Business and Business Environment: An Analysis Report

This report provides a comprehensive analysis of the business environment, examining different types of organizations (private, public, and non-profit), their size and scope, and organizational structures and functions. It includes a case study applying the PESTEL model to the UK retail sector, evaluatin...Read More

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
1) Different types of organisation .............................................................................................1
2) Size and scope of organisation................................................................................................2
3) Organisation structure and function........................................................................................3
PART 2............................................................................................................................................4
A) PESTEL model of the sector for analysing impact of macro environment on UK retail
sector...........................................................................................................................................4
B) SWOT analysis and PESTLE analysis for determining the influence on decision of the
supermarket.................................................................................................................................6
C) Explain how strengths and weaknesses interrelate with external macro factors....................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment is the combination of internal and external factors of company. It
include employees, customer expectation and supply and demand etc. This factors affect the
activity of company in direct or in-direct way and influence the business situation. It help an
organisation to identify different business opportunities and arrange different resources that help
to earn more profits for them (Hillary, 2017). Business environment are of two types which is
micro and macro internal environment represent by micro environment while macro environment
impact on external environment of company. The present report is divided into two parts the first
task cover size and scope of different type of organisation. Second part represent case study
which show positive and negative factors of external environment of company. With the study of
proper business environment company increase overall performance for their business.
PART 1
1) Different types of organisation
To develop an organisation there are more than two individuals work together that help
an organisation to achieve their goals with efficiency and effectiveness. For this different type of
organisation are present which are known as private, public and non-profit organisation. They all
work in the society or market but with different purpose by which organisation are identified and
divided into different sectors. As each company divide their vision as per their purpose it help
company to retain their business for longer period. With study of business environment company
planned their activities and develop product in sequential manner that help to gain competitive
advantage (Hamilton and Webster, 2018). Private organisation are those companies which
operate by individuals or partnership with motive of earning profit for their business. In this task
Mc Donald is chosen as private organisation which operate its business activity under retail food
business. In present company outlets are present in more than 100 countries which help to cover
large base of customer for their business. As company provide quality products to their
customers that help them to serve more than 60 million customers. This factor is the reason that
Mc Donald fall under private organisation category because they operate business activities and
increase their profits with sale of more products in the market. There are more than 30,000
outlets that are operate by Mc Donald and they large variety of products to their business. Like
veg-burger, milk shake etc. For the case of Mc Donald there are different products that are
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manage with work-force of 2 to 200 members. They help organisation to increase their
performance in the market as it also increase the goodwill of company that help to generate trust
among customer's.
Non-profit organisation refer to those companies which advocate their business for the
solution of social cause (Deasy and et. al, 2016). This are mostly operated by government and in
this different members work together that are employed by government. Usually non profit
organisation work with motive to provide services to their customer by charging minimum price
from them rather than to earn more amount of profits for organisation. National health services is
Non Profit organisation which is reputed health care company. It is situated in London and
provide different services to their clients. It include eye-test, emergency test etc. In present
scenario organisation is working in more than 20 countries with help customer to receive better
treatment for their health. As management ensure about safety of clients and provide more health
benefits among their services. The non-governmental organisation are developed with motive of
increasing life principle among customer's. In this different members are volunteer together and
combine their efforts that help to reduce customer problems. Like Oxfam is NGO that was
founded in 1995. in this different team work to raise the living standard of individual. The
organisation work to develop plans that help to reduce poverty in society. They offer food,
education and shelter to needy persons. This activities help to add more value among customer's
by working for the welfare of society.
2) Size and scope of organisation
The vision help an organisation to develop their goals before entering into market. Like
private or profit organisation organise their activities to earn sufficient amount of profits from the
market. While non-profit organisation work to satisfy need and demand to customer. Different
types of organisation has different size and scope by which they work in market to capture large
market (Laudon and Traver, 2016). The purpose of this organisation are different but they all
support for the economic development of UK. For this case small, medium, large and micro
organisation is chosen to understand size and scope of different organisation. In small
organisation usually there are less than 50 employee's with maximum turnover of ten million
euro. In today era Austin Fraser work as small organisation in UK that operate its business by
fulfilling recruitment opportunities in engineering and IT industry. As this organisation came in
market in the year 2006 and operate business to build better customer relationship with
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customers specifically in UK market. Medium organisation are those which operate their
business at national level with providing employment to 250 employee's. Unicorn grocery is the
example of medium organisation that is operating their business and offer fresh grocery items to
their customer such as vegetable and fruits (Kolk, 2016). Management of Unicorn grocery adopt
new technique by which they expand their market. Grocery items are always need by customer
because they are consume to maintain proper health. So there is always scope for company to
increase sell of their products.
Micro organisation are those in which there are less ten employee's work for complete
company activities. Usually this company works to generate high profits by implementing cost
effective ways to produce goods. This organisation are expert or specialize to satisfy need and
demand of customer. Writeup is working as micro organisation in UK they offer cloud based
products to professional specifically for health care department. While in large organisation there
are more than 250 employee's which work to cover potential customer of market. In context of
large organisation McDonald is the best example as they work on the principle and make
strategy by which they increase their market with best possible manner. This increase customer
base and people will prefer quality product which is maintain by management of company.
3) Organisation structure and function
For every organisation it is essential to develop goals and then prepare functional
activities so that organisation are able to complete their project. After preparation of functional
activities management delegate this function as per role and responsibility of company. Along
with this organisation structure is important to perform business activities. It help organisation to
manage their task in co-ordinated way between different employees. In context of McDonald's
company implement their organisational structure to monitor all functions and further divide it
among employee's so that effectiveness in result (Charter, 2017). A proper organisational
structure also help organisation to avoid conflicts and confusion between employees. While on
other hand National health services implement their hierarchical structure. As it is essential for
company because it is complex process and interrelate with the life an individual. This structure
help organisation to make better plans for company. As much management interact with in
different departments of company it is easy for them to perform functional activities of company
because organisation structure is the way by which different department make efforts to achieve
similar goal. Basically NGO execute flat organisational structure in company. It help them to
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make quick decision and effective result will bring out from this functions. They work for
welfare of society as in this case better coordination is needed between volunteers so they
perform well and achieve their motive that help society to improve standard of living. Like the
Oxfam has approximately 20 companies or volunteers groups that work under them. So to
manage them all flat organisation structure is necessary to implement (Deasy and et. al, 2015).
Every system has different positive and negative that impact on goal and objective of
company. In this task Transactional organisation, international and global organisation structure
are mention as follow. First transactional organisation focus to make plans that help to grow
business in other countries as it help to bring foreign exchange in the country. While for the
international organisation promote import and export in the country. Like Mcdonald's promote
business in other countries it help them to find out new culture and deliver their products as per
demand of customer. As decision power hold in the central management of company. The last is
global business organisational structure in this power is divided among all department as in this
organisation want to grow in other countries with high goodwill. Like NHS implement this
structure as it help to gain more customers with similar goodwill.
PART 2
A) PESTEL model of the sector for analysing impact of macro environment on UK retail sector
PESTLE model is an analytical tool which is used for identifying external macro-
environmental factors and their impact on growth and success of organisation. This model
includes political, social, economical etc. which are discussed as below:
Political: This factor comprises of government policies, political stability etc. in which
business organisations of retail sector performs their duties. These factor can impact the
profitability or growth of firm in positive or negative manner (Kljucnikov and et. al., 2016).
Therefore, management of each firm should effectively consider these factors so that any kind of
difficulties are not faced by them in marketplace. Due to Brexit, sales figures of Tesco were
reducing but for overcoming these factors company have started to selling their products at lower
prices so that customer base can be maintained at marketplace.
Economical: This factor includes interest rates, inflation, per capital income etc. which
should be consider by each firm of retail sector while deciding prices of offering. Through
analysing these factors retail companies can easily offer their products as per the purchasing
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power and economic condition of customers. If they not set the affordable prices then it will
negatively impact on the customer base. For e.g. Marks and Spencer have not used effective
pricing strategy for attracting customer due to which profitability and sales figures of firm were
reduced (Reason why M&S is in trouble, 2018).
Social: This factor includes taste, belief, preferences of customers which can positively or
negatively impact on the sales figures and customer base of each retail firm. For example- M&S
have not followed current market trends and needs of customers due to which sales and
profitability of firm were decreased in marketplace (Bah and Fang, 2015). In order to overcome
this issue, company have closed its 22 outlets across the world (Marks & Spencer to close 100-
plus stores by 2022, 2018).
Technological: This factor is related with technological advancement that should be
consider and implement by management of each firm because each individual wants comfortable
zone and quick services while shopping its desired things. Due to increasing demand of
technology, Management of Tesco have implemented advanced technology in form of robotics
in their outlets so that customer don't feels dissatisfied while shopping from their outlets (Tesco
shoppers enjoy grocery delivery via robots, 2019).
Environmental: This factor comprises of laws and legislations which are made by
government for protecting environment and natural resources of nation. As the government of
UK nation is more strict towards protecting of natural resources and environment then
management of each retail firm have responsibility to follow each legislations of environment so
that brand image of company can be maintained in front of customers. For example – In 2012,
Marks and Spencer have removed plastic carry bags from their outlets and started taking charge
on plastic bags (Chang, 2016). Through this, company have made its positive image in front of
government which leads the firm towards competitiveness in marketplace (Marks & Spencer
green chief attacks government's 'uncertain' policy, 2012).
Legal: This factor is related with laws and legislations of government which are
incorporated by UK government for so as to protect the right of employees at workplace. For e.g.
Managers of Morrisons have paid a huge amount in form of claim to their employees because
they have published private information and details of their employees as a report in newspaper
(Morrisons faces ‘vast’ payout after losing data leak legal challenge, 2018).
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B) SWOT analysis and PESTLE analysis for determining the influence on decision of the
supermarket
SWOT analysis is formed by companies in order to identifying internal strengths,
weaknesses as well as threats and opportunities. SWOT of M&S is given as below:
Strengths Weakness
 Brand image and customer base of firm
is very high because company believes
in offering quality products to their
customers.
 Company regularly innovates and make
modifications in existing products
because of which sustainability of firm
is very high in marketplace.
 Due to Brexit, Skilled and capable
workers have left their job which
negatively impacted on the profitability
of firm.
 Company is not focusing on market
trends and customer's current needs
because of which sales figures and
profitability were decreased in
marketplace.
Opportunities Threat
 Marks and Spencer can expand its
business operations in big Asian
markets like India, China which is
beneficial for profitability and sales
figures.
 Company can make diversification of
their products and make focus on
manufacturing fashionable products
which will be beneficial in increasing
customer base and sales figures.
 Giant players like Tesco, ALDI are
providing tough competition in
marketplace.
 Tax duties of government can be
revised at any time which can become
threat for profitability of firm.
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Porter's five force model
` Porter's five force model is the tool in which there is discussion about five factors which
provides knowledge about intensity of competition in industry. There is much competition in UK
retail sector, so in this case it is important to understand factors which affects profitability of
association. In this M&S organization is taken as UK super market chain. Porter's Five Force
Model of M&S is discussed as under-
Threat of new entrants- Threat of new entrants is more in industry because there are
different organizations which enter in retail sector. When new organization enter in market, so
managers of M&S has to plan for launching new product and service in industry.
Bargaining power of suppliers- Bargaining power of supplier is low because of many
suppliers in industry. As there are many suppliers, so M&S has opportunity to contact with other
suppliers. This makes suppliers not to shuffle their cost.
Bargaining power of buyers- Bargaining power of consumers is high because as there are
many consumers, so if products of M&S are expensive, then they can switch to other brand. So
managers of M&S has to analyze demand of consumers and take actions accordingly.
Threats of substitute- Threat of substitute is more in UK retail sector. For instance: if
price of coffee is more, then consumers can switch to coffee. Managers of M&S are thinking to
provide services with service oriented strategies in contract to product oriented strategies.
Competition in industry- This is the aspect which focus on number of competitors in
industry (Erasmus, Strydom and Rudansky-Kloppers, 2016). In UK retail sector, there are many
organizations which operates as retail organization in UK. So competition in UK sector is more
so managers of M&S has to provide products at lower cost as compared to competitors to exist in
market.
C) Explain how strengths and weaknesses interrelate with external macro factors
There are five factors which talk about external environment of industry such as political,
economical, social, technological and legal factor. There is discussion about interrelationship
between external and internal factors of M&S which is discussed as under-
Political factor- In this factor, political government components are considered. Due to
Brexit, there is negative impact on growth and development of association which is weakness for
M&S. But due to Brexit, product of M&S are selling at reduced price, so it is easy for M&S to
expand in market.
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Economical factor- Tax rate in UK industry can be revised any time, so in this price of
product can not fix which affects working style of M&S in negative way. While if tax rate gets
reduced, then this is positive for M&S because cost of product gets reduced and consumers are
ready to spend their money on disposal goods (Wheelen and et. al., 2017).
Social factor- There are many competitors in UK retail sector such as TESCO, Sainsbury,
etc. of M&S. So it improves performance of M&S to outshine in market because new and
innovative approaches are adopted, then consumers satisfaction can be maintained. While
managers of does not focus on consumer demand and desire, so they are not to understand what
changes has to made and this affects sales of M&S which is negative for association.
Technological factor- Managers of M&S are using new and latest technology through
which their operational efficiency is increasing, which assist in keeping consumer satisfied.
While due to implementation of new technology,. There is requirement of funds for installation,
maintaining, training, etc. So it results in costly approach for M&S. Sometimes, employees are
not ready to work under new technology, so this affects performance of M&S in negative manner
(Evans and et. al., 2017).
Legal factors- Under legal factor, laws and regulations are covered. Managers of M&S
have positive impact on performance because they are following rules and regulations properly
such as consumer protection act, etc. But as changes in legal aspects are taking frequently, so it is
important to hire legal expertise which requires hiring cost for M&S.
Environmental factor- Due to increase in pollution, carbon print and other harmful gases
there is negative impact on quality of products and services of M&S offered to consumers. While
managers of M&S are thinking to use solar energy, recyclable material, etc. which assist in
preserving and maintaining sustainability of environment. So there is positive impact on
performance of M&S.
CONCLUSION
From the above report it has been concluded that to manage business environment
company has to cover all scenario that impact on their business activity. Proper plans and
strategy is developed by an organisation with the understanding of business environment. Their
are large number of companies working in similar industry so it is necessary for organisation to
understand their strength and weaknesses it help to perform functions smoothly with efficiency
and effectiveness. Every organisation are developed with different motive and create their
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function and structure as per their purpose, it help organisation to attain goals in minimum time
period.
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REFERENCES
Books and Journals
Bah, E. H. and Fang, L., 2015. Impact of the business environment on output and productivity in
Africa. Journal of Development Economics. 114. pp.159-171.
Chang, J. F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
Deasy, S. and et. al, 2015. User interface for controlling use of a business environment on a
mobile device. U.S. Patent 8,954,050.
Deasy, S. and et. al, 2016. Controlling use of a business environment on a mobile device. U.S.
Patent 9,247,042.
Erasmus, B., Strydom, J. W. and Rudansky-Kloppers, S. eds., 2016. Introduction to business
management. Oxford University Press Southern Africa.
Evans, S. and et. al., 2017. Business model innovation for sustainability: Towards a unified
perspective for creation of sustainable business models. Business Strategy and the
Environment. 26(5). pp.597-608.
Georgescu, M. and Popescul, D., 2015. Social Media–the new paradigm of collaboration and
communication for business environment. Procedia Economics and Finance. 20.
pp.277-282.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Kljucnikov, A. and et. al., 2016. The entreprenurial perception of SME business environment
quality in the Czech Republic. Journal of Competitiveness. 8(1).
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Laudon, K. C. and Traver, C. G., 2016. E-commerce: business, technology, society.
Saleem, S., 2015. BUSINESS ENVIRONMENT, 3/e. Pearson Education India.
Wheelen, T. L. and et. al., 2017. Strategic management and business policy (p. 55). Boston:
pearson.
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