Business Environment Analysis: BA, SMEs, NGOs, PESTLE, VRIO Report

This report provides a comprehensive analysis of the business environment, focusing on British Airways as a case study. It begins by differentiating between for-profit, non-profit, and non-governmental organizations (NGOs), and then contrasts micro, small, and medium-sized enterprises (SMEs). The report delves into the interrelationships of organizational functions and how they align with objectives and structure. A significant portion is dedicated to a PESTLE analysis of British Airways, evaluating the positive and negative impacts of political, economic, social, technological, legal, and environmental factors. Furthermore, it employs Porter’s Five Forces model to assess the micro-environment and identifies internal strengths and weaknesses using VRIO analysis. A SWOT analysis synthesizes these findings, and the report concludes by interrelating micro and macro factors and their influence on strategic decision-making.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
ACTIVITITY 1................................................................................................................................3
Differences between organisations for profit and not for profit, and non-government
organisations (NGOs). ................................................................................................................3
Differences between micro, small, and medium-sized enterprises (SMEs)................................4
Analysis of the interrelationships of the different organisational functions and how they link to
organisational objectives and structure........................................................................................5
ACTIVITY 2....................................................................................................................................6
Pestle analysis of British Airways and its positive and negative impact upon business.............6
Micro- environmental analysis using Porter’s Five Forces model, identifying the positive and
negative impacts upon business operations.................................................................................7
Identify organisation’s internal strengths and weaknesses using Vrio analysis..........................8
Swot analysis of British Airways ..............................................................................................10
Interrelate micro and macro factor and how it influence strategic decision..............................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment is considered as the sum or collection of all the external as well as
internal factors for example consumer needs,employees, supply as well as demand ,suppliers,
activities,innovation with technology,market trends as well as economic changes. These are the
factors of the firm that can impact the firms situations and environment. Businesses environment
aids in identifying the opportunities of business,aids in planning,tapping useful resources,
enhance the overall performance, profitability,growth of the business (Becker, 2016). There are
different types of the business environment such as macro and micro business environment.
Present report focuses on the Differences between organizations for profit and not for profit, and
non-government organizations (NGOs). Differences between micro, small, and medium-sized
enterprises (SMEs). Pestle analysis of British Airways and its positive and negative impact upon
business. Micro- environmental analysis using Porter’s Five Forces model, identifying the
positive and negative impacts upon business operations. Swot analysis. Furthermore it identify
organisation’s internal strengths and weaknesses using Vrio analysis and Interrelate micro and
macro factor and how it influence strategic decision ( TWOS)
ACTIVITITY 1
Differences between organisations for profit and not for profit, and non-government
organisations (NGOs).
NGO
It is an abbreviation of Non government organization. It focuses on citizens that can able to
functions properly from the government so that they can perform a broad spectrum regarding
services as well as functions of the Humaniatarian. It is known as non profit making entity that
can operates national, regional or at the international level that depends on its connectivity and
research. It can be a trust, society or a firm. These firms are raise its funds from
foundations ,private people. It also performs several umber of the activities such as to draw the
attention regarding the connectivity (Vellas, 2016).
NPO
It is considered as an legal entity that can formed by various group of persons that can promotes
religious, cultural and social objectives. The beginning funds are raised by the members
regarding trustees of the Non profit organization (Sirgy and et.al., 2018). As firm is a non-profit
entity that able to implies the surplus funds regarding the promotion of the objectives of the

company instead of distributing it among various members of the firm. It includes an
organization which is charitable, membership groups.
Difference
An NGO represents non government firm through ordinary citizens as it can operates
autonomously of government. While on the other hand an NPO is a firm set up to give goods as
well as services to the people that can operates within the principal as no member will able to
share losses and profits through firm (Eugenio-Martin and Inchausti-Sintes, 2016).
An area of operation of NGO is wider as compare to the NPO.
NGO works for the betterment ,development,upliftment as well as bring awareness regarding the
women empowerment,human rights and many more. While on the other hand NPO is used to set
up to promote science,art,commerce ,research or any useful purpose (Martín, Mendoza and
Román, 2017).
Differences between micro, small, and medium-sized enterprises (SMEs)
Various culture all over the world. It can define the micro,small and medium sized enterprises
with various terms as language but within the developing nations like India ,it is survival for
several families.
Micro- These are the enterprises that are around everywhere as is like an ice cream parlor or the
coffee within neighborhood. There are several businesses with minimum workers as well as
minimal capital. They add values to the economy by creating micro business as it increases the
income as well as lowering the business cost (Sirgy and Uysal, 2016). The various number of
micro is high because of the reason that there is no appropriate training as well as formal jobs
that are available to the workers (Sirgy and Uysal, 2016).
Small enterprises
There are the small firms where the number of the employees are less as does not have the high
volumes of sales. These firms are independently owned as well as operated within limited size.
Small firms are almost all over in every industry. They can be local bakery that has 10 to 5
employs. There are various additional types of the small enterprises such as privately owned
restaurant, engineering, architectural firms and many more (Mulet-Forteza and et.al., 2018).
These firms are also vary within the term of the regularity, revenues,size as they only needed a
business license. On the other hands some are retirement homes ,orphanages, day care are falls
under small enterprises.

Medium sized
These are the firms that are of employees less that 250. These firms are also from the slow as
well as steady growth regarding success of the small business. As firms earns more revenues as
the capital that are needed for equipment, firms, buildings as well as recruitment of more number
of staff members (Mohanty, Swain and Besra, 2018). It builds a bridge between big corporations
and small business.
Analysis of the interrelationships of the different organisational functions and how they link to
organisational objectives and structure.
Production Department: the main function of this department is to produce good by converting
raw materials and processing it to finished goods. However, production is interrelated to sales.
Here, on basis of demand and supply, goods are produced. Beside this, in BA the function is
linked to finance as funds are provided to buy raw materials and machinery. It leads to producing
units and attaining goals and objectives (Gretzel, 2017).
Finance Department: this is the core function performed in bank. in includes managing overall
financial transaction like credit, debit, cash transfer, issue of currency, etc. They all perform
different function but is related to finance. In BA this department is interlinked with all other. It
provides funds to marketing for performing activities like promotion. In addition, funds are
provided to HR department for giving salary and wages and recruiting new ones (Chi, Zhang and
Liu, 2019).
All the departments working so that they can perform the various business function to
achieve the common goals. Such as operations and HR perform several operational functions.
Human Resource and operations work together so that they can perform several operational
functions. It also provides training to the employees of the operational department. Also finance
department allocates resources as well as funds to marketing. Human resource as well as various
more to gives goals as well as objectives (Mohanty, Swain and Besra, 2018). Production
department also produces goods and services as per the need of the market supply and demand.

ACTIVITY 2
Pestle analysis of British Airways and its positive and negative impact upon business
In order to analyse macro environmental factors that can affect working of company, it is
really necessary for them to make use of PESTLE framework. Below will be discussed positive
and negative impact of these factors on company. It includes the following:
Political factor: Company is working in most challenging Political environment. The
positive impact of this factor is that government has agreed to expand the Heathrow airport
which means that more flights of British Airway can run on the platform. This has expanded
business of firm. Negative impact is as increase in the services will also require them to bring
major changes in their working structure that will increase their cost and expenses (Hamilton and
Webster, 2018). It has also been analysed that if British Airways is not being engaged in
following policies then this can lay negative impact on their brand reputation.
Economic factor: The uncertainty following Brexit had an economic impact on BA.
According to the annual report (2016), due to the Pound Sterling’s depreciation, BA’s revenues
generated in overseas currencies benefited, but overall, the impact of exchange was negative on
the company’s financial results. It has also been analysed that there has been a decrease in labour
rate because of which company expenses can be reduced. It has also been analysed that now they
can appoint more number of employees to make work more efficient as labour rate has been
reduced. Thus it will assist British Airways in growing and achieving their goals and objectives.
Social factor: Negative impact of this factor is that British Airways is completely engaged
in creating pollution and they have not appointed traffic controller because of which more of the
public is against company. It has also been analysed that traffic controller in year 2016 started
auditing and because of which many of British Airways flights were being stopped that laid
negative impact on working of company. It also affected greatly on their cost and expenditures.
It has been analysed that company is being engaged in analysing needs and demands of
consumers during travelling process which has laid positive impact on British Airways brand
reputation (Eugenio-Martin and Inchausti-Sintes, 2016).
Technological factor: It has been analysed that British Airways is going through digital
disruption from large number of time that has laid negative impact on their cost and expenditure
structure. But the positive aspect is that they are working towards reducing these disruptions so
that more of the consumers can be attracted if company is technologically advanced. It will assist

firm in growing and also increasing their productivity and operational efficiency. They are also
engaged in making use of digitalised marketing campaigning in order to attract large number of
consumer. This can help firm in increasing their customer base. They have started the booking
system online this has increased flexibility of consumers, now they can book flight any time they
want. This has helped British Airways in enhancing their brand reputation.
Legal factor: It has been analysed that company needs to follow many rules and regulations
in order to increase their goodwill. It has been evaluated that initially British Airways was
providing low quality of food at London Airport because of which consumer has charged legal
actions towards them (Prajogo, 2016). This aspect has laid negative impact on their working.
Now the company is being engaged in providing high quality of food for the sake of consumer
health and well-being. It has also been analysed that British Airways is been engaged in
providing better environment and taking care of health conditions of their employees working
with them. They make sure that no employee works on hazardous condition (Mulet-Forteza and
et.al., 2018)
. Thus, it has laid positive impact on working and growth of company.
Environmental factor: British Airways has been engaged in doing corporate social
responsibility. They are making sure that they keep pace on social and environmental activities.
They are donating their profits in charitable activities in order to help people. Also they are
motivating public to say no to use of plastic (Mohanty, Swain and Besra, 2018). This has laid
positive impact. British Airways has been engaged in creating high amount of pollution, so this
aspect can possess negative impact on public. Company needs to lay emphasis on this.
Micro- environmental analysis using Porter’s Five Forces model, identifying the positive and
negative impacts upon business operations
In order to analyse competitive environment of company, Porters five forces can be used
by British Airways. It includes the following:
Threat of Substitute: It is average, as consumer have the other choices of flight that can be opt
by them but the choices are limited and selective. So threat of Substitute is average. It can lay
positive impact on working of British Airways, this can assist them in gaining competitive
advantage.
Threat of new entrants: It is literally low, as the cost related to capital structure in order to
enter this industry is really high. Also the cost in investing in research and development is really

high, so new entrants will think to enter airline industry. So it can lay positive impact on British
Airways as they have low threat related to new companies (Kljucnikov and et.al., 2016).
Bargaining power of buyers: It can be taken as moderate as there is high level of
competition in airline industry, and they can face increase in cost because of switching. Also it
has been analysed that there are low number of alternative available to buyers for excelling travel
services. So British Airways has advantage over it and they can increase their profitability by it.
Rivalry among existing competitors: It is low as there are few number of flight services
working in state, so consumers also have less option available (Mohanty, Swain and Besra,
2018). Also British Airways is making use of advanced technology that has provided them with
competitive edge.
Bargaining power if suppliers: British Airways is working in challenging environment and
bargaining power of suppliers is high as company has less number of suppliers available from
which they can take raw material. It can lay negative impact on working of firm.
Identify organisation’s internal strengths and weaknesses using Vrio analysis
The VRIO analysis of the British airways are also focuses on the internal sources as these can
provides the competitive advantage. The Vrio analysis focuses on the each stage of the firm that
can be improved day by day so that they can provide the competitive advantage.
Valuable
The British Airways represents that its financial resources are valuable as it aids in investing
within the external opportunities that can rise (Hsu, 2017).These can supports the firm from the
external threats.
The local food products are highly differentiated as it makes the perceived value more than
rivalries through consumers because of such differentiation of these kinds of products.
It also focuses on the cost structure as it is not considered as a valuable resources as due to the
methods regarding production that leads to the greater cost rather than the competition that can
impact the overall profits of the firm (Chi, Zhang and Liu, 2019).
Rare
it is analysed that financial resources of company is rare this is because there are certain asset
that is not owned by rivals who are operating in airline industry. also, financial performance of
organisation is strong

however, food products offered by company is not rare as there are companies that is not able to
offer those food items to customers. thus, this results in increasing competition for BA. they can
easily gain competitive advantage in airline industry (Martín, Mendoza and Román, 2017).
It has been identified that staff possessed by BA is rare as they are highly skilled and qualified.
they provide high quality services to customers and is also able to achieve goals and objectives in
effective way (Martín, Mendoza and Román, 2017). so, this type of staff is not employed by
other firms operating within industry.
The patents of BA is rare as it can not be easily copied by rivals. this has led firm to use it
without facing any competition from others.
Similarly, strong network connection of company is rare as they are highly interconnected
throughout the globe. it can be identified that competitors require a lot of investment and strong
supply chain network to create such a large network (Mohanty, Swain and Besra, 2018).
imitable
it is stated that financial resources of BA is difficult to copy as they are already acquired by
organisation over a long years. thus, new competitors will require a high strategic tactic and long
time to reach and earn high profits.
it has been identified that food products can easily be copied by other competitors as they can
also provide it to customers. in this they do not require any huge investment or R&D to develop
new products and offer it to customers. thus, through it BA can only be able to gain competitive
advantage for short time period (Eugenio-Martin and Inchausti-Sintes, 2016).
in similar way, staff of BA can also be easily employed by other companies. they can be trained
in order to increase their skills and knowledge. moreover, working environment, policies, etc.
can be applied to improve employee skills and compete with others in industry (Mulet-Forteza
and et.al., 2018).
Similarly, strong network connection of company can be developed and interconnected
throughout the globe (Eugenio-Martin and Inchausti-Sintes, 2016). it can be identified that
competitors do not require a lot of investment and strong supply chain network to create such a
large network.
organisation
it is analysed that financial resources of BA are used in proper way. this is because there are
certain asset that is now owned by rivals who are operating in airline industry.

however, food products offered by company is not organised in proper way as company is
offering it in different way to customers. thus, this results in increasing competition for BA. they
are not able to survive and gain competitive advantage in airline industry.
It has been identified that staff possessed by BA is highly organised they are highly skilled and
qualified. they provide high quality services to customers and is also able to achieve goals and
objectives in effective way. each staff is recruited at right place and assign proper role and
responsibility (Eugenio-Martin and Inchausti-Sintes, 2016).
The patents of BA is not organised as it can not be easily copied by rivals. this has led firm to use
it without facing any competition from others.
Similarly, strong network connection of company is effectively organised as they are highly
interconnected throughout the globe. it can be identified that competitors require a lot of
investment and strong supply chain network to create such a large network.
Swot analysis of British Airways
Swot analysis focuses on the strength as well as weakness of the British Airways as it main goal
is to examine the threats as well as opportunities that can be faces by the airlines.
Strength: British airways is one of most top airline in global world. It is to be considered the
largest airline in UK in term of size. The strength of British airways is that is the largest airline
within the United Kingdom (Martín, Mendoza and Román, 2017). It is also the costumer of both
Embrarer and Airbus. It is a full time service that can offers low fares as compare to other
competitors. It also flies more than 80 nations over 200 destinations worldwide. It also serves
around 45 millions of costumers within the United Kingdom alone. Also BA is the official
partner of London Olympics 2012. It is also very busy airline that has at least one of its aircraft
that takes every ninety-second from somewhere within world.
Weakness
BA has various advantages but at the same time weakness also as half of its revenue
came from the market of the United Kingdom market. In fact Almost all the revenues of the
airlines came from the UK. It makes the airline unsafe regarding any potential market slowdown
as well as competition within the nation (Martín, Mendoza and Román, 2017).
Opportunities
In the year 2017 BA announced launching new holiday routes such as Malaga, Palma, florence,
lbiza from Bristol as Briminghan airports within the United Kingdom market.

With the developing economies as well as growing demand regarding inter connectivity,
expansion of the middle class, enhancing international business that crates important
opportunities (Martín, Mendoza and Román, 2017).
Threat
It is known as the last element within the swot analysis as here the threats are the competitors as
firms is facing recently a powerful rivalries within the various routes such as Air India, American
airlines ,Emirates airline. Also, rising the cost of fuels as well as labor cost within the United
Kingdom are some challenges that are facing by BA (Gretzel, 2017)
. It is also considered as form the beginning Ba is involved within various number of the
accidents and incidents.
Infrastructure improvement
With the improvement of the infrastructure within developing as well as developed world as
there are various alternative modes regarding transportation such as Japan and china bullet trains
as well as underground metros posses threat that can be a serious threat to the buisness of the
airlines industry (Mohanty, Swain and Besra, 2018).
Interrelate micro and macro factor and how it influence strategic decision
Strength: British airways is one of most top airline in global world. It is to be considered the
largest airline in UK in term of size. The strength of British airways is that is the largest airline
within the United Kingdom. It is also the costumer of both Embrarer and Airbus. It is a full time
service that can offers low fares as compare to other competitors (Mulet-Forteza and et.al.,
2018). It also flies more than 80 nations over 200 destinations worldwide. It also serves around
45 millions of costumers within the United Kingdom alone. Also BA is the official partner of
London Olympics 2012 (Mohanty, Swain and Besra, 2018). It is also very busy airline that has
at least one of its aircraft that takes every ninety-second from somewhere within world. Due to
the political factors of British Airlines the Effect of Brexit unable to impact negatively on the
firm as it has various destination around 200 all over the world so the negative effects of the
Brexit unable to influences the Firm (Sirgy and Uysal, 2016).
Weakness
BA has various advantages but at the same time weakness also as half of its revenue
came from the market of the United Kingdom market. In fact Almost all the revenues of the
airlines came from the UK. It makes the airline unsafe regarding any potential market slowdown

as well as competition within the nation. Due to Brexit the firm faces the negativity effects
regarding the economic conditions as Firm is mostly operating within UK as due to Brexit firms
faces loss in revenues it faces the loss of the firms (Mulet-Forteza and et.al., 2018).
CONCLUSION
Present Report focuses on Non government organization. Operates autonomously of
government NPO can operates within the principal. NGO works for the betterment ,development
NPO is used to setup to promote science,art. Micro Trade values to the economy increases the
income as well as lowering the business cost. Small enterprises independently owned has 10 to
5employees. They only needed a business license. Medium sized earns more revenues and
employees less that 250. It creates bridge between big corporations and small business. Political
factor as Negative impact is as increase in the services will also require them to bring major
changes in their working structure that will increase their cost and expenses. Economic factor as
revenues generated in overseas currencies appoint more number of employees to make work
more efficient as labour rate has been reduced. Negative impact British Airways is completely
engaged in creating pollution flights were being stopped negative impact on working of
company. Legal factor as British Airways providing better environment and taking care of
health conditions of their employees e impact on working and growth of company. It focused on
consumer have the other choices of flights as cost related to capital structure in order to enter
this industry is really high. Weakness of firm It makes the airline unsafe regarding any potential
market.