Business and Business Environment Report: Analysis of UK Retail Market

This report provides a comprehensive analysis of the UK retail market, focusing on the business environment and its impact on companies like Clarks. It begins by defining business and its environment, exploring various organizational types (private, public, voluntary), and their legal structures. The report then examines organizational structures (functional, divisional, matrix) and their functions, specifically highlighting how Clarks operates within a matrix structure. A key focus is the identification of macro-environmental factors affecting the UK retail market, assessed using PESTLE analysis, and an internal and external assessment of a UK supermarket to identify its strengths and weaknesses. The report also explores the interplay between external macro factors and these strengths and weaknesses, offering insights into the challenges and opportunities within the sector.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Different types and purpose of organizations and legal structures for Royal dutch shell....1
P2. Size and scope of organizations............................................................................................2
TASK 2............................................................................................................................................3
P3. Organisation structures and functions...................................................................................3
TASK 3............................................................................................................................................5
P4. Identification of positive and negative impact of Macro environment factors on UK retail
market Using Pestle analysis.......................................................................................................5
TASK 4............................................................................................................................................6
P5. Internal and External assessment of UK Supermarket to identify its strength and
weaknesses..................................................................................................................................6
P6 External macro factors which interrelated with Strength and Weaknesses...........................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business is the commercial activity of an organization where goods and services are
exchanged for money. Whereas a business concern environment is the total of all internal and
external factors which influence a concern. Factors may include macro and micro economic
causes. Impact of these forces may affect the overall effectiveness and performance of an
organization (Teece, 2010). This report will investigate and explain different types of
organizations like profit making and non-profit making, their size and classification and the
growth of international business environment along with their processes in which they operate
activities effectively. It also discusses the different organizational structure of organization and
environment implications influencing business functions. The report will focus on identifying
factors affecting business operations of Clarks a UK based shoe manufacturer and aim of this
assessment is to gain knowledge and understanding about impact on business functions on the
retail sector of UK. Pestle and SWOT analysis and Porters Five Model forces is also taken to
identify positive and negative impacts the macro environment has upon Clarks Company.
TASK 1
P1. Different types and purpose of organizations and legal structures for Clarks
The main types of business organizations in the UK are private, public and voluntary.
There are also sole traders, partnerships, companies and franchises.
Private Sector Limited Companies- They are privately owned firms and are not suited
for public listing of shares. They raise capital by selling money market instruments such as
shares, debentures, commercial papers etc. It is owned by sole proprietor, partner, or joint
venture where the main motive is to earn profit and market share. In this sector there is no
intention of service to the society or benefiting them in any way (Hilton and Platt, 2013). There
are more than 500000 companies in the UK which are listed as private limited companies. In this
type of company there are many advantages like limited liability, huge amount of capital raising,
economies of scale and market domination. Clarks being a profit oriented firm wants to achieve
its vision of profit making and gaining market share. Before forming a company there is the need
to complete some legal documents such as Memorandum of association and Articles of
association.
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Public Sector Company (PLC) - It is like private limited companies are owned by
shareholders but no restrictions are there in selling the shares to whoever they like. Companies
may take over the control of other shareholders if they start buying holdings to take power.
Public company can register themselves in stock exchanges for the purpose of purchase in
general in public eye. The main motive is to provide services to society regardless of income
and wealth hence they do not aim for profit making. There are many public sector undertakings
in the UK which renders health assistance, free food facilities etc. Their vision is to safeguard
and protect the health of people in UK with a regular examination mission (Drucker, 2017). It
can take many forms like the central or local government. Rather producing products for a profit
they tend to supply public services and are funded by the respective governments.
Voluntary or Non-profit Sector- These organizations are different from private and
public sectors as its main objective is turning profit. Example: Charitable organizations, trade
unions do not distribute its profit with shareholders or owners but uses it to meet the goals. They
do not have any private owners but do have controlling members or boards and they cannot sell
their shares to others personally or by taxable mode. It is mainly owned and run by individuals
with a purpose of helping the social group, works for the welfare by wiping out partialities in the
community hence profit making is not their ultimate goal. Organizations such as EURAD and
DCA are working for the betterment of the society to eradicate poverty. There are mainly three
legal structures used by these firms i.e. unincorporated association, a trust and company limited
by guarantee.
P2. Size and scope of different types of organizations
The goal of a business organization is connected with its structure, size and extent. All
companies are not operating to make profit but businesses that are set up with the objective of
earnings do not necessarily be large multinational corporations but micro, small, medium
enterprises. Also there is an additional category referred to as Small to medium sizes enterprises
(SME). The difference between these are the number of employees, owners or shareholders,
market share and their legal status (Harmon and Trends, 2010).
Micro- The operation scale, capital and level of these enterprises are relatively small.
Their turnover is really less which does not exceed $1 million. Micro business is operated by
sole individual or group of people and do not have any workers. They have less growth rate with
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short sustainability and low market shares. Profit generated in this sector may be not sufficient to
meet the operational costs.
Small- The scale and scope of these organization is little as they are controlled and
owned solely by a proprietor or corporation generating less revenue. The turnover in this sector
may be between $1 and $25 million in a specific year. Minimum workers in this business is
usually a minimum of 20 and a maximum of 50 working at a particular place and time. Small
scale enterprises have sometimes have high growth and low rates. Several subsidies are provided
by the government to increase development and sustainability is depended upon the profits and
help by the state or local authorities. Market share of these businesses are not so high nor so
down. Profit share of these undertakings is not that high but not so low and covers the operation
costs.
Medium- They have a moderate scale of operations controlled and average size of
minimum workers employment. It usually needs great investment funds which creates high
revenue (Cantwell, Dunning and Lundan, 2010). It creates a turnover of $25 and up to $250
million in a specific year. Medium size enterprise has 100-120 workers working at a particular
place and time on a single program. The growth rate is average but is more than small and micro
businesses and level of sustainability depends upon the profit earned by the firm. Market share of
these sector are moderate but is more than micro and small enterprises. Profit share is average
which is more than small and micro businesses.
Large- Big organizations has a large scale operations with huge capital investment as a
result the profit earned is also large volume. Projects in these industry is large so as the cost and
long term revenues. Here the business intends to exceed a turnover of $350 million and has
more than 120 workers who all are having a common goal of the firm's fixed organizational
target. The growth rate gets increased as the profits are very high and sustainability level is for
longer period. Market share of large scale enterprise is more than all other businesses and is huge
with a large profit share. Clarks is a kind of large scale enterprise operating in different countries.
TASK 2
P3. Organisation structures and functions.
An organization's structure in a business defines it authorities, communication, employee
groups, operational workflow etc. It is the hierarchy of people and their job functions for the
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efficient and systematic operations of a business. Strong structure of organization helps a firm
run smoothly with a clear plan for overcoming obstacles (Chavis, Klapper and Love, 2011).
On the basis of size ans scope of operations- Matrix structure, Divisional structure, and
Functional structure are three main types according to this parameter. Clarks has a matrix type
of construction which function and division being in a international retail market. This has the
mix of both functional and divisional structures. Clarks has many different departments
merchandising several goods and assisted by managers with a wide range of services necessarily
having a matrix kind structure so that it can perform activities in a structured manner. The
particular structure of every organisation differentiate it from other firms irrespective of level of
operations.
Transnational, International and Global organization structures- This specific firms
influence particular section in market that helps in deciding market share and profits of the firm.
It includes those companies which have no investment outside the domestic country and that
exports or imports business within the nation. Global enterprises has investment worldwide and
transnational structure of firms are complex type which have investment in foreign institutions.
Company power structure- The main function of organizational structure is the
depiction of authorities within the firm. It can be tall with several layers of management or large
number of employees reporting to a less number of supervisors. Different hierarchy works in
contrary conditions and one cant be better than another.
Human resource management- This is a main part of an organisation and is the main
asset of a business. Clarks maintain human resources for quality of operations. It is important for
the company to carry out the processes and manage activities (Osterwalder and Pigneur, 2010).
Marketing- This is a crucial factor for every business to withstand competition and gain
sales. It is a function of every organization to get knowledge about the growth and opportunities
in the market. Clarks marketing strategies are efficient and effective and is systematically
conducted by its management.
Finance- Capital is the basic thing needed to start any business whether its small, micro,
medium or large. Without fund of investment no task of business can be attained. Every
organization must plan a budget before the commencement of operations.
Functional structure- This suitable for a producer of standardized goods and services
with a low cost at large volumes. Efficiency realization is possible with this structure as they
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integrate activities in a way that makes production to a limited and predictable manner. It
consists of coordination, oversight, and task allotment activities (Pinto, 2010).
Divisional structure- It consists of self restrained divisions which is a collection of
functions producing a product. Utilization of a plan and operating according to that as a separate
business is a feature of this structure. Delegation of authorities is used in this section so that
performance can be easily measured.
Matrix structure- It combination of two separate structures and is more dynamic than
any other management. This allows specialization in a particular field which can increase
knowledge level and complexness of series of command.
TASK 3
P4. Identification of positive and negative impact of Macro environment factors on UK retail
market Using Pestle analysis
Growth and development of UK's economy and GDP of its market has a great
contribution by the retail marketing sector. It generates a large revenue and is a major player in
the economic system. Some macro-environmental factors affect its retail market in UK and it can
be assessed by analysing those with the help of PESTLE are as follows:
Political factors- They play an important role in determining the long term profitability
in a certain country or market. Factors like government policies and regulation of the retail
industry affects the revenue generation in the market. Clarks, Tesco, Sainsbury alleviated their
control and operations function of the firm in an harmful way due to political instability. To gain
sustainability and overcome such hurdles the retail market has to look for better management of
its organizational actions and control them.
Economic factors- Macro-environmental causes like inflation, savings, foreign exchange
rates determine the demand and investment in a particular economy. Controlling the business
operations in a finer way firms like M&S, Sainbury and Tesco reduced the functional capabilities
thereby saving costs due to economical factors by way of cutting short their manpower
(Hamilton and Webster, 2015). Some unsuitability caused certain firms to shut down their
outlets which resulted in revenue generation.
Social factors- Considering the society's culture and way of business doing impacts the
organization's environment and working. It has a great impact on a firm's functions and
operations. As shared beliefs and attitudes of people play a major role in how Clarks understands
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the customers of a particular market , the way they design the marketing strategies which has
created a risk for the staff to undergo termination.
Technological factors- It has a great impact in the rise of production capabilities and
operations of an organization. Advancement in technology benefits both customers and retailers.
Clarks should not only analyse technology in the industry but should also understand what
disrupts that sector. Fast pace of technology interruption may provide firm with less time to
defend and stay profitable.
Legal factors- In many countries legal model are not so strict enough to protect the
rational property rights of an organization. For the effective functioning Clarks should follow a
proper legal obligation in UK market. This will allow them to produce a better financial
performance (Osterwalder and Pigneur, 2010).
Environmental factors- Every company should run in sustainable environment. This
factor may affect the business in negative way like CSR responsibility of the organization thus
business is liable to do some work for the environment and nation. These changes will assist the
firm to come up with effective and new ideas.
TASK 4
P5. Internal and External assessment of UK Supermarket to identify its strength and weaknesses
SWOT Analysis
Strength Weaknesses
The main strength of Clark organization to
improve the economic conditions in business
environment. An advancement of technology,
it will increase the growth and development. In
this way, the profitability and productivity of
organization is increases in day by day.
With the help of technologies, it very easy to
solve the problem of customer in effectively
and efficiently. They generated high revenue in
United kingdom. In UK, it can be established
their business in different areas.
This online business is directly impact to
economy of United Kingdom because most of
the organization is used Traditional method
that are not helping for growth and
development. The business process is very
slow and the cost of operations is very high
and there are so many chances to shows in
errors (Boons and Lüdeke-Freund, 2013).
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Opportunity Threats
They are giving many opportunities in online
shopping business to used different type of
technology to increases their business in all
around the world. This technology is helpful
for increasing their productivity in
International market. The online market can be
improving their services and product.
The competition level is very high in
international marketplace in which the same
product is available in different website with
reasonable price.
The lack of innovative ideas and cannot be
used technology due decreases its productivity
in marketplace.
Porter's Five Forces Model-
 Bargaining Power of Buyer- this model is significant that the buyer has power to provide
the product in lower price so that the demand of product is increases in marketplace. The
clarks is online branding company to provide the product in effective price so that most
of the customer attracted towards (Welford, 2013).
 Bargaining Power of Supplier- the suppliers are mainly sold the product in higher rate but
the quality of product is very low. They would be affecting the clarks profit because they
are taking more money for product in market.
 Threats of new entrants- there are some barriers in market when the new business
established while barriers is affecting the business process an activity. Most of the
organization is used the same product in market so it is very difficult to explore the
business.
 Threats of substitutes- the buyer is easily identifies the attractive product that has
reasonable rate in marketplace. it can be switch from one product to another through low
cost.
 Rivalry among existing competitors- they are applicable in different competitors such as
The growth of organization is not good and they provide low customer loyalty and they have
many barriers in market.
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P6 External macro factors which interrelated with Strength and Weaknesses.
In an organization the strength and weaknesses are linked with the macro environment
because sometimes the company can affected by its outsiders. The company's management team
can not find the different factors which are associated with the management decisions (Gecevska
and et.al., 2010). So for this purpose the organizational macro factors can be found with the use
of external macro elements. There are two factors that first is strength and other one is
weaknesses and both are give power and weakness to the company. Both factors are related to
each other and they will increase the risk of outsider risk of the particular organisation. In this
context, there is a company CLARKS, and its management team can identify all issues regarding
internal environment.
External environment contains macro factors which is analysed by the PESTLE analysis.
So for this reason there are pestle analysis of this company CLARKS in this way. First is
Political Factors, it is influence the company's business by governmental policies and rules. The
governmental pressure arises due to different strategies and laws which may affect to the
CLARKS business activities and also give impact on the operational goals. This factor also
included the rules which impact on the company's business.
The second factor is related to the Economic of that nation where the company is run and
operate. This type of factors are generates from the national bank of that country. It includes the
bank rate and prices of raw materials. This will impact on the production department of the
CLARKS company. The company should follow the right way to reduce this factor impacts and
get competitive advantages in the market. The another one is Social Factors. It has ascertained
the customer behaviour and it will demonstrate the customer attraction towards company's
product and services. Furthermore, the transformation in society lead to the market stableness.
Further, there is the Technological Factors (Teece, 2010). The technological component
influenced the organizational activity and it is taken as circumstances where firm will lay an
essential influence on the retail market.
This factor affected to the business because increasing in digital technology and Legal
Factors also affect the company CLARKS and it gets affected from legal bound and the judicial
factor will cause the organization to gain a better market share and carry out its trading
operations in effectively. This will come up with the amended and advanced services. Last is
Environmental Factors. Every company should undertake the corporate social responsibilities
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because each organization born in society and earn profit from the society it is the
responsibilities of the organization that it will give some part of profit to the help ion
environment and maintain sustainability (Hilton and Platt, 2013). Every company should run in
sustainable environment. This factor may affect the business in negative way like CSR
responsibility of the organization thus business is liable to do some work for the environment
and nation.
CONCLUSION
From this report on business and business environment it can be concluded that the
business of an organisation is mainly affected by its organizational structure. The assessment of
different types of organization, their size and scope which handle the operational activities of the
firm are also discussed. On the other hand impacts of macro-environmental factors on business's
operations along with internal and external analysis of specific organizations for identification of
strengths and weaknesses are also conducted successfully. Porter's five forces model, SWOT
analysis and PESTLE model is also interpreted for positive and negative impact on business
operations.
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REFERENCES
Books and journals
Teece, D.J., 2010. Business models, business strategy and innovation. Long range
planning, 43(2-3), pp.172-194.
Hilton, R.W. and Platt, D.E., 2013. Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
Drucker, P.F., 2017. The Theory of the Business (Harvard Business Review Classics). Harvard
Business Press.
Harmon, P. and Trends, B.P., 2010. Business process change: A guide for business managers
and BPM and Six Sigma professionals. Elsevier.
Cantwell, J., Dunning, J.H. and Lundan, S.M., 2010. An evolutionary approach to understanding
international business activity: The co-evolution of MNEs and the institutional
environment. Journal of International Business Studies, 41(4), pp.567-586.
Chavis, L.W., Klapper, L.F. and Love, I., 2011. The impact of the business environment on
young firm financing. The world bank economic review, 25(3), pp.486-507.
Pinto, J., 2010. Achieving Competitive Advantage. Prentice-Hall, Upper Saddle River, NJ.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries,
game changers, and challengers. John Wiley & Sons.
Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries,
game changers, and challengers. John Wiley & Sons.
Boons, F. and Lüdeke-Freund, F., 2013. Business models for sustainable innovation: state-of-
the-art and steps towards a research agenda. Journal of Cleaner Production, 45, pp.9-19.
Welford, R., 2013. Hijacking environmentalism: Corporate responses to sustainable
development. Routledge.
Gecevska and et.al., 2010. Product lifecycle management through innovative and competitive
business environment. Journal of Industrial Engineering and Management, 3(2), pp.323-336.
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