Business Environment Report: Next PLC and Economic Factors

This report delves into the multifaceted business environment, focusing on the analysis of Next PLC, a British multinational retailer. It begins by defining the business environment and distinguishing between public and private organizations. The report examines stakeholders, including employees, customers, board of directors, stockholders, partners, and funders, highlighting their significance to business operations. It then explores organizational structures, using Next PLC as an example, and explains how these structures fulfill business purposes. Furthermore, the report contrasts mixed and capitalist economic systems, evaluating their impacts on business activities. Finally, it applies a PESTLE analysis to Next PLC, examining the influence of political, economic, social, technological, and legal factors on the organization and its stakeholders. The report provides insights into how these factors shape business strategies and outcomes.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P.1 Describe the type of business if it is a sole trader, partnership or private limited
organization, mention the purpose and ownership of two contrasting businesses......................3
P.2 Describe the different stakeholders.......................................................................................3
TASK 2............................................................................................................................................5
P.3 Describe how two businesses are organized in terms of their structures and functioning
areas.............................................................................................................................................5
P.4 Explain how the style of organization of chosen businesses helps to fulfill their purposes. 6
TASK 3............................................................................................................................................6
P.5 Describe the influence of two contrasting economic environments on business activities...6
TASK 4............................................................................................................................................8
P.6 Describe how political, legal and social factors are impacting upon the business activities
of organizations and their stakeholders.......................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment is the sum total of all external and internal factors that influence
a business. You should keep in mind that external factors and internal factors can influence each
other and work together to affect a business. The present report is based on Next, is a British
multinational clothing, footwear and home products retailer headquartered in Enderby,
Leicestershire. In this, report will shed light in different types of business organization such as
sole trader, partnership or private limited organization. Besides this, it will provide deeper insight
about how businesses are organized in terms of their structures and functioning areas. Further,
report will also highlight the manner in which political, legal and social factors are impacting
upon the business activities of organizations and their stakeholders.
TASK 1
P.1 Describe the type of business if it is a sole trader, partnership or private limited organization,
mention the purpose and ownership of two contrasting businesses
Public organizations: Government owned enterprises are known as public businesses
and their main motive is to deliver services to the people for the social welfare and progress to
become a leading nation.
Private organizations: As name implies, such type of establishments are owned by
individual/s who run owes responsibilities for the successful survival and regular functionality
keeping in view their profit maximization objective (Arrow and Kruz, 2013).
Partnership account: A partnership is a form of business organization in which two or
more persons up to a maximum of twenty join together to undertake some form of business
activity” (Besley, Persson and Sturm, 2010). Now, we can define partnership as an association of
two or more persons who have agreed to share the profits of a business which they run together.
Next Plc comes under the category of publicly listed organization whose one of the main
objectives is maximize customer satisfaction by offering quality services to them.
P.2 Describe the different stakeholders
Employees and customers

Employees one of the most important primary stakeholders in an organization. An
employee contributes labor and/or expertise to an organization, and in many cases they are the
connecting tissue between the products or services being provided and the customer. Efforts
spent in selecting and training employees and creating a corporate culture in which they are
empowered can lead to increased employee satisfaction and competence (Bishop and Walker,
2010). This, in turn, can lead to superior service and increase customer satisfaction, which
ultimately results in organizational growth and success.
Customers represent another key stakeholder group. Many corporate leaders consider
their primary responsibilities to be not only to create financial value for the shareholders, but to
meet the needs of their customers. High levels of customer satisfaction, of course, are likely to
lead to positive business outcomes: high levels of customer satisfaction can lead to higher sales
and profit margins, profits that can be re-invested in the company.
Board of Directors
The board of directors are considered primary stakeholders with substantial power in the
life of an organization. The board is a body of elected or appointed members who jointly oversee
the activities of a company or organization. The board's responsibilities are typically detailed in
the organization's bylaws.
In a stock corporation, the board is elected by the shareholders and is the
highest authority in the management of the corporation (Bocken and et.al., 2013). In an
organization with voting members, the board acts on behalf of, and is subordinate to, the
organization's full group, which usually chooses the members of the board.
Stockholders
Some of the most powerful primary stakeholders are stockholders. A stockholder, or
shareholder, is an individual or institution that legally owns a share of stock in a public or private
corporation.
Partners

Partners can also be significant stakeholders and can help a company grow and become
successful. Typically two companies form a strategic partnership when each possesses one or
more business assets that will help the other but that the other does not wish to develop for
themselves. One common strategic partnership involves a larger company partnering with a
smaller entrepreneurial firm or inventor to create a specialized new product (Booth, 2004).
Typically, the larger firm will supply the capital and the necessary product development,
marketing, engineering, manufacturing, and distribution capabilities, and the smaller firm will
supply the specialized technical or creative expertise.
Funders and Donors
Funders and donors are yet another powerful stakeholder. Funding is the lifeblood of any
venture and is especially important for smaller organizations and non-profits. Most modern
funding takes the form of project funding—money given for a certain project for a certain
duration (Brooks, 2003). Some organizations are endowments, whereby a large amount of
money is invested and the earnings that money makes are used to run the yearly operating
budget.
TASK 2
P.3 Describe how two businesses are organized in terms of their structures and functioning areas

The above depicted graph shows that by allocating roles and responsibilities to the
various departments Next Plc can meet goals and objectives within the suitable time frame.
P.4 Explain how the style of organization of chosen businesses helps to fulfill their purposes.
Next Plc follows the layout of a pyramid to direct and supervise the activities of personnel.
Every employee in the organization, except one, usually the CEO, is subordinate to someone else
within the organization (Carroll and Buchholtz, 2014). The layout consists of multiple entities
that descend into the base of staff level employees, who sit at the bottom of the pyramid.
Advantages of Hierarchical Structure
 Employees recognize defined levels of leadership within the organization; authority and
levels of responsibility are obvious.
 Opportunities for promotion motivate employees to perform well.
Disadvantages of Hierarchical Structure
 Communication across different departments tends to be less effective than in flat
organizations.

 Rivalry between departments may inflame as each department makes decisions that
benefit its own interests rather than the organizations as a whole (Cloud, 2010).
TASK 3
P.5 Describe the influence of two contrasting economic environments on business activities
A mixed economic system (also known as a Dual Economy) is just like it sounds (a
combination of economic systems), but it primarily refers to a mixture of a market and command
economy (for obvious reasons, a traditional economy does not typically mix well). As you can
imagine, many variations exist, with some mixed economies being primarily free markets and
others being strongly controlled by the government.
Next plc operates in the mixed economy system which has following advantages and drawbacks:
Benefits of A Mixed Economy:
In the most common types of mixed economies, the market is more or less free of government
ownership except for a few key areas. These areas are usually not the resources that a
command economy controls. Instead, as in America, they are the government programs such as
education, transportation, USPS, etc (Comanor and et.al., 2014). While all of these industries
also exist in the private sector in America, this is not always the case for a mixed economy.
Disadvantages of a Mixed Economy: While a mixed economy can lead to incredible results
(America being the obvious example), it can also suffer from similar downfalls found in other
economies. For example, the last hundred years in America has seen a rise in government power.
Not just in imposing laws and regulations, but in actually gaining control, becoming more
difficult to access while simultaneously becoming less flexible. This is a common tendency of
mixed economies.
Capitalism is an economic system based on private ownership of the means of
production and their operation for profit. Characteristics central to capitalism include private

property, capital accumulation, wage labor, voluntary exchange, a price system, and competitive
markets (Commander and Svejnar, 2011).
Advantages of Capitalism
1. Reduction in cost of production due to efficient control
2. Efficient control of production process
3. Improved quality of goods
4. Consumer’s choice is given full weight
5. Varieties of products
Disadvantages of Capitalism
1. Inequality in the distribution of national wealth
2. Fluctuations in the level of employment
3. Class conflicts
4. Waste of talents (Daft, 2009)
5. Heavy expenses on publicity result into increase in cost and price of the commodity
TASK 4
P.6 Describe how political, legal and social factors are impacting upon the business activities of
organizations and their stakeholders
PESTLE analysis of Next PLC
Political
There are a wide range of political factors which affect Next at present but also factors which
may have an impact upon the company in the future. One key political decision which affects Next in

the UK is the rate of tax levied by the government. This has the ability to affect both the bottom line
of the company in the form of corporation tax but also the ability of customers to spend with next,
linked to income tax. At present, levels of corporation tax in the UK have been lowered in order to
attempt to stimulate economic activity (Densten, 2002). However, given the continuing deficit, there
is no guarantee that governments in the future will maintain the rate of corporation tax at its current
level.
Economic
A critical factor which may have an impact upon Next in the UK is the current state of the
economic environment. As a business which makes use of a premium based differentiated strategy,
as opposed to being a cost leader, it may be seen that swings within the economic environment have
the ability to impact the fortunes of the company to a greater degree than those operating in the
necessity and budget sector of the market.
Social-Cultural
There are many social and cultural changes taking place in the UK at present which may have
a high level of impact upon the performance of fashion retailers such as Next. In many cases, as
representatives of an essentially socio-cultural industry, the fashion industry itself may be seen as an
industry which is affected by such trends to a greater degree than other industries. One of the key
issues in the UK market, but also seen across Next's wider European markets is the general aging of
the population (Du, Bhattacharya and Sen, 2010). This may be seen as both problematic but also an
opportunity for Next. One the one hand, an ageing population may see Next having to adapt its
product portfolio in an attempt to ensure that the products supplied by company appeal to this aging
demographic of the population.
Technological
There is little doubt that new technological developments have transformed the UK business
environment, especially those operating in the retail sector. Key developments may be seen as those
technologies which are internet or communications based in nature, such as the wide spread diffusion
of broad band. Key technological developments such as the internet have allowed firms such as Next
to develop online business models which complement traditional bricks and mortar retail
establishments. Empirical evidence from the ONS (2009) on the subject shows that the growth has

been almost exponential with a rapid acceptance on the behalf of customers of online shopping in
both retail and other markets.
Legal
Like all businesses, Next must conform to the legal minimum standards which are
enforceable in a jurisdiction. The case of Next's UK operations legal elements may be seen as more
complex given that the company must comply with both UK law and EU law. Minimum wage
legislation affects organizations such as Next with a large number of low paid workers are that of
various minimum wage regulations. In this case, the legislation requires UK employers to pay their
employees a minimum of £6.19 per hour for those aged over 21 (Gov UK). Given the large number
of employees of firms such as Next which are affected by the National Minimum Wage, temporary
shifts in legislative policy can have a high impact upon the sector.
Environmental
The physical environment is also a key issue for firms operating in any given national market
and consideration should be considered two how firms treat the physical environment and the impact
this has on the business, but also the impact the physical environment generally has upon a business.
In general terms, the physical environment which Next operates within in the UK may be seen as
relatively benign in comparison to other parts of the world which suffer from high intensity natural
disasters such as earthquakes, hurricanes and forest fires (Edward Freeman, 2010). Despite such an
environment there have been a number of environmental issues recently in the UK which have
affected the retail sector. These have included increasing more frequent floods and poor sales due to
snow storms and the failure of local authorities to prepare for periods of inclement weather (Hall,
2011).
CONCLUSION
From the above report, it can be concluded that analysis of environmental values is also
significant for Next Plc. In modern era, customers are so smart and they demand high quality of
products and services in low price. They create challenges for the enterprises to maintain balance
between supply and demand of products. By having an improved focus on the international trade
activities the delivery of products and services can be advanced effectively. It also helps in
promoting fair trade activities so that cross border values can be well maintained. Changes in

environmental values also influence the overall outcome of business. By having an application of
diverse methods company need to consider environment analysis. It will assist in advancing the
key values so that positive measures can be employed.
REFERENCES
Books and Journals
Arrow, K.J. and Kruz, M., 2013. Public investment, the rate of return, and optimal fiscal policy.
Routledge.
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and evidence from the US. The Review of Economic Studies. 77(4). pp.1329-1352.
Bishop, S. and Walker, M., 2010. The economics of EC competition law. Sweet & Maxwell.
Bocken, N. and et.al., 2013. A value mapping tool for sustainable business modelling. Corporate
Governance. 13(5). pp.482-497.
Booth, J. 2004. Human Resource Management and Organization Behaviour: Selected
Perspectives. Leadership & Organization Development Journal. 25(1). pp.109 – 110.
Brooks, I., 2003. Organisational Behaviour, Individuals, Groups and Organisation. 2nd Ed.
Prentice Hall.
Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder
management. Nelson Education.
Cloud, R. C., 2010. Epilogue: Change leadership and leadership development. New Directions
for Community Colleges. 3(149). pp.73-79.
Comanor, G.W. and et.al., 2014. Competition policy in Europe and North America: economic
issues and institutions. Taylor & Francis. 6(3). pp.16-23.
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performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Daft, 2009. Organization Theory and Design, 10th Ed. Cengage Learning

Densten, L. I., 2002. Clarifying inspirational motivation and its relationship to extra effort.
Leadership & Organization Development Journal. 23(1). pp.40–44.
Du, S., Bhattacharya, C.B. and Sen, S., 2010. Maximizing business returns to corporate social
responsibility (CSR): The role of CSR communication. International Journal of
Management Reviews. 12(1). pp.8-19.
Edward Freeman, R., 2010. Managing for stakeholders: Trade-offs or value creation. Journal of
business ethics. 96(12). pp.7-9.