Business and Business Environment Analysis of Iceland Foods Report

This report provides a comprehensive analysis of the business environment, focusing on Iceland Foods Limited. It begins with an introduction to the business environment, followed by an evaluation of different organizational types (public, private, and voluntary), their purposes, sizes, and scopes, with I...Read More

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Evaluation of different types and purposes of an organisation.........................................3
P2Size and Scope of different types of organisation..............................................................5
TASK 2............................................................................................................................................8
P3 Relationship between different organisation function......................................................8
TASK 3..........................................................................................................................................10
P4 Positive and negative impact of macro environment upon business operations.............10
TASK 4..........................................................................................................................................13
P5Internal and External analysis of an organisation in order to identify the strength and
weakness of an organisation.................................................................................................13
P6Explanation about how strength and weakness of an organisation is related to external
macro factors of an environment..........................................................................................15
CONCLUSION..............................................................................................................................17
REFERNCES.................................................................................................................................18

INTRODUCTION
Business environment refers to the combination of external and internal factors which
effect the working activities of an organisation like competitors, political, social etc. The
company which is being taken into consideration in order to carry out this assignment is Iceland
food limited which is a British supermarket chain based company with its headquarter in United
Kingdom. This file gives the brief about different types of organisation that is public, private and
voluntary with their size, scope, mission, vision and legal structure. In addition to this
relationship between different organisation function and the positive and negative impacts of
macro environment upon business operations is also being explained in this report. Lastly, how
strength and weakness of an organisation is related to external macro factors of an environment
is being focused in this report.
TASK 1
P1 Evaluation of different types and purposes of an organisation
Organisation is defined as an entity which comprises of multiple people, such as
association, an institution etc. for some specific purposes. Therefore, there are basically three
types of an organisation which exist and they are namely public, private and voluntary and each
possess there own legal structure along with some specific purposes and they are explained
below (Hilton and Platt, 2013):
Private organisation:
Private sector organisation are the part of a economic system which is being run by
companies and individuals rather than by any government. One of the best example is Iceland
Limited which is a private company and is one of the leading supermarket chain based
organisation. The legal structure and purpose of private sector organisation is explained below:
Legal structure: Partnership: When more than two people comes in contract with each other in order to
share the common goals of an organisation is known as partnership. In addition to this, in
such type of legal structure each partner will be liable for the debts of the partnership. Sole proprietorship:This is the type of legal structure under private sector which is
generally formed by single person. In addition to this, while setting of sole business only
few amount of capital are required to set up.

 Limited company:This is another type of legal structure and is a type of joint stock
company in which the business possess separate legal identity from the owners. In
addition to this, it also allows each partners to limit their liabilities.
Purpose:
The main purpose of Iceland private organisation is to render healthy, sustainable and
hygienic food products so as to make more of profit.
Organisation structure:
Iceland follows matrix organisational structure as in this organisation workers have dual
reporting relationship to both production manager and functional manager.
Public organisation:
Public sector organisation are that segment of an economy which is being run under the
control of the government on the behalf of shareholders. One such example of public sector
organisation is National Health service sector (NHS) which is situated in UK. Therefore the legal
structure and purpose of public sector is being explained below:
Legal structure: State government:It is a federal form of government which share which share its political
power with federal or national government. Central government:This is the government which possess control and regulate on
unitary state in order to hold absolute supremacy. Local government:This is a type of government which possess control over specific
geographical region. In addition to this it cannot pass any kind of law that will affect the
wider sector.
Purpose:
The main purpose of NHS trust is to improve the economical and social conditions of the
society by rendering better health care services.
Organisation structure:
NHS follows hierarchical structure as it helps in ensuring effective command of an
organisation because of narrow span of control.
Voluntary organisation:
This is a type of organisation which are administered by autonomous board as well as
such organisation highly relies on regular or occasional volunteers for its operations. One such

example of voluntary organisation is Oxfam, which is a confederation of 20 independent
charitable business focusing on alleviation of global poverty. In addition to this, it was
established in 1942 with its headquarter in United Kingdom. Therefore legal structure and
purpose of voluntary organisation is being explained below:
Legal structure: Trust:This is type of structure under which trustee carries out the business on the behalf
of trust's members and is not a separate legal entity. Association:It is the type of legal structure under which group of people come together
who possess shared objective without the aim of making profit.
Purpose:
The main purpose of Oxfam is to secure life of people by fulfilling their basic
requirements as well as to reduce poverty.
Organisation structure:
Oxfam follows flat organisational structure as it is an organisation with no level of
management and staff level of employees.
P2Size and Scope of different types of organisation
Size and scope of public, private and voluntary organisation are explained below :
Private organisation( Iceland Ltd):
Background of company: Iceland foods Ltd company is a British supermarket chain
based organisation which was established in 1970 by Sir Malcolm Walker.
Size of company: The size of the company terms to be too wider as it serves near about
850 stores in UK with approx 2.2% of share of food market and employees more than 26,000
people.
Scope of company: Whereas scope of Iceland is large as it has acquired seven Irish store
which were previously franchised. In addition to this, it has started selling appliances online too
which help the company largest market share(Karagiorgos, Drogalas, and Giovanis, 2011).
Vision and Mission: The main vision of Iceland organisation is to render hygienic food
and services to its customers. Whereas the mission of the organisation is to eliminate using
plastic packaging for its store-brand products.

Product and Services: Iceland mainly emphasizes on selling frozen foods, including
vegetables and meals. In addition to this the company also render non-frozen grocery items like
meat, dairy and dry goods etc.
Business objectives: The main objective of Iceland is to earn more of revenue and to
sustain for long period of time in market by focusing on frozen food, innovation, convenience
and value by stop using palm oil as an ingredient in all its brand food products.
Stakeholder: In Iceland company stakeholder are the owner of the firm, employees who
are working in an organisation, government, customers, suppliers, shareholders of the company,
creditors and the society in which it is situated.
Therefore, Iceland company follows limited company legal structure.
Public organisation( NHS):
Background of company: NHS is a public funded national health care system, which
was established in 1948 with its headquarter in London.
Size of company: The size of NHS is wider as it is world largest health care service trust
with over 1.5 million workers of which 111,127 is of dental employees, 18,862 ambulance staff,
150273 doctors and 314,966 health visitors and nurses.
Scope of company: It scope is also broader as as it render majority of healthcare
including primary care, in-patient care, long term healthcare, dentistry etc.
Vision and Mission:The vision of NHS trust is to be one of the national and international
leader in healthcare services. Whereas, the mission is to maximise health and well being and to
prevent illness by delivering better heath care services to communities.
Product and Services: NHS render health care services which include primary care, in-
patient care, long term healthcare, dentistry etc.
Business objectives: The main objective of NHS trust is to enhance its services by
improving the environment for patient and staff.
Stakeholder: The main stakeholder of NHS are physicians, insurance companies,
government, patients, employers and pharmaceutical firms.
Therefore NHS follows central government legal structure.
Voluntary organisation( Oxfam):

Background of company: Oxfam is a confederation of 20 independent charitable
business which was founded in 1942 and was led by Oxfam international and is major non-profit
group with extensive collection of operations.
Size of company: Oxfam is one of the UK charitable organisation with 20 charity trust
so as to ensure improvement in the well being of people. In addition to this it has a total income
of approx 408.6 pounds and near about 5000 employees working under and uses the services of
about 23,000 volunteers.
Scope of company: Whereas the scope is related with the achievement of goals and
objectives in a specified time schedule and it can be achieved by proper use of resources and
workforce.
Vision and Mission: Main vision of Oxfam is to render quality services to those people
who all are suffering from poverty by providing employment opportunities. Whereas, mission is
to secure the life of people by rendering necessary facility to citizens.
Product and Services: Oxfam mainly focuses on poverty eradication, disaster relief.
Business objectives: The main objective of Oxfam is to create lasting solutions to the
injustice of poverty.
Stakeholder: Oxfam include stakeholder like customers, trustees, donors, trade unions,
institutions, government, campaigning allies etc.
Therefore Oxfam follows trust legal structure.

TASK 2
P3 Relationship between different organisation function
Illustration 1: Organisational structure of Icelant Limited
In order to run specific organisation in an appropriate manner, various functional
activities are needed to be carried out and each functional activity are related to each other.
Therefore relationship of different organisation functions of Iceland are being explained below
(Osterwalder and Pigneur, 2010):
Finance and marketing department:
Finance department of Iceland is the one who will render funds in organisation in order to
carry out different operational activity successfully. Marketing department is the main
department of an organisation who helps in creating awareness about the products in the
marketplace to large number of customers. So in order to create awareness about product through
different medium channels, like TV radio, newspaper, magazines etc. marketing department will
require sufficient amount of funds which will be rendered by the finance department. As the
Iceland company follows matrix organisational structure because of which communication
among marketing and finance department takes place effectively without the interference and

dependence on other department. This, result in smooth flow of marketing process. Thus, it can
be said that both the finance and marketing department of Iceland company are interrelated to
each other. Therefore relationship of both the department on each other possess certain
advantages and disadvantages which are explained below:
Advantages:
One of the benefits of relationship of finance and marketing department of Iceland is that
if there exist proper communication and co-ordination among both the department then it will
help in smooth running of business without any hurdle.
Disadvantages:
Whereas the drawback of relationship of finance and marketing department of Iceland is
that in some case finance department cannot render the budget as per the demand of marketing
department which would result in creating inefficiency in marketing of products to target
customers.
HR and production department:
HR department of Iceland plays a vital role i.e. of recruiting and selecting the best
appropriate candidate for an organisation who can result in rendering best outcome for business.
Whereas production department role is to convert the raw materials into finished goods and
services by using several tools and techniques. So in order to produce product in an appropriate
manner, production department will require talented workforce who knowns how to carry out
different production process activity in an appropriate manner. Moreover for the production
department if there arises the need of employees then in that case the production department has
to communicate it to the HR department so that the HR manager of the Firm can recruit the
workforce for the Production departments. Thus, the communication between HR and production
department take place effectively without the interferences of other department and this is juts
because the company follows matrix organisational structure. Thus, its the prime responsibility
of HR department to recruit and select the talented workforce who possess all the necessary
skills required in skilled and talented workforce. In addition to this relationship of both the
departments also possess certain advantages and disadvantage which are specified blow:
Advantages:
If there exist proper coordination between HR and production department of Iceland then
it will turn into benefit for an organisation (Weiss, 2014). One such advantage is that, if HR

department will render proper training session to the members of production department then it
will help them to successfully produce the product and services as per the preferences of the
target customer which would result in attracting large number of customer. Thus, it will result in
increase profitability ratio of an organisation.
Disadvantages:
Whereas the main drawback is that, if HR department of Iceland will not select the
suitable candidate and fails to analyse the best workforce for production department then it will
result in creating inefficiency for production department as well as the business will also fails to
influence and attract large number of target customers as well. Thus, it will also result in
degrading of profitability ratio of an organisation.
The following organisational structure which is matrix suits to this company and help in
the achievements of organisational objectives as the projects and the tasks are divided and
allocated across different functional departments which helps in increasing the efficiency of the
work in this way the goals and the objectives of the company will be easily achieved in and
effective and efficient manner.
TASK 3
P4 Positive and negative impact of macro environment upon business operations
Macro environmental factors are those which are not under the control of an organisation
and changes in all such factors will greatly influence the business operations of Iceland in both
negative and positive way. Macro factors here refers to political, social technological etc.
Therefore, in order to evaluate the positive and negative impact of macro environmental factors
manager of Iceland will take PESTLE analysis into consideration which is explained below
(Reed and et. al., 2013):
PESTLE Analysis:
PESTLE here refers to political, economical, social, technological, legal and
environmental factors which are term to be the macro external factors which influence business
operation of Iceland in positive as well as negative manner.
Political factors:
These factors here refers to changes in government rules and regulation like change in
import, export policy, taxation policy etc. As Iceland operates its business in many countries and

each country have different rules and regulation, so it is very much essential for the manager of
Iceland to analysis of changes taking place in political factors (Hunter, Saunders and Constance,
2016). For example: In UK, political scenario is balanced and supportive to business, with
strong legislation to business entities or opportunities. Iceland is the bigger example of this
strong political stability along with legislations to strengthen the business.
Positive Impact - If the management of Iceland will take changes into consideration flexibly then
it will have positive impact on organisation by the way of strengthening the position of company
as well as will also helps in creating expansion opportunities for an organisation (Kew, and
Stredwick, 2017).
Negative impact - If the company will not consider changes taking place in the government
rules and regulation then it will negatively impact an organisation as it will result in decrease in
sales revenue of an organisation due to decrease in buying power of targeted customers.
Economical factors:
These factors refers to the changes taking place in deflation and inflation rate, foreign
exchange rate system etc. Therefore changes in all these economical factors greatly influence the
business operations of Iceland in both positive as well as negative manner. So, it is very much
essential for the manager of Iceland to frame polices and strategies taking changes taking place
in inflation rate, deflation rate, level of income etc. For example: Pounds sterling is relatively
less valued in comparison to Dollar (Zur Muehlen and Shapiro, 2015). Because of this, currency
crash down, Iceland ability to import has decreased. Also, rise in raw material prices is also
major influences of it.
Positive Impact - If the company will adopts all such changes and will frame polices accordingly
then it will positively impact upon business operation by increasing the productivity of an
organisation (Halbert and Ingulli, 2011).
Negative impact - In case if the currency value is low of the country in which the company is
operating as compared to organisation value then it will negatively result in down falling of
company in marketplace.
Social factors:
These factors here refers to the changes taking place in the customers beliefs behaviour
and values which will greatly impact in both positive as well as negative manner on the business
operations of Iceland. For example: Iceland has faced social impact such as social or cultural

ups down, also regarding the social difference and usage of product according to according
sources. As, Iceland is the leading grocery retailer in UK, which has faced issues to social
inefficiency.
Positive Impact - If the company will consider such changes while rendering of foods to the
customers then it will positively impact upon business operation in the form of increase in
productivity and sales of an organisation (Erasmus, Strydom and Rudansky-Kloppers, 2016).
Negative impact - In case if the firm fails to understand the customers preferences as per their
culture, beliefs and traditions then it is negatively impact upon business operation in the form of
decrease in performance and profitability of an organisation.
Technological factors:
These factors here refers to the changes taking place in the advancement of technology
and tools used to produce products and services (Bovee, Thill and Raina, 2016). For example:
Rising in the technological aspects has been resulted into purchasing ease to Iceland buyer's to
buying groceries products. Also, increasing era of mobile apps and portal has led Iceland to
inform their customer about existing or new products.
Positive Impact - If the Iceland company will adopt such changes in technology then it will lead
in improving the products and services quality which will term to be one of the positive impact
upon business operations.
Negative impact - In case if the company fails to adopt such changes in modern tools and
technology then it will result in coming up with lower quality product will will negatively impact
upon creating poor brand image of an organisation in marketplace.
Legal factors:
These factors refers to regulatory and law determinants which affect business and some
of this are customers protection, employees security etc. For example: Iceland has critical and
strong legal control over their business regulations & for flow of their goods & services. In
response, growth as well as profitability is higher for them to pursue to make survive for longer
period of time.
Positive impact: If the Iceland company will functions its different operational activities by
following such rules and laws then it will help in smooth running of business as well as will be
helpful in sustaining for long period of time in marketplace (Cai and Yang, 2014). In addition to

this it will also help in improving the quality of products as well which will term to be a positive
impact upon business operation of firm.
Negative impact: In case if the company fails to implements such changes in laws then it will
negatively impact on the company as the firm will be liable to pay for fine and legal penalties
which will lead in creating bad image of the company in marketplace.
Environmental factors:
These factors refers to the various laws and rules implemented by the government by
taking safeguarding of environment into consideration (Chavis, Klapper and Love, 2011). For
example: Pollution has increased in different part of world, which has ultimately to generate
business sustainability into the work practices. Iceland needs to be enriched with sustainable
practices into their company's operations.
Positive impact:If the Iceland company will manufacture food items by taking environment
protection act into consideration then it will positively impact upon business operation of an
organisation in the form of increase in productivity and efficiency.
Negative impact: In case if the company neglects such environmental issues then it will
negatively impact upon business operation in the form of decrease in brand image of company in
marketplace.
TASK 4
P5Internal and External analysis of an organisation in order to identify the strength and weakness
of an organisation.
In order to identify the strength and weakness of an organisation manager of Iceland food
limited must consider SWOT analysis as it will helps in evaluating the internal and external
analysis of an organisation. SWOT here refers to strength, weakness, opportunities and threats.
Therefore strength and weakness are term to be internal analysis and opportunities and threats
are term to be external analysis (Savrul, Incekara and Sener, 2014).
Strength
The major strength of Iceland company is that
it render variety of choices to customer by
offering both frozen and non-frozen food items
which helps in building brand image of an
Weaknesses
Major weakness of Iceland company is that
there take place increase in employees turnover
and this is because company consider there
employees as a machine and doesn't render any

organisation in mindset of customers. kind of reward system for their better
performance. In addition to this, other
weakness is lack of knowledge about the
market conditions of the nation where the
company wants to operate. Further the IMF
recommended to the government to strengthen
and advance their tax system which has
impacted negatively as the tax rate increased
and profit margin of the company reduced.
Increased cost of production is the another
weakness of Iceland firm.
Opportunities
The opportunity which the Iceland company
can avail is that of adoption of organic food
product so as to target new customers as well
as can make used of new modern technology
instead of old technology so as top render
superior quality food items to customers.
Threats
The threat which greatly hamper the business
operations of Iceland is that of its competitors
policies and strategies, as there exist large
number of competitors like Argos, Zabka etc.
In addition to this other major threat is
volatility in currency, as currency level keeps
on fluctuating.
Analysis of how swot influences the decision making of organisation.
Thus, after SWOT analysis, management of Iceland was able to identify its major
strength, weakness, opportunities and threats which has greatly influenced on the decision
making of organisation. As after SWOT it was being identified that company suffer from it
major weakness like employees turnover and this is because company consider there employees
as a machine and doesn't render any kind of reward system for their better performance. So after
acknowledging its weakness firm decided to decrease the level of employees turnover and this
can be done by considering employees as a valuable resources for the firm and by considering
the needs and preferences of the workforce. Moreover threats were also identified that the
company has many competitors and so in order to deal with this aspect company decision
making got influence the firm has to take decision to carry out research so as to acknowledge the
policies and strategies adopted by its competitors. So that accordingly Iceland can frame its

policies and strategies in order to achieve competitive advantage in marketplace. Furthermore
with the help of SWOT company was able to analyse the opportunities level available to the
company that the firm can produce organic food so as to target new customers as well as can
make used of new modern technology instead of old technology so as top render superior quality
food items to customers. Thus accordingly organisation have to take decision so as to grab
opportunities in order to increase profitability margin.
P6Explanation about how strength and weakness of an organisation is related to external macro
factors of an environment.
Strength and weakness of Iceland is related with the external macro factors and there
relationship is explained below (Moutinho, 2011):
Political factors:
These factors here refers to the changes in trade policy, trade restriction etc. which are
totally under the control of the government. Iceland company was able to achieve its major
strength that is of brand image in marketplace just because firm has taken such changes in
political factor into consideration. The new government formed has submitted new applications
for Iceland company to join European union and provided new policies for their working. This
has impacted positively on the working of Iceland company in the from of increase in brand
image as their working patterns has changed. This became the strength of the company. Whereas
lack of knowledge about the market were term to be the major weakness because in some case
company were fails to recognize the changes made by the government in trade policies. The
change in the tax policy impacted negatively on the working of the company. Thus, it can be said
that strength and weakness of Iceland are related to external political factors.
Social factors:
These factors here refers to the changes taking place in cultural, beliefs, traditions of
society and employee. Iceland company has achieved its major strength in the form of brand
image by attracting large number of customers and this is because company render product and
services items as per the preferences of customer. Whereas its weakness is increase in employees
turnover and this is because in some cases, company fails to understand the need of employees
and doesn't render any reward system for better performance to its workers. Rapid change in the
taste and preferences of the customers impacted negatively on the working as due to this the

company has to make changes in their working rapidly which increased the cost of production
per unit and it is term to be another weakness of the Iceland firm. Thus, it can be said that
strength and weakness of Iceland are related to external social factors.
Economical factors:
Changes made by the government inflation rate, deflation rate, foreign exchange currency
rate etc. are considered as the economical factors. Iceland company has achieved its major
strength in the form of its brand image is just because the company has taken such changes into
consideration while planning appropriate strategies and policies. Increase in the tourism
impacted positively in the growth rate of the economy as more tourism is the source of more
income for the company which provided more revenues and profits to the firm and as as result
firm was able to achieve its major strength in the from of brand image. Whereas the weakness it
suffer from is of employees turnover and this is just because in recession period company
economical condition gets degrade because of which they are unable to render them any kind of
monetary benefits. Thus, it can be said that strength and weakness of Iceland are related to
external economical factors.
Technological factors:
Changes taking place in the advancement of tools and technology is the major
technological factors. Iceland company was able to achieve its major strength of brand image
just because company make proper used of latest technology which helped company in rendering
superior quality of food items to customers. The company has developed it air and maritime
services as it is making purchase raw materials from other countries so this advancement in the
services has made easier for the firm to access the raw material. In this way change in the
technology has impacted positively on the company in the form of brand image of the firm which
is the major strength of the company. Lack of knowledge and experience about the market and
this is mainly because of Due to insufficiency of funds company was unable to adopt the
technology change and because of which company have to suffer from its weakness in the form
of lack of knowledge and experience about the market. Furthermore, the company relies heavily
on the sea connection, so if this connection got damaged the company will lose its connection
with the sources from where the company acquires its raw materials. This is the major weakness

as the company has to make sure that their technical equipments are working properly which is
costly for the firm.
CONCLUSION
From the above report overall, it can be summarized that there are certain external factors
like political, social, technological etc. which greatly impact in positive as well as in negative
way. So, it is very much essential for the manager of an organisation to analyse such factors in
order to overcome the effect of these factors. Moreover, SWOT analysis is also being done in
order to evaluate the strength and weakness of an organisation. Furthermore relationship of
different organisational functions is also being explained along with their advantages and
disadvantages for an organisation.

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