Asda: Analysis of Business Environment, Structure and Functions

This report offers a comprehensive analysis of Asda's business environment, encompassing its organizational structure, functions, and the influence of both macro and micro factors. The report begins by defining different types of organizations, including public, private, and voluntary entities, and the...Read More

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Different types and purposes of organisations and legal structure........................................1
P2. Size and scope of different types of organisations................................................................3
M1. Structure, size and scope linked with objectives, products and services offered by the
organisation..................................................................................................................................4
TASK 2............................................................................................................................................5
P3. Relationship of different organisational function and their link to organisational objectives
and structure.................................................................................................................................5
M2. Advantages and disadvantages of interrelationships and impact on business structure.......6
D1. Complexities of different business structure and interrelationships of organisational
functions.......................................................................................................................................6
TASK 3............................................................................................................................................7
P4. Impacts of macro environment..............................................................................................7
M3. Application of PESTLE model.............................................................................................9
TASK 4............................................................................................................................................9
P5.Internal and external analysis.................................................................................................9
P6. Interrelation of strengths and weaknesses with external macro factors..............................11
M4. Application of SWOT analysis...........................................................................................12
D2. Evaluation of impacts of macro and micro factors on business objectives and decision
making........................................................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment comprises various elements that helps an organisation to identify
expansion opportunities, assisting in planning, taping resources that results in improving
business performance as well as profitability (Bernstein, 2015). It is very important for
organisational members to carefully analyse and understand the factors associated with business
environment before taking decisions. Such environment impacts on operations, activities,
strategies of any business at great extent. To understand the aspects of business environment,
Asda is selected. The organisation performs its operation in the retail industry since 1949 and its
headquarters are situated at South Bank, West Yorkshire, England. It provides products and
services via super centres, George Stores, super markets, petrol filling stations and many more.
The essay discusses about types, purposes, scope, sizes and legal structure of organisations. It
further includes interrelationship of various functions within an organisation along with their
linkage to objectives and structure of organisations. It encompasses impacts of macro
environment on business operations and internal strengths as well as weakness of business along
with their interrelationship with external macro factors.
TASK 1
P1. Different types and purposes of organisations and legal structure.
Organisations are units that are established, run and managed by group of individuals in
order to meet collective goals. They have different objectives such as social welfare, satisfying
market requirements, solving social problems and earning higher revenues. These comprises
numerous people like juries, committee members, volunteers and so on who has specific
purposes. Types of organisations with purpose and legal structure are as described:
Public organisation: Such type of organisation are controlled and managed by
government authorities of the nation with the aim to deliver social welfare (Clarke, 2013). They
operates in public sector by delivering facilities on behalf of people of the country. These are
also known as non for profit organisations as they are not established to earn profits but the
provide social facilities to general public. Some of the examples of public organisations are
Crown Prosecution Service, Child maintenance Service, British Army and many more. One of
selected public organisation is Crown Prosecution Service that provides legal advices to
investigating agencies, assistance to citizens of England and Wales and many more.
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Purpose: Crown Prosecution Service performs operations with the purpose to prosecute
criminal cases, presenting information to investigating organisations and conducting criminal
prosecutions at its home country.
Legal structure: The legal structure of public organisations are as follows:
Local government: Organisations that are administered by authorities of local
government such as counties, school districts, municipalities and many more comes under such
structure (Davies, 2016).
State government: Enterprises that are run by representatives of state government like
executives, judicial as well as legislative are under such legal structure.
Central government: Organisations whose management as well as ownership are with
authorities of central government performs operations under this structure.
Hence, Crown prosecution Service follows legal structure based on the norms and
principles provided by central government.
Private Organisation: The organisation that perform operations in private sector and are
not operated and managed by public bodies. They performs business functions to achieve more
profitability by satisfying demands for the products of targetted customers and hence known as
profit organisations. The examples of private organisations are Tesco, Marks and Spencer,
Sainaburys, Asda and so on. The selected private organisation from defined examples is Asda
which performs operations in retail industry by supplying food and non food products.
Purpose: The purpose of Asda is to increase customer satisfaction by supplying
demanded products on appropriate time period and earning huge profits.
Legal structure: Following are the legal structure of private organisations:
Sole traders: The individual entrepreneurship that is run by single person without legal
distinction between business entity and owner comes under such structure (Dos Santos, 2011).
These organisations enjoy solely profits as well as liabilities are also borne by them.
Partnership: When two or more individuals invests in the business and accordingly
manage all operations by collectively taking decisions and shares profits along with losses as per
the partnership deeds are part of such structure.
Limited company: Such organisations do not offers shares to public directly but uses the
methods of initial public offerings with the objective to earn more profits.
Hence, Asda managers adopts legal structure of limited company.
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Voluntary organisation: These are non governmental organisation that are run by group
of people whose motives are related to deliver welfare services for the betterment or
development of the society as whole. Such organisations are independent from from national or
local government. The examples of voluntary organisations are Oxfam, British Heart
Foundation, Sightsavers, national Trust and hence forth. The selected voluntary organisation
from the examples is Oxfam which is an independent institute which was founded in the year
1942.
Purpose: Purpose of the existence of Oxfam is to raise societal living standards through
eradicating poverty as well as to provide relief to people who are affected from uncertain
disasters.
Legal structure: legal structure of voluntary organisations are the followings:
Unincorporated associations: Such structure are economical as well as quick to set up
and they acts as ideal for small organisations who has short term goals (Edgington, 2018). Not
intend to acquire property, has low incomes and so on. They provides legal advices and guidance
to group of people.
Trust: Organisations that are set up in order to manage assets for general public or entities
having clearly defined purposes. They have no membership structures and establishes formal
relationships with donor of money, trustees and property.
Limited Companies: Entities that are limited by guarantee, share holdings, members and
has distinct identity from their members. These are the groups who manages staff, contracts,
large funds and land.
Hence, the managers of Oxfam follows trust legal structure.
P2. Size and scope of different types of organisations.
Different types of organisations with size and scope are as follows:
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Illustration 1: Business Size, 2018
(Source: Business Size, 2018)
In the competitive environment, distinct organisations operates with different sizes and
scopes in order to conduct operations in effective manner. As per their sizes, managers set
strategies to attain goals. The report is based on three organisations and their size along with
scope of distinct organisations are as follows:
Public organisation:
The selected public organisation is Crown Prosecution service which delivers advisory
services within non ministerial division (Gansky, 2010).
Size: The selected organisation has large employee size which include 14 teams who has
approx 6000 work force and performs operations around the areas of England and Wales.
Scope: The company has scope to expand its operations with the help of digitalisations in
order to facilitate faster services within as well as outside the areas of the country.
Private organisation:
Asda is selected as private organisation that operates in retail division. The company has
divided its structure in small, medium and large organisations.
Size: Such organisation has size of 61 large Gateway Supermarkets, 32 super centres, 341
superstores, 2019 supermarkets, 33 living stores, 319 petrol stations and many more in which
more than 16000 employees are employed to deliver retail products (Size of Asda. 2019).
Scope: The recruitment team of the company selects skilled or unskilled people who has
potentiality to learn new things and perform actions with advanced techniques that expands the
scope to business to provide services globally.
Voluntary Organisation:
Oxfam is the selected voluntary organisation which is a charitable entity.
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Size: Oxfam has diverse size number of shops such as approx 650 Oxfam speciality shops
that includes books, furniture, bridal wear and music that are managed by approx 23000
volunteers worldwide (Size of Oxfam. 2018).
Scope: The company renders humanitarian services in more than 14 nations that states
that it has scope to expand towards new locations to serve services to potential customers.
M1. Structure, size and scope linked with objectives, products and services offered by the
organisation.
The organisational size, structure as well as scope are connected with the products,
services and organisational objectives. In context to Asda, they have large size of employees
with set scope and they functions to attain profits by delivering products or services. If such
organisation employs few workforce in their structure then they are not able to reach towards
targeted clients that delimits their scope to attain business objectives. Asda managers adopts
functional organisational structure through which they are able to manage their employee size
to expand the scope in order to attain their business objectives. Thus, organisations set the
objectives on the basis of their size and reviews organisational structure to expand scope to
provide products or services to international customers (Griseri and Seppala, 2010).
TASK 2
P3. Relationship of different organisational function and their link to organisational objectives
and structure.
Organisational functions are the main activities that are performed within the
organisation in different areas. Some of the functions are human resource management, finance,
marketing, research and development and many more. Asda being a retailer sets objectives and
utilises structure in such manner that are interrelated with different organisational functions. The
managers of Asda follows distinct organisational structure at distinct stores according to the
convenience of managers (Hilton and Platt, 2013). For example, in some stores they follows
functional organisational structure and in some divisional organisational structure in which
employees are groups in different organisational functions as per similar skills, knowledge and
so on features. The interrelationships of different functions of Asda along with linkage to
organisational objectives and structure are as follows:
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Production with other function: Production function of Asda is concerned with
production of goods or services as per the quality and quantity. They coordinates with marketing
function in order to get information related with current trends, needs or demands of consumer,
supply of goods and many more. Such function prepares report related to requirement of funds
and collects them from finance function with the purpose to carry out daily tasks without any
hurdles. Production function sets objectives and operations by considering structure of the
company.
Finance with other function: Such function is concerned with expenditure as well as
usage of financial resources in different activities of Asda. They provides reports based on
financial positions as well as performance as per the objectives and business plan. Such function
allocates resources in different functions such as human resource, marketing, production and so
on. They provide funds to human resource function so that they can provide salaries to
organisational employees. They also allocate funds to marketing function so that marketing
activities are carry out to attain objectives as per the business structure (Kang, Lee and Kim,
2010).
Marketing with other functions: This type of function is concerned with framing
strategies to promote brand in international market. Such function establishes relationships with
all other functions and provide detailed information related to customers as well as market to
production function and collects performance report along with statistics from finance function.
All the activities of marketing function are linked with organisational structure as well as
objectives in some manner that they acts as guidance for performing actions.
Thus, all the organisational functions of Asda performs their activities by building
relationships with other functions and linking the strategies of individual functions with the
business structure as well as objectives.
M2. Advantages and disadvantages of interrelationships and impact on business structure.
The advantages of interrelationships among organisational functions are that they
strengthen employee relationship within different functions that helps in maintaining
cooperation, all employees of different functions shares information that escalates level of profit
which impacts in positive manner on business structure as increases profit level helps in
strengthen business structure. In contrary, all employees have information about job
responsibilities as well as operations of different functions and such information can be utilised
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by the employees to harm the branches as well as increases competition among organisational
functional branches are some of the disadvantages of functional interrelationships (Khilji, 2012).
If such type of activities happens at workplace then it results in negative consequences and thus
impacts on business structure.
D1. Complexities of different business structure and interrelationships of organisational
functions.
Asda managers have adopted different structures in different stores as per the needs. In
context to functional organisational structure, they faces complexities as different functional
groups can not communicate properly in international market that decreases flexibility in
performances. In context to divisional structure, complexities are faced related to operational
inefficiencies within specialised functions such as financial function may not able to
communicate important financial information to another divisions that increases accounting as
well as implications of taxations. All the organisational functions such as finance, marketing and
functional are interrelated with one another in various ways such as building effective
relationships as well as communicating essential information that are needed by the functional
departments.
TASK 3
P4. Impacts of macro environment.
Macro environment:
is PESTLE analysis: This is a multifaceted business tool that is used by different types of
company to analyse the specific project which runs by organisation. It provides appropriate
results that can help to make right business decision. This is consider as macro environment
factor that are not possible to control for organisation. The PESTLE analysis of Asda are as
follows:
Political factor: The European Union has conferred a good opportunity for Asda to
expand its business in to European market where trade barrier have been removed. Moreover,
admission of China in World trade organization made it possible for Asda to expand in Chinese
market for sale its products.
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Positive impact: Asda can expand its business and reach at global market due to having
stable government in UK. Moreover, it can focuses on business operation that helps to run a
business continuously.
Negative impact: The market share and productivity of Asda may be decrease due to
changes in government because if government of UK will be change then it will formulate new
policy that is mandatory to follow by Asda company (Li, Zhou and Si, 2010).
Economical factor: This factor play a role such as if the economy of UK was
experiencing difficulties as faced in 2008 when economy was under recession, most of the
people lost their jobs due to less spending power. Its impacts positively and negatively such as:
Positive impact: Stability in inflation rate can help Asda to increase their revenues as
customers who normally did their shopping at other retailer sector like as Tesco, Mark and
Spencer that helps to make more profits.
Negative impact: The revenues of Asda can be reduced due to increase in inflation rate
because if inflation rate will increase then Asda has to purchase raw material and finished goods
at high prices.
Social factor: The customers are more aware, there is an increased demand for organic
food implying that Asda make sure that it provides organic food for the purpose of meeting with
needs of customers who wanted to get organic food. It impacts Asda business such as:
Positive impact: Asda is British super market that deals in various products. It can
increase customer loyalty by producing better quality of products and supplying products
according to demand, as result purchase product from this company and can refer to others also.
Negative impact: It may impacts negatively also such as as if supply of products are not
equal to demand due to lack of production and not providing organic food. In this situation
customer will purchase products from other organisation that is hurdles for Asda.
Technological factor: This factor involve innovative products and advance technology
which can influence business organization. Asda reach at global level by adopting technological
changes that are helpful for organization.
Positive impact: Asda can expand its business globally by adopting new technology such
as online retail and e- marketing within business industry that helps to be successfully (Kopnina
and Blewitt, 2018).
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Negative impact: It may be challenge for Asda to arrange high amount of funds and
technical person to arrange money for adopting challenges. As result it can create loss situation
for Asda to use new technology.
Legal factor: This factor consider various factor such as laws and legislation, rules and
regulation , employment law and securities law which impacts on business. Such as it is
important for Asda to follow equal pay act and provide security to their employees for working
at there. Its impacts are as given:
Positive impact: By following equal pay act and getting security Asda can maximize
profits at low cost and no employees will be retain for long term as result continuous
productivity.
Negative impact: The production level can be decrease and hiring cost may be decrease
due to not following equal pay act by Asda. If Asda's manager do not provide security and equal
pay then can can leave organization.-
Environmental factor: This factor involves ethical, environment protection law and eco
friendly environment which can impact Asda business. Its positive and negative impacts are as
defined:
Positive impact: Positive impact: ASDA has put in place an environment friendly
approach which have seen that company use recycle material in different situation such as
packaging and labelling which impacts positively on environment.
Negative impact: The cost of Asda may be increase due to not following ethical and
environmental standard. Moreover, wastage of material also increases so it may impacts UK 's
retail sector negatively.
TASK 4
P5.Internal and external analysis.
External analysis: the managers analyses external environment by adopting porters
framework which includes 5 elements. Porter five forces analysis of Asda:
Competitive rivalry: In UK the retail industry is highly competitive as there are many
many retailer that gives a tough competition to old players. It has main competition with Tesco,
Sainsburry and Morrison that deals in same industry. The marketers of these organisation
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launches new strategies different from others in order to beat competition. Asda can beat the
competition by launching new strategies that can influence supermarket decision.
Power of buyers: Buyers are integral part of business that helps to run a business by
purchasing products. In UK, the purchasing power of buyer is high, because there are so many
sellers who sales their products at different prices (McNutt and Rossi, 2010). If Asda want to sale
their product then it has to set their prices according to customer for selling their products, so it
influences decision of super market.
Power of suppliers: The bargaining power of suppliers is low due to having number of
customers as result they can switch their cost for selling their products if better prices is given to
them. As result it can influence market decision.
Threat of new entrants: Asda, Tesco, Morrison are big player in retail sector in UK that
give a tough competition to other for enter into new market. For entering in to new market there
is need to invest huge amount which is difficult for other competitors. As result it is helpful for
Asda to make decision to enter in new market by introducing new products.
Threat of substitute products: Asda is dealing in grocery market which are also offered
by other supermarket at different prices, quality and services. So it may be tough decision for
Asda to sale their products due to having substitutes of products which influences super market
decision. For increase sale Asda need to build strong strategy and provide differentiate products
which can not be copied by other in order to sale and increase profits.
Internal Analysis: in order to analyse internal environment, the framework of SWOT
analysis is used which helps in evaluation of strengths, opportunities, weakness as well as threats
pertaining with the organisation in order to understand critical situations. SWOT analysis of
Asda is as follows:
Strengths: Asda has strong portfolio of district products as well as services that resulted
in diversified in large geographical market. Such entity has loyal customer base and favourable
corporate culture which enhances employees and customers loyalty towards the business and its
diversified products. The marketers of such company have understanding skills that helps in
analysing customer buying behaviour (Nair and Paulose, 2014). To deliver expected products to
customers, managers of Asda have adopted the strategy to lower product prices which boosted
sales that came out as biggest strengthen of the company.
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Weaknesses: Asda does not provide loyalty cards to its customers and highly dependent
on market of home country. In various circumstances, managers at different stores are not able to
tackle challenges such as technological advancements, changed customer perception of
organisational products and hence forth. In various stores, decisions are formulated by managers
without involving employees that limits innovate as well as creative ideas to face situations. Due
changing environment, customers are also changing their preferences and demands towards other
companies and organisational marketers are unable to deal with the changing environment which
is a weakness for Asda.
Opportunities: Asda has opportunity to expand the business in diverse areas such as
jewellery and pharmacies that will attract more customers. It can also grab opportunity of
providing products through online market and reshape its various segment such as books,
clothing and eatable items. With changing preferences, Asda managers can grab the opportunity
to expand the market in different locations or areas in order to fulfil the demands and attract new
market segment.
Threats: Asda is facing competition with large multinational organisations like Tesco
and Sainsburys. The changing market trends as well as customer preferences are also the threats
for the company. The organisation is facing fluctuations in currencies in different countries that
impacts on their decision making. Due changing environment, customers are also changing their
preferences and demands towards other companies which is a threat for Asda.
P6. Interrelation of strengths and weaknesses with external macro factors.
Macro factors are not controllable by organisational members and impacts business
operations at great extent. The interrelation of external macro factors with strengths an
weaknesses are as follows:
Political factors: Such factors comprises of political systems, government policies,
legislations and so on. Asda performs operations in UK market which has stable political system
that acts as strength for the company as they carefully understand policies and apply them in
systematic manner then increases business efficiency (Neubauer and Lank, 2016). In contrary, if
such system changes it affects business in numerous ways such as adds risks and changed
policies acts as weaknesses for company.
Economical factors: These are associated with taxation, business cycle, marketable
surplus, corruption, capital formation and many more. Large investments by strong investors
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helps Asda to enhance its financial performances which is a strength but due to currency
fluctuations the company faces price instability that reduces profitability which is a weaknesses
for Asda.
Social factors: Factors such as religious orientation, ethnicity, economic status, social
governance and hence forth. The markets of Asda have strong skills as well as knowledge to
understand customers preferences and deliver products accordingly that helps in retaining large
customer base which is a strength for enterprise. But in various cases, such preferences shifts
towards competitors products and decreases sales that decreases capability to survive in
competition which acts as weaknesses.
Technological factors: If managers of Asda adopts advanced technologies such as
artificial intelligence in production of products as per the standards results in improving
organisational image and communicating information conveniently in different countries are
strengths. But with the passage of time, machines and technologies becomes obsolete and their
renovation requires huge investments that misbalances budgets as well as hampers operations
which is a weaknesses for Asda.
M4. Application of SWOT analysis.
By applying SWOT analysis, managers analyse internal environment and identify key
aspects that benefits the organisation and which are the hurdles to attain objectives. Strengths of
the company are strong portfolio, loyalty customer base, favourable corporate culture and many
more. Weaknesses are dependence on market of home country only, no ability to tackle uncertain
situations and many more. Opportunities are expansion in different areas, adopting online market
and reshaping various segments (Palo and Tähtinen, 2013). Threats are stiff competition,
recession and depreciation. If organisational managers do not formulate effective decisions to
overcome from weaknesses and minimising threats then they will not be able to implement
strategies to attain objectives that will influence their decision making at great extent.
D2. Evaluation of impacts of macro and micro factors on business objectives and decision
making.
From the above discussion it has been evaluated that macro factors are technological
factors, political factors, social factors and economic factors where as micro factors are internal
factors. Sudden changes in such factors results in misbalancing operations, changing customer
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preferences, increasing taxation implications and many more which impacts on business
objectives as well as decision making (Scheer, 2012).
CONCLUSION
From the above essay it has been concluded that business environment influences
organisational activities, objectives and decision making. In order to attain objectives it is very
important for managers to understand macro as well as micro environment in proper manner then
formulate strategies. Different type of organisations are public organisations, voluntary
organisations and public organisations following distinct legal structures and having different
large, small and medium sizes along with huge scope to expand in the market. PESTLE analysis
is applied to analyse micro and macro environment as they have huge impacts on business
operations. SWOT analysis are used to analyse internal strengths and weaknesses pertaining with
entities. Porter's Forces model is used to analyse forces that helps in reshaping organsiational
activities.
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