Business Environment Report: Macro and Micro Environment Analysis

This report delves into the business environment, focusing on Sainsbury and Iceland as case studies. It explores the purpose, size, and scope of private and public sector organizations, linking organizational functions, objectives, and structure. The report examines the interconnection and differences between organizational functions. Part 2 analyzes the positive and negative impacts of the macro environment on the businesses. It also includes internal and external analyses of Sainsbury, along with PESTLE and SWOT analyses to assess the external environment. The report concludes with a reflective statement and provides a comprehensive overview of the business environment and its impact on the selected companies. The report aims to provide a detailed understanding of the factors influencing business operations and strategic decision-making within the retail sector.

BUSINESS AND
BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION..........................................................................................................................................................1
TASK 1...........................................................................................................................................................................1
Task a.) Purpose, size and scope of private and public sector organisation..............................................................1
Task b ) Link between the organisational functions, objectives and structure..........................................................1
Task c.) Interconnection between the organisational functions along with the difference.......................................3
PART 2...........................................................................................................................................................................4
P4 Positive and negative impact of macro environment...........................................................................................4
P5 Internal and external analysis of Sainsbury..........................................................................................................5
M3, M4. PESTLE and SWOT analysis.....................................................................................................................6
D2 Reflective Statement............................................................................................................................................9
CONCLUSION.............................................................................................................................................................11
REFERENCES..............................................................................................................................................................12

INTRODUCTION
Business environment is considered as important factor for all of the organisation that are
operating in a society. It consists of different internal and external factors that affects the
functioning of business. This can be either positive or negative where every company need to
study which helps in transformation of negative aspects into positive. Present report is based on
the environment of business where two different organisation are taken into consideration in
order to understand the impact of various elements on the business. The selected companies are
Sainsbury that is a public limited company while other company is Iceland Limited that is also a
retail sector which is owned by private individual (Aishah Kamarazaly, Mbachu and Phipps,
2013). These businesses are operated in UK and they also have different branches in other parts
of the nation. Apart from this, in this it has also discussed the structure of organisation of two
businesses where different activities are performed on the basis of objectives set by companies.
Further, this report also covers the micro and macro factors which have effect on the company.
Lastly, it also includes the PESTLE and SWOT analysis of organisation for getting information
regarding positive as well as negative effects on the business.
TASK 1
Task a.) Purpose, size and scope of private and public sector organisation
Covered in PPT
Task b ) Link between the organisational functions, objectives and structure
The functions of organisation can be defined as the different operations which are
occurred in the business and also considered to be important for company. All of these functions
are performed by the different department of the organisation. In this, the selected organisation
which is Sainsbury that is retail firm and public limited company. There are different types of
department where the organisational functions are performed by the stated organisation such as
human resource, IT , finance as well as marketing (Aterido, Hallward-Driemeier and Pagés,
2011). These department are performed in a coordinated manner which assists them in achieving
various goals and objectives of the business. There is a link between structure and objectives of
organisation which is described as below:
Human resource functions- This is an important department in the structure of organisation
which is human resource department which is accountable for the process of recruitment and
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selection. This department makes appropriate plans for the purpose of recruiting efficient
workforce for business and make selection which is based on the needed qualifications. The
stated business organisation has the department of HR which works on the recruitment of
employees along with the plans regarding their welfare and also arrange the activities of training
and development. Other than this functions, the department also ensures to follow all the legal
formalities and also make different provisions for providing safety to employees at workplace
along with arrangements of compensation (Becker, Kugeler and Rosemann, 2013). Further,
department of HR also create an appropriate relationship through making connections among the
employee and employers. Thus, department of HR is considered as significant part for the
organisational structure of Sainsbury.
IT functions- Through the IT department of company which make sure the proper functioning of
the business which helps in managing the activities in a systematic manner. There are various
technologies are used by IT department which records the data of various activities of the firm.
The stated firm's IT department have a software which assists them in order to manage all of the
activities of various department and also makes an combination between certain functions.
Further, the management of inventory is also done with the help of software that keeps track of
the stock along with the needed stock which are to be ordered. Apart from this, the business have
various tools and techniques which helps to manage the production of goods along with the
control on the quality. Sales through online is also managed in an appropriate manner by the IT
department in order to fulfil the needs of consumers (Boons and Lüdeke-Freund, 2013). The
relationship with the customers is also maintained by the department of IT where they maintain
the information related to consumers and utilise it in a proper manner in order to develop
relationship with them. It department also helps to make sure to keep the data secured in the
system of the organisation. Along with this, it also helpful for managing the communication
between the various department by the system of mailing. Thus, the department of IT plays a
important role at Sainsbury for the purpose of maintaining all of the activities at workplace.
Marketing functions- This is considered as main function that helps the cited business for extend
the information related to the business and their products (Bryman and Bell, 2015). With the help
of marketing, the firm make different promotional strategies and advertisement of their products
and services which helps them to provide appropriate information to the consumers. According
to the structure of organisation, there is an important role played by marketing manager with the
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help of their team members. This department is anticipated to complete certain responsibilities
that covers the study of market, promotion of products and services and formulation of strategies
of company. The marketing manager of the stated firm prepared for performing different tasks
by providing appropriate guidance along with the leadership.
Finance functions- It is another major function in organisational structure which is played by
the finance manager that is responsible for making arrangements of funds and also make the
budget for the activities of business (Cantwell, Dunning and Lundan, 2010). The stated business
has finance manager which make plans for the activities related to finance and also supervise the
various income and expenses. If there is inappropriate management of funds, the organisation
can not carry out all of the activities of the business. The plan is made by the finance manager
where he forecast all of the expenses and make appropriate planning related to finance. Other
than this, financial manager also monitor the balance sheet and financial statements of the
company for evaluating the performance of business. Thus, the department of finance plays an
important role for managing funds along with cash of business for carry out smooth functioning
of business.
Furthermore, all of these departments there are certain other department such as
production, operations along with distribution department which perform their roles in order to
fulfil the objectives of business which shows the relationship among the structure with the
objectives (Carroll and Buchholtz, 2014).
Task c.) Interconnection between the organisational functions along with the difference
There is a close link between structure of organisation and functions of business where all
of the department plays an important role in order to attain aims and objectives of business. All
of the functions which are performed by the different levels of structure based on the market and
other certain activities of business (Chesbrough, 2013). The structures which are to be followed
by the organisation as it is on the basis of various kinds such as matrix, functional and divisional.
The structure of organisation are independent where the functions which are performed by one
department will effect on the another one. Apart from this interconnection, there are certain
difference which are mentioned below:
Functional structure: In context of functional structure of company which is mainly used a
system where the firm is divided in some of the various department that are based on the
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specialisation which involves finance, human resource, information technology along with sales
and marketing. At Sainsbury, they adopted this kind of structure that is simple and delegates
appropriate roles to the employees to all of the department (Commander and Svejnar, 2011).
Divisional structure: In divisional structure, it make the division of business where the
segmentation is based on the projects. For example, at Sainsbury , here the division is according
to the different types of segments such as bakery items, meat products, etc. Thus, with the help
of divisional structure it make small divisions within company for the purpose of making
systematic work.
Matrix structure: In this structure, there is division in the role of employees in which they are
required to report according to the ascertained matrix. This system ignores the system of
hierarchy and make the workers responsible in terms of functional as well as product manager.
This type of structure is followed by less of the businesses as it is considered as one of the
complex which involves some of the drawbacks (Crane and Matten, 2016). However, there is
appropriate level of communication where the workers easily communicate their issues directly
to the employees as well as supervisors.
Thus, all of the companies make different type of divisions according to their suitability
which helps in the growth and development of the business along with this it will also
interconnected.
PART 2
P4 Positive and negative impact of macro environment
Macro factors can be termed as the factors on which there is non control of the
organisation but there are certain improvement can be made by taking corrective measures. This
factors consist of social, political, technological, economical and cultural. Sainsbury is a retail
firm which operates their business over the world (Fernando, 2011). Further, it is second largest
supermarket chain in UK. However, the stated business also trade at international level so it is
essential for them to understand the macro factors. These factors can affects the firm in positive
as well as negative manner. It will be beneficial for the business to find out the factors for the
purpose of operating activities at global level in an effective manner. Moreover, at international
level there is requirement that the firm have to concentrate on the norms and legal policies at the
time of dealing with the other economy. It will helps the business to mainly concentrate on
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various elements that helps in achieving positive results effectively. With respect of this, by
evaluating appropriate macro factors of the business so that they are able to make proper
strategies along with the plans. Thus, it will helps in achieving the goals and objectives of
organisation in an effective manner (Hill, Cronk and Wickramasekera, 2013).
In addition to this, after explaining the benefits the cited firm also faces some of the
negative impact due to the macro environmental factors. There is one of the major disadvantage
of this which is on the development of policy. If the stated firm develop their policies according
to the concerned economy so that it will have direct impact profit of the business. It will results
into that the policies which are formulated might have impact on the level of performance of the
stated business. Apart from this, changes in the needs and requirement of consumers along with
the culture also have negative impact on the organisational performance (Klapper, Lewin and
Delgado, 2011). It has been assessed that there is no control on this factors by the owner of
business. In context of this, competition is also faced by business at micro level so that which
affects the performance of business. However, it is essential for the business to identify the
positive as well as negative impact of the micro environment on the business. Thus, it will helps
the company to develop appropriate strategies and plans for remain competitive in marketplace.
P5 Internal and external analysis of Sainsbury
One of the major strength of Sainsbury is their brand name and their main focus is on to
provide quality of products. Apart from this, the cited business also make investment in the
different types of business unit. This will allow the business in order to make reduction in the
risk if there are some of the loss generated by some of the branches so that it can be remunerated
with the profitability. Further, there is strong information technology infrastructure of the stated
business. In this, the firm is able to reach an appropriate idea with the help of wide market. This
helps the organisation to make an effective communication through broad range of market
(Osterwalder and Pigneur, 2010). The stated firm also have quality of human resources within
the organisation. Firm also make investment in the activities of providing training to employees
for the purpose of enhancement in the knowledge. On the contrary of this, the stated firm is
facing some of the weaknesses such as competition and other different factors. However, the
strengths of company is interrelated with external factors of the business. For example, stated
business has already created a positive image in the UK retail sector which will be helpful for
them in order to enter the market like China. Further, it will assists the company to cover an
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appropriate market share in an effective way (Storey and Greene, 2010). Other than this, due to
the weaknesses of this business also leads to impact on the current position of the business. It has
been assessed that the company does not have an appropriate management of supply chain. This
factor can be responsible at the global level while carrying out the supply of products and
services. Due to the improper supply chain management which affects the productivity along
with the sales of the business. Along with this, there is increase in the level of competition which
is considered as one of the issue which is faced by the company. There are some of the
competitors of Sainsbury such as Asda as well as Tesco which offers an appropriate quality of
products at reasonable prices (Teece, 2010). Thus, as a result it will affect the position of the
organisation at high level.
M3, M4. PESTLE and SWOT analysis
It is essential for the business to concentrate on the external factors as the organisation
may get impacted due to this factors. Macro environment factors includes political, cultural,
economical, technological and demographical. Sainsbury is a retail firm which operated their
business around the world (Turban, Sharda and Delen, 2011). In UK, it is second largest
supermarket chain. Besides this, the company also trades at the global level so it is essential to
make sure the analysis of macro environmental factors. It will results that the business is required
to focus on the external factors for the purpose of making plans and strategies which can be
effectively developed. Therefore, the PESTLE analysis of the stated firm is carried out which is
explained below:
Political factors- In context of political factors, it can highly effect the level of performance of
the business. These are the factors which shows the interference of government in the country. It
consists of policies of tax, trade restrictions and labour law. However, the management of
organisation is required to focus on the factors for effective working of the business. It has been
analysed that the economy of UK has high level of debts which are imposed by them on the
customers. This provides result as it have impact on the attitude as well as perception of
consumers. It able to create pressurising situations for the business such as Sainsbury. But at the
same time they are able to sustain in that particular situation (Wild, Wild and Han, 2014). The
stated firm continue their position in the marketplace in an appropriate manner.
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Economical factors- This factors consist of rate of growth, interest rate along with the rate of
exchange. It is essential for the business to identify the economic factors for attaining the goals
and objectives of the business. In context of this, there are two factors such as high inflation and
economic rates which can have impact on the purchasing power of the customers. These are the
factors which are important for the profitability of the business. There is reduction in the sales of
the products of Sainsbury because of the high prices of the products and increasing the level of
unemployment in UK.
Socio-cultural factors- In context of social factors which includes the aspect of culture, growth
rate of population, age distribution along with emphasis on the safety. If there is high trend in the
social market that affects the demand of the products of company and in the manner the company
will operates. For example, the population which is ageing may express less and small
workforce. In modern era, customers prefers the place where they can get fast pace and they can
get all of the products at one place. Sainsbury provides this type of facilities as they also
introduced non-food products to the customers (Zeng, Li and Duan, 2012). Moreover, there are
certain social factors includes that there is increase in the female workforce which leads to
decrease in domestic meal making. However, due to this there is increase in the demand which
helps in the improvement of the performance of business.
Technological factors- In present scenario, the main reason behind success is due to the
adoption of some of the different new technology. Through this concept the stated business is
able to maintain their presence at international level. In addition to this, due to the fas delivery of
products by Sainsbury which leads to enhancement in the sales of the company. As per the
annual report of Sainsbury which helps in carrying out the improvement in the operations of the
business. The sales of the stated business is required to enhanced by 20% in coming years. Thus,
it shows that the business is aware about the advancement in technology.
Legal factors- In terms of legal factors, it highly affected the performance of the stated business.
It consists of various factors such as consumer law, health and safety law and discrimination law.
The cited firm is required to concentrate in this particular factors for the purpose of effective
working of the company. It has been assessed that all of the economy has varied laws as well as
policies. However, while operating at international level the stated business needs to focus on the
laws and policies. For instance, due to the law which is introduced in terms of fats policies so
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that the stated firm required to adopt it at the time of production of goods (Zikmund and et.al.,
2013). Thus, the management of company needs to adopt it for the purpose of achieving goals
and objectives in an appropriate manner.
Environmental factors – There is one of the major motive of firm is provide services to the
society. There are certain sources taken by company from nature so that it is responsibility of the
company to provide something for consideration to the environment as well as society. Further,
the company is aware about the conditions of environment where they are focusing on to reduce,
recycle and reuse the type of product. By adopting this approach the management is able to avoid
the wastage of the material. Apart from this, it is the responsibility of the business to ensure the
effective production at international level.
SWOT analysis is consider for analysing the strengths and weaknesses of the business.
Through this evaluation the firm will able to find out the different areas where they are required
to work on and improvement in the performance (Aishah Kamarazaly, Mbachu and Phipps,
2013). This analysis is described below:
Strengths- Brand name of Sainsbury's is its major strength and their main focus is on the quality
of products which they offering to the customers. This stated has an appropriate employee
strength which is over 1500000 people along with an highly experienced team of leadership.
Further, Sainsbury's have broad range of products and services that is convenient for their
customers. It also consist of excellent branding as well as advertising which helps in attracting
large number of customers. Moreover, the stated firm also have their consideration on the issues
related to environment and going green. Apart from this, the IT infrastructure is also considered
to be strong of Sainsbury.
Weaknesses- Sainsbury is one of the oldest that is facing competition from Tesco as well as
Asda. This affects the opportunities of growth of company for gaining market share. If there are
different strategies and policies are adopted by the firm it consists of long period of time. Along
with this, the stated firm also faced the issues of in terms of supply chain management (Aterido,
Hallward-Driemeier and Pagés, 2011). It has been assessed that company make changes in the
management which facing losses. Other than this, there are certain stores of the company due to
the different types of investors of the company. This type of weaknesses affects the performance
of the stated firm.
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Opportunities- There are various types of opportunities for Sainsbury in the market of China.
Further, the firm can open new stores in the different market. The economy of China is one of
the fastest growing economy in the world. Along with this, this economy has high level of
population around the world. In order to enhancement in the production of company which can
be done through the establishment of some of the new stores as well as outlets. Thus, it will
results in for appraising the share of market along with the profitability of the business (Becker,
Kugeler and Rosemann, 2013).
Threats- One of the major threat of the business is the competitors of Sainsbury along with the
increasing the globalisation which shows the challenges as well as the opportunity to the
business. Due to the other organisation which have appropriate market share so that it affects the
competitiveness of the stated firm. In context of online strategy , there are certain cyber attacks
are faced by the stated organisation. Thus , this issues affects the position of the business.
D2 Reflective Statement
It can be stated that it is important to consider micro and macro factors by the managers
which affects the environment of business either negatively or positively. This factors includes
the government, customers, employees as well as investors that have power to affect the
functioning of business. According to my opinion, it is required for firm to consider micro and
macro factors so that effective strategies can be developed. Through SWOT analysis, I have
assessed the strengths and weaknesses of the company. They are mainly focuses on the quality of
products and the firm also make different types of investment in the various activities of
business. This will help the company to make reduction in risk as if there are any losses faced by
the business (Bryman and Bell, 2015).
In terms of above, it can be evaluated by me that the business required to make
appropriate strategies as well as plans for achieving goals and objectives of the business. Further,
I analysed that the firm is directly or indirectly affected due the macro factors which have impact
on the functioning of the business. I also think that company is required to make effective survey
which helps them to came up with the strengths and weaknesses. On this contrary, there are
certain threats which are find out with the help of particular analysis. This will be helpful in
order to increase the area of understanding of both of the micro and macro-environmental
factors. I must suggest that there are some of the models along with the theories including
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PESTLE and SWOT that are efficient for the purpose of developing the research regarding the
environment which will also helps the company to take appropriate decision-making.
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