Business and Business Environment Analysis Report - University Report

This report provides a comprehensive analysis of the business environment, encompassing various organizational types such as profit, non-profit, and non-governmental organizations, along with their sizes and scopes. It delves into organizational structures like functional, divisional, and matrix structures, as well as transnational, international, and global organizations. The report further explores macro-environmental factors using PESTLE analysis, focusing on the UK retail sector and its political, economic, social, technological, legal, and environmental aspects. Additionally, it incorporates SWOT analysis and Porter's Five Forces model to evaluate the strengths, weaknesses, opportunities, and threats of a UK supermarket, specifically Tesco. The interrelation between strengths, weaknesses, and macro environmental factors is also examined, providing a holistic view of the business landscape.

Business and Business
Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
SECTION 1.....................................................................................................................................1
P1. Different types of organizations............................................................................................1
P2. Size and scope of the organisations.......................................................................................2
P3. Organizational structures and functions................................................................................4
PART 2............................................................................................................................................5
P4. PESTLE analysis and the way positive and negative impacts macro environment has upon
the UK retail sector......................................................................................................................5
P5. SWOT analysis and five forces model of a UK supermarket to identify its strengths and
weaknesses...................................................................................................................................6
P6. The way strengths and weaknesses are interrelated to macro environmental factors...........8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................1

INTRODUCTION
Business environment plays an important role for the organization in assessing that
whether it will prove to be profitable or not. The report makes comprehensive discussion
regarding various types of organizations such as profit, non for profit and non-government
organization. The report then focuses on size and scope of sole trader, partnership and large
corporation. It will help in analysing that whether it is small, medium or large corporation. In
order to concrete the knowledge base, the report will then focus upon conduction of SWOT
analysis, PESTLE analysis and Porter’s five forces model for Tesco which is a retail sector
organisation.
SECTION 1
P1. Different types of organizations
An entity is considered to be a social unit that is actually formed to manage and achieve
collected goals being framed by management of the organization. There are various roles and
responsibilities that are required to be carried out by the members belonging to that organization
in such a waythat collective goalswill be achieved. However, the main objective of each and
every organization may differ based upon the framework and type of organization it has chosen
to become. Various types of organizations are discussed as below in detail: Profit organization: Main objectiveof these types of entities is to earn adequate amount of
profitwhere all the members collectively try to achieve this common goal of maximization of
income. There are various organizations that are considered to be profit making such as
insurance companies, real estate firms, restaurants, etc. Tesco is one such company which
aims at earning maximum profits and enhance its overall market share in the economy as
well. Since their business purpose is to achieve maximum profits, it has become important
for them to delegate the duties in the same manner. Tesco tries to fulfil the requirements of
grocery and other daily essential products to customers.Current motive of e company is to
expand its branches worldwide (Adeoye and Elegunde, 2012). Not for profit organizations: These are the institutions which are not meant to earn profits
but to serve requirements of society. It does not have stakeholder, but members, whose main
aim is to serve the society rather than employing profits. They invest in the organization
without having any expectations of receiving returns. All profits that are generated by the
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organization are then reinvested back in the organization so that better resources can be made
available to the institution for fulfilment of its goals. Some of non-governmental
organizationsalso granted with tax exemptions that can contribute in tax deductible aspect of
the individuals who invest in the organization. Since, NPOs are the charitable trust,
cooperatives or other voluntary organizations, they are formed so as to serve the professional,
cultural and educational rights of the individuals. Common examples of the same is Oxfam
which is focused to alleviate global poverty Non-governmental organizations: There are other non-governmental organizations as well
which are private sector companies contributing to not for profit organizations as well and
hence, work for the welfare of society. The main goals of these types of businesses are
training, education and preserving human rights of individuals. They are commonly
accredited by UN where they are responsible for gathering funds or donations so as to serve
the requirements of distress people. Common examples of these types of NGOs areWorld
Wildlife Fund (WWF), International committee of Red Cross and Word Wide Web (W3).
The main aim of these organizations is to servethe society in a manner that it can be made a
better place to live in (Babatunde and Adebisi, 2012).
P2. Size and scope of the organisations
The size and scope of business may vary where there are various forms of it. Its sizes can
also have higher dependence on the form it belongs to. Various forms of businesses are described
as under: Sole Traders: In sole trader type of business, there is exclusively one owner who is entitled
to all types of profits and losses of the business. It is considered to be the simplest method to
start and run a business as it does not require any type of registration fees to it. However, it
becomes important for the individual to get himself / herself registered as a sole trader.It is
not important for a sole trader to disclose its financial accounts. However, maintenance of
records as per the convenience in the form of receipts and payment can help him in taking
better business decisions. The size of sole trading company is generally small due to limited
availability or resources and funds to runbusiness. The main issue linked to this aspect is
thatthe person is solely liable to cope up with all the debts alone which makes it difficult for
an individual to expand in a limited time period. It lies in small sized organization with less
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market and profitability share. Sustainability can be higher based upon the type of business
that has been started by the individual (Bah and Fang, 2015). Partnerships:These types of entities have more than two or more traders who gather to
achieve a collective goal for the business. Partnership deed is signed by the individuals so as
to have legal binding of contract stating regarding profit or loss sharing ratio, investment
aspects and covering all other aspects that play an important role in running the business. It is
important for the partners to get their operations registered as per the Partnership Act of the
country disclosing the type of business they will be running. Based on the scope of business
and its establishment, may vary. Generally, partnership businesses are medium sized to large
sized organizations. Based upon the mutual agreement of the partners,size and scope of
business can be expanded considering all the aspects of profitability and type of business
they are running. Private limited Companies: These types of businesses tend to enjoy limited liability but are
privately held by an individual or a group of people. The number of shareholders in a private
limited company are limited to 50. However, restriction is provided to publicly traded shares
as these shares are not registered with the stock exchange (Epifanova and et.al., 2015). As the
company enjoys limited liability, any type of liability or debt generated excluding the
periphery of the members are not payable by them.
Micro Small and Medium Enterprises
The size of an organization may vary from micro, small, medium or large organization
based upon the number of employees working in it and turnover earned by the organization in
one financial year. In order to qualify in the category of micro, small and medium enterprises,
the number of employees working in it must not expand from more than500. In case if number of
employees in the organization aremore than500, then it comes under the concept of large
organisation.SME structure of UK can be defined in the following format:
 Micro organization is where it has not more than 10 employees, with turnover less than £2
million.
 An organization is considered to be small when it has not more than 10 employees with
maximum turnover of£10 million.
 Medium organization is when it has not more than 250 employees with overall turnover not
exceeding from £50 million.
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 In case of large organization, the number of employees exceed from 250.Further, turnover of
the firm also inclined\from £50 million.
P3. Organizational structures and functions
Every organization is set up in different manner so as to accomplish different goals.
Appropriate structure adopted by the organization helps inensuring that whether it will be able
accomplish the goals being framed by it or not. hence, the organizational structure can b in the
following classification:
 Functional structure: Each part of organization is groupas per the requirements and
functions. For instance, the organization can have marketing department, sales department or
production department. This type of structure generally relies on the overall knowledge and
talent of its workers.
 Divisional structure: This type of structure is generally adopted by the large corporations
where; the entity generally operates in a wide area. It can also be used to separate small
organizations from the large umbrella of various organizations. The main benefit attached to
divisional structure aspect of the business is that, it is able to fulfil the requirements of the
business in the most effective manner as each division have right to take their own decisions
and work independently (Hamilton and Webster, 2015).
 Matrix structure:It is the third type of organizational structure which is considered to be a
hybrid of both divisional and organizational structure. It is generally used by large
multinational organizations that allows to get benefit of both type of business structures.
Apart from specific organizational structure, there are various types of organizations as
well. These are:
 Transnational Organization: This is much more complex form of organization which
includes the organization that have opted for investment in foreign operations and have some
central corporate facilities existing in it as well. However, all the decision-making aspect,
research and development and other marketing powers lies in the hands of individual foreign
market only.
 International Organization: These are basically the importers and exporters which do not
have any type of investments in the companies in foreign countries.
 Global Organization: These organizations must have invested in foreign companies and are
present in various countries as well. Although, they use their same coordinated brand for its
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all markets. There is only one corporate office that is responsible for its global strategy.
Hence, these types of organizations have strong emphasis on cost management, volume and
efficiency of the business.
It is important that the organizational structure and type of organization is based on its
functions so that better strategies can ultimately be formed so as to accomplish the goals.
PART 2
P4. PESTLE analysis and the way positive and negative impacts macro environment has upon
theUK retail sector
PESTLE Analysis is a macro environment factor that helps in analysing that whether the
organization will be able survive in the current macro-economic conditions of the market or not.
In this scenario, it is important to analyse all the factors incorporated in it. These are, political.,
economic, social, technological, legal and environmental. PESTLE analysis for retail sector UK
has been described as under: Political: There are various political factors based on which it can be ascertained that
whether it is in favour of the organization or not. Since, government is responsible for
changing the policies and procedures with respect to entry and exit; it becomes important to
ascertain that whether it is suitable for retail sector or not (Harrison, 2013). Further, the
current political condition of UK is favourable enough that it promotes the organization that
are perfectly competitive in nature. hence, retail sector, due to its belongingness to this
market enjoys favourable condition from the side of government regarding its investment
purposes. Economic: It is another important aspect that is required to be considered by companies
belonging to retail sector. Since, retail is a perfectly competitive market which does not have
any type of restrictions on entry and exit. However, the organizations must be aware of the
changing policies that can help in ensuring that these changes are brought in overall policies
of the organization as well. However, the threat to the organization can be in the form of
Brexit which is attracting constant changes in policies and procedures of the organization. In
this scenario, retail sector of UK market may turn around due to constant changes in prices
and demand aspect of the organizations. An impact on overall profitability of the
organization can also be assessed (Granger and Schroeder, 2013).
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 Social: Due to constant changes in the taste and preferences of the customers, indication of
trend and having adequate knowledge regarding the same is quite important. UK have now
moved towards bulk shopping in comparison to one stop shopping. It became important for
the organizations to adopt the changes in a manner that maximum benefit out of it can be
accumulated by the organizations (Pestle analysis of Tesco, 2018). Further, customers have
become quite aware regarding various health issues, due to their constant changes in their
approaches to food. In this condition, it becomes important for the organization to adapt these
changes in a well defined manner so as to initiate maximum amount of profitability. Technological: Constant advancement in the technology have been able to bring new
opportunities to the organization of retail sector. One important aspect related to it is
introduction of online shopping facilities and service of home delivery made available to the
consumers which has become quite important for the organization to adopt the same for each
and every retail sector organization for their survival (Kubasek, Brennan and Browne, 2016). Legal: Government tend to opt for changing its policies and procedure in such a manner that
the performance of the organizations belonging to retail sector can be improved to the
maximum possible extent. Changes in the floor and ceiling prices, changing demand of the
customers, increase or decrease in the prices of fuel can act as a barrier which can have
greater impact on overall cost and profitability aspect of the organization. Environmental: It is another important aspect that is required to be considered by companies
belonging to retail sector. Hence, it becomes important for the companies to opt for the
methods and operations ultimately benefitting the society. One of the important aspect that is
considered by the organizations these days are, carbon footprints and also increasing the
overall social conscience of customers.
P5. SWOT analysis and five forces model of a UK supermarket to identify its strengths and
weaknesses
SWOT Analysis of Tesco
SWOT analysis help in understanding the internal and external strengths, weakness,
opportunities and threats of the organization. SWOT analysis for Tesco can be conducted in the
following manner:
Strengths:
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 Tesco have been able to create a brand value in the minds of customers which helps in
attracting maximum of them towards it.
 It has been able to gain global recognition through its stores being functional in various parts
of the world.
 It tends to opt for various types of appeals and cultural format so as to attract maximum
number of customers towards it belonging to each culture (Solomon, 2014).
 It uses improved technology through out its operations that helps in enhancing the overall
service experience of individual.
Weaknesses:
 There are certain subsidiaries of Tesco which are not able to perform well due to vulnerable
external conditions.
 Pressure of competition is quite high due to its belongingness to perfect competition market.
 Consumers who have less personal disposable income may not be able to purchase much
from the organization which affect the organization’s inventory level and revenue aspect.
Opportunities:
 Tesco can choose to have strategic alliances with other brands so as to promote its overall
business functions so as to target maximum number of customers towards it.
 It has adequate amount of opportunity in growing its online business so as to initiate
maximum profitability towards it.
 Tesco has the opportunity in private label market as well.
Threats:
 Economic recessions in the country sand cash and credit crunch can have severe impact on
profitability aspect of the market.
 Existence of competitive pricing in the global retail sector which forces Tesco as well to cut
short its prices, reducing total number of purchases made by it (Welford, 2013).
Porter’s Five forces model Bargaining power of suppliers: The bargaining power of supplier in case retail sector is
quite less due to major availability of suppliers in the market. Bargaining power of customers: Due availability of high amount of competition in the
market, the bargaining power of customers is quite high.
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 Availability of substitutes: There are various substitution companies available in the market
which can be preferred by the customers if he / she does not like the stuff or requirements of
Tesco being presented to them. Threat of new entrants: Since, retail sector belongs to a perfect competition market, there
are higher chances of new firms to enter into the market. However, Tesco have been able to
make its own brand value, its this situation, the threat is less. Industry rivalry: The industry rivalry is quite high due availability of various organizations
in the market who offer similar kind of variants to its customers.
P6. The way strengths and weaknessesare interrelated to macro environmental factors
The macro environment of UK keeps on changing and hence, can have both positive and
negative impact on overall functioning of organization. In this scenario, it becomes important for
the company to ensure that it is aware of all that can ultimately help in maximizingthe overall
profits of the organization. A constant change in the market also helps in bringingpositive change
where retail sector is allowed to grow in the maximum possible extent. In this scenario, the laws
and lenient with strong emphasis on pricing policy of the market as well (Wild, Wild and Han,
2014).
However, negative image in the market can also affect the functioning where wrong
strategic decisions from the side of management can affect the overall profitability in the market.
Constant changes in the minds of customersas well astastes and preferences also affect the
overallprofitability aspect of the organization is a negative manner. Hence, it can be stated that
while preparing strategies for the organization, these strengthsand weaknesses must be
appropriately considered by the management (Yu and Ramanathan, 2012).
CONCLUSION
It can be concluded from the above report that an entity is considered to be social unit
that is actually formed to manage and achieve collected goals being framed by the management
of organization. The size and scope of the business may vary wherethere are various forms of it,
its size can also have higher dependence on the form it belongs to.The size of an organization
may vary from micro, small, medium or large based upon the number of employees working in it
and turnover earned in a financial year.Also, it has been assessed that every organization is set up
in different manner so as to accomplish different goals.
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REFERENCES
Books and Journals
Adeoye, A. O. and Elegunde, A. F., 2012. Impacts of external business environment on
organisational performance in the food and beverage industry in Nigeria. British Journal
of Arts and Social Sciences. 6(2). pp.56-65.
Babatunde, B. O. and Adebisi, A. O., 2012. Strategic Environmental Scanning and Organization
Performance in a Competitive Business Environment.Economic Insights-Trends &
Challenges. 64(1).
Bah, E. H. and Fang, L., 2015. Impact of the business environment on output and productivity in
Africa. Journal of Development Economics. 114. pp.159-171.
Epifanova, T. and et.al., 2015. Modernization of institutional environment of entrepreneurship in
Russia for development of innovation initiative in small business structures. European
Research Studies. 18(3). p.137.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Harrison, A., 2013. Business environment in a global context. Oxford University Press.
Granger, M. J. and Schroeder, D. L., 2013. Integrating the Internet into the business
environment. Internet Research.
Kubasek, N. K., Brennan, B. A. and Browne, M. N., 2016. The legal environment of business: A
critical thinking approach. Pearson.
Solomon, M. R., 2014. Consumer behavior: Buying, having, and being (Vol. 10). Engelwood
Cliffs, NJ: Prentice Hall.
Welford, R., 2013. Hijacking environmentalism: Corporate responses to sustainable
development. Routledge.
Wild, J., Wild, K. L. and Han, J. C., 2014. International business. Pearson Education Limited.
Yu, W. and Ramanathan, R., 2012. Effects of business environment on international retail
operations: case study evidence from China. International Journal of Retail &
Distribution.
Online
Pestle analysis of Tesco. 2018. [Online]. Available through: <
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