Business Environment: Macro and Micro Analysis Report for Businesses

This report provides an in-depth analysis of the business environment, focusing on both micro and macro factors influencing organizational success. It begins by examining different types of business organizations, including private, public, voluntary, and charitable entities, as well as sole traders, partnerships, and companies. The report then explores the interrelationships between various organizational functions, such as customer services, marketing, trading, finance, and human resources, using Sainsbury's as a case study. Furthermore, the report identifies the positive and negative impacts of the macro environment, such as the UK's exit from the European Union, societal preferences, and competitive forces. It conducts internal and external analyses using SWOT and PESTLE models, linking strengths and weaknesses to external factors to devise effective strategies. The report concludes with a reflective statement summarizing the findings.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION.........................................................................................................................................3
PART 1..........................................................................................................................................................4
(A). P1 & P2 Different types of organization, sizes & scope....................................................................4
(B). P3 Interrelationship between organization function and objectives.................................................16
(C) Video attached...................................................................................................................................17
PART 2........................................................................................................................................................17
(P4) Section: 1. Identify some positive & negative impacts of the macro environment.........................17
(P5) Section 2: Conduct an internal and external analysis to identify its core strength and weaknesses 19
(P6) Section 3: Explaining how these strengths and weaknesses can be linked to the external macro
factors.......................................................................................................................................................20
(M3 & M4) Section 4: Apply several models, PESTLE & SWOT/TOWS to gain an in-depth
understanding of the impact of macro environment................................................................................21
D2 Reflective statement lightening the findings of the report.................................................................24
CONCLUSION............................................................................................................................................26
REFERENCES............................................................................................................................................27

INTRODUCTION
Business environment regards to the factors & composition of both the internal (micro) as well as
external (macro) forces that shape an organization behavior to derive success in the competitive edge.
(Kubasek and, 2016) Micro components determine change in internal conditions, process & operations
that can be controlled by an organization like suppliers, employees and operational effectiveness. In
contrast, macro factors are called uncontrollable because entity will not have any control over such
conditions like technological changes, legislative framework, stability of the government, new taxation
regime & policies and many others. Looking the corporate world of UK, it is founded that different
organizations operates in the market that are sole proprietorship, partnership, and company & public
sector businesses. All these run their functions & activities following distinguished aims, targets &
purpose. Therefore, the report will analyze various types of business organizations with stating their
defined targets & objectives. The main focus of the report will be on two case studies, one is Primark a
private limited organization and another is Sainsbury Plc, a public company. Both the companies operate
at multinational level and run operations in retail industry. It carries out their activities and functions
having different structure or hierarchy, thus, the assignment will gives an in-depth analysis & evaluation
of interrelationship among various functions and how it is aligned with the overall strategic targets. Apart
from this, lastly, it will make internal analysis via SWOT & external through PESTLE along with linking
together both the micro & macro factors to devise best plans & strategies.

PART 1
(A). P1 & P2 Different types of organization, sizes & scope

Private organization: Private companies has a private ownership, a private company is a
part of economy which gives goods and services. private sector companies based on profit
welfare, it only works for a provide good services and maximum profit earning.
Public organization: These are the a companies which are owned by the governments,
state owned companies is called public limited companies. Public companies are contributes to in
economic development. Public companies are work for public welfare, it help to provide better
service in less amount. Public sector companies operate by the government and strictly followed
the all rules and regulations. Public limited company's share are open to the public, two examples
are: franchise and workers cooperative.
Voluntary organization: A voluntary association is a group of individuals who
voluntary enter into an organization to accomplish purpose. Many voluntary organizations are
working for the social economic development and for art culture and sports

Charitable organization: These are the non- profitable organization, these type of
business is work for rural people and public welfare. Charitable organizations main motive is a
help needy people and run foundation courses for the public.
Sole trader: It is a run by one individuals where there is no legal distinctions between
the owner and the business. Sole trader is a legally responsible for all aspects of the business.
Partnership: A partnership is an arrangement of two parties where knows as partners, it
is either limited or unlimited liability.(Cavusgil and et.al., 2014 )
Company: a company is a large entity of business, company can be structure in different
ways. For example, company can be a sole proprietorship, a partnership, or a corporation. Which
type of company you dealing with; it may be owned by one person or a group of people.

 Line structure: A line organisation has direct and vertical relationships between
different levels in the organisation. There are only lines departments- departments are
involved, and focus on fulfil of the firm goal.
 Staff or functional structure: In this structure line officer or manger has a direct
authority over the line.
 Line and staff structure: In this organisation have direct relationship between different
levels and also have specialists from specialized areas
 Committee structure: This type of organisation is designed for the combination of all
departments.
 Divisional structure: In this type of structure is organisation have different departments,
and they divided in the different departments like, function base, product base, or
territory base.

 Project structure: In this type of organisation distribution of authority is based on the
projects.
 Matrix structure: This type of structure is designed for achieve specific result by using
team of specialized.
 Hybrid structure: It can be design for the all structure can be combined into a hybrid
structure.

(B). P3 Interrelationship between organization function and objectives
There are different functional areas within the business of Sainsbury's are as follows:
Customer services: This is majority of Sainsbury's workforce, in this, general duties to be
carried out on the shop floor. Sainsbury's have a stock control customer services, in this where
level of stock are checked and the employees working here will order more goods when needed.
It can be develop customer’s perspectives, and interrelation between services quality and
enhancing customer satisfaction and loyalty. According to research results indicate that service
quality influence customer loyalty through customer satisfaction.(Ferrell and 2015.)
Retail services: the retail function of Sainsbury's is basically sales department, this
department is responsible for selling items to customers. Sainsbury's have a sales representative
in store to discuss about the customer wants. Sales department would need information of as
prices of product so that they can inform customers.(McCarthy, 2013)
Marketing: Sainsbury's related to investigating customer need in marketing. In this
department to carry out market research to find out what the customer want.(Novakovic and,
2014) In this functional area Sainsbury's use their 4p's of marketing. they would also need
information about the market competitor.(Crane and, 2016) It can use promotion in many
different ways such as newsletter with special offer on products , advertise on the television
using celebrity endorsement with Jamie Oliver.
Trading: In this Sainsbury’s do purchasing and distribution. Purchasing part of the
department has has to make sure Sainsbury's product need and stock control over the production,
and distribution side is to make goods properly delivered to them.
Finance: the finance department of this company is deals with all aspects of money, and
keeps detailed record of all profit and loss and other financial records. They also control flow of
money and supervising payroll system.
Human resource: this department is called personnel department, in this department are
responsible for recruitment, staffing, training, promotion and compensating. Basically this
department is for welfare of the workforce. (De Klerk and,2013)
Interrelationship among various department of Sainsbury

Customer services is interrelated to the marketing department where as advertise to
attract more and more customers and increase productivity, this department is also interrelated
to production and distribution system that can be help in more productions and increase
distribution channels. Marketing department is lay on a trading department , that can be help in
customer preference and market competitor, and provide information about the market
environment and current market trend. it can also interrelate to retail department , that can be
help in retail business of Sainsbury as in more selling products .(Weiss, 2014) In Sainsbury
finance department is interrelated to all these departments , that can be help in keep all financial
records and maintain all quantitative activities (Yee-Loong Chong and, 2014). Finance
department is mainly related to production and distribution department, that can be help in profit
maximization and increase in market share and growth rates (Kolk, 2016)
Retail department is interrelated to trading department that can be helped in more
production and distribution, it can be used for a increase in supply chain management process
and interact with more new customers. On the other side HR department is interrelated to all
above these departments , that can be help in workforce welfare, they can help in training,
staffing, recruiting, and built healthy environment in organization, provide better performance of
employees and train more skilled people for organization. it can be help in a better production
and distribution staff. In any organization all of these departments are interrelated to each one
of them and they can built a healthy interaction and relationship among all departments and it
can be build team work in an organization. (Crane and, 2016)
(C) Video attached
PART 2
(P4) Section: 1. Identify some positive & negative impacts of the macro environment
In the dynamic and changing business environment, companies face turbulent market conditions
& situations due to sudden and rapid volatility in the external market analysis. There are two types of
environmental conditions, micro & macro factors. In the first elements, company has control over factors
and can adjust their internal functioning and activities according to the changes to survive successfully in
the market. In contrast, macro factors are the external factors that are outside the control of the entity still
have a strong effect towards the success of the organization.

Referring the cited organization, Sainsbury Plc, there are wide range of changes that can occur in
the external market such as technological, social, environmental, political stability or instability, changes
in legislative framework and many others. Favorable movements can influence organization positively
whereas adverse fluctuations can influence corporation in an adverse manner. For instance, recently as
UK refendum from the membership of European Union has both sided impact over the UK-companies
like Sainsbury & others. Being an EU member before, Sainsbury Plc was allowed for the free movement
of goods & services without any trade barriers & import duties. However, now, after refendum, if
company imports any products from any of the EU nation, then firm will be accountable to pay tariff
charges thus, direct cost of the business will be increase at a lower return.
In contrast to this, it will also have several positive impacts to the Sainsbury. For instance, after
separation from EU membership, now, it will be able to globally expand their operations across other
nations as well to gain traffic or crowded audiences to get better yield. As a result, its sales, market share
& competitive strength will be definitely increased. On the other side, now, UK will create its own
legislation & trade policies, thus, change in legislative framework & domestic trade laws will also impact
the functionality of the Sainsbury to a major extent.
Apart from this, now-a-days, society’s preferences, attitude & like and dislikes towards grocery
items, nutritional and healthier products also has been changing at a very faster pace. Therefore, it
become essential for the marketing manager of Sainsbury to carry out market research and pay attention
towards dynamically changing expectations and demand of the audiences. Delivery of superb & excellent
quality grocery items that meet people nutritional demand positively impact the sales & return or vice-
versa. At the same time, competitors like Tesco Plc, Greggs Plc, ASDA Plc & many others also have an
effect on the corporation (Carneiro, Matos and, 2015). For instance, if there is an option for the audience
to get the same quality product, called substitute items from the rival organization at cheaper prices, then,
obviously, they will go the other company; as a result, Sainsbury will lose its user base, result in, poor
sales and return as well.
In despite of the above, in the current period, the rate of inflation goes up at very high rate. Thus,
increased inflation rate rises up the supplier charges of grocery products from whom Sainsbury purchase
the products & services to meet their audience’s expectations, needs & wants. As a result, cost of goods
sold goes up at a declined gross margin, hence affect operations adversely. Further, looking to the fastest-
growing age of technology, it become necessary for the business like Sainsbury Plc to implement
necessary changes in their operations to use the best technology for automization of their work like
computer database, customer relationship management (CRM), media marketing, social-media marketing

(SMM), e-mail, website development, Search Engine Optimization (SEO) & web 2.0 technology for
developing user-specific content for the marketing practices. Lagging behind the technologies have a
negative impact over the competitive advantage & strength of the business, as a result, they cannot defeat
competitors.
(P5) Section 2: Conduct an internal and external analysis to identify its core strength and
weaknesses
Internal analysis refers to the analysis and critical examination of the business practices
and functioning whereas external analysis is the process of uncontrollable factors & situations
that are outside the business control. Looking onto the current operations of Sainsbury Plc, it has
a strongest brand position and reputation in the international market, which is the main strength
of the company (Belás and et.al., 2015). Further, if we look at its USP than it is founded that
Sainsbury charges economical rates for their offerings or product portfolio to serve audiences at
affordable rates. It rises up their satisfaction level and result in maximum competitive strength.
Despite this, its wider geographical or international presence all around the world and large
capital investment to establish more supermarket & convenience stores is its strength that
indicates strong distribution platform. In 2016, in UK, the number of grocery stores of the
organization goes up to 1374, out of which, 773 were convenience stores.
However, on the other hand, rising inflation is a weakness because it maximizes the
selling cost for the Sainsbury & as a result, gross yield lower down that is a weakness of it.
Further as company serve larger audiences across the world, therefore, its warehousing and
inventory policies must be designed very well for serving all the consumers. However,
Sainsbury’s inventory policies not seem effective and cause hurdles to serve large audiences on
demand (Botha, Kourie and Snyman, 2014).
In contrast to this, under the external environment, expansion into emerging economies
brings probability for the firm for the long-term success. Recently, Sainsbury made capital
investment in establishing supermarket in China under its expansion program for achieving
extensive growth. Contrary side, competitive pressure from Tesco, Asda, Walmark & others are
the threats for the longer success. In addition, EU separation arisen legal liabilities to the firm to
pay import tariffs for the movement of goods across other EU nations, increased its liabilities and

declined net yield. However, advancement of technologies likes online dealing proven as an
opportunity for the wider success & growth.
(P6) Section 3: Explaining how these strengths and weaknesses can be linked to the external
macro factors
Although, internal & external components are distinguish from each other as first are
under the control whilst later are not, still, both these cannot be separated because they are
interrelated in different respect. For instance, under the external market, technological
upgradation & its advancement is an opportunity for the Sainsbury to derive targets & build
longer success, thus, adoption of newer & innovative techniques, website creation & social-
medial marketing become its strength. Sainsbury’s excellent Information Technology
infrastructure with the development of web portfolio drives larger audiences with greater market
share.
Further, changing people preferences, attitude, demand, likes & dislikes create a risk to
the firm and threaten its success, still, consistently catering the needs and desires of the buyers
strengthen its capability to deliver quality services considering consumer specification. This in
turn, it became able to generate crowd & high-yielding audiences at the supermarket stores with
high return (Granger and Schroeder, 2013). On the contrary side, if business does not deliver
required goods timely to the services due to inappropriate warehousing & logistic then it will
become a weakness & have an adverse affect over the functionality.
In despite, externally, Sainsbury is liable to follow its environmental responsibilities
through keeping environment balance, neat & clean for the people safety. Thus, introduction of
20 by 20 plans became strength of the firm to become greenest retail supplier in UK and thereby
created a unique reputation as well. Apart from this, strong media presence & wider network
following expansion a strategy exists under the external market become strength of the firm to
serve globalized consumers.
In addition, competitive pressure from the rivalry retailers likes Tesco, Asda & others
caused extreme level of difficulties to grab larger market share and arises threats. However, its
strongest media & online advertisement enable it to expand business overseas and maximized
competitive success.

(M3 & M4) Section 4: Apply several models, PESTLE & SWOT/TOWS to gain an in-depth
understanding of the impact of macro environment
PESTLE is an abbreviation used for the political, economical, social, technological, legal
& environmental factors used to make a thorough analysis of the changes take place between the
outside market conditions. Thus, it is widely used techniques that are often used by the
companies to cater the situation of volatile market conditions and accordingly change the internal
procedures & activities for deriving success. Referring Sainsbury Plc, its macro environment has
been analyzed through following PESTLE model as under:
P-Political:
Viewing the current political framework of UK, cost of consumer debts is extremely high, which
in turn, adversely influence the consumer attitude and create pressure to the organization to attract higher
number of consumers. Thus, it becomes extremely difficult for the company to operate in current and
prevailing market conditions & ensure continual functioning. In addition, recent separation of UK from
EU also caused political instability in the market because of changing regulative framework and brings
difficulties in continual operations (Kubasek and et.al., 2016). Although, political situations are
adverse, still, Sainsbury adjusted their policies & plans accordingly and sustain competitive strength to
create a long heritage for the steady & successful growth. In addition, taxation policies also influenced the
net result, in UK, in the year 2016, corporation tax rate remains constant to 20%, and Sainsbury has not
been affected because it has to pay tax at same rate (Reynolds and Rohlin, 2014).
E-Economical:
Economic factors play an inevitable and crucial role in the success of the industry. In UK,
economic slowdown, very high rate of inflation & increased unemployment significantly effects the
growth and success of the Sainsbury. Inflation caused growth in food & other grocery items charges result
in high cost of sales. Further, rampant unemployment in the country caused adverse change in the
aggregate market demand, this in turn, declines the production output of Sainsbury. In order to sustain its
competitiveness in the globalized market, firm may be suggested to expand business internationally
especially in emerging nations, so that, it can well manage its risk associated with the changing economic
conditions.
S-Social:

Looking today’s social preferences, every consumer prefer to buy all the demands, products &
services under a single roof, thus, they prefer to shop goods at one stop. In order to meet such demand,
Sainsbury also introduced non-category food items such as clothing, homeware & seasonable products
also and derive substantial benefits from the same. Despite of this, it also changes in recruitment policies
and hire female workforce at their supermarket & convention stores. Moreover, now-a-days, busy
working schedule, longevity population and so on decreased domestic meal preparation, which in turn,
grown overall market demand. Further, its CRM & other marketing strategies also allow Sainsbury to
cater the needs and desires of the consumers through delivering goods and/or services accordingly.
T-Technological:
In the digitalized & advanced technology, web-based operations can be considered as the best
initiative that bring significant growth in the Sainsbury’s competitive strength via diversifying operations
into newer geographical areas (Prajogo, 2016). It maximized its food deliveries to a very high extent as
now, any one needs to just click ones to place online order and they will receive ordered item at their
home or other place. Further, E-mail, SMM, 24 hour check out system & many others affected
organization positively.
L-Legal:
Governmental legislative & policies such as content, new tax laws on advertisement of fatty
foods, consumer interest, trade legislation, competitive framework policies & many others influenced
organization in many ways. In order to comply with the modified laws, Sainsbury altered its products
accordingly & meet lawful requirement.
E-Environmental:
Establishments either commercial or service rendering are required to work in socially or
ethically responsible manner. Sainsbury introduced a 20*20 sustainability plan to give full
respect to the environment and keep it safe & secure (Sainsbury’s 20 by 20 Plan, 2016). It aims at
becoming the greenest grocery delivery firm through minimal of wastage, less carbon footprint
& three R (reduce, reuse & recycle). Moreover, sustainable seafood, emission & environmental
standards, reducing the use of alcohol in own wine and beer and waste management enable firms
to bring substantial growth in the sector.

SWOT/TOWS: This is an abbreviation used for both the internal & external analysis, in
the first, both the strength and weaknesses are identified, whilst under the external analysis,
opportunity and threats are discovered. For Sainsbury, SWOT analysis has been made here as
under:
Strengths:
Diversified & globalized customer base: Sainsbury is one of the leading & globalized
British retailers that operate in wider market area across many nations of the world like UK,
Australia, Italy, France & others.
IT infrastructure: Wider internet & web platform & online check out build a strong IT
network, as a result, it bring good growth in the success of the business. Moreover, the online
operations also boost its sales and number of orders to a great extent (Rodrigo, 2012). It is also
awarded as the best Convenience Retailer in the retail sector exceeded its total revenues above 1
GBP billion (Wetherly and Otter, 2014).
Wider outlet coverage: In the year 2016, in UK, the number of grocery stores of the
organization goes up to 1374, out of which, 773 were convenience stores (Number of Sainsbury’s
stores in UK, 2015). Moreover, extension of the stores outside UK enable firm to reach greater
consumer audiences that maximized its market share to a great level.
Quality workforce: Sainsbury value their workers importance and provide them training
also to expand their competencies level. The best quality & expert people in diverse knowledge
enable firm to give superior quality services to the consumers.(Reynolds and, 2014)
Weaknesses:
Poor inventory management: Sainsbury’s warehouse management is not very good that
directly impacts the logistic and supply chain operations adversely. Although after bearing a
heavy loss, board has changes in warehouse policies, still, it did not achieved significant growth.
Cultural differences: As Sainsbury has diversified worker portfolio, therefore, cultural
differences is very common & obvious give rises to several issues in effective HR management.
Opportunity:

Expansion strategies: Looking to the newer markets & emerging countries will bring
opportunity to the firm for wider geographical coverage through more retailer shops. Recently,
Sainsbury opened its stores in China for maximizing audiences & global market share in the
retail industry (Felsted, 2010)
Consumer awareness: Regular and consistently monitoring the actual needs &
expectations of the customers bring enable firm to cater the demand of the global traffic and
derive success.
Technological advancements: Adoption of technological advancement & it’s up-
gradation build a unique reputation & corporate image in the mind of consumers and strengthen
competitive position.
Threats:
Tough competition: Tesco, Walmart, Asda are the retailers that are consistently giving
tough competition in every areas to the Sainsbury which is threatening its long-term success
(Menychtas and et.al., 2014).
Change in policies due to refendum: As, now, UK has been separated from EU, so no-
doubt, there will be a separate legislation & policies of UK that will greatly influenced its
success.
Prone online network: Cyber-crime by the hackers & computer malfunctioning are the
potential threats that is threatening its online platform and affect efficiencies in an adverse
manner.(Belás and et.al.,2015)
D2 Reflective statement lightening the findings of the report
After carried out detailed analysis of the investigation, I have gained diversified
knowledge of business environment covering both the internal (micro) and external (macro)
factors that are really important for the company to analyze consistently, so that, appropriate
plans, policies and strategies can be devised for accomplishing vision and mission of the
corporation. Detailed and thorough analysis of the environmental situations helped me to
strengthen & improve my analytical skills because I differentiated both the internal & external
conditions and critically examine both the positive & negative impact of the same on the

organization. Furthermore, web research to analyze and evaluate both the micro and macro
factors improves my research skills significantly.(Botha and,2014)
In the report, I also applied several models such as PESTLE & SWOT model to find out
that what are the factors and how it affect the functioning of Sainsbury in distinguish manner
either positive or negative. After applying the PESTLE model, it has been founded that recently,
EU refendum will have both sided effect towards Sainsbury, as it has to pay import tariffs for the
trading or merchandising operations with the EU countries. In contrast, expansion globally into
other nations and domestic trade policies and laws might have a favorable effect. With the help
of this, Sainsbury will be able to expand their operations.(Granger and, 2013)
In addition, I discovered that inflation rate give rises to cost at a declined return, which
will affect performance in an adverse manner. Therefore, Sainsbury must make contracts with
the suppliers and use derivatives hedging itself against inflation. Unlike this, online delivery,
social-media & mobile marketing rises up consumer demand, as a result, enhance sales & will
enable firm to gain a leading position in the retail industry.
Furthermore, analysis taken place to assess interrelationship between the internal &
external market volatility improve my critical thinking & analytical skills to a great extent. After
applying SWOT & PESTLE, I founded that Sainsbury must be suggested to bring several
changes in its internal procedures, most importantly, warehousing, inventory management &
logistic supply chain operations. By making an excellent plan, it can manage sufficient quantum
of grocery & other food and non-food category items at their stores and satisfy audience’s
demands appropriately. Further, several cost-controlling measures needs to be adopted like
closure managerial monitoring, controlling, budgetary framework & others to minimize high
operational expenditures and thereby improve net yield substantially.(Menychtas and et.al.,
2014)
Apart from this, it can use latest technologies like SEO, Web 2.0 & 24 hour checkout
system for maximizing competitiveness to serve consumer optimally and thereby achieve
extensive growth. Furthermore, focusing consumer needs & wants and thereby making policies
to produce the required items as per product specification enable Sainsbury to defeat rival firms
and uphold success.(Wetherly and, 2014)

CONCLUSION
Above report summarized that all the activities, divisions & functions are distinguish still
they are significantly interrelated to each other and make a substantial contribution towards the
success of the business. From the report, it has been inferred that HR function aims at
maximizing workforce competencies of all the other staff like sales, marketing and consumer
service through training & motivation. However, all the departments make contact with the
finance divisions to identify the limit of the budget for the production, selling, marketing & other
operations. Hierarchy defined the relationship among all and helps to establish good coordination
among various practices & functions.(Prajogo and, 2016) Lastly, PESTLE analysis founded that
inflation; unemployment rate, political instability, competitive forces and pressure are the threat
contributing factors that brought hurdles to the Sainsbury. In contrast, SWOT founded that
diversified portfolio, wider consumer base, excellent product-portfolio having both food & non-
food category goods are the strength whereas poor inventory & warehousing & cultural
differences are its weakness. Therefore, Sainbury can be suggested to prepare plans for the
expansion in China & other emerging countries, use of latest & advanced techniques for the
wider growth & competitive success.

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