Business and Business Environment: Sainsbury's Report Analysis

This report examines the business and business environment, focusing on Sainsbury's. It begins with an introduction to business operations within open systems and differentiates between internal and external factors. Task 1 explores public versus private organizations, followed by a short essay on organizational functions and their link to objectives and structure, using Walmart as a case study. Task 2 delves into internal and external analysis, with a PESTLE analysis of Walmart's macro environment. It identifies the positive and negative impacts of political, economic, socio-cultural, technological, environmental, and legal factors. The report then analyzes Walmart's strengths and weaknesses and links them to external macro factors, culminating in a reflective statement on how these factors influence business decisions.

BUSINESS AND BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION......................................................................................................................1
TASK 1......................................................................................................................................2
A.............................................................................................................................................2
B. Short Essay........................................................................................................................5
1.3 The relationship between different organisational functions and how they link to
organisational objectives and structure..............................................................................5
TASK 2......................................................................................................................................7
A. Internal and external analysis............................................................................................7
2.1 Positive and negative impacts of the macro environment on the business operations.7
2.2 Internal and external analysis to identify strengths and weakness...............................9
B. Reflective statement........................................................................................................11
2.3 How these strengths and weaknesses are linked to the external macro factors.........11
2.4 Impact of micro and macro factors on how decisions are being made so that business
objectives are ultimately met...........................................................................................12
CONCLUSION........................................................................................................................13
REFERENCES.........................................................................................................................15

INTRODUCTION
A business performs in an open system that gets all needed resources from the
environment and offers its services and goods to the environment. There are distinct forces of
the environment, some are internal and close to the business, while others are external
factors. These external factors may be in relation to regional, national or global level. They
provide threats or opportunities to the business world. Every businesses tries to grasp the
current opportunities and put necessary attempts to combat threats that arise from the
business environment. Here, the report is briefing about internal and external factors affecting
the business operations of Sainsbury. The reader will also able to comprehend how the
internal strengths and weaknesses of the company links to the external factors. At last, the
reflective statement is elaborating the way in which business decisions are influenced by the
internal and external forces.
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TASK 1
A.
Slide 1
Slide 2
Slide 3
2

Slide 4 Public organisations are owned and
operated by the government
including federal, provincial, state,
or municipal governments. These
organisations have the purpose of
serving the citizens and society’s
welfare. The capital is funded from
public revenue sources like tax,
duty, penalty etc. These
organisations generally operate in
Police, military, health, education,
electricity, banking and insurance
sectors.
On the other hand private
organisations are privately owned
by individuals or companies. They
have the purpose of earning profits
or maximising shareholder’s return
on investments. The funding is done
by the capital provided by owners
and partners or from loans, issuing
shares and debentures. Generally
operates in sectors like Information
Technology, Finance, Construction,
Pharmaceutical, Retail etc.
Slide 5
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Slide 6
Slide 7
Slide 8
4

Slide 9
Slide 10
B. Short Essay
1.3 The relationship between different organisational functions and how they link to
organisational objectives and structure
An organisation is a social entity that has a collective goal and is linked to an external
environment. The role of retailers like Walmart is to respond dynamic change related to its
stakeholders for example, varying customers’ expectations and the demands from the
suppliers and local communities. To meet the challenges and fulfil the expectations from
different groups of stakeholders, Walmart commits to be helpful in meeting the
responsibilities of the organisation and core values. Moreover, skilled Human Resources is
needed to fulfil these commitments of the company. It also has responsibility toward the
environment, which is maintained through the lower emission of carbon along with offering
the quality foods and grocery items toward the society (Robbins, 1990).
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Therefore, the structure of an organizational consists of activities such as allocation of
tasks, coordination and supervision of human resources and various activities, which are
directed towards the achievement of organizational objectives. Organizational structure
allows the expressed allocation of responsibilities for different functions and processes to
different entities such as the branch, department, workgroup and individual. An organization
can be structured in many different ways, according to its objectives. The structure of an
organization determines the mode of operation (Bedeian and Zammuto, 1991). The structure
defines the assignment of the roles, power and responsibilities, its control and coordination
and the flow of information flows between the different levels of management. A structure
depends on the organization's objectives and strategy. In a centralized structure, the top layer
of management has most of the decision making power and has
tight control over departments and divisions. In a decentralized structure, the decision making
power is distributed and the departments and divisions may have different degrees of
independence (Gerloff, 1985).
Walmart adopts a functional organizational structure where different functions go into
separate departments that report to departmental heads. These managers report to higher level
of management hierarchy. The adoption of functional structure provides several advantage to
the Walmart such as having clear lines of authority, and allows each employee to concentrate
on a particular task. However, there are certain drawbacks such as it may happen that
departments fail to talk routinely to each other or at cooperate well. A customer may get
bounced from department to department if his problem doesn't relate to one particular
function. The grouping of various departments is done on the basis of functions such as
production, finance, marketing, sales, purchase and human resource. These various
departments or functions can be further sub-divided for example, marketing function of
Walmart can be divided in to advertisement, sales and after sales service functional
departments (Robbins and Coulter, 2002). So the functions can be classified into two parts:
 Basic functions such as Production, Marketing, Finance and Personnel.
 Secondary Functions as further sub-parts of basic functions according to the
organizational requirement for example the Production function may have sub-
departments such as Product planning, R&D, Quality control and material handling
(Khandwalla, 1973).
The interrelationship between these functions is an important aspect as it helps to
provide advantage of integrating the specialization of individual functions for the overall
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achievement of the organisational aims and objectives. Also, easy control over functions and
pinpointing training needs of manager can be ascertained. The lack of interrelationship
between these functions may lead to increase conflicts and coordination problems among
departments (Mullins, 2007).
The most important feature of functional organization is that the entire organizational
activities are divided into specific functions such as operations, finance, marketing and
personal relations in such a way that identical functions of various departments in the
organization are performed by specialists. Each functional area is put under the charge of
functional specialists and he has got the authority to give all decisions regarding the function
whenever the function is performed throughout the enterprise. Moreover, specialists often
operate with considerable independence which increases the efficiency of employees.
Specialisation also helps to better divide the labour according to the related function (Zeki,
et.al., 1981). Management control is simplified as the mental functions are separated from
manual functions. Checks and balances keep the authority within certain limits. Specialists
may be asked to judge the performance of various sections. In this way, greater efficiency is
achieved because of every function performing a limited number of functions. Specialization
compiled with standardization facilitates maximum production and economical costs. Expert
knowledge of functional manager facilitates better control and supervision (Jones, 2010).
However, the lack of interrelationship is disadvantageous for the organisation like
Walmart. Although, the functional system is enough complicated to be carried out at low
levels. Lack of co-ordination weakens the disciplinary control as worker is not commanded
by one person so there will be no unity of command which creates confusions. Multiple
authority also pose difficulties in fixing responsibility. Because, there may be increasing
conflicts among the supervisory staff of equal ranks (Galbraith, 2008).
TASK 2
A. Internal and external analysis
2.1 Positive and negative impacts of the macro environment on the business operations
By using the following PESTLE analysis, the managers and leaders at Walmart can
identify negative and positive impacts of the business environment and factors that needed to
be prioritised in developing the business strategies (Gillespie, 2007):
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Political factors – Walmart takes into consideration the retail market political aspects,
generally related to government policies. The below are potential impact of political
environment on the Walmart:
 Politics high stability (Opportunity)
 Politics support to global activities (Opportunity)
 Pressure for hike in wages (threat)
The macro environmental aspects show that the company should adequately address the
high wages threat. The particular factor is a threat, as it goes in against of cost minimisation
concept of the company (Frank, 2006).
Economic factors – The organisation is under important pressure of changes in the economy.
The economic changes directly results in the business revenue fluctuations. The following are
some economic factors impact on the Walmart:
 Major economies stability (opportunity)
 Developing nations regular growth (opportunity)
 Decreasing level of unemployment at the global level (opportunity)
All the above factors reflect that the Walmart should exploit the economic opportunities
around the globe. The emphasis must be given on the emerging nations that have increased
level of demand for the retail products and services (Chang, 2005).
Socio/cultural factors – These factors mainly affect the preferences and perception of the
company’s potential customers. It includes the following:
 Trend of healthy lifestyle (opportunity)
 Urban migration (opportunity)
 Cultural diversity trend (opportunity)
Hence, it can be said that the socio/cultural factors present several opportunities for the
company. Walmart can enhance its portfolio in more healthy and nutritional products. Also,
the organisation can improve its products range to satisfy the several cultural preferences.
Furthermore, the firm can adjust its tactics to exploit the rising demands of customers around
the globe (Clayton, and Hilz, 2015).
Technological factors – The new trends of technology should be adequately considered by
the Walmart. The company’s competitive landscape is affected by the technology. The
following are technical factors potential impact on the business:
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 Increasing automation of business (opportunity)
 Available of wide information and business analytics (opportunity)
 Increasing use of mobile device among the customers (opportunity)
The organisation can raise its overall investment in all above factors. Moreover, the
Walmart can grasp the opportunity of offering online services by developing mobile apps.
The online selling and marketing activities will definitely enhance the revenue of business
(Yao, 2005).
Environmental/ecological factors – These factors are important to be considered by the
Walmart and includes the following:
 Trend of business sustainability (opportunity)
 Environmentally friendly development of product (opportunity)
In order to achieve the sustainability of business, Walmart should enhance the
operational effectiveness. The technological innovation will support in increasing business
efficiency. The improved standards and policies on products offered at the stores can also
strengthen the organisation capacities in addressed the ecological factors (Min and Galle,
2001).
Legal factors – These are in relation to the requirements of regulations and laws. The
following legal aspects creates threat and opportunity for the business:
 Employment regulations (opportunity)
 Food safety regulations (opportunity)
 Reform of tax law (threat)
The tax reforms are the possible threat that results in high rates of tax. Walmart should
focus food safety regulations and other policies of government in relation to food supply,
with an aim to maintain its quality standards. The organisation can also exploit the
opportunity of effective human resource management practices to comply with employment
legislations and gain better image in the market (Larkins, 2015).
2.2 Internal and external analysis to identify strengths and weakness
Strengths - Walmart is one of the leading retailers with more than 10,000 stores generating
$400 billion revenues. The company is able to exercise the power of its customers on the
suppliers to lessen the prices. The retailer has value for the convenience, money and wide
products range all in one outlet. The organisation has grown sustainability in past some years
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as well as has experienced the internal expansion. It also has key competency in using
information technology that perfectly supports its global logistic system. For instance, it can
analyse how the particular product is performing store-by-store and country-wide. It support
in the effective procurement for the company (Mata, Fuerst and Barney, 1995).
Walmart has also put a focused strategy for the adequate management and development
of human resource. People are main player in the operational and business success of the
organisation and it invests money and time in training and retaining competent staffs. Being
the largest retailer in the world, the company has major advantage of economies of scale as it
can share the fixed costs over several locations and many product lines so that it becomes the
cheapest destination to shop. Moreover, due to its size, Wal-Mart can exercise the negotiation
power over suppliers by asking for lower prices from them. The company can also affect the
competition by selling some of the selected items at no-profit, thus driving competitors out of
the market (Davies and Ormosi, 2013).
Weaknesses – The organisation in its intentions of saving costs has been disrespectful with
staff members and thus, involved the labour related cases or lawsuits. The firm is also
criticised for its unpaid overtime work, poor conditions, female discrimination and low
wages. Walmart does not adopt the differentiation strategy, which is followed by its rivals,
due to which it loose the potential customers. Moreover, the employee’s high turnover is one
more weak point in the retail sector (Rosen, 2005). The organisation loses quality staffs, as
they find better labour conditions and high skilled jobs at rivalries. Also, the negative
publicity tarnishes the organisation reputation of Walmart that is criticised for the poor
working conditions and the practice of bribery (Ravi, 2015). Since, Walmart sell products
across several industries like clothing, food, home furnishing etc. it may not be having the
flexibility and specialisation as some of the more focused competitors.
Opportunities – The Company can merge with, takeover and develop strategic alliances with
other international retailers concentrating on particular markets, like the Greater China
Region and Europe. Currently, the outlets only perform its business in a relatively in few
nations. Thus, there are many further business opportunities in the consumer markets of India
and China. New store and locations offer the company an opportunity to exploit market
development. The retailer has an opportunity to expand its line of products. It is because there
is a rising awareness among people related to health issues. The customers are also willing to
buy healthy food in outlets, so that the company can enhance the range of health and
nutritional grocery, in order to earn more (Rajput, Kesharwani and Khanna, 2012).
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