Business and the Business Environment Analysis of Arcadia Group

This report provides a comprehensive analysis of the business environment, focusing on the Arcadia Group, a British clothing retailer. It begins by defining the business environment and its impact on organizations, then explores different types of organizations—public, private, and voluntary sectors—using examples like the British Council, Arcadia, and Oxfam. The report delves into the size and scope of organizations, comparing employee strength, revenue, market size, and scope across the three sectors. It then examines the relationships between various organizational functions, such as purchasing, production, and human resources, and their link to organizational objectives and structures. The analysis extends to the positive and negative impacts of macro-environmental factors on Arcadia, followed by an internal and external analysis of the company's strengths and weaknesses in relation to these factors. The report concludes with an overview of the interrelation between Arcadia's strengths, weaknesses, and macro factors.

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1 Different types of organisations and their purpose ...............................................................1
P2 Size and Scope of Organisations............................................................................................2
LO2..................................................................................................................................................5
P3 Relationships between different functions of an organisation and their link with
organisational objectives and structures......................................................................................5
LO4..................................................................................................................................................6
P4 Positive and negative impact on macro environment:...........................................................6
LO4..................................................................................................................................................8
P5 External and internal analysis of an organisation..................................................................8
P6 Interrelation of Strengths and Weaknesses of Arcadia with its macro factors.....................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business Environment consists of a set of climatic factors whether internal or external
factors that have an impact on the organisation and its business. These environmental factors
affects the organisations' performance in sustaining it success and profitability. Business
environment also effects the organisations decisions. It consists of set of political, cultural, social
and other factors of an environment in which the business operates. In this report Arcadia is
taken as an organisation, Arcadia is a British company deals in retails of clothing, accessories
and shoes(Schaltegger and Wagner, 2017). This report discuss about the types and purpose of
different organisations, their size and scope. This report also highlights the relationships of
various functions of an organisation. This report also discusses about the positive and negative
impact of macro factors on an organisation. This report analyses the internal strengths and
weaknesses of an organisation and their relationships with macro factors.
LO1
P1 Different types of organisations and their purpose
Public Sector Organisations – A public sector organisation is an organisation that is
completely owned and managed by the government. The main objective of a public sector
organisation is to deliver services to the people while at the time generating enough profits to
functioning better. Also, its aim includes to get better infrastructure and pay its employees. These
organisations run on commercial basis(Belás and et.al., 2015.).
For example – Organisations such as British council specialise in international structure
and educational opportunities. The key role of such organisation is to promote a wider
knowledge of United Kingdom and the English language. It operates under the command of
Royal Charter or its governing body, which is British government.
The legal structure of British Council consists of group structure which, in addition to the
British Council charity, includes subsidiary undertakings in the UK and overseas. Information
regarding these separate legal entities is provided in the governance statement and notes of the
accounts sections of the British Council's annual reports.
Private Sector Organisations – Private sector organisations are part of a country
economic system that is run by individuals and companies, rather than the government. Such
organisations run with the intention of making profit. These organisations are larger in free
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enterprise economies, such as United States and United Kingdom. In these country's government
imposes relatively few restrictions on businesses, which makes it easy for individual
organisations to run and flourish.
For example – Organisations such as Arcadia Group in UK, comes under private sector
organisations. The company owns high street clothing retailers in UK and worldwide. With
having more that 2,500 outlets in UK, the company's major objective is to garner maximum
profits in the clothing retail as well as to develop tools and capabilities that improve the
productivity, quality, and dissemination of the organisation.
The legal structure of Arcadia consists as a joint-stock company. It is an incorporated
business organisation where the business has a separate legal identity from its owners. Also, the
firm is owned by the shareholders as well, where each shareholder has limited liability for the
company's debts and can, therefore, loose the value of their investment in the company.
Voluntary Sector Organisations – Voluntary Sector usually includes those organisations whose
purpose is to benefit and enrich the society. Without having profit as a motive or with little or not
having any government intervention.
For example – Organisations such as Oxfam in United Kingdom is a confederation of 20
independent charitable organisation focusing on the alleviation of global poverty. It a major
non-profit organisation with an extensive collection of operations. Oxfam objectives include to
serve the needy and gather funds for research and awareness(Apăvăloaie, 2014.).
The legal structure of voluntary firms such as Oxfam include trust and unincorporated
association within the organisation. Also, the Board of Oxfam is the major deciding factor for
any changes within the organisation. It elects the leaders and voting members. Its purpose is to
ensure that Oxfam International is accountable, transparent, and fit for purpose. The constitution
and Strategic Plan are also approved at Board level in the organisation.
Public Sector Private Sector Voluntary Sector
Definition Public sector is a type
of an organisation
which are operated
and owned by the
These are the type of
sectors which run and
operated by the private
Voluntary sector is a
sector in which the
social activities are
taken up by the
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Government in order
to provide services to
its citizens.
individuals. organisations
Objective Its objective is to
deliver services to its
citizens.
Its main objective is to
earn profits.
Its objective is to
provide benefits to the
society without
making profits.
Examples
P2 Size and Scope of Organisations
Criteria Public Sector Private Sector Voluntary Sector
Employee Strength The employee strength
for a public sector
organisation is larger in
context with any other
type of organisation.
As such organisation is
completely managed
and governed by the
government itself. They
have high chances of
large employee
admissions and
participations. In
context of an
organisation such as
British council. With
having its bases in over
The employee strength
of private sector
organisations is mostly
dependent on its value
within its reach.
Organisations such as
Arcadia have a number
of 22,000 employees in
United Kingdom or
worldwide. Such
organisations main
purpose to keep
increasing its employee
base and to increase its
value nationally and
internationally as well.
Arcadia group's main
Voluntary
sectors can be
both small or
large. Their
employee base
depends upon
the size and
objective of the
organisation.
Any voluntary
organisation can
have its
employee to
manage the
organisation, but
organisations
such as Oxfam is
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100 countries, the
company strength
varies from a huge
number of employees
working with different
class, cultures and
traditions.
objective is to train its
employee to earn better
profits and provide
satisfactory services to
its customers, with
meeting the best of
standards.
a huge voluntary
organisation that
is spread across
the world. The
organisation is
having a lead
staff of 2500
members
working for
different
purposes to
achieve the same
goal of the
alleviation of
global poverty.
Revenue British council's annual
revenue sums up to
$273 millions. This
typically showcases it
worldwide reach and
the ability of the
organisation. The
revenue generation of
public sector
undertakings mostly
gets invested in
Arcadia group owns a
variety of retails stores
worldwide and the
organisations' revenue
is measured as $3
billions in 2017. The
revenue of such
organisation largely
becomes the part of the
owners capital and he
alone is the sole
Oxfam being a
huge voluntary
organisation
earned the major
revenue of $463
millions. It
reaches and
donations makes
it one of the
biggest revenue
generating
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infrastructure, or into
the growth of the
organisation.
proprietor of the profit. voluntary
organisations.
Revenue of
voluntary
organisation is
mostly provided
to its growth and
prosperity.
Market Size The market size of a
public sector
organisation such as
British Council
determines the value of
its assets and its reach.
British Council with its
reach in 100 countries
stands as great
organisation that has
made its position
globally.
Arcadia with its 2,500
retail outlets in the
United Kingdom has a
wide clientele in the
nation itself. The
company owns a
variety of brands under
its name and serve a
leading Private Sector
organisation in United
Kingdom.
Voluntary
organisations in
general do not
have a large
market size.
They usually
serve in a
desired
community or
market. Oxfam
considered as a
large volunteer
makes it spread
not only the UK
but worldwide.
Such
organisations
operate freely
with support
from the
governments
worldwide.
5

SCOPE
Number of
Outlets/Branches
British Council serves
as a leader in the
educational platform of
United Kingdom and
the English language
worldwide. The British
council have its reach
towards all over the
world and its learning
centres are also spread
worldwide.
Arcadia is spread
across united kingdom
with its 2500 retail
stores. The company is
still looking forward to
open more stores in
United Kingdom as
well as worldwide.
Oxfam is spread
across 90
countries
worldwide with
its centres
located in
countries such as
India, China,
Mexico etc. This
makes the
organisation's
reach
worldwide.
Number of
Products/Service
British council services
include providing its
members with
extensive knowledge of
United Kingdom and
English language.
Arcadia serves as a
leading organisation
that serves it customers
with high end clothing
and owns a number of
retail stores in United
Kingdom.
Oxfam provides
worldwide
services to
reduce global
hunger and
identifying
related
situations.
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LO2
P3 Relationships between different functions of an organisation and their link with organisational
objectives and structures
The relationship between different organisational functions and their interrelations
11 Purchasing and Production – Arcadia's purchasing department plays a key role for the
overall organisations' reputation. Purchasing departments main objective is to buy the
raw material from which the company can produce desired clothes to sell in the market.
The purchasing department of Arcadia stays aware of the best quality raw materials
required to maintain the company's reputation. After raw materials being selected, the
production of the clothes starts. There has to be the close cooperation between the two.
The purchasing department knows in advance the needs of production department. It
helps the production department to ask for the kind of material required for producing the
goods.11 Production and Human Resources – The interrelation between production and Human
Resources of Arcadia plays a important role for the organisation. The human resource
department ensures that the right skilled employees are being recruited for the production
department. Also, the production department's employee salaries, staff allowances etc. are
provided by the Human resource team. The human resource team also ensures the right
environment between the employees of the production and they are being fairly as per the
organisational rules and regulations. Also, human resource recruits new employees
during shortage and eliminates them during surplus.11 Marketing and Accounting – The accounting department of Arcadia monitors the
financial condition of the company based on financial statements that are compiled on a
regular basis. The accounting department works closely with the marketing department to
monitor trends in the business as well as manage the efficiency of sales promotions
initiated by the company. Marketing and Accounting teams work together to create long
term strategies that leads towards greater profits and ongoing success. The cooperation of
these departments is also required in analysing ratios of costs and their sales, which helps
the organisation to determine not only how much money was spent and how much was
made, but also how much each department spent on a particular expenditure.
7

11 Research and development and finance – R&D department is one of the core
departments of Arcadia which requires big budget as its job is to evaluate fashion, market
trends and analysis and research on new products and raw materials appropriate for the
desired market segment. The interrelation of R&D and finance in Arcadia deals with the
requirements of the R&D, and as per the requirement the budget's allocation from finance
is initiated.11 Marketing and IT – The marketing department of Arcadia requires and effective system
from which the team can manage its operations efficiently. The IT department makes a
big difference by providing the right tools for the finance department to function. Also,
the marketing department needs to be functioning for its role-playing in the organisation,
which is the job of IT department to ensure the smooth operations.
Divisional Structures: It is the type of a organisational structure in which those employees are
grouped together which are responsible for the market service or are responsible for product type
as per the work flow. It increases the flexibility as it can be broken in to as per the market,
product and other geographical structures.
Matrix Structure: It is the type of a organisational structure in which the employees are
performing dual reporting relationships such as product manager as well as functional manager,
these relationships are set up as matrix.
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Flat Structure: Flat structure is a type of a structure which have very less or no management
levels management that exists between staff level employees and the management. In this
structure these is high employee participation in decision making.
LO3
P4 Positive and negative impact on macro environment:
There are various types of environmental factors. That is external factors. Like political,
social, legal, environmental, technological, economical. There are using macro environment,
they are impact on marketing decision of the business. And also effect performance, strategies of
the company. Business environment uses internal factors and external factors affect the company
success.
 Political factor: positive and negative impact on business environment:
Political factor involves law, rules and regulations, rights and duties. It can change situation of
the company when came to very sensitive issues. It is affect companies are uncontrollable.
Change in political condition can be a very smooth and sensitive issues to Arcadia company. The
fact government rules and laws accordingly policies created are to profit an organization by
realisation of maximum benefits, so same negative impact on the country(Erasmus, et.al., 2016).
 Social factor: Positive and negative impact on business environment:
Social factor can be affected by the Arcadia company demographics and change in culture and
sociality. The social factor impact on business concern to related to mangers and employees with
the company. An organization through advertising on social media networking like internet.
They are provides company brand and image so connect with social media networking like
Facebook, twitter, Instagram so on. The same social contact that serve so other competitors
copied can trough to information so buyers to go viral. That is negative impart on company.
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 Legal factor: Positive and negative impact on business:
Legal factor affects the Arcadia company includes all laws rules and regulations that can be
change results of company. Legal factor affected by company internal part like strategy's
method. They create taxes, trade unions regulations, duties and monetary policy. The company
need to response and flexible to changing regulatory and policies uncontrollable system so
current changes the able to government to systematic rules and order. This is negative impact on
business.
 Technological factor: Positive and negative impact on business:
Technological factor save money and save time for the business. Arcadia company used
technology factor so up to date work, complete and meaningful information and addition helps
immediately. Reports are ready to some hours and minutes. Internet technology is organization
decreases because a person connect to other person in relationship. So the company growth
decreases mind and other conversations that use in relational touch. So it is negative impact on
business(Kolk 2016).
 Economical factor: Positive and negative impact on business:
The Arcadia company value of buying products and services for international entities, creating
domestic organization far many competitive. The company economic growth increase when
customers demands increase. But customers demands decrease because high inflation in the
market. So company economy decrease. That's negative impact on business.
 Environmental factor: positive and negative impact on business: impact on business.
Environmental factor affects by the strategy of the business. It is increasing customers because
customers want to good climate of the nature. The business are facing environmental issues to
pressures by government departments. So it is negativity in the business.
Total impact of PESTLE will be both as well as negative there are the factors which
provide the opportunities for growth for the organisation but the organisation has to formulate
the strategies as per these macro factors as they have strong impact on the business of an
organisation. There exists many issues which have to be addressed by the organisation in order to
gains a competitive advantages and profits.
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LO4
P5 External and internal analysis of an organisation
Arcadia's internal and external analysis can be done by using SWOT analysis which
includes:
Strengths: Strengths of Arcadia includes that it has a strong work force which is
considered as the main strengths of an organisation. Another strength of Arcadia is that it has a
strong brand and improved brand. Its brands are stylish and are perfect and are meeting the
styling needs of its customers across the country and across the globe.
Weaknesses: With its strengths there are also some weaknesses which Arcadia has to
face like it has very less communication areas(Bah and Fang 2015.). The process of
communication needs to be improved by the company which have created the problems in
meeting its targets and has effected the performance of the business. This communication
weaknesses have also brought dissatisfaction among the employees of an organisation as they
fail to achieve their targets. Another weakness of Arcadia is that it is facing problems in its
trading environments, its trading environment is poor and need to formulate new strategies in
order to improve its trading environment.
Opportunities: It is the external factor of an organisation which can effect and enhance
the growth of an organisation. An opportunity that Arcadia finds in its external environment is
that it can develop a strong relation with its international suppliers which is huge opportunity
available for Arcadia with this opportunity a company can increase its production level and
helps in cut costs. Another opportunity for Arcadia is that it can stop buying the cotton from
Uzbek as there is the issue of child labour in the country this will increase the image of the
company and also will create the positive impression about the company(Bah, Eand and Fang
2014.).
Threats: Threats can prove set back for any company, but it also can bring new changes
and provide a chance of development for any organisation. The major threats faced by Arcadia
that it facing tough competition from its competitors who are in the same business i.e. in retail
business this is considered by Arcadia as the major threat. Another threat faced by Arcadia is the
threat from the legislation, this kind of threats include VAT, which a government imposes on the
products of Arcadia.
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Porters Five Forces of ARCADIA
Threat of new entrants: Arcadia has to face the threats of new entrants from the agricultural
chemicals
Bargaining power of Suppliers: Suppliers of Arcadia are in the dominant position and can
decrease the margins of Arcadia.
Bargaining power of Buyers: Buyers are also in the dominant position and keep on demanding
a lot from the the organisation.
Threats from Substitutes: Arcadia is facing the threats from Dropbox and google drive which
are its substitutes in storage hardware drives.
Rivalry: There is a strong rivalry with Agricultural chemical companies and Arcadia is facing
stiff competition from them.
P6 Interrelation of Strengths and Weaknesses of Arcadia with its macro factors.
There is a strong relationship between strengths and weaknesses of Arcadia with its
macro factors which can be explained as
Strengths and Weaknesses Macro factors
Strengths: Strong Work force and strong Brand
Image
In order to maintain its strong works a
company has to follow the employment laws of
the country. A company need to understand
various employment laws of different countries
in which its business exists. What are the
working hours, minimum wages of employees
as per the law. A company has to take into
consideration various policies regarding
labours which helps in the smooth functioning
of a business. While as the Strong brand image
of a company effects the consumers
preferences and also can make them to switch
their brand. So there is a relationship with
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social factors of the environment(Chang, J.F.,
2016.).
Weaknesses: communication gap and poor
trading environment
A communication gap of the company with the
government of any country will lead to the
political problems. It can no connections with
the government can lead to the fatal
consequences on the companies like penalties
and fines which could be lavished on the
company by the government. A poor trading
environment can affect the legal factor, the
exchange rate , tax rates, currency exchanges
comes in this factor(Schaltegger, Hansen and
Lüdeke-Freund, 2016.). Poor relationship
between the two may result in the loss of the
business.
The relationship and the analysis of macro and micro provides a brief information about
the entire environment of an organisation in which the organisation operates, it will help an
organisation to overcome the set backs and to make out the maximum of the opportunities
available to organisation. By studying macro and micro factors an organisation can go for the
expansion of business by gaining the competitive advantages and also to formulate the strategies
to overcome the challenges faced by Arcadia.
CONCLUSION
From the above report it can be concluded that purpose of each organisation is different
from each other. Each firm has its legal structure and it has to follow guidelines of government.
Macro factors impact on overall operations of business to great extent. Entity has to look upon
these elements and have to make correct strategies so that it can sustain in market for longer
duration.
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