Business and Business Environment: Sainsbury's Analysis Report

This report provides a comprehensive analysis of the business environment, exploring different types of organizations including sole traders, partnerships, limited companies, government and charity sectors, and their characteristics in terms of meaning, purpose, size, scope, and legal structure. It delves into the interrelationship between various organizational functions such as human resources, marketing, finance, and information technology, and how these functions link to organizational structure, using Sainsbury's as a case study. The report examines the organizational structure of both Sainsbury's food retail and its banking division, highlighting how different structures support their diverse operations. Furthermore, it demonstrates the positive and negative impacts of the macro environment on business operations and determines the strengths and weaknesses of the company in relation to external macro factors, including the use of a PESTLE analysis. The report's findings offer insights into how businesses can adapt to their environment and optimize their structure for success.

Business and Business
environment

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
Different types of the organisations and difference between them in terms of meaning,
purpose, size & scope and legal structure..............................................................................3
LO2..................................................................................................................................................6
Interrelationship between various function of the organisation and how they link to
organisation structure.............................................................................................................6
Interrelationship between different organisational function and how they link to organisational
objective and structure............................................................................................................8
LO3..................................................................................................................................................1
Demonstration of positive and negative impact the macro environment has on business
operation.................................................................................................................................1
LO4..................................................................................................................................................3
Determining the strengths and weaknesses of the company and its interrelationship with
external macro factors............................................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
Books and journals.................................................................................................................7

INTRODUCTION
Business environment refers to the sum total of the all people, organisations and other
practices which are outside the control of a business unit but the business is still depends upon
them because they affect the over all performance and sustainability of the firm(). This report
defines the various types of the organisation in terms of their purpose, scope and size of the firm.
This study also evaluates the two types of the organisation structure that Sainsbury's might have
considering that they are both a food retailer and finance provider. In this we also determine the
strength, weakness, threats and opportunities of the sainsbury business firm. In this report we
will also use the pestle tool for identifying the key areas of the business firm.
LO1
Different types of the organisations and difference between them in terms of meaning, purpose,
size & scope and legal structure
basis Sole trader Partnership
firm
Limited
company
Government
sector
charity
Meaning Sole trader
business is
legal setup
which owned
and controlled
by a single
person and
therefore, is
responsible for
all the aspects
of the business
in terms of the
profit and loss.
Partnership
firm are the
business units
which owned
and controlled
by the two or
more persons.
This
partnership
also defines
the
responsibilitie
s of the
partners.
It refers to
incorporate
business units,
in which they
have their own
legal status.
This types of
the companies
includes the
constitution
which help the
share holder
and director to
regulate their
relationship(P
It is the
organisation in
which the 51%
of the capital
invested by
the central
government
and are owned
and controlled
by the
government
(Rose, 2017).
It is the non-
profit
organisation
which can run
efficiently
through
donations and
other non
financial helps
from peoples
and other
institutions(M
ellor, 2018.).

earson, 2017).
Purpose The purpose
of sole trader
is to provide
the service
with full of
their own
responsibilitie
s. for
example-sole
trader as
electricians.
The main
purpose of the
partnership
firm is to
maintain the
profitability by
providing
goods and
services to
consumers.
The purpose
of the limited
company is to
maximise their
profitability as
well as
productivity
by providing
good and
better service
to their
employee. For
example
Marks and
Spencer
company(Rose
,2017).
The business
objective of
this type of
organisation is
to provide the
various
services to the
local
communities
and earn
limited profit
for reinvesting
in the firm for
the benefits of
customers. For
example
National
Health
Services.
As they are
non profit
organisation
the main
objective of
this
organisation is
to provide
social services
to the peoples
and also care
the well being
of
communities(
Hockerts,
2015). For
example
OXFAM.
Legal
Structure
The sole
trader
considered as
the easiest
business
structure to
form due to
limited
number of the
formalities
This types of
business take
place when 2
or more
persons doing
a business in a
partnership
agreement
which defines
the various
The legal
structure of
limited
company are
entitled to the
company law
which defines
certain
regulation for
these types of
The legal
structure of
the
government
sector firms is
defines as the
company is
owned and
controlled by
the state or
The legal
structure for
forming the
non profit
organisation or
charitable firm
at the state
level and to
apply for (501)
(c) 3 Tex

required for
starting a
business as a
sole
trade(Banica
and Hagiu,
2015). In this
some sole
trader requires
to obtain a
business
licence for
successful
running.
aspects of
business
activities such
as profit
sharing ratio
and roles &
responsibilitie
s.
companies
such as they
have included
at least one
director or
more than one
and one
company
secretary
which are
responsible of
day to day
management
activates(Cran
and Matten,
2016.).
central
government
and the
investment of
government in
the capital of
company is
more than
51% of total
investment of
the
enterprises.
exemption at
federal level.
It also includes
the board of
directors and
the staff of the
firm.
Size and scope of the different types of the firm:
Sole trade
sole trader is the type of the business that is usually in small size which includes one
owner and produce one type of goods and services. In this the owner of the business has
unlimited liabilities for any debts against the business which could affect them individually. Due
to their small size, business serve a public and are restricted to local boundaries. For example the
Sarah's bookkeeping services, established in the England, it provides a full range of accounting
services including book keeping invoicing and credit control, management account and payroll
activities. (Schaltegger, Hansen and Lüdeke-Freund, 2016).
Partnership firm
the size of the partnership firm is larger than a sole trader and it includes minimum two owners
to more number of partners. In this business can produce the a wide range of product and
services but they are also restricted to a set locations because of its size. For example a
construction company that build the houses(Picciotto, 2018.).
Limited companies

The size of the limited company is larger than sole trader and partnership firms. It includes the
unlimited owners due to stock ownership and transfer ability. With the help of their large size
firms are near to boundary-less and it can produce their goods and services internationally. For
example heavy equipment manufacturer company that can sell goods in the country as well as
internationally.
Public companies:
The size and scope of public sector firm is larger as compared to other types of businesses. For
example national health service organisation is expand there business globally and also earn
profits and value from their consumers through providing various goods and services to their
local public. The advantage of this type organisation, it is able to raise the finance through
selling share to the public(Um, 2017).
Charity organisations
The size and scope of these types of non profit organisation is very large and it plays an
important role in the well-being of the society through providing various services to their local
communities. For example OXFAM is the organisation which includes 20 charitable trust which
helps in the alleviation of global poverty. It has many shops across the world which sell fair
trades and donated items.
The size and scope of different type of the organisation plays an important role in the
accomplishment of organisational goal and increase productivity of the firm because if business
runs globally and work on various operations they can achieve higher profitability by producing
a wide range of products to consumers through their retail shops which are located across the
world. Whereas, business with small size and scope grow slowly and earn limited profit through
accomplishing organisational goal in terms of providing goods and services to their local
communities(Pearson, 2017).
LO2
Interrelationship between various function of the organisation and how they link to organisation
structure

Organisation structure of sainsbury's food retailer
The organisational structure of the sainsbury's food retailer is followed the hierarchical
structure that is interrelated with various departments such as production, marketing, finance,
human resource department and distribution and logistics departments. It includes the series of
level of people and each level is responsible for the higher level. For example senior manager are
responsible for the line manager and line manager are responsible for sales
assistants(Komljenovic, Loiselle and Kumral, 2017).
Illustration 1: Organisational structure of sainsbury's food retailer

Organisational structure of sanisbury's bank
Sainsbury's bank follow the functional organisational structure because it offers many
services and financial product to people's and business firms. Clients and products vary so
widely, banks is divided into functional business units. In the functional structure of the
sainsbury bank all aspects of bank operations is controlled by the board of director and executive
team and director, manager and staff is includes in each business unit(Iivari and et.al., 2016).
Illustration 2: Organisational structure of Sainsbury bank

Interrelationship between different organisational function and how they link to organisational
objective and structure
Human resource and marketing department
Human resource management and marketing department runs together to gain the
organisational goal effectively. Both is interrelated because human resource department and
marketing department works together to increase the brand loyalty of the sainsbury company
which results in increasing the market value of the enterprise(Crane and Matten, 2016.). HR
department provides the employees with high skill and knowledge which can become brand
ambassadors and strengthen the marketing department.
Human resource and marketing department is linked with hierarchical organisation
structure of sainsbury which follow the distinct chain of vertical command. In which the HR
department and marketing departments have clear roles and responsibilities which minimise the
conflicts among the departments and helps the sainsbury's company in attainment of
organisational goal(Crane and Matten, 2016).
Human resource and finance departments
human resource ensures that organisation have the resources with right kind of the
skills and competencies in the right position. To achieve the objective of sainsbury human
resource largely depends upon the finance for various activities such as new hiring programs,
budget and also arrange the training programs which increase the employee engagement. Both
functions are interrelated and plays an important role in the effective achievement of
organisational task of the sainsbury. The HR department focuses on human capital which is an
important assets of the every industrial establishment whereas, the finance department focused
on the profitability and views the HR department as a cost unit(Camillus, 2016).
Human resource department and finance department also linked with organisational
structure of the Sainsbury because it reduces the conflicts regarding the roles and responsibilities
of both departments which ultimately results in increased productivity of the sainsbury. The
human resource and finance department work together to achieve the higher level of
performance and profitability because HR manager must consider the cost and benefit of hiring
new employees and also evaluate the impact of human resource policies on the profitability of
the sainsbury through financial projection. Finance department also consider employees as cost

and determine the ways for achieving higher profitability through human capital(Calabrese and
et.al., 2018).
Information technology and marketing department
information technology and marketing department are interrelated with each other and
runs together to achieve the organisational objective of the saibnsbury. The manager of the
marketing department concentrate on the various type of resources to communicate with the
consumers in their business practices. Information technology has great impact on the
sainsbury's because of technology competition and great technology advancement(Banica and
Hagiu, 2015). With the help of the information technology marketing department encourage
employees interest towards the products of the sainsbury because information technology
provides various technology's such as online surveys and social media for providing product
information to consumers and attract consumers towards the company. These procedure improve
the productivity of the sainsbury company.
Marketing department and information technology work together with the help of the
organisation structure of the sainsbury because the hierarchical structure of the company ensures
the clear roles and responsibilities of all the department which reduce the barriers in the
communication and results in better working environment in the enterprise and increase the
motivation level of the employees and helps in producing higher productivity in the
organisation(Bah and Fang, 2015).
This interrelationship between all the functions of the organisation plays an important
role in the attainment of the sainbury's business objective. If human resource departments
provides the better employees with high skill and knowledge and through this talent acquisition
marketing department plays an important role in enhancing the productivity of sainsbury by
attracting customers through providing products information in terms of price, quality and values
of the product.

LO3
Demonstration of positive and negative impact the macro environment has on business
operation.
In order to report impact of Brexit on Sainsbury's business, PESTEL analysis would be
used to find out various positive and negative effects of Brexit on the different functional areas of
business.
Pestel analysis – it is a tool that is used in order to analyse the impact of various macro
environmental factors on the performance of the organisation. It consist of following factors:
Political factors – these are those factors that should be taken into account in order to
reduce the complexities in smooth running of the business. These complexities arise because of
government interventions such as government policies, corruption, political stability or instability
and trade related policy(Cumming and Zahra, 2016). Hence, it is very important to analyse this
factor properly because it creates a major impact on the business.
Due to Brexit, political relations between UK and Qatar deepened, the gulf countries
promised to make more investment in the country. Apart from that, they also fostered free trade
between both the countries. This had a major positive impact on the business of Sainsbury's as
now they can freely carry out their trade in gulf countries.
Economical Factors – these are those factors which are determined by the countries
economic performance. These factors include inflation rate, exchange rate, interest rate,
employment rate and disposable income. Analysis of these factors is very important for the
company in order to sustain and grow in the long term. Furthermore, they help the companies in
determining the prices of products based on the purchasing power of the customers.
Due to Brexit, steep decline in the price of GBP which in turn lead to increase in
inflation, interest rate exchange rate and decrease in the disposable income of the customers.
Hence, this has negatively affected the earnings of the Sainsbury's because of less revenue , less
profit and increase in cost(Kierzenkowski and et.al., 2016).
Social factors – social factors are those factors which represent the demographic
situation, culture, norms and values. It includes factors such as population growth, age and
income distribution, attitude, personality and lifestyle of people where the business run its

operations. Study of these factors are very important because if the company will fail to provide
products as per the taste and preferences of its customers then it wont be able to survive for a
long time in the market as well as it will lose its existing customers. Hence, it becomes a
necessity for every business to produce goods as per the desire of the customers in order to
maintain its image and grow and expand in future(Hodge, 2017).
At the time of Brexit, Sainsbury adopted sustainable business practices which helped the
company to improve its brand image and gain support of many customers. This initiative taken
by the Sainsbury helped a lot towards retaining the customers through brand loyalty. Since the
company came up with providing organic food, it further helped the company in increasing its
revenue and profits as during Brexit demand for organic food was very high and this in turn
helped the company in improving its financial performance.
Technological Factors – these are those factors which need to be analysed properly in
order to bring innovation in technology that affect the working of the business which will in turn
help the company in surviving in this entirely competitive environment by gaining the
competitive advantage over its rivalries. These factors include innovation, automation,
technological changes and research and development. Hence, it is very important for every
company to analyse these factors correctly in order to increase its market share.
During Brexit, Sainsbury used data driven analytics to derive retail customers' insight.
This has helped a lot in approaching the customers and increasing the performance of the
company by increasing the sales and thus in turn increasing the profits.
Environmental factors – the analysis of these factors have become important nowadays
because of scarcity of raw material, increasing pollution, etc. These factors not only include
environmental factors but also include ecological factors such as whether, climate, etc. Its study
is very important to find out the impact of these factors on company in terms of producing goods
and services.
At the time of Brexit, Sainsbury adopted various environment measures in its processes
which not only helped the company in reducing its cost but also helped in improving the image
of the company. The company adopted measures such as reduction in operational waste and
recycling. Apart from this, company also reduced its carbon emission and adopted strategic
sustainability plan. Hence, environmental factors had a positive impact on the working of the