Business and Business Environment Analysis Report: LO1, LO3, LO4

This report provides a comprehensive analysis of the business environment, focusing on different types of organizations (public, private, and voluntary) and their associated legal structures. It explores the scope and size of various organizational models, including micro, small, medium, and large enterprises. The report also examines the interrelationship between organizational functions, such as finance, marketing, human resources, and research and development, highlighting their importance for effective business operations. Furthermore, it applies the PESTLE model to analyze external factors impacting businesses, comparing Tesco and Asda. The report concludes with an assessment of how internal strengths and weaknesses interrelate with external macro factors, providing a holistic view of the business landscape. This report is a valuable resource for understanding key aspects of business development and environment analysis.

Business and Business
Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1. Types of organisation and legal structure associated with it................................................3
P 2 Scope and size of various types of organizations..................................................................5
P 3 Relationship between organizational functions.....................................................................6
LO3..................................................................................................................................................7
Pestle Model................................................................................................................................7
LO4..................................................................................................................................................9
P5 Internal and External Analysis...............................................................................................9
P6 Strengths and Weaknesses Interrelate with External Macro Factors...................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business can be explain as a process in which supply of products and services of an
organisation is used and purchase by the customer. Business environment consist of both internal
as well as external factors which impact on the growth of the organisation for example
employees, customers satisfaction level, supply and demand, management, clients, suppliers,
owners, laws and policies by government, innovation and technological advancement, social and
market trends, economic fluctuation etc. The report highlights different types of organisation and
its legal structure, it also explain size and scope of this organisations.
LO1
P1. Types of organisation and legal structure associated with it.
Public, Private and voluntary are three different types of organisation. Public organisation
sold it shares in stock market to public. And on the other hand, Private organisation is run by the
individual and all benefits remain in hand for example Hotels. In voluntary sectors, organisation
is concerned with social awareness and development for example save the children.
Public organisation
Purpose:
This type of organisation is run for the benefits of all share holders and public can
purchase share of the organisation in stock market. Public organisation is focused on providing
services to citizen of the country with minimum profit and on the other side public can contribute
too by investment. Organisation has benefit of increasing financial capacity by public investment
and on the contrary public also become part of organisation by purchasing share (Khan and
Khandaker, 2016).
Example:
Tesco is public organisation and help the customer by providing services in reasonable
price. It has multiple retail stores in different part of UK and share its market.
Legal structure:
Group of director takes decision in development and process making of the organisation
and hence decrease more structured. Records and account in the end of year publish in
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government magazines and newspaper in the interest of public. Share holder can send opinion
using feedback and Board of director frame policies by keeping public investor in mind.
Private organisation
Purpose:
Private organisation is run and owned by the individual and government can also
interfere in the matter of laws and policy. Opening and running of the business required
government permission and after each year company has to submit report relating to CSR,
balance sheets etc. Most of the profit is taken by the owner of the company and can make quick
changes if required.
Example:
ASDA is private organisation run by the individual and takes all profit as well can make
quick changes when required. It sells variety of product in UK (Mobiles, Groceries, Clothes
etc.).
Legal structure:
Company is flexible in dealing of all internal matters of the organisation. Owner can
make quick changes according to need and market demand. Different types of taxes have to pay
the government and show financial report of the organisation. Company has to responsible
towards CSR and on the other hand Laws and policy by the government has to applied in the
organisation.
Voluntary Organisation
Purpose:
This type of organisation is related to social interest. Voluntary organisations focus on
social and environment protection and development of the country and its citizen (Mohan and
Bennett, 2019). There is no profit generates in such kind of organisation and on the other hand
funds of organisation raise form individual, organisation or government.
Example:
Save the children is voluntary organisation of the UK. It runs by the group of people who
can make changes by group decision. It concern with the saving of children and program relative
to it for example poor children’s education.
Legal Structure
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The rules governing voluntary organisation is written in the constitution of the country
and time to time amend by the governments. These types of organisation form by group of
people and run the organisation in public interest. However, large number of formalities and
documentation required for opening such kind of organisation and audit has to submit to
government in the end of the year.
P 2 Scope and size of various types of organizations
Micro Enterprise
The number of employees are low and so is the investment which these businesses up in the
organization.
Size- Since the turnover is not that high the company has less than 10 employees working in the
organization.
Scope- These businesses are found in developing countries and being small in size therefore they
can take risks and innovation is going to be higher in these organizations. For example, Cancer
UK is an organization which is having more investments in the business and flexibility and
freedom is more for the employees.
Small Enterprise
These enterprises are owned by individuals and the number of employees is low as well in
these enterprises.
Size- There is not more than 50 employees in these enterprises and the team work and
coordination is very good.
Scope- Sole proprietors own these enterprises for example; Prufrock café is having small number
of employees working in the company (Roobeek, De Swart and Van Der Plas, 2018). The profit
margins are not that high but they have the right economic factor to be able to invest in the
future. These businesses focus on the customers and the management is well planned and
organized for the organization to function effectively.
Large businesses and medium enterprise
These businesses have to make large investments and they can function effectively and
efficiently so that there is an opportunity for these businesses in the market.
Size- There is maximum 250 employees in medium and more than 250 employees in a large
business which are present in market.
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Scope- These businesses are dependent on government and are very much dependent for decision
making. For example, Virgin money is belonging to this category and the customers have to be
retailed by the organization which is a great task for the company.
P 3 Relationship between organizational functions
The competition in the market has increased which is why it is very important for the
company to have a strong internal working which is by having a good relationship between
departments. This is going to make the organization have a good functioning and the
organization will be able to operate effectively. The departments which are going to be discussed
in the further report are finance function, marketing function, human resource function and
research and development functions.
Finance function
There are budgets which have to be planned by finance department for all the other
departments so that there is a track of investment which Tesco is having. To make sure that the
department has got the right amount the departments will have to interact and make sure that
they have the right amount. There has to be good communication so that the funds can be raised.
Marketing team also helps the finance department to get in the funds from the customers as well.
Marketing function
There are a lot of changes which have to be done in the products and services which is
why the company will have to have a strong understanding and functioning between the HR and
research and development department (Bashir and Verma, 2017). The employees have to get the
right information which is why there has to be a good bond of marketing department with the
others so that Tesco can maintain their reputation in the market. The goals have to be achieved
by marketing team with the help of finance department therefore there will have to be a good
communication between the two.
Human resource function
The human resource is the bridge between the management and the employees which are
present in an organization which is why it is very important for the Human resource department
to have a good bonding with all the departments so that the right decisions can be taken. There
are changes which the marketing department gets in the organization which will have to be
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implemented but human resource makes it easier for the employees to be able to follow them
effectively in the market.
Research and development functions
There is no direct interaction of this department with the customers which is why it is
very essential for this department to take feedbacks from the marketing team about the products
and services so that the changes can come in effectively in Tesco. There is a need of financial
help as well therefore the finance department will also have to be in confidence.
If the departments are not going to have these factors present then the organization will
not be able to maintain their reputation in the market. The demands of the customers are also not
going to be fulfilled and that is a great loss for the company in economic factor and loyalty of the
customers.
LO3
Pestle Model
It is a strategic planning tool that is used to examine external environment of the company.
It comprises five factors i.e. political, economic, socio-cultural, technological, legal and
environmental factors. Pestle analysis model is used to compare between Asda and Tesco plc.
Political factors:
Political factor is one of the major external business environment factors that put more
impact on organization’s functions.it includes all policies and strategies associated with company
that has imposed by UK’s government in order to keep control growth of businesses (Bîrsan,
Shuleski and Cristea, 2016). Government stability is one of the major opportunities for the retail
businesses because they do not have to change their trading policies again and again as result,
they will enable to gain high profitability in their retail sector. For example, UK’s government
policies such as taxation policy, foreign policy has influenced different aspects of decision-
making of Asda and Tesco in order to expand it’s business and product portfolio in the UK’s
retail sector. But trade restriction policy ha impacted on Asda and Tesco’s business activities
because they unable to trade it’s products among wide number of countries.
Economic factors:
Economical factor is also considered one of the important external business environment
factors that directly impact on business activities of companies in retail sector. It involves
economic stability, currency exchange rate and other economical aspects that increase decision-
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making process of companies in retail sector. Inflation in economy is considered one of the
major factors that promotes sustainability and growth of business in the UK’s retail market.
However, retail market is considered one of the most economic stimulating markets that give
huge contribution in influencing purchasing behaviour of the targeted customers by involving
value-based products accordingly people lifestyle. For example, Asda and Tesco both are retail
companies whose pricing policies and strategies are highly based on inflation and economical
aspects. When recession period starts up, in that state Tesco gets positive impact because people
prefer to buy groceries instead of dine out but Asda plc gets negative impact on recession period
because Asda unable to generate high profit margin on products which it sells at lower cost.
Social factors:
Social factor is one of the important business environment factors that directly impacts on
the decision-making process of corporate business associated to sustainability a growth of the
business organization (Christodoulou and Cullinane, , 2019). Social factor involves cultural,
traditional, religion, mentality, attitude and other social aspects that affiliated with customers in
UK’s retail market. For example, all retail companies i.e. Tesco, Asda and others make all
strategies i.e. marketing, promotional, product launch strategies and other strategies based on the
social aspects in order to extend growth potential of the business in the target market.
Demographical changes often brings negative impact on Tesco, Asda’s like supermarket
companies because they have to change their existing strategies in order to fulfil customer’s
needs again and again that impacts working efficiency of employees.
Technological factors:
It includes all technological development and up gradation in society that directs
organization to apply latest technologies development in society in the form of expanding the
growth potential and sustainability of the retail companies in the target market. All retail
companies i.e. Asda, Tesco and other applies internet and other social media channels to promote
it’s sales of product as a resulted technological development of society. Internet and social media
have led negative impact on Asda’s business activity because marketing representative of the
Asda announced fake promotion or discount offers but actual it was not like that. Due to this,
company have to face negative publicity among customers.
Environment factors:
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Environment factor is one of important external business environment that involve in
decision-making process of retail companies which operates in retail sector market. Currently
UK’s government has become more concern about environment crisis (Vallati and Grassi, 2019).
So, UK’s government has imposed policies for the retail and manufacturing companies to
produce eco-friendly products and takes eco-friendly practices in their business practices. All
retail companies i.e. Tesco and Asda plc recently focuses on selling eco-friendly products in
order to gain profit ratio and makes their business sustainable in the UK’s market. To meet up
with government policies have to face huge financial loss by retail companies like Asda and
Tesco.
Legal factors
It is another important external business environment factor that involves in all laws and
legislation related with corporate sector and retail market. All legislations related to workplace,
wages and employment are projected in this factor. For example, there are numerous legislative
requirements such as companies act, equal pay act, licensing, equality act as well as other
legislative regulation management of Tesco and Asda requires to comply effectively in order to
run their business in the retail market more effectively.
Situation Analysis
Market Analysis
It gives importance on the present situation of the target market. However, it involves in
examining the needs and requirement of the potential users or customers of the business. It also
involves in determining current and future needs of the target users of the company. It includes
several business environment factors i.e. marketing mix elements. It contains various external
business environment factors that change the needs and expectation of the market and financially
strong customer’s base. It also includes budgeting, monitoring and control associated to all on-
going development of the market. Management of the company plan and set budget of business
based on financial requirement of the business in order to implement different strategies. Market
analysis involves all aspects which promotes needs and requirements of organization’s loyal and
potential customer base.
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LO4
P5 Internal and External Analysis
Swot analysis is a analytical model that is used to determine strength and weaknesses of
particular organization’s i.e. Tesco and Asda plc.
Swot Analysis of Tesco
 Strengths
Tesco has strong global presence in the retail sector that is major strength of the business.
Marketing team of the Tesco is quite excellent as compared others and plays productive role in
order to bring profitability of business.
 Weaknesses
Upper management of the Tesco plc still applies traditional business tactics and strategies in it’s
business sector. These traditional tactics is not that much effective in order to improve growth of
the business.
 Opportunities
Tesco has opportunity to expand it’s business activities into multiple sectors in order to build
large customer base. For example, if organization starts it’s business in technology sector that
will generate high revenue.
 Threats
From past few years, increasing market competition in retail sector has become major threat for
the retail companies like Tesco.
Swot Analysis of Asda plc
 Strengths
Asda has strong product portfolio that is major strength of the company (Kuznetsova, 2020). It
offers it’s product and services at affordable price in the UK’s retail market as compared other
retail companies.
 Weaknesses
Existing marketing team of the Asda plc is not good due to this it often faces lose in the
economic infrastructure. In this situation, upper management of Asda must practices good
managerial skills like decision-making skills. The reason behind is that existing skills will offer
only limited success in the business.
 Opportunities
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Digital marketing is one of the major opportunities for the Asda in order to build strong customer
base. With this strategy Asda can stimulate buying behaviour of customers for it’s product and
services.
 Threats
Tesco, Sainsbury, M&S are the potential competitors for the Asda plc.
Justification
Strength, weakness, opportunity and threats are the major factors of internal business
environment are highly promoting decision-making process of both organizations. The reason
behind is that upper management of both organizations i.e. Tesco and Asda take decision as per
the market situation. Managers and leaders of the Tesco and Asda takes decision in achieving
effective returns over these factors.
P6 Strengths and Weaknesses Interrelate with External Macro Factors
Tows Matrix
It is a strategic planning tool that is used to analyse internal and external environment of
the business. Tesco use this framework
Tows Matrix for Tesco External opportunities or
External macro environmental
factors
 Online shopping
 Emerging market
 Strategic alliance with
other brands
External Threats or External
macro environmental factors
 Brexit
 Competition with
supermarket giants
 Economic crisis
Internal strengths
 Strong global
presence
 Growing market shares
 Superior technology
usage
SO Strategy
(Intrerrelationship)
 Tesco has opportunity
to build strong online
presence in the e-
commerce market
except global presence.
 Emerging market share
will support company
ST strategy (Interrelationship)
 Strong global presence
will support to
overcome Brexit crisis.
 High market share
helps to gain
competitive advantage
over supermarket
giants.
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to increase high market
shares.
 Strategic alliance and
superior technology
will help in order to
gain high profitability.
 Superior technology
application will help in
declining economic
crisis.
Internal weaknesses
 Low-cost strategy
 Poor operational
performance in
particular market
WO Strategy
(Interrelationship)
 Online shopping will
promote low-cost
strategy and attracts
customer towards
buying process.
 Strategic alliance will
overcome poor
performance weakness.
WT Strategy
(Interrelationship)
 Tesco must apply
sustainable practices
that will overcome
low-cost and Brexit
strategy (Mugo and
et.al., 2017).
 Tesco must conduct
training program that
will improve
operational
performance and
economic crisis as
well.
CONCLUSION
This report has concluded inter relationship of various function within an organisation and
connection of it with structure. This report has been shown negative and positive impact of
macro environment on business operation. In the end of report, PESTLE analysis has concluded
strength and weakness of the chosen organisations i.e. Tesco and Asda. Tows matrix model used
for Tesco to provided understanding about Interrelationship between external environmental
factor and internal strengths of Tesco on it’s business performance in this report.
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