Business Environment Analysis: Macro Factors & Organizational Impact

This report provides a detailed analysis of the business environment, focusing on the impact of macro environmental factors on organizational structures. It begins by identifying different types of organizations, including public, private, and voluntary sectors, and their respective purposes and legal structures. The report then examines the size and scope of various organizations, using BBC, John Lewis Partnership, and National Council for Voluntary Organisations as examples. Further, it explains the relationship between different organizational functions, such as human resources, marketing, IT, finance, production, and research & development, and how they link to organizational objectives and structure, with specific reference to Shiseido Company. The report also conducts internal and external analysis of Shiseido Company using PESTLE and SWOT frameworks to identify strengths and weaknesses and how these interrelate with external macro factors. The analysis includes positive and negative impacts of macro environmental factors, such as political, economic, social, technological, legal, and environmental factors, on Shiseido's organizational structure.

Business and the
Business Environment

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1............................................................................................................................................3
Different types of organisation and there purpose.................................................................3
P2 Size and scope of different kinds of business organisations.............................................5
TASK 2............................................................................................................................................6
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure..................................................................................6
TASK 3............................................................................................................................................7
P4 Positive and negative impacts of macro environmental factors that affects the organisations
structure..................................................................................................................................7
TASK 4..........................................................................................................................................10
P5 Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses.....................................................................................................10
P6 Explain how strengths and weaknesses interrelate with external macro factors.............12
CONCLUSION .............................................................................................................................13
REFRENCES.................................................................................................................................14
Books and Journal................................................................................................................14

INTRODUCTION
Business Environment is collection of external and internal environmental factors such as
customers, suppliers, management, government, demand and supply, technological changes,
government activities, market trends etc. All these factors influence the business and have impact
on the working of the organisation. Decision making of an organisation depends on the
environment the business is operating. It is essential for a business organisation to find the
opportunities that are prevailing in the market and grab them to become successful. It is
important to take wise decision by analysing the environment as that helps the business to grow.
Shiseido Company, Limited is a multinational company that was founded in 1872 (Ahmad,
Ramayah, Wilson, and Kummerow, 2010). It is a Japanese company that deals in personal care
that is cosmetics, hair care, skin care and fragrance producer. It is fifth largest cosmetic company
in the world and largest cosmetic company in Japan. It is a public Limited company that has its
headquarters in Tokyo, Japan. The report deals in types of companies and their nature. PESTLE
and SWOT Analysis is done to know he impact of external and internal factors on the
organisation. Also there is discussion about negative and positive impact of macro environmental
factors on the organisational structures
MAIN BODY
TASK 1
Different types of organisation and there purpose
There are different kinds of organisation that exist in the market and main kind of
organisations are public, private and voluntary organisation. It is essential to understand various
kinds of organisation all of them have their own purpose, the following organisations are
described below along with legal structures:
Public sector organisation: This type of organisation is controlled and managed by
government the goods and services that are provided by them are for the benefit of company.
The decision making is done by government and has full interference in the operations of the
organisation. Public sector organisations work to provide services to its citizens. BBC is a public
sector organisation which has vast broadcasting activities. The organisation is funded by License
fee that is paid by households of UK.

Purpose- The purpose of public sector organisation is mainly to provide services to
customers and earn some profit that helps the business to run effectively.
Legal structures- the main bodies that decides the legal structure of public organisation
are mentioned below:
Central Government: The organisations are managed and controlled by central
government like the Environment Agency, Department for International Development, etc. They
are under the control of government and the legal structure is is also decided by them.
State Government: The organisation that have functions related to state are controlled
and managed b y state government. (Ahmed, Sharif, and Ahmad, 2017).
Local Government: Municipal corporations that are involved in the functioning of local
areas are controlled by Local Government.
Private sector organisations: The organisations are incorporated by private individuals
and there is no interference of government. These organisations focus on the benefit of all the
stakeholders that are related to the organisation. They make there own strategies, laws and
policies and able to take decisions independently. John Lewis partnership can be taken into
consideration for understanding the private sector organisation that is largest organisation and
deal in many products and services that are catering the needs and demands of the customers.
The organisation has high ended departmental stores through out Great Britain.
Purpose- The main purpose is to provide quality goods and services and earn maximum
profits that helps the organisation to become successful.
Legal Structure- Their legal structure of business depends on the nature and that are
mentioned below:
Sole Proprietorship: It is controlled and managed by single entity that has unlimited
liability. It is a simplest form of business and the proprietor is responsible for all the debts.
Partnership: Two or people come under an agreement and do the business together. The
contribute capital and share the profits in the proportion of capital contributed. There liability is
limited according to the amount invested by them.
Companies: The organisation are incorporated under Companies act, 2013 and they
make be public and private. This legal entity is formulated by group of individuals and it may be
industrial as well as commercial.

Voluntary organisations: The organisations are refereed to as non profit organisation
that are mainly functioning to provide service and do charity. The motive is not to earn profit.
Purpose- The purpose of existence of voluntary organisation is to do social welfare and
charity and not to earn profit.
Legal structure- The legal structure of voluntary organisation are discussed below:
 Unincorporated Association: The common goal of this kind of organisation is social
welfare and not profit earning.
 Trust- These organisations mainly do donations and help needy people. Trust is a
relationship that is formed between two parties and the benefit is given to beneficiary that
is the third party.
P2 Size and scope of different kinds of business organisations.
All the organisations have different scope and size according to their nature, they set the
goals and objectives that they want to achieve. Success of business depends on size and the way
functioning of the organisation (Demirgüç-Kunt, Love and Maksimovic, 2004). The size and
scope of various organisation is discussed below:
Public sector organisations: BBC is one of the largest broadcaster in terms of
employees. It is a large sized organisation that have many members who are working for the
organisational success:
 Size- In BBC there are around 35400 employees that include both part time full time
employees. It is a large scale organisation in terms of operations and team members. It is
oldest national broadcast Scope- As it is a large scale organisation and has wider scope, a it is not limited to new
channels other things that are included under the operations of BBC are TV channels,
online services and radios.
Private sector organisations: John Lewis Partnership is largest and high end
departmental store that provides products and services like jewellery, financial services and
clothing.
 Size- John Lewis Partnership is largest organisation if seen in case of employees as it has
approximately 85000 employees that are working for the organisation and the employees
impacts the structure of organisation (Gornicka, 2018).

 Scope- The organisation provides goods and services to its customers in a way that
satisfies them. The company has wider scope as it achieves the objectives on time.
Voluntary organisations: These type of organisations have narrow scope. To explain
further National Council for Voluntary Organisations is undertaken.
 Size- the organisation is small sized and is narrow as compared to other organisations
because they have around 14000 peoples that are willing to do charity.
 Scope- it has narrow scope because it is not easy nor common for people to do charity
based business.
Above mentioned is the size and scope of various business organisations that help them
to achieve goals and objectives. Organisations target customers according to their scope and that
helps them to be successful.
TASK 2
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.
An organisation to operate successfully has to perform many functions. It is important to
function effectively and maintain coordination between all the functions as it help the business
top work smoothly (Hamilton, and Webster, 2018). All the functions are important for an
organisation to understand each function as it helps to attaining business objectives and targets
on time. There are various departments that are interrelated with each other and helps the
organisation to maintain coordination are become successful. Various departments of Shiseido
Company and their interrelation is described below: Human resource and marketing: Human resource department of an organisation is
i9mportant as it helps to recruit, select right people that have skills and knowledge about
the job. The HR of the company has to fit right people for right job. The main task is to
find out the people and then to understand them and fulfil there needs and solve the
conflicts between them within time. Marketing department of Shiseido Company is
responsible for promoting the goods and services and boosting the sales of the
organisation. In relation to Shiseido Company, the marketing department helps HR
department to advertise the vacancies and gather people from which they have to select
from. Also the skilled people in marketing department are selected by human resource

department. Good selection of employees helps the marketing department to be
successful and increase the sales that is profitable for the organisation. Information & Technology and Finance: The world has turned digital and it is
important to update the organisation to compete well in the market. Information
Technology plays a vital role as it helps the comp-any to update technology and make
innovations that are required. Shiseido Company provide online services that is taken
care by the IT Department of the organisation. They make research about the current
trends in the market and provide the goods and services to the customers according to
trends and there needs and wants. Finance department sets the budget for the organisation
and take care of finance of the organisation. In Shiseido Company the finance department
gives approval to IT department before the money they want to spend on innovation and
also checks the return that they will get (Hofstede, 1994). They are interrelated with each
other and work smoothly together as its helps the company to do technological up
gradation effectively. Also with the technological advancement the finance department is
also able to maintain the reports easily which is adopted by Shiseido Company. It helps to
make the work of the organisation faster and easier. Technology has helped to make the
calculations automagically through use of software and there is no need of manual work
so chances of errors also decrease.
 Production and Research & Development: Research and development of an organisation
helps to know about the competitors and the demand of customers. It is important for an
organisation to make good research as it will help the organisation to make policies and
that is responsible for the success of the company. Production department of the
organisation is responsible to convert the raw material in finished goods. The production
should be smooth and have proper management to fulfil the demand of the customers in
the market. In respect to Shiseido Company the research department analyses the needs
and wants of customers and that helps the production department to manufacturegoods
according to the demand of customers. The more they are coordination the better they can
satisfy customer needs and wants. In relation to Shiseido Company they are able to
provide he cosmetics that are in demand and make changes that helps to attract more
customers (Klapper, Laeven and Rajan, 2004).

All the functions of organisation are important and should be performed effectively. All
the department in Shiseido Company are related to each other and coordination between them is
essential as it leads to achievement of goals and objectives of the organisation. If there are
conflicts between any department they should be resolved within time as it helps the organisation
to achieve the goals and targets on time. It is important for management to team balance all the
departments as that helps Shiseido Company to become successful.
TASK 3
P4 Positive and negative impacts of macro environmental factors that affects the organisations
structure.
Macro environmental factors are dynamic in nature and changing constantly and
competition is rising drastically. There is impact of macro environment factors on operations of
the business. To become successful an organisation should understand and analyse the macro
economic factors and there impact on the business. PESTLE Analysis is discussed below in
relation to Shiseido Company:
PESTLE Analysis
This is done to analyse the impact of macro environment factors on Shiseido Company:
Political Factors- The policies that are made by government have direct impact on the
organisation. It includes labour law, tax policy, trade restrictions, environmental law etc.
Organisations should respond to the legislations and make policies accordingly. In relation to
Shiseido Company, it has gained competitive advantage in the market. A bill Personal Care
Product Safety Act was published that ensures product safety (Montazemi, 1988). The company
follows all the policies that are made by government and it helps the organisation to become
successful. The companies has top make reports recalls, ingredient statements, and register
manufacturers. Liberalisation has also helped the business to boost sales of cosmetic industry.
 Positive Impact: It can be identified that the positive impact of political factor on
Shiseido Company is related to stability of government in the market where the
organisation is working. It is helpful to the firm to achieve business objectives as it helps
to formulate polices due to stability of government and that helps to increase the
profitability to the business.

 Negative Impact- It can be seen that the country faces problem of terrorism and that is
problematic for the business that are operating in that marketplace. This decreases the
profitability of the company.
Economical factor- One of the factor that has impact on the business is economic factor.
It includes interest rates, inflation, economic growth etc. There is development in cosmetic
sector. As other companies, Shiseido Company has also faced recession and suffered losses due
to that. The company is providing employment to many people and contributes to GDP of the
country.
 Positive impact- The economical condition of the country is good and GDP is high the
people of the country are willing to spend it helps the organisation to become successful.
The company is able to make profits by attracting more and more customers towards the
organisation. Negative Impact- There is inflation at the place of operation of Shiseido Company and
that is concern for the company as it reduces the spending capacity of the customers. The
organisation should promote its goods and services of the company so as to become
successful.
Social factor- This is also called socio-cultural factors and includes the beliefs of people,
attitude of population. Social factors directly impacts the business and it is important to study
social factors and make policies accordingly. Cosmetics and other personal care products are
demanded by customers and they prefer to use them, which is profitable for Shiseido Company.
The company should make study of current trends in the market and innovate the product and
services accordingly (Needle and Burns, 2004).
 Positive Impact- By studying the trends of the market Shiseido Company they are
focusing on current trends and understanding the needs and wants of the customers they
are able to fulfil there requirements. Also they always motivate the employees that help
to them to increase productivity and achieve the targets of the organisation on time. Negative Impact- The customers needs and wants are drastically changing and to fulfil
the needs and demands they have to make proper research and if they are unable to
understand the needs and demands of customers then competitors may take lead and it is
a situation of loss of the business.

Technological factor- The world isa dynamic and technology is regularly updating, so to
compete in the market it is important to take technological advancement and attract more
customers. With development in technology there are ways in which Shiseido Company is able
to produce goods and services faster and promote their goods and services effectively. It is
important to use technology as it makes the business successful and achieve goals and objectives
on time.
 Positive Impact- Through online delivery system Shiseido Company is able to take
advantage of technological advancement which shows the positive impact of technology
on company. This helps the organisation to gain brand loyalty and attract more customers
that are loyal towards the organisation. Negative Impact- As technology keeps on updating and becomes obsolete, it is difficult
for business to regularly update the technology.
Legal factor- The laws and regulation that the company needs to follow comes under
legal factors. It is important for companies to know what is legal for them and what they should
follow. In includes equal opportunities, health and safety, advertising standards, product
labelling, consumer rights and laws and product safety. In relation to Shiseido Company, follow
the legal factors to work smoothly.
 Positive Impact- In relation to Shiseido Company, it follows all the laws like equality law
and treats all the employees equally. This helps the organisation to achieve success and
improves productivity of the organisation and makes the organisation successful. Negative Impact- The company has to follow various rules and regulations and many
ACT are there the ensure the safety of products that are offered by the company.
Environmental Factor- It is important to focus on environmental factors as the business
uses the resources that they have got from the environment. It is responsibility of every
organisation to use the resources wisely and fulfil social responsibility for business. As the
resources are scarce and should be saved to continue the operations of business. Also the
environmental condition of the place of operation of business has impact on the business
operations (Okeyo, Gathungu, and Peter, 2016).
 Positive Impact- In context of Shiseido Company it uses renewable resources and sells
the products and services that do not impact the business adversely and that has helped
the business to develop a good position in the market.

 Negative Impact- The packaging of company is creating pollution and is not environment
friendly (Seles, ,and et, al., 2019) .
From the above PESTEL Analysis is can be seen that Political factors that is stability in
the government is positive factor for the organisation but if the economic factor is analysed that
there is inflation and due to which the spending capacity of customers is reduced and because of
which Shiseido Company is unable to make more profits. There are many competitors and it is
important for Shiseido Company to make strategies that help to gain competitive advantage.
Technological advantage is taken by company as Shiseido Company is providing online services
to its clients and the drawback is the packaging of products done by Shiseido Company is not
ecofriendly.
TASK 4
P5 Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses.
It is important for an organisation to know about the strengths and weakness and also analyse the
opportunities that are available in the market and get ready for the threats and take measures.
SWOT Analysis in relation to Shiseido Company is mentioned below:
Strengths
 The company has good brand value that
helps the company to gain loyal
customers and become more profitable.
 Shiseido Company is a multinational
company and has its operations around
many countries that helps the
organisation to become successful by
serving more customers (Poon, 2000)
(Ranjan, 2008).
 The company has variety of products
and has strong portfolio that makes the
company as leading brand in the
market.
Weaknesses
 The demand of products is less in
among younger people.
 They do not make use of technological
advancement and that is weakness for
them.
 The company has less scope outside the
core business and which is a limitation
for the comapany.

Opportunities
 The company has leading image in the
market and that is beneficial for the
company and helps to gain competitive
advantage in the market.
 The company is serving more
customers as it is using online mode to
attract more customers.
 New policies have helped the business
to increase its market share.
Threats
 Changing needs and wants of
customers is also threat for the
company.
 The company do not innovates product
regularly it will lead to reduction in
customer base of the organisation.
 As the strengths of distributors have
increased this can impact the margin of
the company.
It can be said that Shiseido Company has established a brand image and has operations in
different countries along with that the company has loyal customers. Along with that the
company deals in variety of products and services. All the strengths should be improvised and
focused. Along with that Shiseido Company has good brand image and is able to gain
competitive advantage and the company is serving customers through online and offline mode. It
is important to grab alll the opportunities that arise in path of the company. There are some
weaknesses also and Shiseido Company takes measures to overcome the weakness and achieve
success.

P6 Explain how strengths and weaknesses interrelate with external macro factors.
Every organisation wants to deal with external factors and that is possible the company
focuses on its strengths and weakness. To understand the impact of macro factors PESTLE
Analysis of Shiseido Company is mentioned below:
Political factors: Companies dealing with many issues regarding political factors due to
their weakness towards political interference. To overcome these issues it is essential to maintain
good strengths regarding terrorism. Shiseido Company is a public sector organisation due to
which it gets affected by many political authorities.
Economical factors: strength regarding sound position of companies finance is an
effective sign of getting economic advantage. Shiseido Company has strong finance exposure
which could contribute to economy growth and maximise the inflation level by maintain
moderate demand and supply. ( K.Y. and Aspinwall, 2004).
Social factors: This factor enable and focus on customer preference which would be
beneficial for society. Shiseido Company always deals with customer desirable products which
is their best strength over all as it fulfil society demands from their contribution. They render
their products mostly targeted to middle class women so that teenagers would not get suffer with
irrelevant product for their skin
Technological factors: People want more of innovation and attractive products to satisfy
their needs. It is one the weakness of Shiseido Company as it could not activate all the
upcoming technologies and gets underrated over innovation.
Legal factors: It defines all the government interference e with it impose towards
organisation operations which is essential to take into consideration. It is the strength of
Shiseido Company as it rules under all the acts regarding equality, disability, discrimination, and
wage act.
Environmental factors: This factors defines the environment well being which has to be
maintain to consist economic growth. The chosen firm has its weakness as it is practising to
maintain their products eco-friendly but could not get successful as it has to be consistent
regarding products fragrance and customer demand (Worthington, and Britton, 2009).
These all macro factors has much impact on companies growth and objectives but it has
the ability to overcome into nearby future. Shiseido Company should focus on the strengths and
work on weakness so as to deal with the macro factors. All the opportunities should be garbed

and the company also take measures so that the threats do not have much impact on the
profitability position of the organisation. Also measures are taken by Shiseido Company to
reduce and eliminate the threats.
CONCLUSION
From the above report it can be concluded that business environment includes and is sum
total of all internal and external factors and it is important to study the factors as they have direct
impact on the organisation. The report is based on Shiseido Company which is largest cosmetics
company in Japan. There is discussion about types of organisation and there nature. The size and
scope of organisation is also described. SWOT and PESTLE Analysis is done to study the
influence of internal external factors on business. The company should work on weakness and
improvise the strengths to become successful.

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