources, give assistance in companies planning and enhance the overall performance,
profitability and growth of the business. It involves various types of business environment that
are the microenvironment and macro environment. Mainly there are three types of structures that
are functional structure, divisional structure, and a combination of these two is matrix structure
these are followed by three sectors that are a private, public and voluntary sector.

TYPES OF ORGANIZATIONS
Private sector
The private sector is a business which is not overseen by the government. It is a part of an
economy which is run by individual and companies. This sector earns profit from sales and
enables the employee to increase their income and perquisite. This sector can make their revenue
by competing with competitors by ensuring that they are providing goods and services on fair
prices and products which are not harmful to anybody, which will entice their customers and
ultimately helps in earning a higher profit. For example, Tata Consultancy Services (TCS),
Unipart, Bestway group. Most of the companies are in the UK are private limited companies
which need to be incorporated with the company’s house including legal documents MOA and
AOA which forms the company’s constitution.
Public sector
The public sector companies are controlled and managed by the government. This sector does
not work for purpose of profit their motive is to offer the best product and services to the public.
Public sectors are capitalized by the government, which is gathered through the taxes and fees
paid by the public. Shares of these companies can be easily sold to the general public which
listed on stock exchange. Examples of some public organizations the police, teach first, audit
commission and Indian oil corporation.
Voluntary sector
The voluntary sector is also known as community sector, they do business without the motive of
making a profit out of it, and the community sector serves the public without the intention of
earning. The workers who are working in voluntary sectors do not earn anything as they choose
to work by themselves as it's a charity work so they do not generate revenue from this. Some
examples of voluntary sector are The National Trust, Oxfam, Cancer Research UK etc. (Goffee
and Scase, 2015)
 Business functions are meant to be efficient when all their employees of the organization
clearly understand their job and procedure of doing work. Employees can understand
their proper roles and responsibility, whom to report within the company etc. if the

organizational structure is comprehensible and easy to understand. An organizational
structure should be strong so that business can run smoothly and efficiently according to
the business strategy they have made so that it can overcome all the hurdles coming in
executing the plan. Every organization include some common functions that are linked
with the organizational structure which involves marketing, sales, production, accounting
and human resource, in the functional organizational structure the communication can
make the organization highly flexible or might be slow.
 The primary function of an organizational structure is to impart clear chain of command,
it should be clearly defined which employee needs to report which manager, where the
director needs to report to the owner or someone else. A structure should also
communicate who will conduct the evaluation of the performance of employees,
managers, and directors.
 Organizational structure also explains the teamwork. These teams are divided into
different departments such as accounting and marketing or it can be divided according to
the geographic areas or regions for the specific project or product line. It ensures that the
entire team member is working towards the same goal and further it helps in balancing
the working of employees by knowing their strengths and weaknesses (Goffee and Scase,
2015).
 The organizational structure helps the manager to take correct decision for each employee
and some organization also include employees in decision making.
 Organizational structure enablers the advance opportunity with higher level positions and
making the responsibility clear, it enables the people who are expected to take new
positions to train by their old people who were on that old positions.
STRUCTURES OF AN ORGANIZATIONS
i. The functional structure of an organization

Functional structure refers to the grouping of activities that are being performed for the same
purpose and same nature of work. The functional structure is more suitable for the working of a
small organization where the work is done on the basis of employee talent for an example
marketing department, production department, and sales department (CFI, 2019). In these kinds
of organization that are functionally structured have downside also due to the separate working
of each department; these boundaries restrict the coordination and communication of
organization which increases the gap of understanding.
ii. Divisional structure of an organization

Divisional structure is an independent division of a company which are typically adopted by the
large companies or organizations that have a separate small organization for unlike products and
market region. Examples are car industries generally preferred divisional structures to meet the
specific needs of each geographic area.
This structure definitely helps in heightening and diversifying the organization whereas
functional structure doesn't cope up with this. When a company wants to grow, they must go for
another division, here the focus is concentrated on a diversity of product, and performance and
profitability as divisional managers are free to concentrate on strategic matters as they don't need
to look after each division. This structure is expensive because of the size and scale of the
organization.
A small organization can also adopt this structure by having different offices in different cities or
in the region of the country.

iii. Matrix structure of an organization
This structure is a composition of a functional and divisional structure called a matrix structure.
The matrix structure is used to solve the problems of management in the organization. This
structure widens the knowledge and skills of the employee as they have to work under two or
more authorities. Marketing people can learn about finance and finance people can learn about
marketing. But this structure has limitations also as it gives a high workload to employees, it is
very complex and difficult to balance both authority and responsibility of an organization (CFI,
2019).
Importance of business organizations
1. Business organizations lead the production towards the betterment of good and services.
2. Organization plays an important role in providing the optimal use of human resources
and makes the process of production more efficient.
3. A good organization can provide better scope for technological improvement.
4. It encourages creative thinking in various departments for production.

5. The organization provides the best-skilled salesman to satisfy the needs and wants of the
customer
6. It enables quick decision making in business.
7. Investigating and recognizing the problem, generating solutions to that problem so that
necessary orders can be taken at right time.
8. Roles and responsibility can be easily pinpointed.
9. The organization always tries to achieve the desired objective of the organization at
minimum usage of cost.
SIZE AND SCOPE OF ORGANIZATIONS
 Point of reference to measure the Size of business differ from country to country,
according to the European Commission's definition of micro, small and medium-sized
enterprises is established according to the number of employees working in company and
annual turnover of company.
A. Micro-enterprises:
Employees should be fewer than 10 and an annual turnover or balance sheet should be
below 2 million (the amount of money taken in a particular period and a statement of the
company's assets and liabilities).
B. Small enterprises:

Employees should be fewer than 50 in the company and turnover or balance sheet must
be below 10 million (FSB, 2019). In 2018, 5.6 million new small business was started
(Maisto, 2016).
C. Medium-sized enterprises:
Employees should be fewer than 250 and the balance sheet should be below 43 million or
annual turnover should be below 50 million (UN, 2019).
D. Large enterprises:
Employees, more than 1000 in a company and annual revenue should be over 1 billion.
a) The scope of the private sector:
It is very much agreeable for the people who have the same mind for the operations of
their business. But as a private company, it has some restrictions also, for the proper
conduct of functions companies owner get involved in operations (Wonka et al., 2010). It
has a vast opportunity to expand their business by acquiring the best skills, human
resource and capital for the industries.
b) The scope of the public sector
As a public sector company, it has more than enough number of opportunities to expand
their business; by investing in new projects it can expand their business. These companies
can avail the finance by issuing the share to the general public and can initiate the new
projects (Wonka et al., 2010). It has vast opportunity to make future plans as they can
raise the funds easily; here management is separated from the owner so the manager is
liable for any mismanagement done in the company.
c) The scope of the voluntary sector
It has N numbers of scopes to achieve its organizational goals; it has many employees
who work here voluntarily which can help in growing the organization in a shorter period
of time. They must train their employees to utilize them in proper working operations.

INTRODUCTION OF THE BODY SHOP
Its story was started in Brighton, England in 1976. The founder of the body shop was Anita Roddick she
used to believe in something thoroughgoing: that business could be a force for good. The body shop
brand is the world's first moral and ethical business and they recognized for its moral principles in
working internationally. In 1987 they launched community trade; evolve fair trade in the beauty industry.
Currently, they have suppliers in more than 20 countries across the world, collected the supreme raw
ingredients and conventional skills from various place on the planet to benefit the customers.
In 1989, they have campaigned for cruelty-free beauty. They helped in a ban for animal testing in the UK.
Then they carry to hit the EU for the same. Now they are aiming to blow away cruel practices from
everywhere and forever. In 2017 they started work with Natura and Aesop that is a global cosmetic group
committed to cruelty-free beauty and ethical business. Now they are working together to make beauty a
force of good (L Occitane and The Body Shop, 2019).
THE PESTLE ANALYSIS OF BODY SHOP
The body shop is unsheltered to a huge amount of influences in its environment. Let’s
understand this analysis of body shop.
Political
It is very relevant to have political stability and safety of the country where it is working
especially for multinational companies. Regulations of trade by the political institution can also
affect the trade connection of the company (Mukher, 2018). Political disturbance or upset
atmosphere in the trading county can be the reason for a trading breakup. It can be more
problematic when the political threat is coming in the same region where the body shop is
trading.
Economic
For Multinational companies, exchange rates play a crucial role as it has providers or distributors
throughout the world. Revenue generation of stores from outside of the eurozone should be
exchanged in euro and the supply of ingredients from many communities for the making of a
cosmetic need to be paid in their national currency. Therefore, the exchange rate of products
highly affects the revenue of the body shop (The Body Shop, 2019).

Social
Consumers are influenced by the changing lifestyle, moreover, they are aware of the issues of
social and environmental because now day’s consumers are very conscious about the company
where the product belongs from and Body Shop is greatly known for its CSR activities which
highly influence the image of the company in the minds of the consumer (The Body Shop, 2019).
To choose a particular company consumer is crucially focusing on the factors such as policies of
sourcing product and components through fair trade or company's loyalty to sustainability.
Technological
Customers are getting clarity and transparency about the product and company because of
enlarged availability of internet. It promotes communication among unlike locations of the
company and usually to the fair trade groups the company trade with. Body shop has established
credibility with its customers by educating them through the internet.
Environmental
Environmental protection law was proceeding because of the increased wordiness of saving the
earth's flora and fauna. The body shop is one of the first brands who prohibits cosmetic animal
testing and presents the concept of fair trade to the beauty industry. In 1998 UK government
announced that issuing of licenses to test the cosmetic product on an animal will no longer be
provided (Mukher, 2018).
Legal
The new rules and regulations are triggered by the growing distress about skincare health and
safety level also for product safety. Refilling of cosmetic bottles and jars are also prohibited by
the law.
SWOT ANALYSIS OF BODY SHOP
Strengths-
The best body shop which can give the upper hand over its competitors:
1. Positioning