Business Environment Report: Types of Organisations and Macro Impacts

This report provides a comprehensive analysis of the business environment, focusing on various organisational types, their sizes, and scopes. It explores the relationships between organisational functions and their links to objectives and structures. The report identifies the positive and negative impacts of the macro environment on business operations, using Tesco as a primary example, and examines internal and external factors to pinpoint strengths and weaknesses. The report also delves into the interrelation of strengths and weaknesses with external macro factors, offering a detailed understanding of how businesses operate within a complex and dynamic environment. The analysis includes the private, public, and voluntary sectors, with examples like John Lewis Partnership, Atomic Weapons Establishment, and Wellcome Trust. The report also explores the impact of political, economic, social, technological, environmental, and legal factors.

BUSINESS AND BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. Introduction on different types and purposes of organisation.................................................1
2.Size and scope of range of different types of organisations.....................................................2
TASK 2............................................................................................................................................3
3. Relationship between different organisational functions and their link to organisational
objectives and structure...............................................................................................................3
TASK 3............................................................................................................................................4
4. Identifying positive and negative impacts of macro environment upon business operation
with specific examples................................................................................................................4
TASK 4............................................................................................................................................7
5. Internal and external analysis of specific organisations to identify strengths and weaknesses
.....................................................................................................................................................7
6. Explanation of strengths and weaknesses interrelation with external macro factors..............9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment is defined as surroundings and aggregate of all conditions and
influences affecting enterprise. It consists of various internal and external factors that affects
functions of business to a great extent. Tesco is the British multinational groceries and general
merchandise retailer. It is headquartered in Welwyn Garden City, Hertfordshire, England. It is
world's third largest retailer in world. Tesco was formed in 1919 by Jack Cohen as a group of
market stalls
Thus, in following report, different types of organisations, their size and scope has been
discussed. This assignment also highlights relationship and link between organisations functions
with organisational objectives and structures. Furthermore, positive and negative impacts of
macro environment on business operations has been also discussed. This assignment aims to
provide strengths and weaknesses of organisation.
TASK 1
1. Introduction on different types and purposes of organisation
Private sector
These sectors are not a part of government or state bureaucracy. Thus, for private sector
business organisation there exist variety of lawful structures in which they have legal domicile.
People conducting such business are free from being a part of any organisation. The main types
of private sector are sole trader and worker’s cooperative. Hence, companies who work under
private sector may issue stocks or have shareholders. Their shares are not issued on initial public
offerings (IPO). Therefore, the shares of these private sector businesses are less liquid. In order
to determine value of these shares are quite difficult. There are limited number of members in
private sector. Thus, main aim of private sector is to earn profit and cut cost in business
environment. Tesco and John Lewis Partnership are private firms of UK.
Public sector
Public sector companies are one who has open membership and is owned and operated by
government that provides services to citizens of country. Thus, stock of such companies can be
acquired by anyone and there are limited holders to lose amount paid to purchase shares. Public
sector company advertise by way of prospectus to make general public aware of shares and are
subjected to control supervision. Such companies have limited liability which is granted to its
owners and managers. In order to form such sector minimum seven members is required. They
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are subjected to minimum capital requirement. Thus, its main purpose is to provide public
service rather than making money or profit. They try to create employment that helps in
increasing economic growth of a country. Atomic weapons establishment is one of public sector
company based in UK.
Voluntary sector-
This sector indicates that there are group of individuals who enters into business or agreement to
form a body to accomplish their objectives. It includes community organisations such as
associations, social enterprises etc. it plays significant role to provide services in community.
These sector support beneficiaries in number of ways from direct monetary aid to supply of
services or facilities. Thus, its main purpose is to generate social rather than material wealth.
Hence, there are many voluntary sectors that are working for development of socio economic
and for promotion of art, culture and sports. Wellcome trust in UK is one of largest voluntary
company (Concept of Business Environment, 2010).
2.Size and scope of range of different types of organisations
John Lewis Partnership
John Lewis Partnership is UK based enterprise This company operates department stores,
waitrose and partner’s supermarkets. Thus, Trust own this firm on behalf of all employees which
are also known as partners and receive fixed share of annual profit involved in this company.
They recognized that there was a rapid change in retail company's customers taste and
preferences so they had to respond quickly. It is a leading business in UK having 30 department
stores, 225 Waitrose supermarkets.
There were 336 branches till 2015 and 61000 partners till 2014. The main objective of
this company is to give happiness to all members through employment satisfaction in business.
They share ownership and rewards between all partners.
The mission is to bring happiness in customers and employees and enhance the position
as an outstanding retailer and become an example of employee ownership. The organisational
structure of John Lewis is based on ownership of employee.
John Lewis is building kind relationship with all stakeholders.
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Atomic Weapons establishment
This company is mainly responsible for manufacturing, designing and warheads for Uks
nuclear weapons. Quoted company is responsible for day to day operations and is owned by
Jacob Engineering groups. It was established on 1st April 1950 by ministry of supply.
Mission of this company is that it delivers nuclear warheads and uses expertise for
supporting national security. For doing this they operate Awe estate on behalf of ministry of
defence.
Hence, to deliver operations effectively is their prior objective. This company operates
from Aldermaston and Burchfield. Hence, 4,500 staffs are involved in operating this company.
Wellcome Trust
This trust is a global charitable foundation which helps in improving health for everyone.
It is politically and financially independent. It was established in 1936 with legacies from
pharmaceutical magnate.
Thus, its main aim is to achieve extraordinary improvements in health by supporting
brightest minds. It is second wealthiest charitable foundation having $23.2 billion endowment in
2017. The overall investment objective is to generate 4.5% real return over long term.
They have vast range of stakeholders and receives funding from BBSRC that is supported
by department for innovation and skills. Hence, to improve health of everyone is main mission of
Welcome trust for which Board of Governors guides cited trust to achieve particular mission.
TASK 2
3. Relationship between different organisational functions and their link to organisational
objectives and structure
The main functions of organisations are planning, organizing, leading and controlling. In
order to achieve success, it is important to maintain functions of organisation.
Hence, organisational structures are interaction and relationship between part of the
business. It is way of grouping and organising functions to make sure that works are done
efficiently. It is important in every firm to maintain different functions of organisation.
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Organisation is that function of management in which development of organisational
structure is involved. It allocates human resources and ensures that objectives have been
accomplished., structure is framework under which efforts are coordinated.
Different department runs various functions. There is interrelationship between all departments.
Marketing department must make accurate research of consumers’ needs and requirements. This
research will help production department to produce goods as per desired needs of customers
which helps in attracting customers towards company. Thus, financial department has to
maintain finance for future investments that leads to productivity by proper and wide promotion
of products in market with help of advertisements. Hence, if there is change in one department it
will affect functions of other departments as well.
TASK 3
4. Identifying positive and negative impacts of macro environment upon business operation with
specific examples
 Political factors- this are government regulations that positively or negatively affects
business operations. Political factors greatly influence performance of Tesco as it is a
retailing company which operates worldwide. Thus, this factors includes tax rates,
acts of legislation and country's stability in which it operates (Reason, 2016). Hence,
selected company is playing its part in creating employment opportunities, demand
for products also increases that diversifies its workforce. They may affect business in
various ways by adding risk factors that leads to a major loss (Wee, 2017). Political
factors have power in changing results by affecting government policies at local to
federal level. This factor has been given lot of importance as many aspects of
Government policy can affect firm. Company might increase taxes for some
enterprises and lowers for others when there is increase or decrease in tax.
 Economic factors- these factors include consumer behaviour, banking, inflation and
overall economic indicators. This factor plays a crucial role in making company
decide about decisions they make as this are connected with goods, services and
money. Hence, both domestic and international business are affected by economic
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conditions in market. In order to maximize profit, selected company has to analyse
demand of customers and maintain quality of goods and services. Labour cost is an
important factor affecting UK’s supermarkets. The cited company has to decrease
cost price to attract customers towards products so that it will not affect reputation of
that enterprise. Thus, to overcome such issue, Tesco has changed leadership strategy
by diversifying business to large extent and by being active in competitive market
that aids to achieve success (Rahim, 2017.).
 Social factors- this factor includes elements such as family, community and religion.
It consists of beliefs of societies, customs, practices and behaviour. There is
continuous change in society in form of taste and preferences. Thus, popularity of
social media has also affected business environment as younger generation uses such
technology to shop online on company's website. There are different peoples having
unique taste and preferences in a society, so selected company has to change
production process as per consumers desired needs. In addition to this, trend has been
changed in society. People are more health conscious, so firm has to take care of this
factor and produce goods that leads in achieving success. Thus, people are more
attracted towards products on social media, so selected company has to change their
decisions as per needs or requirements of society.
 Technological factors- technological factors affect business on many levels. This has
brought new opportunities for Tesco (Concept of Business Environment, 2010). Thus,
there is development in online shopping with home delivery facilities, so company
has to adopt updated technology which does not includes outdated websites. This
factor has changed a way of business to perform their activities. Hence, information
technology has been advanced in every department of organisation (Proctor, 2014).
Furthermore, digital marketing strategy has been developed through which products
and services are sold by company. Tesco has developed own online mobile system in
which customer gets loyalty points for payment on shopping online. Cited company
has to update technology in order to fulfil customers desired demands. Introduction,
Meaning & Importance of Business Environment.
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Illustration 1: PESTEL analysis
(Source: MARKETING THEORIES – PESTEL ANALYSIS,
2013)
§
 Environmental factors- This factors includes economic, cultural, demographic or
physical environment that affects operations of business. Thus, company cannot
control them from affecting business, so Tesco has to make possible changes in
production process as per changes in environment. Their importance has been
increased due to increasing scarcity of raw materials, population targets etc (Kew and
Stredwick, 2017). Thus, environmental policy affects business due to law implied on
organisations. Therefore, organisations have to change their procedures of operations
and equipment’s to meet customer standards that can increase profit for company.
Furthermore, changing climate also affects business as consumers are health
conscious. Thus, enterprise has to change production process in order to meet needs
of customers and keep them enthusiastic.
 Legal factors- This factors includes regulations and law determinants that can affect
business positively or negatively. Thus, Tesco has to analyse all legal factors of
particular company they feel to trade, as every country has different rules and
regulations. They play a big role in deciding business operations, profits received and
behaviour of consumer (Nguyen, 2017). The taxes being imposed by Government
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among regulatory measures helps in promoting economic growth of a country and
customers are protected from exploitation and illegal factors.
TASK 4
5. Internal and external analysis of specific organisations to identify strengths and weaknesses
Tesco having a large online retail store, it is a global retailing powerhouse that serves
food and non-food items in countries all over the world in different format (Deasy and et.al.,
2015). Swot analysis is a technique which helps in identifying strength, weaknesses, threats and
opportunities. The SWOT analysis of Tesco is explained under.
Strengths
 Numerous award has been won by Tesco for its customer service, retail excellence and
overall shopping experience (Hamilton and Webster, 2015).
 Many competitors have tried to emulate Tesco, as it known as one of the largest
profitable supermarket and retail format in the world.
 It has wide range of property and significant cash reserves, its portfolio in undeveloped,
which makes it financially strong to weather all types of economic cycles (Story, Boso
and Cadogan, 2015).
 Powerful brand equity in its name with world recognition.
 throughout its operations, creating greater cost efficiencies and enhanced service
experiences it has developed the use of technology (Ingram and et.al.,2015).
Weaknesses
 Some subsidiaries of Tesco are not going well; they are more assailable to certain
external factors.
 Price wars has been arising due to competitive pressures that worn some of the retailer's
profit margin.
Opportunities
 In countries where Tesco performance is not going well, there is an opportunity for joint
ventures in which the local organization, to improve the areas with the help of market
research and analysis (Botha, Kourie and Snyman, 2014).
 Tesco can offer home delivery service to more areas.
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Threats
 Pressure related to the surroundings and social responsibilities also provide harmful
impact on Tesco.
 Rise in costs are also threatening Tesco Profit (Schaltegger and Burritt, 2017).
 Food prices are on the peak, which also cut down what consumers can buy and how
much they have income.
External analysis
For analysing the external environment of Tesco the best techniques which is to be
considered is Porters five forces model. This model consists of five forces of external
surrounding which can affect the operations of TESCO, it includes
 bargaining power of suppliers
 bargaining power of Buyers
 Threat of substitutes and complementary goods
 Threat of new entrants on the market
 Competitive rivalry
Bargaining power of suppliers
Tesco is having large number of suppliers and for the supermarkets chain there is no
suppliers switching cost (Bini, Bellucci and Giunta, 2018). In order to improve its operational
profit margins under the previous leadership in 2014 company has history of using its bargaining
power to delay payment to suppliers. Since October 2015, the supplier relationship practices
have been subjected to an extensive review by the new leadership and an extensive media
coverage damaged the brand image of Tesco due to poor supplier’s treatments. Tesco has
conducted survey in which only 58 percent suppliers says that are satisfied with organization.
Bargaining power of buyers.
Demands of buyers increased day by day. They want best product with less price. This
make pressure to the TESCO in achieving profitability in long run (Bhawsar and Chattopadhyay,
2015). With the help of large customer base, it will decrease the bargaining power of buyers and
also help TESCO to streamline its sales and production.
Threat of substitutes and complementary goods
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When a fresh product or service meets a similar customer needs in different ways,
industry profitability suffers (Baumgartner, 2014). Tesco have to be service oriented than to be
product oriented by understanding the taste, preferences and requirements of the customers.
Threat of new entrants on the market
New entrants will come with new invention, and creative ways of work with high
pressure level on Tesco to lower pricing strategy, reduction in costs, and supply new value
perspective to the customers.
Competitive rivalry
If rivalry increases, it will drive down the prices and decreases the overall profitability of
Tesco. Collaboration with competitors to increase size of market rather than just competing for
small market will save TESCO from competitive rivalry
6. Explanation of strengths and weaknesses interrelation with external macro factors
Tesco company is affected by the social factors by making making goods for the
different types of customers. There are various peoples having different taste and preferences in
a society, so selected company has to change production process as per consumers desired needs
The main theme of business strategy in Tesco customer behavior. Tesco takes the advantage
from their competitors shop and give the best service for the customers by the social
environment strategy (Apăvăloaie, 2014). Customer's life style is also being responsed by the
environment strategy. Technology adaopted by tesco makes customers more reliable. The
consumer make their choice by internet and order through the online system while tesco renders
the services on online process and take feedback from them. With the positive attitude from
customers Tesco has build strong advantage for organization.
Due to economy and politics Tesco cannot increase their business. The main weakenesses
of tesco is economic and political environment. Rise of retail shop has influences the business
contraction strategy (MARKETING THEORIES – PESTEL ANALYSIS, 2013). Different countries
have diffrent economic factors which are influencing the business of Tesco. Therefore, strength
and weaknesses of tesco interrelates with each other.
CONCLUSION
In the above report it has been concluded that environment plays an important role in
analysing the business position. For every business it is very important to research the market for
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the sustainability. Organisation uses various factors of environment to analyse their affects.
Thus, Tesco makes possible changes in order to achieve core benefit for an enterprise and further
improves various issues that puts great impact on growth of the economy. Hence, company
changes its production processes so that they can easily meet consumers’ needs that leads in
increasing productivity and efficiency.
In addition to this, there is a link between organisational function to achieve objectives.
Tesco has to maintain process from production to distribution of goods that leads in meeting
consumers desired needs which in turn increases consumer’s loyalty and reputation of firm to
great extent.
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