Business Environment: Organizational Types & UK Supermarket Analysis

This assignment provides a comprehensive analysis of different types of organizations, including profit, not-for-profit, and non-governmental organizations, categorized by profit generation and size. It examines the characteristics of micro, small, medium, and large enterprises, highlighting their market share, profit share, growth, and sustainability. The assignment also delves into organizational structures like functional, divisional, matrix, and flat structures, discussing their complexities in transnational, international, and global contexts. A case study of the UK supermarket sector, focusing on Tesco and Oxfam, is presented using PESTEL and SWOT analyses to identify macro-environmental impacts, strengths, and weaknesses within the retail industry. The relationship between internal strengths/weaknesses and external macro factors is also explored, providing a holistic view of the business environment and organizational functions. Desklib offers this assignment as a resource for students, alongside a wealth of other study materials and AI-powered tools.

BUSINESS AND BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION................................................................................................................................2
SECTION 1 - ESSAY...........................................................................................................................3
Different types of organizations (P1)...........................................................................................3
Differences between profit, not for profit and non-governmental organizations (NGOs).....3
Profit Organizations.................................................................................................................3
Not-for-Profit Organizations....................................................................................................4
Non-governmental organizations............................................................................................5
Size and scope of the organizations (P2).....................................................................................7
Difference between micro, small, medium-size and large enterprises...................................7
Market share, profit share, growth and sustainability............................................................8
Organization structures and functions (P3).................................................................................9
Complexities of transnational, international and global organization structures................10
How functions relate to overall organizational mission and objectives...............................11
SECTION 2 - THE UK SUPERMARKET SECTOR................................................................................13
Using PESTEL model, identifying the positive and negative impacts the macro environment
has upon the UK retail sector (P4).............................................................................................13
Identifying the strengths and weaknesses of retail industry by SWOT Analysis (P5)...............15
Explaining how strengths and weaknesses interrelate with external macro factors (P6)........17
CONCLUSION.................................................................................................................................18
REFERENCES...................................................................................................................................19

INTRODUCTION
The purpose of this assignment is to provide the knowledge and understanding of different
types of businesses, their functions and the business environment in which they are operating.
Profit, not-for-profit are the main types of organizations when differentiated on the basis of
profit generation. On the other hand, when categorized on the size and scope, the
organizations can be of 4 types i.e. micro, small, medium and large. The operations of these
businesses are also highlighted in the assignment.
The assignment is divided into two parts, an essay and a case study. The first part covers the
types of organizations and the second part of the assignment covers a case study of the UK
supermarket sector. The examples of Tesco and Oxfam have been taken into consideration,
which are the two best examples of profit and non-profit organizations in the UK.

SECTION 1 - ESSAY
Different types of organizations (P1)
In this modern era, the Success of the organizations is depending on the experience and
competence of the officers of that particular organization. This is because they are the most
important part of the organization and effective in achieving the goals and objectives of the
organizations (Roness, 2017). Organizations are designed on the basis or principles of labour
and span of management. Following are the main types of organizations when compared on
the basis of profit generation:
Differences between profit, not for profit and non-governmental organizations
(NGOs)
Profit Organizations
These organizations are the one that is owned and run by the private individuals. For example,
the sole traders are an individual that is running a business on his/her own risk. The other
example of private sector organizations is the partnership businesses that are run and owned
by two or more people who are sharing both profit and losses (Rahim, 2017). Franchise and all
the private small, medium and large companies are the examples of private sector businesses.
TESCO is one of the British Multinational retailers and groceries and its headquarters are
located in the Welwyn, Hertfordshire, England. Tesco is the third largest retailer in the world

and this position is calculated when the profit has been taken into consideration. On the
revenue basis, it is the 9th largest retailer in the world (TESCO, 2018). The first shop of Tesco was
opened in the year 1931 and now the private company has stores in around 7 countries all over
Asia and Europe. The company is based on the retailing is based on a diverse range of products
including the books, clothing, electronics, toys, software etc.
Business purpose and supply of goods and services of TESCO
TESCO is aiming to make shopping cheaper for all the average households. The Tesco is
achieving this aim by cutting the prices and offering the products and services more in the
store. Other than this, introducing more healthy eating products for the people is also the
business purpose and objective of TESCO, as they are supplying these products to all the
groceries under their operations. The goods and services are designed by the Tesco engineers
from getting the raw materials from various suppliers and dealers are also helpful in the supply
of goods and services (TESCO, 2018).
Not-for-Profit Organizations
These businesses are dedicated to promoting a specific social cause and the main aim of these
organizations is not to earn the profit. These organizations do not have to pay tax on the money
that is earned by them (Maroun and Lodhia, 2018). The government and public sector
authorities are responsible for running these businesses. The overall management is observed
by the government. These organizations can operate in all the settings like research, religious,
educational and scientific.

Metropolitan Police Service (MET) is the best example of these organizations and the main
responsibilities of it are coordinating and leading on various terrorism matters in the UK along
with the protection of senior members of the British Royal Family. MET is having more than
43,000 full-time employees which include police officers, police staff and support officers (MET
POLICE, 2018).
Business purpose and supply of goods and services of MET
Public safety and security along with the security of the main members of the Royal family are
the basic business purpose of the MET. The VAMs, other safety equipment are provided by the
government of the country. Also, the management of the MET is overlooked by the
government and its authorities along with the support from the local people (MET POLICE,
2018).
Non-governmental organizations
NGOs are the organizations that are independent of local and state governments along with the
internal government organizations. But they are often funded by the governments. There are
various objectives of the NGOs in order to solve the social issues, to provide education to the
local people, awareness of human rights, health care and other environmental protection
activities can be performed in the NGOs (Elbers, 2017).

Oxfam is the best example of NGOs as it is an association of around 20 independent charitable
organizations. The main focus of the solve the global poverty, as it thinks that is can be
avoidable and eradicated with the help of human actions as well as political will (Oxfam, 2018).
Business purpose and supply of goods and services of MET
Oxfam is concerned with solving the social issues and also providing education about the
human rights to the local people. The supply of goods and services are managed by the
management committee of the Oxfam and government and higher authorities are also funding
for the services (Oxfam, 2018).

Size and scope of the organizations (P2)
Difference between micro, small, medium-size and large enterprises
Differences Micro and Small
enterprises
Medium enterprises Large enterprises
Employees 0-9 employees in micro
and 9-100 employees in
small enterprises.
100 to 999 employees
can be there in these
organizations
More than 1000
employees.
Equity The equity held by
fonder or family
Mostly privately held,
few with public
Mostly public
investors – held
equity
Decision making By the owner By the owner/ CEO and
some other key leaders
Distributed
decision making as
per the
organizational
hierarchy
Customer base Small customer base –
generally local markets
Limited customer base –
limited to geographical
or industry niche
Diverse markets
with diverse
customers base
Opportunities Limited personal
development
opportunities
Personnel development
limited to few key
employees
Multiple career
development
paths and
programs
Sources of capital and
resources
Most capital needs to
be met by leveraging
personal net worth
A limited source of
capital, hard to access
A wide range of
funding sources
Processes Informal processes,
mostly “people” get
Some formal processes Formal processes

things done
(Gul, Muhammad and Rashid, 2017)
Market share, profit share, growth and sustainability
The market share of Tesco is 28.3% from January 2015 to March 2017 when compared to the
other grocery stores in Great Britain (TESCO, 2018). The Metro Political Police, FBI and CBI
controls all the security services in the UK and they all have the same ratio of responsibilities
with them in the market. From 90 years, the Oxfam is working as an NGO and holding 52,448
global ranks and 3,006 country rank in the UK.
Apart from this, the profit share of Tesco, MET and Oxfam is high in the retail market, public
market and the non-government sector in the UK and all of them are growing continuously and
expanding their services and products in order to achieve more sustainability (Oxfam, 2018).

Organization structures and functions (P3)
Following are the different kinds of structures relating to size and scope of operations of
organizations (Harrison and Lock, 2017):
Functional structure: it is also called as bureaucratic organizational structure as it is dividing the
company on the basis of speciality and functions. The people that are performing the same set
of functions and roles are grouped into a group. Various departments are there in this structure
like the sales, marketing, customer, HR etc. (Alexiadou and Lohndal, 2017.) Tesco is following
this structure as it has many advantages like the individuals are dedicated to a single function
hence accuracy is obtained in working. In addition to this, all the roles are clearly defined and
the expectations also limit the state of confusion. Apart from this, the downside of the
functional structure is that it is challenging to maintain a strong communication between
various departments at the TESCO’s workplace.
Divisional structure: the companies such as Metro Politian Police structure leadership
according to different projects are using this structure. The MET, FBI and CBI are the divisions
under the security department that are dedicated for different projects (Johns and Conroy,
2017).
Matrix structure: the companies that are following this structure have multiple bosses under
which the employees are working and reporting to the head. The divisional managers are not
only the highest authority but they are project managers for specific projects. Flexibility and
balanced decision-making are the advantages of this structure, but this is confusing and
complex at the conflicts (Johns and Conroy, 2017).
Flat structure: all the small businesses in the UK are using this structure while the tall structure
is used by all the large businesses. All the top-level managers are having the information and
power which they share with the employees via the two-way communication. Oxfam is using
this structure (Kato et al. 2018).

Complexities of transnational, international and global organization structures
Transnational organizations are the most complex organizational structure among the other
two. This is because they have invested in the foreign operations and have the central
corporate facilities with them. On the other hand, these organizations give the decision-making
powers, R&D and marketing powers to all the foreign markets (Iwan, 2017.).
International organizations are the importers and exporters and their structure is less complex
than the transnational one as they have no investments outside their home country.
Global organizations market their products and services with the help of same coordinated
brands in all the markets. And only one corporate office is responsible for making global
strategies. Their structure is less complex than transactional but more than international.
Figure 1:
[Source: https://www.researchgate.net/figure/Multinational-strategies-and-supporting-
structures_fig3_273191545]

How functions relate to overall organizational mission and objectives
Following are the main functions of every organization such as TESCO that is following a
functional structure. The different departments are having different functions and all of them
are contributing to accomplishing the mission and objectives of the whole organization. So all
the below-listed functions are related to the overall organization's mission and objectives, apart
from this, these departments are also having a relationship with the other departments in the
structure (Bryson, 2018):
Marketing department – in order to attract a large number of customers, the TESCO requires
attractive and innovative marketing and promotional strategies that are made by the marketing
department of the company. This department is conducting various campaigns in order to
increase the product selling and promoting it in the international marketing. The finance
department is funding for the promotional activities whereas the HR and the operations
department are also helping to make strategies for promotion.
Finance department – the flow of money in the TESCO is managed and handled by this
department. The expenses that are required for designing the products and services are
handled by the managers and this department is working effectively with the other
departments in carrying out their operations in an effective manner (Levitin et al. 2017).
Human resource or HR department – recruitment and selection processes are carried out by
the HR department in the TESCO and it also provides training and development programs to the
employees at the workplace. All the lacking in the workforce is analyzed by the HR department
and then they recruit new people with the skills that are lacking previously (Ulrich et al. 2017).
Operations department – product manufacturing, designing, daily operations, collecting raw
materials from different suppliers are some of the basic roles of this department. They make
quality products which are reliable and suitable as per the demand of the customers.

Figure 2: inter-relationship between different departments of TESCO
Operations
Department
desiging of
products and
services
Marketing
Department
product
marketing
and
promottion
Finance
Department
Funding for
production
and
promotion
HR
department
recruitment,
selection,
training and
development

SECTION 2 - THE UK SUPERMARKET SECTOR
Most of the major UK based supermarket chains have recently announced that there is a need
to plan for the restructuring of their businesses. This is done in order to achieve a more
competitive edge in the business market. So, the UK base supermarkets like the TESCO, Marks
& Spencer, Sainsbury and ASDA are changing their business environment in positive aspects
and according to the new trends (Sivalingam, 2018).
Using PESTEL model, identifying the positive and negative impacts the macro
environment has upon the UK retail sector (P4)
Political and legal factors – in the retail industry, the business trade agreement has many types
of influences due to the BREXIT in the UK. The policies and procedures that are made after the
BREXIT might affect the businesses of the retail companies like the TESCO, ASDA and NGOs like
the Oxfam. All the legal policies bring flexibility to the workplace of TESCO as the governmental
laws are nor more effective and powerful. But sometimes, these laws are also hindering the
business environment at a high rate (Shen, 2017).
Economic Factors – the business organizations like TESCO is working under the complex
economic environment. The inflation rates, currency exchange rates are affecting directly or
indirectly the business processes at a high rate. The decisions related to the TECO's product
development along with the decision making processes of various customers are also affected
due to the economic factors in the retail industry (Saleem, 2017).
Social and cultural factors – these factors are including the targeted customers and employees
of the TESCO as their preferences and choices for the products are changing as per the new
trends and technological development. The attitude of the customers and employees are
making some positive changes and increasing the level of standard in TESCO. Some policies like
anti-discrimination, equal pay act are accepted by TESCO for attracting their employees (Orford,
2017).

Technological factors – new technologies, skills and knowledge are positively affecting the
business of TESCO and also help it to gain a large customer base. This is done by using
promotional techniques under the digital technologies like Social Media, networking etc. The
production of products becomes easily due to the latest technological equipment and tools
(Dodgson, 2018).
Environmental factors: TESCO is using some natural and agricultural resources in making their
products. So it needs to safeguard the environment and the activities of TESCO are also not
affecting the environment as various environmental policies are adopted by it.

Identifying the strengths and weaknesses of retail industry by SWOT Analysis
(P5)
Following are the strengths and weaknesses of the TESCO Company that are observed by
conducting a SWOT analysis for the internal environment and a Five Force analysis for the
external environment of the TESCO (Pantano et al., 2017).
Strengths
 Introduction of new products and services – with the increase in technological
development, the production and promotion of new products become easily and hence
a large base of customers can be gained by this.
 Market Expansion – the TESCO Company is also expanding their market through online
platforms, social media and other technologies. This expansion is not affecting the local
market at any cost.
 Market value and customer base- the market value of TESCO’s products are more and
preferred by the customers when compared to the other competitors in the UK.
Weaknesses
 The chances of growth and expansion in China are limited as the people there are not
accepting the products. This is because the store sites of the Tesco are expensive and
the product translation is poor.
 Due to ineffective operations, in the recent fiscal year, the financial performance of
TESCO is low (Pantano et al., 2017).
Opportunities
 The Tesco is trying to open its online stores which can be the best opportunity for the
company as it is a digital era and customers prefer online shopping.
 Another opportunity for Tesco is an expansion of the business market in the emergent
countries like India and Turkey.

 Competitive edge can be achieved by regularly enhancing the company’s operational
strategies as per the demand and need of the customers.
Threats
 All the competitors that are present in the UK market are the biggest threat to the
TESCO Company as they are attracting the customers of the company by giving them
offers.
 The customers are changing their views and opinion as there is a large variety of food
and clothing products present in the global market of various brands.

Explaining how strengths and weaknesses interrelate with external macro
factors (P6)
The above SWOT and PESTLE analysis is helpful in determining the strengths and weaknesses of
the TESCO Company. One of the major strengths of the retail store is that it is offering stylish
and trendy products at affordable prices to the customers. The position and brand of TESCO are
also increasing and strengthened due to the market expansion of the company. On the other
hand, the growth in China is not possible as the business strategies of the company are not
much effective. Form the previous few years, the company is also facing some financial issues
which have to be minimized as soon as possible. This can be done by enhancing, monitoring
and restricting the business strategies (Kapoor and Kaur, 2017).
Apart from these, the external factors like the governmental, legal and environmental policies
are also affecting the decision making processes at the TESCO’s workplace. Social and cultural
issues are hindering the business processes at a high rate and the company is adopting various
strategies to limit it. On the other hand, the technological factors and the legal factors are
sometimes becoming strengths for the company and supporting their activities at a high rate.
In this way, it can be concluded that the strengths and weaknesses are interrelated with the
external macro factors as the opportunities can be achieved by the strengths of the company.
On the other hand, the threats can be removed by the strengths. Apart from this, the
opportunities and threats can be limited and increase respectively by the weaknesses.

CONCLUSION
The aforementioned assignment is supportive of gaining a proper understanding of the
business and business environment at various private, public and voluntary organizations like
the TESCO and Oxfam. All the departments need to work together for accomplishing the
objectives and aims of the company. The business structures are adopted as per the working
culture of different organizations and they are helpful in managing the working activities of
different employees. In short, the overall assignment has provided all the essential information
about the business and areas related to the business environment.

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