Impact of Macro and Micro Environments on Business Operations

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Business and the Business Environment
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Table of Contents
Introduction................................................................................................................. 3
LO1............................................................................................................................. 4
LO3............................................................................................................................. 9
LO4........................................................................................................................... 12
Conclusion................................................................................................................ 15
Reference List...........................................................................................................16
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Introduction
The report discusses about business as well as business environment. Many factors
influence the business environment of an organisation. The process is direct as well
as indirect and has uncertainty and multiple faces. The determination of the impacts
of these elements is not up to the organization. The organisation is not capable of
anticipating the future results of the influence on business environment. The
management should consider and analyse all the factors while embarking on any
venture operations. The business environment is responsible for the success as well
as failure. The report will provide different organisational legal structure as well as
their size and scope along with organisational functions and their interrelations. A
PESTEL analysis will be done to investigate impact of macro environment and
internal factors will be evaluated through SWOT analysis.
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LO1
P1 Explain different types and purposes of organisations; public, private and
voluntary sectors and legal structures.
Major kinds of different organisations are voluntary, public as well as private. Their
purposes of business along with their legal structure are given in details below.
Public: The public organisations have administers and controllers like federal,
central as well as state government. They collect their funds from the tax amount
that the common public pay. Their purpose is to serve the wellbeing of common
people (Henttonen et al., 2016). The organisations sometimes work in partnerships
with the private companies and provide services to national citizens. A recognised
public organisation of UK is National Health Service, which is under control of
health and social care Department. It provides various heath as well as well care
related services like emergency care, dentistry As well as mental health care along
with other services.
The organisation ensures that the customers and common people are provided with
best possible services and care backed up with evidences and designed with all the
resources that are available in the market currently. This is the mission of NHS
stated by them. The organisation aims to have collaborated relationship with
clinicians as well as patients. All of them together will serve the health care of people
with a quality foundation. The organisation aims to give every child a health start in
life and to grow its mental health. The legal structure is public because it is
administered as well as regulated by the government. Professional bodies of
Academy for Health Science and National Health Care School hold the major stakes
of the company (nhs.uk, 2018).
Private: Individual groups administer and control the business operations of these
organisations different from public sectors. The companies build a large part of the
economic patterns of any country. Their business operations have intension of
making profit. They give better services than other organisations and expand their
revenues (Gill and Murray, 2018). The retail company Mark and Spencer is an
example of private organisation based in UK. It provides services like clothing, luxury
food as well as home products. The company makes good quality products, as their
aim is to reach customers and gain their trusts with affordability and accessibility.
The company possess visions of integrating their stores and using simple as well as
relevant digital technologies. The company wants to increase retail market share
with having large amount of stores in international markets. The main shareholders
are responsible for holding significant shares and taking all operational decisions.
They are Temple Bar, Invesco UK, Jupiter income fund and others. The legal
structure is PLC that is public limited company as issues of public is given the share
(marksandspencer.com, 2019).
Voluntary: Group of people administers these organisations. The governing bodies,
trustees as well as directors control these organisational performances. The
business objectives and their fulfilment is the responsibility of the board members.
The public can take account of the organisational operations. The company has to
give reports annually to government regarding the financial returns (Schwabenland,
2016). An instance of UK based voluntary organisation is Care International. Their
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purpose is to eliminate global poverty. It is non-governmental and large in size and
revenue. The company aims to give support regarding social development as well as
humanitarian relief.
Their mission includes accomplishment of social justice, saving lives, defeating
poverty all around the world. The vision of the organisation is to make people’s life
secure and dignified by deleting poverty. The organisational objective is to save
people from the crisis of humanitarian aspects. They also support women to have
power regarding economical aspects and gain control of fundamental aspects of life.
These operations will give quality services and make people’s life better and
simultaneously the company will make difference and gain global recognition. The
company has legal structure of a NPO that is non-profit organisation. The trustees as
well as members of the board are the major shareholders (careinternational.org.uk,
2019).
P2 Explain the size and scope of a range of different types of organisations
The organisation M&S has a large size with a workforce of 84000 employees. The
stock is exchanged with quoted shares. For this reason, the company has great
financial scope and future prospects. The company has many large scopes of
generating high revenue. The public is involved in having and receiving shares of the
company. The increased sales rate has made the cost of production lower due to
high economy scale. The company has dominance over the retail market with large
size market. The better recognition of the company has made it easier for the
company to gain investors that are more interested and raising fund for the business
operations. They possess better chance for expansion. The company Mark and
Spencer has objectives related with its scope. The company, with large scope, gets
many platforms to fulfil its aims. The company will have future demands always as
the retail business experienced global expansion (corporate.marksandspencer.com,
2019).
The health care organisation NHS has a large size with a total workforce of 1400000
employees. The company has successfully eliminated risk factors like monopoly and
increased customer acceptance for its services. These organisations do not use
additional promotional as well as marketing strategies because the aim is to serve
public welfare. The company does not have to face many competitions in market,
which has helped them in developing better services and manufacturing more
products. The company earns money from the tax paid by national citizens as well
as business enterprises. The organisation does not have much scope for gaining
profit as serves for health care. However, the future demand of the services will not
decrease in coming times and their business can increase further (england.nhs.uk,
2019).
The organisation Care International has large size with a workforce of million
employees. The employees provide global service among 94 countries. The
company handles many big projects in business. The company has connections with
the government as well as other private sector industries. The company has
collaborated operations with other companies and this factor has given it larger
scope. It can largely solve social problems and serve needy people. For this reason,
the company does not many restrictions regarding regulations as well as rules. The
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organisation will never lose its scope for development, as the common citizen will
always require care and developmental services (care-international.org, 2019).
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LO2
P3 Explain the relationship between different organisational functions and how
they link to organisational objectives and structure.
Organisational functions refer to the functions of various departments within the
organisation. The departments include marketing, finance, manufacturing, research
and development. Mark and Spencer also possess significant departmental
activities and performances.
Marketing refers to the operations, which make the services and products produced
by the company known, popular to the customers, and public. The customers, by
marketing operations, let the people know about the price set for every product. The
customers become aware and go to retail shops of the company. The marketing
operations also include proper market research. The research tells company about
market trends and helps to identify the target customers. The marketing operations
take responsibilities regarding product development and business planning. The
company M&S designs their marketing strategies to promote the products through
advertising on social sites. The company maintains proper relation with public to
achieve better recognition. The sales and others are also promoted by marketing
functions. The marketing managers handle all these functions. They also look after
customer services. The department takes care of customer several functions that
give the customers better experience, more satisfaction and the company gains trust
(Bustinza et al., 2017).
Finance
The functions operated by the finance department are important for any organisation.
This department handles functions regarding cost setting and managing. The
financial mangers administer these functions. They handle these functions skilfully
and help the company generate its revenues. The retail stores need detailed
analysis of the financial documentations. The managers operate other functions like
planning, organising, auditing as well as controlling company finances. The
department presents timely report regarding financial transactions of the business.
The department also take part in direct investment as well as budget preparation. It
estimates all business expenses to achieve long-term goals. The managers have all
data to execute beneficial decision. The business gets high funds from profit. They
pay all shareholders accordingly (McDonald, 2017).
Manufacturing managers handles lines of latest manufactures, new service
productions as well as the distributional procedure. Their task includes planning and
organising production timings, analyze resource requirements, negotiating about
budget and schedule with clients as well as managers, raking care of health
measurements, controlling quality of products by selecting and buying correct
materials, looking after future repairs, supervising juniors and organising trainings for
them.
R&D Management administers disciplines, working procedure and implementation
of latest technological facts within products and operations, commercialization
strategies etc.
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Figure 1: Organisational Chart
(Source: Created by the learner)
Different organisations possess various structures like flat, matrix, functional as well
as divisional along with others. The organisation Mark and Spencer has functional
organisational structure. The organisations have divisions for operating
organisational functions. The managerial leaders work in collaboration to achieve the
goals. The departments have interrelated work process for smooth performance.
Interrelationship between function
The functions of marketing always work in coordination of the functions of operation
to satisfy the needs of their customers. The completion of the operation and the
delivery and it comes with a deadline, which needs to be complete within time.
Employees of marketing development tries to make aware of the product while
department of operation tries to release the products only after a complete test and
its development. Finance and marketing works with collaboration with each other in
order to ensure the budget allocates in adequate amount for satisfying the needs of
activities like promotions, distribution, Research in Market etc. The HR resource
department of the organisation fulfils the needs of the staff (Zornoza et al., 2017).
Marketing are assist by the logistic departments for receiving resources from
suppliers and assists in packaging them as well. Employees of Marketing used to
charge price over company is cost and it totally depends on the cost charged by the
department of logistics. An HR function is use in order to training and recruiting of
employees.
Department of finance enables the department of marketing and operation in order to
tap customer demand. This department also enable the leasing of material,
purchasing of equipment etc. The department of finance the department of Marketing
starts developing the company goals and marketing plan approves once the budget.
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It is the duty of HR department to identify the requirement of people in the
organisation and hire the staff according to the requirement. For maintaining as well
as enhancing the market share and for creation of a brand image the department of
finance tries to frame some policies for the departments of marketing.
Human Resource looks for the welfare of their staffs in all the departments including
payment, activities relate to payroll, health requirement, safety etc. Human resource
department are directly related with all the other department because of training and
development.
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LO3
P4 Identify the positive and negative impacts the macro environment has upon
business operations, supported by specific examples
Pestle analysis is a process of identifying the impact of both external and internal
macro environmental factors of Mark and Spencer. This analysis helps an
organisation to know how social, legal, political and economic factors affect its
business. These factors have both positive and negative impact on the organisation.
The tool for scanning strategic management is regarded as PESTLE (Fozer et al.,
2017).
Factors Impact
Political factor The political factors consist of rules, regulation, taxation, trade
rules, government policies and other.
Positive Impact: UK is one of the most stable countries in term
of political factors like law and control on corruption and is well
known for their policies. Therefore, the sourcing cost is reducing
for Mark and Spencer; it has a liberal trade policy. The company
has been successful in expanding their business in many
different regions because of UK free trade policy and the
corporate tax is going to decrease in coming two years.
Therefore, it is quite easy for Mark and Spencer to invest for
expanding the business in such favourable tax jurisdiction.
Negative impact: For retailer business, which is, operating in
UK there is a wave of uncertainty because of Brexit. The political
landscape is altered in the country because of this wave of
uncertainty (Irwin, 2015) and is continuously affecting the Mark
and Spencer business. This reduction in value has led to
decrease in Mark and Spencer revenue.
Economic
factor
Economics factors consist of cost of labour, rate of interest and
exchange, inflation etc.
Positive Impact: The country has announced that there will be
recession in the economy in 2008, further the reduction seen in
the rate of interest help in reducing the level of unemployment
rate of the country in 2009. The capability of the customer of
spending is increasing and provides a better opportunity for the
generation of revenue. Mark and Spencer was able to have a lot
of support for expanding their business financially.UK has the
fifth rank in Gross Domestic Product (Barnett et al., 2012)
Negative impact: The industry is facing conflicts with local
retailers because of the increased price of the product due to
effect of Brexit. The expense of the business has increased due
to significant changes in the interest rate.
Socio-cultural
factors
Socio-cultural consists of factors such as customer fashions,
lifestyle, demographic, career attitudes and many others.
Positive Impact: UK has a high spending power in comparison
with other nation. People tend to spend for new products, which
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inspire the Mark and Spencer to introduce new and variety of
products. The chance of generating the revenue is higher when
the product range is more. The company is motivated to sell
hygiene and organic foods as the consumer of UK are health
conscious, which is also a source for generating high revenue.
People of UK keep themselves because high internet literacy
level about the latest trends (Jackson 2012). This helps Mark
and Spencer in putting less effort for making the people of UK
aware of all recent trending products
Negative Impact: online shopping is most preferred by current
generation as compared to the old traditional generation. To
some extent, the retail outlet purchase has reduced. As there is a
dynamic behaviour of people while purchasing, this has made
the organisation suffer a lot. Due to reduce in demand of old
existing products the business is facing slight loss.
Technological
factors
Technological factor consists of networking, innovation, social,
security etc.
Positive impact: Mark and Spencer are able to incorporate
some new system and technology in it infrastructure due to a
high technological platform present in the country. The advanced
hardware and advance software application has enhanced all
department efficiency (Gawer, 2014). Improved technology also
helps the company in maintaining the security system.
Negative impact: The major concern of Mark and Spencer in
case of any cyber breach, stealing of data and security has
increased. The reputation of Mark and Spencer has started
degrading as this major concern often leads in exposing the data
of million customers. Some of the advance technology are very
expensive and have a bad impact on the industry in attaining
goals.
Legal factors Legal factors consist of health, consumer protection law, safety,
employment law etc.
Positive Impact: Mark and Spencer are ensuring that the goods
they offer are measurable and are with accurate weight (Howells
and Weatherill, 2017). Protection of staff from unfair
discrimination is Employment law. All this legislation followed by
the company has made it capable of adding value toward its
business.
Negative impact: The operational procedures modifies due to
change in legislation. The changes brought by the government at
regular intervals are putting a negative mark for Mark and
Spencer, as the company needs to change their business
operation, which costs the industry.
Environmental
factors
Environmental factors consist of sourcing ethically, using
resource effectively etc.
Positive impact: The population current generation in UK are
accepting environmental products each day. Therefore, the
company is using fewer resources during the process of
manufacturing. This gives some competitive advantages to Mark
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and Spencer from other companies. Thus, the company is trying
to use the resources in an effective and efficient manner in order
to be environment friendly and minimising the cost of production.
Negative Impact: Changes in environmental policy may affect
Mark and Spencer as the policy make changes to procedure of
operation and the equipment’s of the company. This lead to the
loss of the company
Table 1: PESTLE Analysis
(Source: Created by the learner)
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