Business Environment Factors Impacting ASDA Business Operations Report

This report analyzes the business environment of ASDA, a multinational British supermarket retailer. It explores different types of organizations (public, private, and voluntary), their purposes, legal structures, and the size and scope of their operations, using examples like NHS, ASDA, and Oxfam. The report examines the relationship between organizational functions (HR, Finance, Marketing) and their link to achieving business objectives, emphasizing ASDA's departmental structure. Furthermore, it assesses the positive and negative impacts of the macro environment on ASDA's operations, including internal and external analyses, identifying strengths and weaknesses, and evaluating the interplay between strengths, weaknesses, and external macro factors to provide a comprehensive understanding of ASDA's business environment and strategies.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................4
P1. Different types and purposes of organisations with their legal structures............................4
P2. Size and scope of different types of organisations................................................................6
TASK 2............................................................................................................................................8
P3 Relationship between different organisational functions and their link to organisational
objectives and structures ............................................................................................................8
M1...............................................................................................................................................9
M2.............................................................................................................................................10
D1..............................................................................................................................................10
TASK 3..........................................................................................................................................10
P4 Positive and negative impact of macro environment on business operations of ASDA.....10
P5&M3 Internal and external Analysis of ASDA company with other similar organisation...12
TASK4...........................................................................................................................................14
P6&M4 Evaluate how strengths and weakness interrelate with the external macro factors.....14
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Business environment has many factors which affect the activities of company. These
factors are of two types called as internal and external. All organisations operate their business
operations in such environment and for their success, they have to consider all these factors.
Management of these factors helps company to build a strong position in market and effectively
operate their functions. Consideration of these factors helps in the preparation of effective
strategies and reduce their adverse impacts as well. ASDA is a multinational British supermarket
retailer that is chosen for the present report. This company deals in grocery, general merchandise
and financial services (Avramenko, 2012).
In the present report, different types and purposes of organisations as well as their size
and scope with legal structures will be discussed. Relationship between different organisational
functions in achievement of business objectives will be highlighted as well. Also, positive and

negative impacts of macro environment on the business activities as well as internal and external
analysis of organisation in identification of their strengths and weaknesses will be studied.
TASK 1
P1. Different types and purposes of organisations with their legal structures
There are many types of business organisations which are operating their business
transactions in business environment. Mainly, three types of organisations i.e. public, private and
voluntary are provide their functions for the purpose of earning profit and benefits of society. All
these organisations have their different purposes and objectives along with the legal structure
which are define as below:
Public company
This company operates their business activities for the purpose of providing benefit to
society. Central government of country has control on the operations of public company. This
provides many governmental services that include military, police, medical, etc. Public
companies openly trade their shares in the open market with shares which are purchased by
investors. This is the main source of funding of public organisations.
NHS is a public organisation which has main objective to provide free medical services
to the needy people of UK. Their main aim is to work for the benefit of society and provide basic
medical facilities to everyone.
Objectives of NHS
 To provide basic medical services to society
 To work for the benefit of different stakeholders
 To help in social development of the UK
Legal structure of public organisation
Legal structure of public companies is defined as below:
 Central government: This includes both central and state government departments.
 State government: This includes functions of both state government and state agencies.
 Local government: This governs the activities related to public organisation.
Advantages and disadvantages
Advantages Disadvantages
Works for the benefit of society and High control of government on the business

development of economy. operations.
Main aim is development of basic facilities
from which poor people are deprived.
Large amount of funds is required to operate
their operations
Private company
These companies operate their business activities to earn high amount of profits. These
companies are governed by non-governmental organisation and shareholders. Their main aim is
to work for the benefit of their stakeholders. Government of country has no control on the
operations of private company (Bovee, Thill and Raina, 2016). There are many restrictions
imposed on private companies while operating their business activities. They are not allowed to
invite public to subscribe their shares.
ASDA is a private company which operates their business operations in many countries.
This is a large supermarket which deals in grocery, general merchandise and financial services.
The main purpose of company is to expand their business operations and contribute in economic
development of UK.
Objectives of ASDA
 To earn high profits
 To contribute in economic development of the UK
Legal structure of private company
The legal structure of private company is mentioned as below:
 Partnership: Partnership business starts by two or more persons with mutual agreement
for the purpose of earning profit. All partners are equally responsible for the liabilities of
company.
 Sole proprietorship: This includes the companies which are start by single person. All
the rights regarding operations of activities are held by such personal y. Such person is
solely responsible for all liabilities.
 Limited companies: This includes the companies on which the shareholders have
control and responsible for business operations.
Advantages and disadvantages
Advantages Disadvantages

Contributes in development of economy by
operating their different business functions
They are not allowed to trade their shares
freely have some restrictions
To earn large number of profits Not working for benefits of society
Voluntary company
Voluntary organisation is not working for earning profits. They are also called as non-
profit organisations. Their main purpose is to work for the benefit of society. Their activities help
in the social development of country. This helps in improving the living standard of individuals
of society by providing them basic necessary facilities. These companies are required to take
license from the government to operate their business operations. All the conditions are fulfilled
in this regard to operate their transactions as a voluntary organisation. If they are not able to fulfil
such conditions, then they are considered as the private companies (Cavalcante, Kesting and
Ulhøi, 2011).
Oxfam is a voluntary organisation which provides their activities to remove poverty from
the country. They also provide food relief to poor individuals of country with the help of British
government and local committees.
Objectives of Oxfam
 To remove poverty from country
 To provide food relief to poor people
Advantages and disadvantages
Advantages Disadvantages
Provide free services to help needy people Take license and follow conditions provided by
government
Increase living standard of persons Does not work to earn profits
P2. Size and scope of different types of organisations
Every organisation have their own size and scope of activities. All these size and scope of
different companies are describe below:
NHS

 Size of NHS: NHS is public company which operates their business activities to provide
basic medical facilities to the individuals of different country. They provide their
facilities in many countries for the development of society and individuals of different
countries. They provides their services in UK, England, Scotland, Northern Ireland. NHS
not only provides basic medical facilities but also they proved dental and optical care
services. All these services are provide by them free of cost with the help of volunteers
for their social development. 1.6 million volunteers are working and having budget of £
136.7 billion.
 Scope of NHS: NHS provides variety of services for providing help to individuals of
society includes basic medical facilities, dental and optical services. This company
provides their services in UK, Scotland, Ireland and England (Commander and Svejnar,
2011).
ASDA
 Size of ASDA: ASDA is large multinational company in which 180000 employees are
working to operate their business functions. They have large number of super market in
different countries. They have their business activities in more than 638 locations from
which they are generating more then £ 1 billion of profit. They have diversified business
activities like grocery, general merchandise and financial services.
 Scope of ASDA: Diversified business activities are provide by ASDA. This helps the
company to generate large number of profits and competitive advantage in market. This
company deals in grocery, general merchandise and financial services. Such diversified
services helps to attract the large number of customers from different regions. These
functions helps the management of company in rapid expansion of their business.
Oxfam
 Size of Oxfam: Oxfam is is voluntary organisation which provides services for the
benefit of society. Their main aim is to remove poverty and provide food relief to poor
people. Large number of volunteers are working to provide these services in different
countries.
 Scope of Oxfam: There are many services are provide by company which are beneficial
for society includes removal of poverty, food relief, disaster relief, policy research, pro
migration etc. All these services are provide by this company worldwide with the helps of

their volunteers and local committees. They also working for providing equal human
rights to all the individuals (Dahan And et. al., 2010).
TASK 2
P3 Relationship between different organisational functions and their link to organisational
objectives and structures
Behind the success of every organisation there is main role of their different departments.
All the functions of company are depends upon their working for the achievement of common
goals. All the functions of different departments are interrelated to each other and guides
employees in performance of their duties effectively. ASDA is also large company and many
department are working for the success of organisation. These different departments which are
operate their activities in ASDA includes Human resource, Finance, marketing etc. All these
have different functions but they are interrelated to each other and contributes in achievement of
common objectives. Contribution of such different department in achievement of targets of
ASDA are define below:
 Human resource department: This is the main department which is responsible for
workforce planning and operate the different functions of company. This helps the other
departments by providing them talented new employees as per their requirements in
achievement of their targets. There are many important functions perform by this
department in company like appraisal of performance, determination of remuneration,
management of employees etc. These functions contributes in removal of problems which
are faced by company during operations of their functions and helps in achievement of
their organisational targets.
 Finance department: This department of ASDA has the duty to identify the needs of
fund which are required by different department in performance of their functions. This
helps the management of company to properly allocate funds to different departments
improves their efficiency. They also prepare budgets for future which are working as
standard to compare the actual results of company with such budgets and find out the
deviations. This provides chance to management to provide solutions and helps in
achievement of organisational targets.

 Marketing department: This department of company is responsible for the promotion
and advertisement of the products and services. There are many other function perform
by this department which is helpful for other department to perform their functions
effectively. Market research done by such department helps in identification of demand
of their products and such information is used by the production department to produce
actual amount of products. Promotional activities helps in increase their sales and
profitability (Hair, 2015).
Organisational structure
Four types of organisational structure are present which are define below:
 Function based: Under this, structure of organisation is divide on the basis of different
functions which are performed in company. It means the organisation is divide on the
basis of their different departments like human resources, marketing, operating ,
marketing etc.
 Geography based: This includes divide the organisational activities on the basis of area.
This helps in identification of the preferences of different customers of different areas.
This method is useful for the company which operates their business activities in many
countries.
 Product based: Organisation structure is decide on the basis of products which are
provide by them. For ex. ASDA provides, grocery, general merchandise and financial
services and it is divided on this basis.
 Consumer based: This includes about decide the organisational structure on the basis of
consumers. This helps in satisfying their needs.
M1
Different size and scope of companies and the products and services provides by them
helps in achievement of their objectives. This can be define below:
 NHS is public company which main is to provide benefit to society. NHS provides the
services related to free medical treatment to the individuals of society. This helps in
achievement of their objective (Hamilton and Webster, 2015).
 ASDA is private company which main is to earn large number of profits. Large number
of supermarket and employees helps in achievement of their desired objectives.

 Oxfam is voluntary organisation, main aim is to remove poverty and provide food relief
which can be achieved through large number of volunteers and government support.
M2
Different advantages and disadvantages of interrelationship among different departments.
Advantages Disadvantages
Helps to achieve their objectives effectively
within stipulated time
Lots of confusion among different functions
reduces their ability to achieve results
Helps in building good teams and promote
team work
Difficult to manage all such functions
simultaneously.
D1
Complexities faced during interrelationship among different functions are define below:
 Difficult to manage and time consuming process faced by the management.
 Due to mistake of one department other department has to suffer in performance of their
functions.
TASK 3
P4 Positive and negative impact of macro environment on business operations of ASDA
There is huge impact of macro environment on the business operations of company. The
factors which are included in the macro environment are political, economical, social,
technological, legal and environmental. All these factors have positive and negative impact on
the performance of ASDA. All such factors are not under the control of management of company
and present in the macro business environment. If these factors are favourable in terms of ASDA
then they have positive impact on the business operations of company and if these factors are
not favourable then they have negative impact on the business functions of ASDA and affects
their ability to achieve their organisational targets. So, positive and negative impact of such
factors of macro-environment on the business of ASDA is described below:
Political factor: This includes the factors related to government of country and the
regulations made by them in relation to operations of activities of company. The main factors
which are include in this are stability of government, rules and regulations, international laws

etc. All these factors have positive and negative effect on the functions of ASDA which is define
below:
 Positive impact: ASDA is multinational company and conduct there business activities
in many countries. Favourable international laws helps in easily perform their activities
ion different countries. This helps the management of company to easily implement
different employment legislations and other laws etc.
 Negative impact: If the government of country is not stable and have strict regulation
than it affects the ability of ASDA to control their activities effectively. If the tax laws
are not linnet than they have to bear higher tax which reduces their ability to generate
higher number of profits (Karagiorgos, Drogalas and Giovanis, 2011).
Economical factor: This includes the factors related to economic condition, inflation,
deflation, pay level, cost of credit, competitive pressure, labour supply and demand and energy
prices. All these factors shows the economy of country.
 Positive impact: If the economic condition of country is good and having good policies
regarding cost of credit and inflation in market then it is beneficial for ASDA to operate
their business activities and expand their business. If the labour are easily available in
country then it is beneficial for company to reduce their operational cost.
 Negative impact: If there is situation of deflation and the level of income of individuals
of country is low then it affects their ability of demand to different products. This reduces
the ability of company to generate higher sales. If the prices of energy or electricity is
high in country then it effects cost of production and increase the cost of their ultimate
products.
Social factor: This includes the factors which are related to society. The social factors
which are include in this are age of people , level of education, occupation and consumer
behaviour etc. If all these factors are favourable then it has positive effect on the operation of
ASDA otherwise it has vice versa effects.
 Positive impact: If the level of education of individual is high and they able to use online
technology helps the company to increase their sales by operating their transaction online
also. If the behaviour of consumer is good and not changes frequently helps the company
to understand their preferences and achieve their targets.

 Negative impact: If the level of education is not good and the individuals of country are
not having good occupation effects their ability of earning income which has indirect
impact on the ability of company to increase demand of their products and generate
higher number of profits.
Technological factor: There are many technological factors which have both positive
and negative impact on the performance of ASDA. This includes the factors related to
advancement of technology, new methods and process which are present in market.
 Positive impact: If the management of company is able to adopt the new technologies
and methods helps in performance of their work faster and saves their cost. This also
provides the opportunity to expand their business activities by application of online
technology (Kolk, 2016).
 Negative impact: If the management of ASDA is not able to adopt such new
technologies then it effects their business activities and reduces their capability of
attainment of competitive advantage.
Legal factor: This includes the factor related to copyright, patent, employment
legislations etc. All these factors are required to follow by the management of company to
remove the adverse effects which are going to bear by them in situation of non regulation.
 Positive impact: If all these regulations are fulfilled by ASDA then it helps the
management of company build their image and prevent the company legal actions and
fines.
 Negative impact: If all these regulations are not fulfilled then they have to bear legal
actions.
Environmental factors: This includes the factors related to pollution, hazardous waste etc.
 Positive impact: If all the environmental regulations are fulfilled by ASDA helps in
build the image in between society.
 Negative impact: If company is not aware about environment and increase pollution then
they have to face criticism of society.
P5&M3 Internal and external Analysis of ASDA company with other similar organisation
The company need to make SWOT Analysis in order to identify the internal and external
factors which affects the business operations through which company get to know about their
strengths and weaknesses, opportunities and threats and thereafter they are capable to implement

corrective measures in order to eradicate any hindrances which may occur during business
operations. This will help company to attain strong position among their competitors (Nishitani
and et. al., 2012).
Here is the SWOT Analysis of ASDA and its competitor Tesco:
ASDA Tesco group
Strengths:
 It offers variety products and services
including financial services.
 ASDA keep in touch with the targeted
customers through social networking
where they collect feedback and
conducts various competitions etc.
 ASDA has over 140,000 employees
engaged in over 500 stores.
 ASDA is well known for its economies
of scale and superior technology. They focuses on conducting marketing
campaigns to the targeted customers.
Strengths:
 TESCO is the largest market leader in
UK'S grocery market gaining 28.9%
market share.
 Tesco has expand their business in
different sectors also such as banking
oil and natural gas, phone shops and
mobile etc.
 Tesco has attain more than 750,000
registered online customers.
 Using new advances packaging
techniques will bring the company to
build positive image in consumer's
mind.
 Tesco has over 520,000 employees
engaged in their business activities.
Weaknesses:
 They offers their products and services
in limited countries due to high threat
competition of local vendors. As an organisation is large in size so it
can be difficult to manage and
coordinate all the activities.
Weaknesses:
 The main sources of generating revenue
is from demotic market.
 Company faces controversial issues
which affect the reputation and brand
image in competitive market.
 Weak presence in other countries.

Opportunities:
 The company can also diversify their
services into other sectors such as
travel, insurance and broadband
services (Pulver, 2012). ASDA should focus on developing
countries such as India, China etc. in
order to sell their products and services.
Opportunities:
 Need to focus on selling products
through using online platform.
 New outlets should be planned for
different countries in order to expand
their business all over the world.
 Tesco need to focus on acquisition of
smaller chains and tie ups.
Threats:
 ASDA faces a tough competitions from
small vendors such as Aldi.
 Competitors lowering the price of their
product and services may also threat for
ASDA. Changing policies of various Central
government also become threat for
ASDA.
Threats:
 Faces a tough competitions from their
competitors such as Walmart etc.
 Changes in government strategies
regarding taxations also become threat
for Tesco.
 Increase in raw material cost will affect
profitability of company.
TASK4
P6&M4 Evaluate how strengths and weakness interrelate with the external macro factors
ASDA company can identify strengths and weaknesses with the external factors with the
help of PESTLE Analysis. This will enable the company to know that how the external factors
made affect on their business operations. Therefore PESTLE consists of:
Political Factors: This factor involves rules and standards which are implemented by
government for the company in order to operate smoothly. It will affect the overall sales and
revenue of company. The company need to follow government legislation, consumer rights,
taxes etc. while operating their business operations. This will influence the decision making
process of an organisation. Therefore ASDA company need to monitors all political changes
related with laws, standards etc. in order to gain competitive advantage in competitive market
world (Osterwalder and Pigneur, 2010).

Economic Factors: It is important of ASDA to consider economic factors such as pay
level, competitive pressures, labour demand and supply etc. This will may reduce the
profitability of company. Therefore company need to implement effective actions in order to
handling these economic factors. For example during inflationary pressures, the price of the
products and services are increasing due to which the profit margin of ASDA will be adversely
affected. Therefore it becomes challenge for ASDA to lower the prices of their products in order
to attain large number of customers.
Social Factors: ASDA need to introduce new products and services with standard quality
in order to fulfil the needs and demands of targeted customers. The company need to focus on
connecting customers emotionally through providing standard quality of products and services
which also helps in maintaining healthy lifestyle of their customers. This will help in maximising
the level of satisfaction of consumers.
Technological Factors: As it has been observed that customers prefer online purchasing
rather then visiting physical stores. Therefore ASD need to offer mobile app along with click and
collect delivery services to their customers. This will enhance cost structure of company. ASDA
also need to focus on expanding their business through using online market channels which helps
them in communicating and promoting ASDA and its products to their targeted customers.
Online marketing helps ASDA in providing information about the product and services and also
influence the customer's behaviour towards purchasing their products. This will help in attracting
large number of customers at minimum time,
Environmental Factors: It is important for nay business to operate their business
activities in an environmentally-friendly manner so that it cannot affect environment negatively.
As customers are also aware regarding Global warming and green movement therefore they also
also prefers those environmental-friendly products which cannot impact on the environment.
ASDA need to offer products and services according to their expectations and needs which helps
company in gaining market share as well as long-term profitability. This will also helps in
building brand image of company in market place.
Legal Factors: Legal factors also influences and affect the business operations of firm. It
has been observed earlier that ASDA is following illegal employment practices and misleading
advertisement which will adversely affect brand image of company. Therefore in order to avoid
such issues and contingent liabilities the company need to comply with laws related to the

environment, health safety and advertisement of products and services. The manager need to
ensure that ASDA will perform as per the legal requirements of business which will help
company in running smoothly (Pikka, Iskanius and Page, 2011).
CONCLUSION
It has been concluded from the above report that, business environment consist various
factors which affects the functions of company. It is the duty of the management of company has
to consider all the factors and make strategies and plans which are beneficial for them. SWOT
analysis helps the company to identify their strengths and weaknesses and reduce the impact of
macro-environment factors.

REFERENCES
Books and Journals
Avramenko, A., 2012. Enhancing students' employability through business
simulation. Education+ Training. 54(5). pp.355-367.
Bovee, C.L., Thill, J.V. and Raina, R.L., 2016. Business communication today. Pearson
Education India.
Cavalcante, S., Kesting, P. and Ulhøi, J., 2011. Business model dynamics and innovation:(re)
establishing the missing linkages. Management Decision. 49(8). pp.1327-1342.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics 93(1). pp.309-337.
Dahan, N.M. And et. al., 2010. Corporate-NGO collaboration: Co-creating new business models
for developing markets. Long range planning. 43(2). pp.326-342.
Hair, J.F., 2015. Essentials of business research methods. ME Sharpe.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Karagiorgos, T., Drogalas, G. and Giovanis, N., 2011. Evaluation of the effectiveness of internal
audit in Greek Hotel Business.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Nishitani, K. and et. al., 2012. Are firms' voluntary environmental management activities
beneficial for the environment and business? An empirical study focusing on Japanese
manufacturing firms. Journal of environmental management. 105. pp.121-130.
Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries,
game changers, and challengers. John Wiley & Sons.
Pikka, V., Iskanius, P. and Page, T., 2011. The business enabling network–a tool for regional
development.International Journal of Innovation and Regional Development. 3(3-4).
pp.324-344.
Pulver, S., 2012. Business and the Environment.
Reed, O.L. and et.al., 2013. The legal and regulatory environment of business (p. 328). McGraw-
Hill/Irwin.
Reinhardt, F.L. and Stavins, R.N., 2010. Corporate social responsibility, business strategy, and
the environment. Oxford Review of Economic Policy. 26(2). pp.164-181.
Shigang, Y., 2010. Competitive strategy and business environment: The case of small enterprises
in China. Asian Social Science. 6(11). p.64.
Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to do
it right. John Wiley & Sons.
Van Vuuren, T., Roberts-Lombard, M. and Van Tonder, E., 2012. Customer satisfaction, trust
and commitment as predictors of customer loyalty within an optometric practice
environment. Southern African Business Review. 16(3). pp.81-96.
Werther Jr, W.B. and Chandler, D., 2010. Strategic corporate social responsibility: Stakeholders
in a global environment. Sage publications.
Wirtz, B.W., Schilke, O. and Ullrich, S., 2010. Strategic development of business models:
implications of the Web 2.0 for creating value on the internet. Long range
planning. 43(2). pp.272-290.

Online:
Business Environment. 2017[Online]. Available
through:<https://www.slideshare.net/NikhilSoares/business-environment-
featuresmeaningimportanceobjectives-porters-model>