Analyzing Business Environment: Sectors, Functions, and PESTLE Impact

This report provides a comprehensive analysis of the business environment, focusing on the public, private, and voluntary sectors, their purposes, and legal structures. It examines the size and scope of different organizations and links their objectives, products, and services. The report also explores t...Read More

Business and Business
Environment

Table of Contents
INTRODUCTION.....................................................................................................................................3
MAIN BODY............................................................................................................................................3
TASK 1....................................................................................................................................................3
P1. Public private and voluntary sectors and its purpose and legal structure...................................3
P2. Size and scope of a range of different types of organizations......................................................4
M1. Size, structure and scope of different organisations link with the objectives, product and
services which is offered by organisation..........................................................................................5
TASK 2....................................................................................................................................................5
P3. Interrelationship between organizational functions and its objective and structure..................5
M2. Advantages and disadvantages interrelationship between organizational functions.................6
TASK 3....................................................................................................................................................6
P4. Macro environment and its positive and negative impacts on business operations....................6
M3. PESTLE Analysis...........................................................................................................................6
TASK 4....................................................................................................................................................7
P5. Internal and external analysis of specific organisation................................................................7
P6. Interrelationship of strengths and weaknesses with micro factors.............................................8
M4. SWOT analysis influence decision making..................................................................................9
CONCLUSION.......................................................................................................................................10
REFERENCES.........................................................................................................................................11
Books and Journals: ........................................................................................................................11

INTRODUCTION
There are various functions included in the business which has lots of benefits and get
by an individual. Business activities can be understood with those operations or activities
which are done by an individual in order to get a source of income in the business (Aka-
Wolugbom, A.). Business has different types, structure and forms. Business environment
have internal and external factors, which highly affects business functions and its profits. It
embraces with customers which may be a person or a group, legal legislations, competitions,
management, media and so on which are working in external world. It influences the decision
of organisation whether it is directly or indirectly it influence the business. The report is
based on Sainsbury's which is a London's second largest supermarket chain. The company
founded by John James Sainsbury in 1869. It has three divisions Sainsbury's bank,
Sainsbury's supermarket Ltd. as well as Argo.
MAIN BODY
TASK 1
P1. Public private and voluntary sectors and its purpose and legal structure.
Private sectors: Private sector organisations are those organizations which are owned
by persons, shareholders as well as investors whose main objective is to earn profits from the
business. When a private sector organisation grows and develops, it shows that are earning
huge profits and give tough competition to the rivalries. They make their contribution in the
GDP of a nation (A.Akhmedov, F. V., 2018). Sainsbury’s is one of the best example to
identify private sector organisation which run their business to earn huge amount of profits.
The main objective of private sector organisations is to create an enhanced profit in order to
grow and develop their business day by day.
Legal structure of private organisation:-
 Partnership: It is a legal agreement between two or more persons in order to share
equal or predetermined profit and losses.
 Sole proprietorship: A business which is owned by single owner and have unlimited
liabilities.
 Company: In the companies act, the companies can be understood as a separate legal
entity which may be private limited company or public limited company.
Public sectors: Public sector organisations work under the government. These
organisations are work for the citizens and community while providing enhanced services and
with no major intention to get profit. The main purpose of public sector organisation is to
provide essential services to the local public or citizens. They are worked with the support of
taxes which is deal in serious services such as education, health, housing, social work and
which is paid by the local citizens of a nation (Diamond, M. and Mattia, A., 2017). Virgin
money is one of the public sector organisation whose main intention is to offer significance
worth by delivering a positive contribution to show concern about the society.
Legal structure of this type of organisation is to work competently and to earn huge
amount of revenue in order to serve to society:-

 Central government: Organisations such as environmental agency or department of
international development which mainly organized and controlled by the central
government.
 State government: When the business is operated at a state level then state
government is determined its legal structure.
 Local government: This involves municipal corporations and local government.
Voluntary sectors: Voluntary sectors comes are those organisations which are working by
choice or with an intention not to earn profit but to serve societies. The main focus of these
type of organisation is to perform social activities and which is not ruled by government,
mainly concentrated on welfare of the society (Elias, R. and Mwakujonga, J., 2019). Cancer
research in UK is one of the best example of voluntary organisation. The main objective is to
serve different types of welfares to the society without earning any type of profit. Cancer
research offers their services by conducting different types of research and campaigns are
organized to aware about cancer in the society. This type of organisations can be referred as
third sector organisation, non-profit organisation, civil society organizations or NGO which
are owned by those individuals who are not salaried for their contribution.
Legal Structure:-
 Unincorporated associations: These are the type of voluntary sectors in which two
or more persons are involved with a same intention.
 Trust: It is a non-profit company which is outlined by trustees on behalf of their
members in which responsibility are assumed.
P2. Size and scope of a range of different types of organizations.
Sole proprietorship: A business which is run by an individual person or have a single
which have not any separate legal entity can be termed as sole proprietorship. It is described
as a business where a single owner enjoys all amount of profits as well as bear losses all
alone. Employees can be hired if necessary for the growth and development of their business.
The scope is limited for the sole proprietorship and there is no need to get higher investment
for the business.
Partnership: When two or more individuals are come together mutually with a
certain terms and conditions as well as to share predetermined profit and loss can be termed
as partnership. In comparision with sole proprietorship, the partnership business includes
shared profits and losses by partners, where liabilties are also distributed among the partners.
Partners have limited liabilities and this type of business are managed by partners where they
understand that they are responsible for debts and obligations.
Joint Stock Company: Joint stock company is a business in which shares are
purchased and sold by the shareholders, where they are free to transfer the shares to the other
indivduals. It has separate legal entity from their owners. The owners are liable up to face
value of their shares (Fonseca Braga, M., 2017). The company has wider scope while having
large size in the market. In the past years, when these are not incorporated, the liablites are
unlimited for debts. It has higher amount of investment pf capital in which shares are alloted
to public.

M1. Size, structure and scope of different organisations link with the objectives, product and
services which is offered by organisation.
It has been analyzed that Sainsbury’s is a private limited company which was
established in UK. It is the second largest supermarket chain in the UK which is employed
with 1,11,900 according to the record of 2020. It owns Sainsbury’s bank, Sainsbury’s
supermarket, as well as Sainsbury’s local. The company has its own convenient shop,
supermarket, forcourt shop, and hypermarket. In public sector organisation, the virgin
company is discussed in which their size has significantly improved and in 2012 customer
base with the purchase portion of ‘good bank’. It has a broader scope and their business
operations significantly rises across the globe (Hahm, S.W., 2018). In voluntary sector, the
Cancer research organisation is discussed where they make their investment as $500 million
per year. They are enjoying their freedom as they are not dependent on any other organisation
and it use their resources for Cancer research. The scope of company is also broader which
publishes original opinions, studies and reviews by current broad and the vital impact to
varied addressees.
TASK 2
P3. Interrelationship between organizational functions and its objective and structure.
A business owner has to manage several functions and operations in the organisations.
There are different functions and activities in an organisation which needs to be operate with
a coordination. All such functions are interrelated and support each other to produce a proper
internal structure. In context Sainsbury’s, the management authority are required to overlook
and highly focus on the cooperation and coordination among those functions so that they can
result in a productive way.
 Human Resource and Marketing: Human resource is significant to any organisation
or it can be considered as the backbone of an organization in order to manage
resources in the most productive way. Human resource management is associated
with employees or workers of the organisation. Sainsbury’s have skilled and talented
employees for their business operations and activties which are needed for the defintie
purpose, goal and objecties. Marketing helps an organisation in order to provide
information about products and services which are launched by the organisation in
order to increase the production and sales (Harris, E. D., 2020). As marketing is a
functional department, it needs to be operated by a safe hand. HR and marketing
have to be work with coordination to find out the right candidate to manage their
activities. Marketing supports HR to provide the required information to the market
such as advetisment of job vacancies and many more.
 Finance department and IT department: It is very important to identify that IT
department plays a significant role in order to meet the success and objectives of
organisations. This department makes a business to use latest technologies. Finance
department in the organisations helps to take decisions regarding budget. In addition
to Sainsbury’s, finance department make a significant role as they are granting fund
for everything and keep record a lot of work. Finance department and IT department
in the organisation are interrelated with each other as a company uses latest
technologies and to purchase those technologies a budget has to be maintained by
finance department in the best possible way.

M2. Advantages and disadvantages of interrelationship between organizational functions.
Advantages Disadvantages
 As employees and organisational
functions are interrelated, in context
Sainsbury’s it supports the
organisation in order to bring
coordination and cooperation
(Haynes, L. D., 2018).
 It is also supportive in order to rise
profits for the organisation as every
employee of different functional
units shares their information.
 It also upsurges the organization and
employees and increases effectivity
in the business.
 It increases competition among
different functional branches.
 As every employee have interaction
with eachother, there is chance to
leak informaction which has to
confidential and can be misued for
any purpose.
TASK 3
P4. Macro environment and its positive and negative impacts on business operations.
Micro environment factors are those factors which are not in control and also
influences the organization’s decisions, strategies and performance. While macro
envioronment consists with those external factors may include legal, economic, social,
cultural, natural forces or technological changes. This can be understood with some examples
such as changes in taste and preferences of customers, change in interest rate or change in
government policies and so on. In context to Sainsbury’s, the business influenced by these
external forces of environment (Leszczewska, K., 2017). It is consist with new risk factors
which might be not easy to identify.
Social factors influences with market trend which can change anytime such as
eradication system in the UK which has positive impacts on the customer segmentation. It
influences a great number of customers to the brand which also helps to create growth
opportunties and make business effective. Economic factor creates positive impact on the
organisation where it helps to create job opportunities for growth and development. It makes
business to use advanced technologies such as online mode of payment which has been
incredibly accepted by customers in UK. In context to Sainsbury’s, it helps them to shop
without any trouble and they don’t have to wait in queue for their chance are some of the
positive impacts that influences the business operations.
Macro environmental factors has negative impacts which is considered with political
and legal factors which influences the business operations of Sainsbury’s. When the business
wants to launch its new branch in any other new location, they may face obstacles from legal
and political factors such as political boundation of particular country. Furthermore, itthe
food laws with fat-free food usage or minimum calories are also used as boundaries that
might makes an obstacle for the business effective growth.
M3. PESTLE Analysis
The following is the Pestle analysis of the Sainsbury’s which are mentioned underneath:-

 Political and legal factors: Political and legal factors are considered with changes in
government policies and regulations. Political and legal factors impact the marketing
decisions of the company (Letonja, M., Duh, M. and Ženko, Z., 2021). Government
offers subsidy or low rate of taxation of retailer business it impacts positively on the
marketing decisions of the Sainsbury’s. Political factors includes with effects of
election and dedicate with the possible outcomes such as whether the environment
will be peaceful or there will be chance of political transition.
 Economic factors: Economic factors are broad in range. It is a combination of
national and international environment. The business environment of Sainsbury’s
organisation is highly complex which impacts the decisions related with production as
well as consumer decision making process.
 Social and cultural forces: Social factors and cultural factors outlines the customers
of any organisation which includes wealth, taste and preferences, education, family
size or structure and so on which impacts the demand and supply of organisation. In
context to Sainsbury’s, the business produces their products and services as per the
taste and preferences in order to create positive impact to the organisation.
 Technological factors: These factors include advanced technologies, IT knowledge
and skills which is required for production of any organisation. In addition to
Sainsbury’s, the technologies, materials, logistics or resources are vital in the
production process in the organisation which influence profits of company.
 Environmental factors: Every company use some of the natural resources in their
production process such as forest, sea products, agricultural products and many more
which influenced with climate, geaographic location, global chnages and so on. In
addition respectiv firm, the decisions regarding production can be taken with the
availability of these resources.
It is analyzed that macro environmental factors impact the business in an positive and
negative manner. It is very necessary that management authority of company should analyze
these factors in order to make a fruitful decision (Lucaci, A. and Nastase, C., 2020). It also
helps to make an effective business plan for the Sainsbury’s.
TASK 4
P5. Internal and external analysis of Sainsbury's organisation.
SWOT analysis can be taken as a proven management framework that allows an
organization to benchmark the performance with its competitors and industries. The SWOT
analysis of the Sainsbury's helps to identify its strengths and weaknesses which are internal
factors of brand and opportunities and threats are consider as external factors of brand.
Strengths of Sainsbury's:-
 Right expansion moves: Initially from the small grocery stores to the convenience
stores, from products with limited range to the supermarket which is dealt with
countless number of merchandise that purepose is to serve the customer as well as to
fulful the requirements of customers (Mayer, C., 2018). It is one the most well known
supermarket in the UK.

 Wholesale and retail banking: As it is retail service provider it has financal divisons
which which includes number of retail banking services and wholesale banking
services. As it is not common in the market and among the competitors, it supports
them to diversify the risks.
 Opportunities to provide all the customers: The company includes all types of
services to all types of customers that is from high end customers to the common
customers while including products with their speciality.
 Innovation and promotional strategies: The company has lots of strategies to
promote their products as well as create lots of innovative product to catch customer's
attention (Middleton, A. and Et.al., 2020). This helps them to improve their sales. The
company has adopted one the strategies where they like to compare their products
with brands in order to specifies their qualities and distinct charateristics.
Weaknesses of Sainsbury's:-
 Increasing Costs: In reference to procurement costs, the brand have to increase costs
in their shopping experience of customers which is consider as key differentiator
specifically for high end segments (Scholz, T. M., 2019). There are various expenses
in order to use advanced technologies that supports self service also.
 Low margins: Many brands reduce costs to attract their customers in order to make
them purchase but this will result in low profits for the company. In context to
Sainsbury's, they cut their costs as well as keep prices at very affordable range so that
customers can move to their brand instead of their rivaliries like Tesco or any other
brand.
 Brand Switching: The brand still focusing on to retain customers towards their
brand. There is risk of switching the brand to other by the customers.
Opportunities of Sainsbury's:-
 Growth in small towns or villages: In ancient times only people from urban areas
use branded product and know their worth (Mironko, A., 2021). But now everyone
from urban to rural like to know the brand and use branded products in order to show
their personality. So there is a great scope for the respective brand to create branches
fro their supermarket in those areas in order to create more customer base.
 Global market: There are opportunities for the brand to expand and grow their
business in other countries such as Asia, Africa and so on. In order to explore the new
markets, the company can grow with partnerships, franchise or joint venture.
Threats of Sainsbury's:-
 Competions: Industry is full of competitors that has lots of innovative strategies in
order to grow and develop with their brand. In addition to Sainsbury's, there are lots
of tough competition in the industry who run their business with same enthusiasm
such as ASDA, Tesco and many more.
 Threats of losing customers: There are lots of customer who still remain loyal or
addicted to the brand but there are customers who can switch easily to any other
brand. It is very vital to understand that the customer is stick towards the brand when

they company produces quality products which benefits the customers or fulfil their
demand (Muneeza, A., 2019). So sometimes it becomes the threats of losing
customers if company does not produces quality in their products or services.
P6. Interrelationship of strengths and weaknesses with macro factors.
Strengths and weaknesses of the organisation are interrelated with macro
environmental factors. Management compares strength of the organisation with
environmental factors such as political, economic, social and cultural, technological in order
to implement and execute strategic decisions (Mayer, C., 2018). Sometimes there are sudden
changes in the macro environmental factors which also influences the business decisions of
Sainsbury's. In business, the SWOT analysis and PESTLE analysis are the effecticve tools to
analyse the internal and external factors of business evironment. If business makes right
analyzation of such factors then it will also supports to make an effective business plan. As
considering the SWOT and PESTLE of business they are closley related with each other.
PESTLE is an acronym which includes six factors political, economic, social, technological,
legal and environment. Whereas SWOT can be considered as a situational analytical tool for
the organizations involves identification of strengths, weaknesses, opportunities and threats.
The SWOT includes both external and internal factors. In context to Sainsbury's, the political
factors can be a threat for the company because it has legal boundations in which they have to
operate their business on the political facts. Ecomonic factors influence the decisions of
company which is deal with taxes, legal policies, interest rate and so no. Economic
development of company influnces the success of business where they have to match and
fulfil the demand of customers as per their taste and preferences sometimes it become a
threats if they are unable to fulfil the demands but if fulfiled they are able to grab the
opportunties which simultenously becomes their strengths (Raghuramapatruni, R. and Kosuri,
S., 2017). It also supports to have qualified and talented employee in the company who
supports to achieve organizational goals. Social factors can be taken as strengths of company
where they can understand the demographic, cultural trends and many more of countries. The
countries have different cultures and values, if the brand like Sainsbury's serve customers
accordingly then it can be great opportunities to raise revenue for the company.
Technological factors influence company's decisions as it deals with speed, time and
expenses. Company can smoothen their functions by using latest technologies but using that
can raise the expenses which also affects the profits of the company. Environement factors
can be a threat of the company because company already produces products which harm the
nature but recycling waste prodcuts can be taken as a opportunities to reduce the wastage of
resources (Scheepers, C., White, L. and Kitimbo, A., 2017). Legal factors can be a threat in
which companies have to create policies such as employees laws, sick leaves laws an so on,
and have to maintain them.
M4. SWOT analysis influence decision making.
In context to Sainsbury’s, strength and weaknesses of business have direct contact
which influences the business directly. On the other side, the macro environmental factors
influences decision making of business, its performance, strategy and working on the
business. In context to Sainsbury’s, it makes business to grab opportunities through which
they can take benefits to increase the profits for company. It helps to focus on strengths of
company in order to work on where they are lacking and take benefits from the opportunities
in the best possible way (Rosário, A. T., 2021).

CONCLUSION
From the above discussion it has been summarized that there are three types of
organisations which can be classified into public, private and voluntary sectors. Every type of
business has its own legal frames, structure and size. The report is included with different
topics such as PESTLE and SWOT. The internal and external analysis of company will help
to examining the strengths, weaknesses through they can work on threats and opportunties. It
has been seen that they are interelated with eachother. It is also seen that Sainbury's is
performing well amonst its competitors and good brand image as well as culture of company
is great to work.

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(Scholz, T. M., 2019)