Analysis of Business Environment Factors: Arcadia Group PLC Report

This report provides a comprehensive analysis of the business environment, focusing on Arcadia Group PLC, a British retail company. It begins by explaining different types of organizations (private, public, and voluntary) and their legal structures, using Arcadia Group, the BBC, and the British Red Cross as examples. The report then examines the scope and size of these organizations. Next, it explores the interrelationships between various organizational functions (human resource, marketing, operations, and finance) and how they align with organizational structure and objectives. The core of the report involves a PESTLE analysis to determine the positive and negative impacts of macro-environmental factors (political, economic, social, technological) on Arcadia Group's operations. A SWOT analysis is also applied to identify the company's strengths, weaknesses, opportunities, and threats, and to demonstrate how these internal factors are linked to the external macro environment. The report concludes with a summary of the key findings and their implications for Arcadia Group.

BUSINESS & THE
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
Explanation of different types of organizations and their purposes and legal structures............3
Scope and Size of various types of organizations........................................................................5
LO2..................................................................................................................................................6
Relationship between various organizational functions and they are interlinked with the
organizational structure and objectives........................................................................................6
LO3..................................................................................................................................................7
Negative and positive impact of macro environment on the business operations.......................7
LO4..................................................................................................................................................9
SWOT Analysis of Arcadia Group plc........................................................................................9
Weaknesses and Strengths are interrelate with external macro factors.....................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment refer as external and internal factors that influence the functions of
the company including customers, employees, management and regulations of the business
(Krajnakova, Navickas and Kontautiene, 2018). This is the forces and factors that affect the
organization ability. The study is based on Arcadia Group Ltd. It is retail industry and mainly
deals in clothing, shoes and accessories. The report will explain various types of organization
and their purposes. It will explain the scope and size of various types of organizations.
Furthermore, the study will define the relationship between various organizational functions and
will define how they are interrelated with the organizational structure and objectives. Moreover,
the report will determined negative and positive impact of macro environment factors on the
operations of the business. It will apply SWOT analysis for identifying the weaknesses and
strengths of the company. Lastly, it will explain how weaknesses and strengths are interlinked
with macro factors.
LO1
Explanation of different types of organizations and their purposes and legal structures.
Private organization - Arcadia Group Ltd
Arcadia Group Ltd is British retailing company. It is founded in the year 1903. The key
people of the company are Ian Grabiner, Philip Green and Paul Budge. The company deals in the
products such as shoes, clothing and accessories. The headquarters of the firm are situated in
London in UK.
Purpose -The purpose of Arcadia Group is to deliver and create fashion that is loved by their
customers through fashion online experiences, great stores and for the brilliant people as they
love what the company serves. They want to make better things for their people, customers and
partners (Vasilev, Bakhvalov and Kazakov, 2017). Thus, by this the company is able to attain
higher profitability.
Legal Structure - Arcadia Group has legal team that provides legal advices in broad spectrum to
all their brands and service departments. Their work includes negotiating commercial contracts

for providing best advice on the business projects, corporate governance and litigation. They
provide legal compliance and protect the business. They also look after intellectual property.
They do audit and helps from preventing the fraud and loss in the business.
Public organization - British Broadcasting Corporation (BBC)
BBC is public service broadcaster. It serves mass media industry. It was founded on 18
October in the year 1922. BBC founder is HM government John Reith who was a first director
general. The headquarters of the corporation is situated in Broadcasting House, London in
United Kingdom. The corporation telecast their news on television, radio and through online
channels.
Purpose - The BBC purpose is to serve the audience through provision of high quality,
distinctive and impartial services that entertain, educate and inform the public. There purpose is
to provide factual programming, current affairs and high quality news for engaging the audience
with the current events (Komljenovic, Loiselle and Kumral, 2017).
Legal Structure - BBC is regulating by the Ofcom. It helps in issuing the operational framework
and also sets licensing which contains the regulatory requirement which should be met by the
corporation. There legal structure consists of Executive board, Governor, Journalism and
Commercial board. BBC executive board has nine directors who have to report to Director
General.
Voluntary organization - British Red Cross Society
British Red Cross is the body of impartial and neutral humanitarian network who served
worldwide. It is founded on 1870. The society is incorporated by Royal Charter. The chief
Executive of British Red Cross Society is Mike Adamson.
Purpose - British Red Cross purpose is to mobilize the humanity power through which
communities and individuals can be prepare to recover and deal from the crisis. They also
support the victims of modern slavery.

Legal Structure - British Red Cross society is governed by the board of trustees. There is chief
executive officer of British Red Cross in which there is policy and legal unit who look after all
the legal and compliance matters. They follow up legal laws and regulations in the organization.
Scope and Size of various types of organizations
Private organization - Arcadia group
Size - The group has more than 2500 outlets in UK, as well as more than hundred franchises in
other countries. The company has more than 22000 skilled and trained employees. The company
also has more than 1170 stores in 36 other countries outside UK and it provides shipping in more
than 107 countries across the world.
Scope - The scope of the company is good as increasing number of users on social sites makes it
popular among individuals (Hamilton and Webster, 2018). The company has various scope of
growth on digital platforms in countries such as USA, Brazil, and Canada.
Public organization - British Broadcasting Corporation
Size - It is one of the largest company having more than 22000 qualified and trained staff, more
than 16000 are in public sector broadcasting. Number of part time workers is 35402. The
company earns net revenue of more than 69 million pounds and more assets of more than 1.172
billion pounds.
Scope - The scope for this company is extremely high in under developed and developing
countries such as India, Germany and Finland, etc. The company also has some scope in
developed countries such as USA.
Voluntary organization - British Red Cross Society
Size - This organization has more than 32500 volunteers and more than 3500 staff members. The
company has a assets status of more than 1.94 billion pounds and generates a surplus of more
than 56 million pounds. The company has more than 1000 offices throughout the UK.
Scope - The Company has a big scope of growth in countries which are either developed or
developing such as Japan, USA, Russia, etc (Prajogo, 2016). The scope of this organization is

not in countries which are underdeveloped such as South Sudan, Burundi, etc. because they will
have lack of financial resource to donate.
LO2
Relationship between various organizational functions and they are interlinked with the
organizational structure and objectives.
There is close interrelationship between the organizational functions, structure and
objectives. The organizational functions are operated in Arcadia Group based on their objectives
and structures. The interrelationship between various functions of the business is as follows -
Human resource - The Human resource function of the Arcadia Group is interlinked with the
marketing function. The work of HR function is to recruit top talented staff and employees in the
company. For this the marketing function post job advertisement on the company’s website and
also publishes in print media through which large number of applicants apply for the vacant job
role in the company (Bejtkovský Rózsa and Mulyaningsih, 2018). Hence, by this the HR
department of the company is able to select top talent. If the well educated and skillful workforce
is present in Arcadia group then one of the objectives of the company gets fulfilled. To improve
the productivity of the company it is crucial to have a skillful workforce.
Marketing - The Marketing function of the Arcadia Group is interlinked with the IT function of
the company. For doing promotion and advertisement of the products of the company, Marketing
function take help of the IT department. They highly use social media platform for doing
advertisement of the company's shoes and clothes. They also use online platform for doing
promotional activities and for running various campaigns for attracting the customers towards
their product and making the sale happen. Thus, through this the sales of the company get
boosted. It is also interlinked with the company's objective which is to increase the sales.
Operational function - The operational function of Arcadia Group is interlinked with Finance
function. For running the day to day operations of the company and for purchasing the raw
materials there is need of finance, which can only be fulfilled by the finance department. Hence,
finance department provide good sum of money so that fashionable clothes can be manufactured
by the operational department of Arcadia Group. Also, the objective of the company’s gets

fulfilled that is to increase the customer satisfaction. If the operation department of the company
makes high quality products then the customer’s satisfaction will surely increased in Arcadia
Group.
Finance - The finance function of the company is interlinked with marketing department of the
Arcadia Group plc. The finance department of firm has to make budgets for the company. They
also have to prepare marketing budget for doing the promotion of the products, for this they take
insights from the marketing and then prepare budget accordingly. Marketing department provide
relevant data to the finance department through which accurate budget can be prepared. Finance
function is also interlinked with the human resource as they have to provide salary to the staff,
employees and manager of the company. Thus, through this the employee’s feels motivated if
they get paid accordance with the work they have done for the company. If they get motivated
then employee’s retention will also gets increased in Arcadia Group which is also a objective of
the firm to retain their employees for long time.
LO3
Negative and positive impact of macro environment on the business operations
Pestle Analysis of Arcadia Group plc
Political Factors - Arcadia Group operates in 36 countries and provides shipping to 107
countries by their online websites. The political forces of all the countries affect the business of
the company. The government policies and regulations in different countries also influence the
global business of the firm (What is PESTLE Analysis?, 2020). The company needs to follow
the policies and procedures of the government in which they are operating. There are also
government restrictions of foreign brands n some of the countries. Thus, it makes harder for the
foreign brands to enter in such markets.
Economic Factors - It plays crucial role for the business environment of Arcadia Group. The
economics conditions decide how much revenue and profit can be generated by the company. At
the time of recession the purchasing capacity or power of the customers get decreased during this
time the company has to suffer from the heavy losses. The exchange rates fluctuations also put

impact on the firm's operations (Fabus, 2018). Arcadia group have to deal with the exchange
rates in the countries in which they are operating.
Social Factors - The cultural and social factors put potential impact on the business profits of
Arcadia Group. It is important for the firm to gain deep knowledge of the cultural and social
background of the customers in the countries in which they are running business. The choices
and preferences of the customers gets changed as per their culture, so it is important to deliver
fashion and clothes which link with their needs and choices. Thus, through this the customer
satisfaction in the company gets increased if Arcadia Group makes clothes as per their
customer’s choices in different countries. The company has a reputation that their clothes size is
not very good. There is lack of availability in the sizes, it is limited especially in women
clothing. Hence, Arcadia Group has to invest their money for providing better sizes to their
customers which can be availed in their retail stores.
Technological Factors - Arcadia Group is making huge investment in the Virtual and
Augmented Reality for transforming their sales. The company is using data analytics for shaping
their customers experience in retail stores (Lee, 2017). To enhance the buying experience of the
customers, the Arcadia Group is personalized the customer experience through technology. The
company is also using social media platform for doing advertisement of their products. They are
also using technological software’s in their supply chain for doing timely delivery of the
products. Smart mirrors are highly in use in retail stores of Arcadia Group plc. This helps to
increase the sales of the company. Hence, technology plays crucial role to drive the business of
Arcadia towards success.
Legal Factors - The laws and legal compliance varies in countries. The Arcadia Group has to
follow the legal obligations of various countries in which they sale their clothes and shoes. Labor
laws also put potential impact on firm's operational costs. They have to provide minimum wages
to their staff and workers. Health and safety laws related to the workers and employees also put
potential influence on the operations of the company.
Environmental Factors - Sustainability is becoming major concern of all the countries. This
helps to create a better brand image for the Arcadia Group plc. The plastic bags are banned in
many of the countries (Kozubikova, Kotaskova and Ključnikov, 2019). They cannot sale their

clothes or shoes in plastic bags, they are using paper bags most of the times in their retail stores.
Through this there brand image get improved. Hence, the Arcadia Group has to consider the
environment laws in various countries. Renewable energy is another concept related to the
environment safety. Arcadia Group has also taking various initiatives by investing in solar
panels.
LO4
SWOT Analysis of Arcadia Group plc
Strength -
 Arcadia group has a strong distribution network all over the world; the company's online
as well as physical outlets are one of the biggest strength of the company (Gürel and Tat,
2017).
 The financial position of Arcadia is well designed and the company has a strong financial
base, also the company has earned good amount of profit in past five consecutive years.
 The cost structure of the company is well designed and helps the company to to produce
goods at low cost and enables the company to sell products at low price.
Weakness -
 The Arcadia's production and sales are not satisfied as the company has an excess
inventory of products that are left after per day sales.
 The company has high employee’s turnover rate as compared to its customers. As a result
the company has to spend more on training and development.
 The liquidity problem of Arcadia group is also a big weakness of the company as for
meeting day to day expenses the firm needs to be dependent on other institutional and
non institutional sources.
Opportunity -
 Increasing social media users is the biggest opportunity for the Arcadia group, as the firm
mostly deals on online platforms such as Facebook, Twitter, and other social sites
(Ištvanić, Crnjac Milić and Krpić, 2017).

 The technological development in the field of e-commerce is providing opportunity for
Arcadia of carrying business on online platforms.
 In the new era decreasing trade and tariff barrier in every country are making bigger
opportunities for Arcadia.
Threat -
 One of the threats to Arcadia group is the coming of new business units of similar nature
in the market which is often called threat from new entrants.
 The fluctuating exchange rates are the biggest barrier for the Arcadia group as these rates
keeps on changing and the firm will incur losses during trade of its products across the
world (Phadermrod, Crowder and Wills, 2019).
 Constant technology development is also a kind of threat for Arcadia, as the company has
to spend a lot of money again and again to train the employees the technology is rapidly
upgrading and changing day by day, as new innovations are introduced every day.
Weaknesses and Strengths are interrelate with external macro factors
 How strength of a company affects its decision making?
Decision making is directly affected by the strengths of Arcadia. The strengths are key points
which affect decision making in an organization. The strengths such as strong financial base
enable the firm to make investment decision in easy way as the financial need will not affect
the investment. In this way decision making is directly affected by strengths of a firm. If the
company has skilled and well trained personnel they will be able to take decisions regarding
technological development in an easy way as the trained personnel will be able to easily
handle new technology (Ghobakhloo Azar and Tang, 2019). The strength of Arcadia is that it
has well designed cost structure and this directly affects the decision making of the firm. As
the company produces its product with lowest possible cost and provides the customers
maximum satisfaction then the firm can take decisions irrespective of competitor’s strategy.
 How weaknesses of a company are affected by external macro factors?
Weakness directly interrelates with external macro factors. Such as the political factors of a
company directly affects the weakness of a company. If the attitude of government is not

good towards a particular business then it can affect the functioning of a company. Arcadia
group also has a weakness of lack of liquidity in the firm and for this company will borrow
money from government also and can government will not support that business. The rules,
regulations and laws of a country also affect the company's weakness and can influence the
operations of a firm negatively (Okeyo, Gathungu and Peter, 2016). The Arcadia group
operates in various countries and laws of each country are different. The biggest weakness of
Arcadia is high employees turnover rate will also be increased if laws of a particular country
provide a right of minimum amount of wage to every employee; the will increase the
problem of Arcadia as the company will increase its cost and expenses to cover the loss. By
this the customer satisfaction will be directly affected.

CONCLUSION
It has been concluded from the above study that businesses environment influence the
operations of Arcadia Group plc. It also includes how well the customers’ expectations meet in
the business. It has been summarized that the size and scope varies as per the organization type
and purpose. It has been identified that organizational functions, objectives and structure are
interconnected with each other. It has been determined that there is potential impact of macro
environment factors on the business of Arcadia Group. The political, legal and economic factors
are affecting the most for the business operations of Arcadia Group. There is opportunity for
Arcadia Group in e-commerce through improving the technology in their retail stores they are
able to gain competitive edge and they can also increase their profitability.

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Online
What is PESTLE Analysis?, 2020. [Online]. Available through:<
https://pestleanalysis.com/what-is-pestle-analysis/>