Business Environment Analysis: Centrica PLC's Operations Report

This report examines the business environment of Centrica PLC, a British multinational energy and services company. It explores different types of organizations, including public, private, and voluntary sectors, and their legal structures, with a focus on Centrica's operations. The report analyzes the size and scope of various organizations, linking them to business objectives and product/service offerings. It details the relationship between organizational functions (marketing, finance, operations) and their impact on organizational structure. Furthermore, the report identifies the positive and negative effects of the macro environment on business operations, utilizing the PESTLE model for a detailed analysis. Internal and external analyses are conducted to identify Centrica's strengths and weaknesses, and the interrelation between these factors and external macro factors. Finally, SWOT/TOWS analysis is applied to justify how they influence decision-making within the company. The report concludes with a summary of findings and references.

Business and business
environment

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
P1 Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures......................................................................................................................3
P2 Explain the size and scope of a range of different types of organisations.............................5
M1 Analyse how the structure, size and scope of different organisations link to the business
objectives and product and services offered by the organisation................................................6
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.......................................................................................6
M2 Analyse the advantages and disadvantages of interrelationships between organisational
functions and the impact that can have upon organisational structure........................................8
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples................................................................................8
M3 Apply appropriately the PESTLE model to support a detailed analysis of the macro
environment within an organisation..........................................................................................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.................11
M4 Apply appropriately SWOT/TOWS analysis and justify how they influence decision
making.......................................................................................................................................14
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business environment comprises of some crucial aspects that are required to run the
operations of business and in order to sustain for a long period of time. The aspects therefore
includes suppliers, competitors, customers, the condition of economy and other external factors
that impacts the workings of business directly or indirectly. The aspects mentioned above are not
in control of business but affects the performance of same. Therefore it is also defined as a group
of external factors such as political, economic, environmental, social, technological and legal.
The business environment keeps on changing and never remains constant. In context to
CENTRICA PLC, which is a British multinational energy and services company engaged in
supply of gas and electricity to the consumers in UK and Ireland(Alford, 2019). The report will
describe about the types of organisation exist in the business environment along with the purpose
of its existence. The overview will also be depicted of the relationship of distinct organisational
functions and their link with the objectives and format of organisation. The report will also
showcase the negative and positive effect of external factors on the operations of business. The
brief also be provided for strength and weakness of company and the relation of same with the
macro factors.
TASK
P1 Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures
Organization is association with the activity of identification and grouping the work to be
performed, handling the responsibility and authority that is delegated to the person in order to
work effectively and with full efficiency in order to achieve the objectives(Burnham, 2018).
There exist different types of organisation in the business environment along with the purpose
stated for each type. In context to CENTRICA, being it is a public company it has some different
purpose to exist. Therefore describing each type of organisation and its purpose separately-
 Public form of organisation- It is the form of organization in which more than 51% stake
is hold by central government or state government or partly by state and partly by central
jointly and severally. It also comprise of company whose majority controlling power is
with the Public company. There exist various methods with respect to funding of public
services like taxes and financial transfer from other organisation.

Purpose-In context to CENTRICA, being a public company the purpose is to provide the
services that is considered essential for the well being of society and along with this to promote
the economic growth and stability.
 Private company- It is associated with the use of private source of finance that can be in
the form of independent investments. Articles of Association of company confers the
restriction on shares transferability and prevention of public from subscribing the same. It
comprises of members capacity of maximum 200(Chanana, 2021). in counting of 200
former and present employees are not considered. The company can be in the form of
Limited by shares, Limited by guarantee and Unlimited liability.
Purpose- The aim behind the existence of company is earning of profits and be a leader in their
business line. Also to increase the income in order to be stand alone with respect to the
competitors doing the similar form of business.
 Voluntary organisation- A group of people that voluntarily forms a group who have the
common objective to achieve. This can be in the form of trade association, trade unions
and professional associations. There exist no stringent regulations to follow and thereby
people can work and form groups independently with freedom. This is considered as not
for profit organisation in which no payment is made to run the business operations.
Purpose- The aim of voluntary form of organisation is to get through the planned mission and
work towards for the achievement of objective that is beneficial for the society not in terms of
profit.
 Legal structure- It has been observed that legal structure of any organisation comprises
of activities such as raising of capital, a sense of responsibility for the obligations of
business and the amount of tax imposed on organisation that tax authorities levy on the
same. It can be in the form of sole proprietorship, partnership, corporation and LLC.
Purpose- The main aim behind this structure is to implement the rules and regulations of
operations of business so that business can run systematically and legally(Copelovitch and
Pevehouse, 2019). Each and every sector under this structure is required to follow the procedure
required for running a business.

P2 Explain the size and scope of a range of different types of organisations.
There exist number of organisation in UK whose size depends on the wideness of its operations.
This comprises of Micro, small and large enterprises. Elaborating the enterprises- Micro enterprise- this is also known as small business which generates funds with the
startup loans. Being the credit worthiness of company is not so good so they get financed
by Microcredit.
Size- In general the working people count is not more than 10 employees with a turnover of
around EUR 2 million(Enke and Borchers, 2021).
Scope- It aims to set up employment on the large scale in economy which is distinct from formal
sector Small enterprise- It is the distinguished business activity with their branches that is
managed by more than one owner.
Size-The count of working people is not more than 50 employees and turnover less than EUR 10
million.
Scope-It aims to cover wide range of activities that is characterized by the low capital
requirement and use of labour intensive technology. Medium enterprises- this is generally referred to as privately held company that is
restricted location wise and the format is small .
Size-number of people account for about not more than 250 employees and turnover is not more
than EUR 50 million
Scope- this aims to increase the business worldwide and an important contributor in job creation
and development of economy.
In context to CENTRICA PLC, the size and scope of business consist of -
Size- As per the report of 2021, the number of employees count for around 20000 with the net
income of pound 1.73 billion
Scope- CENTRICA initiated the digital transformation of HR in replacements of SAP HR apps
with workday HCM cloud due to the reason that the cost of modern cloud based alternatives
were lower than support cost.
Product and services offered- British Gas, CENTRICA business solutions and Energy
Marketing and Trading

M1 Analyse how the structure, size and scope of different organisations link to the business
objectives and product and services offered by the organisation.
The objectives that business aims to achieve depends upon how big the organisation is and the
reach of their product and service offered(García‐Sánchez and Martínez‐Ferrero, 2019). When it
comes to micro enterprises then they pursue with the objectives that can be achieved in a short
span while the objectives pursued by medium and small enterprises generally takes more time to
achieve as the product and services offered by them have wider coverage and also the fund
requirement is quite big in comparison to micro enterprise.
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.
It has been observed that there is the correlation of business functions in order to achieve the
company success that cannot be achieved if function worked alone. In order to achieve the goal
by linking different functions there required a close communication and also the synergy
between them. In context to CENTRICA PLC, it comprises of basically four functions -
 Marketing- it is headed with the responsibility for the satisfaction of preferences of
customer in order to maintain the relationship with them for a long period of time. This
will help CENTRICA to gain loyalty and retain customers. This department of
CENTRICA therefore works with other such as finance or HR or any other with the
objective to -
1. Create strong workforce in order to implement programs and strategies
2. In order to work on research and development, hiring of new employees
3. A relation with the inventory management in order to keep the stock updated with the
need of customer
4. Setting the price in a way that results in benefit for the company needs the knowledge of
production cost
 Finance- this function comprises of cash inflows and outflows and along with this the
reporting on same. In context to CENTRICA, company have enough sources of finance
and is able to conduct its operations effectively(Medsker and Bailey, 2020). For the
company to run finance is required like the food for the body. The relation of this
department with other in reference to CENTRICA with the objective of -

1. To have highly skilled staff with the proper knowledge and clear understanding of
accounting and finance
2. When the function correlates than ability to allocate the budget for productive use gets
enhanced.
3. The monitoring process gets easier with respect to budget allocation
4. In order to make profits marketing department plays a major role in depicting the sales
targets.
 Operations- In order to maintain inventory level for the purpose of production and also
in order to run the production process efficiently, this department is held
responsible(Mikalef and Gupta, 2021). For the reason to carry out daily activities the
department requires a help of other department. In context to CENTRICA, the operations
department work with other department in order to run its operations effectively like,
1. With the help of sales department, operations functions can be performed by forecasting
about the production requirements and ensuring that the function of supply chain
management run successfully
2. Introducing a product requires the use of selective productive approaches.
3. The role of budgetary function is played in context to operations in a way to maintain
daily operations.
4. Staffing function is of vital importance as it provides new people needed at the time of
increased production.
Therefore, there is the co-relation of different organisational functions with the organisational
structure in order to smoothly run the operations of business. In context to CENTRICA, the
structure of business revolves around the organisational functions. Linking is provided as- Departments are separated by the functional structure- CENTRICA by adopting the
structure of functional organisation is differentiating its functions into distinct
departments that is to be updated to head of department. By this company is able to held
responsible the authority respectively. Each and every employee working in company is
responsible for the assigned task. Role of different branches in context to divisional structure- CENTRICA by operating
in different product segments is able to work functionally such as functions like Research
and Development and Accounting. Company along with this pros is facing certain

obstacles as when its employees are associated with the similar working than it leads to
inefficiency.
M2 Analyse the advantages and disadvantages of interrelationships between organisational
functions and the impact that can have upon organisational structure.
When different organisational functions relates to each other than it has a wider impact on the
structure of organisation. In context to CENTRICA, the interlinking of structure and functions is
associated with certain pros and cons. When the functional structure provides the advantage of
producing a focus by employees on the vision and mission of company it also provides the
disadvantage of shuffling of departments when the problem of customer relates to different
department. When branches are linked to divisional structure than pros can be assigned
responsibility for each individual and cons can be like as CENTRICA is following centralized
operations so this may lead to duplication of functions.
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples
The environment of business is affected by numerous factors that can be favourable or
unfavourable. Further the analysis of macro environment will provide an insight into the
strategies used and process applied. In context to CENTRICA, the examination of external
environment business can be followed by using the PESTLE model with there positive and
negative impacts(Nizam, Ng, Dewandaru, Nagayev and Nkoba, 2019). Therefore in context to
CENTRICA, this analysis will provide the understanding of external performance of company
and a brief description is-
 Political- Company like CENTRICA has a control on market at wider level by running
its operations through number of branches in world and also this has a bigger impact on
the political scenarios for the company.
Positive impact- by involving government in the operations of company it has explored itself
with certain rules and regulations in order to work effectively and for the assurance that task is
performed with full capacity.
Negative impact- due to political contraventions in the company, the issue of licence resulted
in conflict between the government and the company

 Economical- these factors demonstrates the performance of company in outer world. In
context to CENTRICA, the rise in inflation rate affects the purchasing power of its
customer. Discussing the negative and positive impacts-
Positive impact- emerging features like the greater effectiveness of cost comes from the deep
study of economical factors
Negative impact- As uncertainty associated with the economy it is difficult to point out the
how it will affect the operations of company. Influencing factors like interest rate, tax rate,
recessions and depression provides a major impact on the working.
 Social- This provides the organisation with the ability to scan the market that influence
its operations socially. In context to CENTRICA, it includes factors like trends,
population etc
Positive impact- by involving in culture that provide social values is considered of vital
importance and provides a sense on behaving pattern that is to behave in ethical and professional
way.
Negative impact- In context to CENTRICA, it has been observed that when neglecting the
social factors at the time of entering a market which is completely new or with the new product
may lead the company to negative publicity.
 Technological-It is concerned with the innovative technologies that provides a way to
enhance the product and explore itself to the opportunities prevailing in the market(Önder
and Zengin, 2022). In context to CENTRICA, company innovated wireless
communication tool in order to communicate effectively and efficiently.
Positive impact- In order to maintain the trend with respect to use of most innovated
technology these factors are of crucial importance as it provides CENTRICA to keep a pace with
ongoing trend.
Negative impact-sometimes company faces difficulty in keeping the record of ongoing
trend so this in negative sense can impact the customer retention ratio. It might also happen that
company in pursue of using outdated technology can lost its relevance.
 Legal- this is concerned with the policies and rules that are required to regulate the
company in legal terms. These factors play a major role in maintaining the reputation of
company like CENTRICA. This impacts the company internally and externally.

Positive impact- By overviewing this factor, company is able to get an insight about selling
certain product an also provides understanding of laws that are applicable to the company so that
company can run systematically.
Negative impact- As the company is operating in different segments in different countries
therefore abided by its rules and regulations. It becomes really tough to follow the rules and
regulations and work as per the laws of different country.
 Environmental factors- this includes factors like climate, weather and geographical
location. In context to CENTRICA, the company believes that these factors mostly
affects its working as operating in distinct environment is not an easy task.
Positive impact- By working in different environment company is provided with the
opportunity to act as per the requirement as it has gained the knowledge about how to behave
and react to the environmental situations that keeps on changing.
Negative impact- Working in different countries would require a deep understanding of
its environment along with the rules and regulations(van Ewijk and Belghiti-Mahut, 2019).
CENTRICA being running its operations in distinct countries is facing an obstacle to understand
the environment in proper way and because of this company is not able to run the business
properly that lead the company to face the loss.
M3 Apply appropriately the PESTLE model to support a detailed analysis of the macro
environment within an organisation.
By applying PESTLE model, CENTRICA get the clear understanding of its operations and the
way in which it has to move further to become successful player in the industry of energy. Being
a easy set up , this ease the understanding of business environment. Company by examining
external environment is able to predict the threats that might emerge from the external
environment and also company is in a position to reduce the impact of threat(Wessler, 2019).
The analysis will also let the company to exploit the opportunity.
P5 Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses
Internal analysis is considered as the procedure that an organisation conduct with the view to
examine its internal factors that affects the operations of company. In context to CENTRICA, it

depicts the ability of company to execute and manage the operations and decisions
appropriately(Xiao, Makhija and Karim, 2022). In company like CENTRICA, the use of SWOT
analysis is done to examine its internal environment-
Strengths
 Company is the largest supplier of gas
and electricity in UK markets
 Its omnipresence has gained the
opportunity of optimizing business and
reducing the risk.
 The company is named as largest gas
storage reservoir and is at the top
among the other gas markets.
Weakness
 With more focus in UK markets has
disclosed about the local factors such as
labour strikes, change in regulations
and economic conditions
 High dependence on third party with
respect to infrastructure negatively
impacts company's revenues and profits
 More use of debt finance has made its
investors to invest less
Opportunities
 The acquisition with
CONOCOPHILIPS and STATOIL has
explored the company with the
opportunity to achieve high growth and
increase its profits.
 By LNG supply in UK through MOU
increase its market share
 Its contribution to clean and renewable
energy sector will enhance its eco
friendly image
Threats
 Strong competition with other big
players that pursue with great financial
resource can degrade its market reach
 the company is into extensive state and
environmental regulations that can
increase the cost of compliance and
affect the profits adversely
 The business pursued by the company
is seasonal and depends on the weather
conditions so continuous change in
weather could affect the operations of
company and financial position.
P6 Explain how strengths and weaknesses interrelate with external macro factors
Business environment comprises of internal factors that impacts the business within an
organisation and external factors that impacts externally(Suhirwan, AP, Prakoso and SIP, 2020).

In context to CENTRICA, there is a interrelationship between the internal analysis and the macro
environmental factors like-
 Political factors-This segment of PESTLE analysis influence the political environment of
CENTRICA that impact its sustainability. Discussing strength and weakness of this
segments
Strength
company pursue with the power to influence
the market globally and also has the ability to
expand worldwide.
Weakness
Changing political environment leads to
change in government rules and regulations
according to which enterprise need to operate
can be negatively impacted
 Economic factors- In reference to CENTRICA, factors like growth rate, inflation and
economic indicators of industry helps in identifying growth prospects not only from the
sector point of view but from the organisation point of view(Creaney and Smith, 2020).
Briefing the ability and disability in this context-
Strength
The company prevails with the strong ability
with strong rates and stability so that it can
host country currency
Weakness
Inability to cope up with the economic trends
in other countries creates an obstacle to
produce the products internationally.
 Social factors- In context to CENTRICA, major role is played by attitudes and behaviour
of people that decides how marketers of company will understand the customers.
Assessing the pros and cons with respect to this-
Strength
Company provides high customer satisfaction
in comparison to its competitors with the god
customer relationship management.
Weakness
Due to the presence of enormous competitors
CENTRICA faces difficulty in continuous
evolvement of its products

 Technological factors- Technology is not constant therefore continuously evolving. So
CENTRICA is required to keep a record of speed at which technology is changing. It has
major impact on the company's product offering.
Strength
By the use of upgraded technology,
CENTRICA is pursuing with powerful and
potential distribution network which has
helped in reaching the wider audience.
Weakness
In order to expand its operations need huge
technological investment and as per the
scenario the vision to invest in technology is
not considered.
 Environmental factors- It is advisable for the company that before a entering any new
market to study the standards of environment carefully(Whyte and Sethares, 2022). In
context to CENTRICA, environmental factors that affects the operations of business is
weather and climate change.
Strength
CENTRICA by investing huge amount in
sustainable resources and providing more focus
to green house is able to green marketing
activities
Weakness
Despite involving sustainability in its
operations company is unable to predict the
environment of each and every market in
which it wished to operate its business.
 Legal factors- It includes laws regulations relating to discrimination, consumer and
employment with respect to CENTRICA. Company has carefully identified the legal
framework of the market in which it is entering. The ability and disability of this segment
is-
Strength
Company prevails with the ability to adapt the
rules and regulation of the country where it has
to enter or targetting to enter with its product
and services.
Weakness
Despite adapting rules and regulations of
different country it is difficult for the company
to follow them on regular basis and use in daily
operations.

M4 Apply appropriately SWOT/TOWS analysis and justify how they influence decision
making.
SWOT analysis is of high importance for the decision making process. Because this in context to
CENTRICA assesses the business deeply that provides a clear understanding of business should
operate further or not(Moirangthem and Nag, 2022). Each and every element of the analysis will
brief about the way to make effective decision that turns out to be full of profit for the company.
CONCLUSION
Business and Business environment goes hand in hand. Therefore it is required for the business
to keep a pace with the environment changes and adapt them and apply them in the business
operations. From the report prepared above of CENTRICA, it has been provided different types
of organisation that exist along with its size and scope. Further the report also described the
internal and external analysis that is required to conduct operations successfully. Hence an
interlinking of external and internal factor was also provided in order to assess its impact.

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