Report on the Business Environment and Its Impact on UK Organizations

This report provides a comprehensive analysis of the UK business environment, examining the impact of internal and external factors on organizations. It explores different types of organizations, including private (ALDI), public (NHS), and voluntary (Oxfam), detailing their purposes, sizes, and scopes. The report investigates the interrelationship between various organizational functions, such as human resources, finance, research and development, and marketing, in achieving business objectives. Furthermore, it utilizes PEST analysis to assess the positive and negative impacts of political, economic, social, and technological factors on businesses. The report also includes an internal and external analysis of organizational strengths and weaknesses, and how they relate to external macro factors, providing a thorough understanding of the business environment.

Business and
Business
Environment

INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types and purposes of organisation.........................................................................1
P2 Size and Scope of various types of organisation....................................................................2
TASK 2............................................................................................................................................4
P3 Relationship between various functions of organisation in respect to objectives..................4
TASK 3............................................................................................................................................6
P4 Positive and negative impact of macro environment upon business organisation.................6
TASK 4............................................................................................................................................8
P5 Internal and External analysis to strengths and weakness of organisation.............................8
P6 Interrelation of Strength and weakness with external Macro factors.....................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Due to increase in competition, nature of businesses have now become more dynamic.
Internal and external factors of environment create a large impact policies and strategies of a
company. It includes interference of stakeholders, government policies, change in trends of
marketplace and more (Yu and Ramanathan, 2013). The present report is going to elaborate how
such aspects of business environment affect organisations of UK. Along with this, a discussion is
also made on different types of companies like private, public and voluntary with their purposes
and size of business. For this assistance, ALDI as private, NHS as public and Oxfam as
Voluntary has been taken. Furthermore, interrelationship of different departments of companies
also highlighted in this assignment.
TASK 1
P1 Different types and purposes of organisation
In business world, there are several forms of companies which carryout business activities
to deliver goods and items to satisfy the needs to people (Saleem, 2017). Individual persons and
government authorities manage and run companies for earning profits and stable economy of a
particular nation. These are various types of companies which are mentioned beneath:
Private organisation: They involve those companies which are established and managed
by individuals to generate revenue. They enhance job opportunities and deliverer services and
goods to fulfil the demand of different sections of society. This leads towards increase in
economic capability of a country. One example is ALDI which is a retail company and produce
variety of eatables and personal care.
Purpose: Aim of ALDI is to establish a robust system that supports in delivering quality
services and items to the clients. This helps the organisation in increasing their reputation of
brand to compete with rivals and competitors.
Public organisation: This is a different sector which gets funds and regulations from
officials of government to increase the development criteria of a nation. Various kinds of
schemes and benefits are given by them to the people in need. In England and whales, Crown
Prosecution Services handle cases that are related with the crime and laws. This is a public
agency. This department take cares of trial and enquiry work in Magistrate court and crown
courts.
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Purpose: The main aim of this organisation is to assist investigation and police departments
regarding advices which are concerned with laws (Sekaran and Bougie 2016). They help them in
solving different crime cases. In accordance with collected evidence they decides whether a
person is guilty or free from charge.
Voluntary Organisation: They consist of those companies which are responsible to
carry out activities and services for the welfare of the community. Different type of firms that
are part of it are for profit, Non- profit and hybrid which are happily ready to provide support
and assistance to the needy peoples. Their main motive is to improve the conditions of society
without considering their profit goals. Relevant example is UNICEF which is abbreviated as
United Nations Children’s Fund organisation. It is situated in New York. It provides
humanitarian assistance and developmental benefits to those child and mothers which are in
need.
Purpose: the major purpose of UNICEF is to protect rights of mother and Childs by
providing them with basic wants and requirements (Meiners, Ringleb and Edwards, 2014). Their
target is to eliminate poverty and reduces the cases of discrimination; violence and other life
threaten incidents.
P2 Size and Scope of various types of organisation
There are three major kind of organisations namely, Public, private and voluntary that
carry out business operations and activities with different scope and purpose. Such organisations
also differ in accordance with size, scope, objective and structure (Zsambok and Klein, 2014).
Three types of firms are mentioned as below:
Public organisation: NHS (National Health Service) provides services related with
healthcare in UK and this is a publicly funded organisation. It also provides emergency helps to
needy people.
Products and services: This health institute deliverer services and goods such as crucial
and non-critical service in medical field to individuals without any fees. It involves eye tests,
dental care, ophthalmology, Prescription and more benefits
Size and scope: It has around 210 commissioning groups of clinics with approx 1.5 million
of facility providers. In UK, government authority is responsible for the proper working of NHS
and spends around €111 billion per year for giving free services to needy people.
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Vision and mission: NHS’s mission is to contact that individuals who want to help others by
providing them free assistance and facilities. Main vision of this organisation is to increase and
improve patient’s facilities.
Business objectives: main aim of NHS is to offer emergency care to patients and eminent
services to people of old age with less charge.
Legal structure:
 State Government: This government share political and other right strategies with
authorities at national level They make right decisions and manage federal government.
 Local Government: It is a small unit of public administration which consists of lower
level with in a state. They carryout activities that are specified by the top authorities.
 Central Government: This is the highest governed association within a unitary state
(Chetwood and et. al, 2014). They formulate policies and regulations which other
department needs to follow for proper functioning.
Private organisation: ALDI is a private retailer firm in United Kingdom. It serves its
services and products around the globe and managed a stable position by maintain a high
position among all global brands.
Products and services: This corporation provides modern, trendy and fashionable
clothing & bags by both offline and online medium throughout the globe.
Size and scope: ALDI has around 10,000 stores that are present in and outside UK. Here
consumer can get modern and trendy clothes for different sections like men, children and
women. It has employed more than 12,000 workers and earned around 445 billion pound
annually.
Vision and mission: Vision of ALDI includes being among the top retailer within the
globe. Along with it, providing best and fashionable dresses to their potential and high class
clients.
Business objectives: ALDI main aim is to enhance the demands of consumers and exceeding
their level of satisfaction by providing them with opportunity to introduce new patterns of their
products (Vaiman, Sigurjonsson and Davidsson, 2011).
Legal structure:
 Sole proprietorship: Those Businesses that are established and managed by individuals to
produce capital for increasing their standard of livelihood, come across sole
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proprietorship in private sector. Organisations such as tailors and groceries, tailors are
some valid examples of these companies.
 Partnership: It involves private organisations that are managed by two or more owners of
business after signing some agreement. All involved parties signed a officially authorized
document to involve equally while making a decision n the favour of company.
Voluntary organisation: An international non-government organisation OXFAM is one of
the non-profit firms established in United Kingdom.
Products and services: This organisation works to fight against poverty and injustice.
Size and scope: Around 22 non-governmental organisations are involved with this
organisation. It has partnership with approx 20counries around the globe. They all work together
to remove poverty from the world.
Vision and mission: The main motive of the company is to fight against poverty and
preserving the rights of innocent peoples. Along with this, its vision is to enhance the living
standard and conditions of the society by eliminating poverty from each section of the society.
Business objectives: Goal of this company named OXFAM supports people in
establishing their business for raising their living standards (Wack, 2017).
TASK 2
P3 Relationship between various functions of organisation in respect to objectives
There are many departments in a company which conduct different-different operations in
order to execute operational activities in adequate manner (Chetwood and et. al, 2014). It
includes finance, marketing, human resource department, production, sales, research and
development etc. All these divisions have performed various roles and responsibilities in order to
achieve business objectives and goals in predetermined time. Therefore, functions of such
sections are interrelated with each other as they work for common purpose. In context with
ALDI, to gain high competitive advantage, all departments cooperates each other to deliver best
quality of products or services to customers.
Organisation structure: In business, different types of organisational structures are
formed like functional, matrix, project and divisional. Under this process, roles and
responsibilities of staff members are given as per objectives of business, size and scope of
organisation and more. Since ALDI deals in retail sector and operate business in many countries.
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Therefore, it follows divisional organisation structure so that business can be run effective at
global and domestic level properly. This would help in utilising available resources in efficient
manner and gain cooperation of entire departments like marketing, R&D, Sales Division etc. to
win competitive advantage (Crane and Matten, 2016).
Figure 1: Divisional Organisation Structure
(Source: Divisional Organisation Structure, 2018)
Therefore, relationship of different departments of this company can be explained in
following manner:-
Human resource department: The main duty of HR managers is to give employment to
best employees at workplace (Gilboy, 2016). They manage manpower by giving them proper
training and development program as well as provide various benefits to them as well. This will
give opportunity to other departments to get best human resource and gain their cooperation for
operating functions more effectively. In addition to this, by getting best employees, ALDI gain
advantage to win high competitive advantage as well.
Finance department: It is another department in an organisation whose main
responsibility is to bring and manage adequate amount of funds in business. Finance managers
formulate proper budget plan, keep records of every transaction and maintain stock in business.
They also provide finance to other departments like R&D, HRD, marketing etc. so that they can
conduct activities more adequately. Further, by auditing, accounting and keep control on cash
flow of different operational activities, ALDI gain advantage to run business in a proper way.
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Research and development department: This department of ALDI helps HR division in
hiring best employees at workplace by determining competitor’s strategies. They help marketing
managers in determining demands, purchasing power and preference of customers
(Gharajedaghi, 2011). This would aid to operational managers of ALDI to set effective and
competitive price strategies. Furthermore, R&D department also helps finance department in
identifying areas from where they can get funds on low rate of interest.
Marketing department: It is considered as main department of a company which helps in
promoting business at marketplace in positive manner. Marketing managers perform various
activities like identifying current trend of marketplace, promoting products or services at vast
locations, determining demands and purchasing power of customer etc. They provide
information to other departments also like from where HR managers can get high skilled
employees, R&D department in conducting market research, Sales division in enhancing sales
performance and more.
TASK 3
P4 Positive and negative impact of macro environment upon business organisation
PEST analysis is considered as main tool to analyse how external factors impact on
business both in negative and positive manner. It includes political laws, economical situation,
social demand and technological change. Therefore, determining influence of such factors on
operational activities and functions of business, a company can formulate effective and unique
policies. In this regard, the way such factors affect functions of ALDI can be elaborated in
following manner:
Political factor: Taxation policies, licensing, trading and more, are some factors which
come in this category (Türetken and et. al., 2011). Government establishes such laws in order to
run business of organisations in legal manner. In context with ALDI, as it operates business in
various countries which have own laws and legislations, therefore, it creates a large impact on
business policies.
 Positive impact: Stability of political rules of countries where this company serve its
products, helps in generating high revenues. As UK has stable government therefore, it
gives support to ALDI to conduct business at international level.
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 Negative impact: Since every country has own laws and legislations therefore, to make
policies according to them, is really difficult for ALDI. Along with this, Government of
UK has made legislation related to employment which that companies dealing in retail
sector has to pay adequate amount of salary to staff members. This would impact on
budget and profitability of ALDI in negative manner.
Economic factor: This factor of business environment currency exchange rate, growth rate,
inflation and deflation period of marketplace, per capita income and more. Therefore, business of
organisations affects much by economical crises and condition of marketplace. Since ALDI has
conducted its business mostly in developed and developing nations. Therefore, it impacts on
business generally in positive manner because such nations have high GDP rate as well good
inflation period also. Positive impact: High GDP rate, good income level of people and high currency of UK
and other nations, give opportunity to ALDI to develop strong base of customers. This
would help in generating high amount of revenue. Negative impact: Fluctuation in interest and foreign exchange rate affect policies and
strategies of ALDI in negative manner. It also impacts on budget and profitability of
business as well, which create difficulties for further business expansion.
Social factor: This factor assists a firm to produce high qualities of products or services as
per preference of customers. It also demands organisations to make investment for welfare of
society and their development. ALDI offer a wide variety of products like personal care
commodities, food items and more as per demand of customers (Tayur, Ganeshan and Magazine,
2012).
 Positive impact: Today people generally prefer to buy products from those stores where
all kind of groceries are available in same store. Along with this, purchasing behaviour of
them also changes as per quality and price of products. In this regard, ALDI gets benefits
to gain attention and retention of customers because it offers a range of products as per
basic necessities.
 Negative impact: But due to take less interest towards CSR activities create adverse
impact on brand image of ALDI.
Technological factor: It is the main factor which proves beneficial for those companies
which operate business at international level (Zeng, Li and Duan, 2012). By introducing best
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technology in business, a firm gets advantage to carry out operations in short period of interval
as well as obtain best outcomes also. With respect to ALDI, this factor impacts on business both
in positive and negative manner as shown below:-
 Positive impact: This company has implemented best electronic machines at its stores
which helps in providing best services to customers and reduce waiting time for billing
process. This would aid to gain high satisfactions of people as well.
 Negative impact: Due to development of E- commerce business, sales performance of
ALDI has affected adversely.
TASK 4
P5 Internal and External analysis to strengths and weakness of organisation
In order to evaluate strengths and weaknesses of business, managers of company conduct
SWOT analysis (Meiners, Ringleb and Edwards, 2014). It also provides opportunities and threats
present at business environment by a firm can make strategies to stay competitive at
marketplace. Therefore, for utilising market opportunities, managers of ALDI also conduct
SWOT analysis as shown below:
SWOT Analysis of ALDI:
Strengths Weaknesses
 ALDI is considered as one of the famous
industry in retail sector which offer best
quality of products at reasonable price
rates.
 Currently it has more than 10, 000 stores in
many countries. This would help in easily
accessible for customers so that they can
buy products as per choice anytime
(Sekaran and Bougie 2016). In order to
gain competitive advantage, this company
offers its items on reasonable and low
costs. Along with this, in seasonal period, it
offers items on attractive discounts as well.
 In context with other retailers like Tesco,
H&M, Morrisons and more, ALDI fails to
gain high attention of customers. The
reason behind this is ineffective marketing
strategies.
 Offering products on cheap prices affect
negatively on brand image of ALDI. In
addition to this, due to high labour
turnover, ALDI also fails to provide
effective services to customers at stores. It
has decreased its customer base also.
Opportunities Threats
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 By selling products through online
techniques, ALDI gains opportunity to
improve and increase sales performance.
 Developing strategies as per marketing mix
techniques aid this company to expand
business in more locations. Giving benefits
to employees and proper salary, will help
ALDI in reducing labour turnover also.
 Intense competition of marketplace has put
a large threat for sales performance of
ALDI.
 Changes in customer’s preferences, crises
in economy and demand to enrol in CSR
activities, also affect business of ALDI.
P6 Interrelation of Strength and weakness with external Macro factors
There is an intense relationship between macro environmental factors and strengths or
weakness of a company. As any change in macro factors will either give advantage to a firm or
impact on business negatively (Zsambok and Klein, 2014). ALDI operates business in
international market so, it is essential for management of this company to analyse external
aspects which affect business policies.
Factors Strengths Weaknesses
Political factor Stability in government
policies of UK aid ALDI to
run business at global level
more effectively.
Any change in trading policies
will affect import-export
activities of ALDI in negative
manner.
Economic factor: Good per capita income helps
ALDI to increase its sales
performance on high rates.
Deflation period of economy
adversely affect profitability
of organisations including
ALDI.
Social factor Demand to get trendy products
aid ALDI to offer good quality
of products at marketplace.
Changes in trend of
marketplace put negatively on
existing products of ALDI.
Technological factor Introducing best technology at
stores help customers to pay
easily for purchasing products.
Demand to offer products
through online applications
affect budget of this company.
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