Business and Business Environment: Analyzing Tesco and ASDA

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Business
and Business
Environment

Table of Contents
Introduction...........................................................................................................................................3
Task 1....................................................................................................................................................4
LO1: Explain the different types, size and scope of organisations.....................................................4
P1: Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures........................................................................................................................4
P2: Explain the size and scope of a range of different types of organisations................................7
M1: Analyse how the structure, size and scope of different organisations link to the business
objectives and product and services offered by the organisation...................................................8
LO2: Demonstrate the interrelationship of the various functions within an organisation and how
they link to organisational structure...................................................................................................9
P3: Explain the relationship between different organisational functions and how they link to
organisational objectives and structure..........................................................................................9
D1: Provide a critical analysis of the complexities of different types of business structures and
the interrelationships of the different organisational functions....................................................13
LO3: Use contemporary examples to demonstrate both the positive and negative influence the
macro environment has on business operations...............................................................................14
P4: Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.................................................................................14
M3: Apply appropriately the PESTLE model to support a detailed analysis of the macro
environment within an organisation (the same organisation of Task 1).......................................16
D2: Critically evaluate the impacts that both macro and micro factors have upon business
objectives and decision-making...................................................................................................17
LO4: Determine the internal strengths and weaknesses of specific businesses and explain their
interrelationship with external macro factors...................................................................................18
P5: Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses............................................................................................................................18
P6: Explain how strengths and weaknesses interrelate with external macro factors....................19
Conclusion...........................................................................................................................................21
References...........................................................................................................................................22
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Introduction
There are various different types of business organisations that exist in the business
environment with different purposes i.e. to make profits or to serve public or provide welfare
to the local people of the country. The different organisations have different size, scope and
legal structure that impact the organisational structure and objectives. The various functions
of the organisation are also based on the structure of the organisation and are interlinked with
each other. The following assignment is based on the business environment and the various
external and internal factors that has an impact on the functioning of the organisation. We
have considered the two organisation from the retail sector of UK in the following
assignment in order to discuss the business environment.
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Task 1
LO1: Explain the different types, size and scope of organisations.
P1: Explain different types and purposes of organisations; public, private and voluntary
sectors and legal structures.
There exist many types of organisations with different purposes and different objectives. The
different forms of organisations are:
Private Sector Organisations: The private organisations are those organisations that operate
their business functions in order to generate revenue so as to maximise the profit for the
business. Their main objective is to generate maximum profit in return for the various
services and the products that are offered by them. Other than this, their business objective
includes gaining maximum market share, growth and revenue generation. Their main
characteristic is the profit generation and the distribution of the profits equally among the
partners in the business. For example:
Google, Samsung, Tesco etc. are private organisations (Craig & Campbell, 2012).
Various different types of legal structures exist for the private sector organisations which are
explained as follows:
 Sole Trader: A sole trader is a kind of business set up where the whole business is under
the control of the single person and that person is the owner of the business. Legally, the
owner and the business are not distinct entities and hence the whole liability of the
business goes to the owner of the business. For example: All the profits made by the
business as well as the debts are the liability of the business owner. These businesses can
be set up by a single person with little or no investment at all. For example: Electricians,
plumbers etc. are all sole trader business (Craig & Campbell, 2012).
 Partnerships: The business organisations that have two or more than two owners are said
to be partnerships. The scope as well as the structure of the partnership defines the profit
sharing between the partners as well as the sharing of responsibilities and the debts of the
business if any. The partners of the business are responsible for all the debts of the
business. However, not all partnerships have unlimited liability as limited liability
organisations are also becoming common now-a-days in which the partners of the
business have the limited liability towards the business and are not responsible for other
partner’s faults or negligence. Example of partnerships include Law firms, doctors etc.
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 Private Limited Companies: The private limited organisations are those private
organisations where liability of the business is limited by the number of shareholders. The
private limited organisations can have minimum 2 shareholders and maximum of 200
shareholders. However, the shares of the business are not open for public trade which
means that the business shares cannot be listed on the stock exchange. Therefore the
liabilities and risks as well as the responsibilities gets divided between the shareholders.
No single shareholder is responsible for the liability of the business (Baron, 2012).
 Public Limited Companies: The public limited companies are those business
organisations that have the limited liability and the shares of such companies are available
for trade in the stock market. In UK, in order to start a public limited company a
minimum amount of 50,000 Pound. The shareholders need to appoint at-least two board
of directors and the name of the company must always end with PLC. It can have
minimum 7 and maximum of any number of shareholders in the organisation. All the
shareholders are responsible for the debts as well as the profits of the organisation (Baron,
2012).
Public Sector Organisations: Public Sector organisations refer to all those business
organisations which are directly under the control of the central government or the state
government. The funds to the public sector organisation are provided by the central or the
state government. Their main objective is to provide services for the public of the country
rather than making profits for the organisation. The organisations provide services in the form
of education, hospitals etc. The amount for the services for the welfare of the public is
collected in the form of taxes and are utilised by the public sector organisations for the public
cause.
Their legal structure includes the ownership of the business which is either in the hands of the
central government or the state government or is shared by both (Butler & Wilson, 2015).
For example: Bank of England, Police Services etc.
Voluntary Organisations: Voluntary organisations are also known as Unions which is
generally a group formed by individuals who mutually decide to enter into an agreement in
order to accomplish a common purpose for the sake of the public. Their main objective is to
make profits and to utilise those profits for the sake of the humanity. They are usually run by
the volunteers who carry out business operations for earning profits so as to provide services
for the sake of the welfare of the local public.
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For example: Cancer Research, American Red Cross
The legal structure of the voluntary organisations may vary in accordance with the country or
the region of the country in which it operates. It usually has a legal structure that includes
being either an unincorporated association or a trust consisting of volunteers or company
which is limited by guarantee (Butler & Wilson, 2015).
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P2: Explain the size and scope of a range of different types of organisations.
The size and scope of different types of organisations is explained as follows:
Micro enterprises: Micro enterprises are those businesses that are usually run by one or two
owners so as to generate small profits. The main motive of the business is to earn bread for
the family and therefore the annual turnover of such enterprises is very less. Micro
enterprises usually have less than 10 employees.
Small enterprises: Small organisations are those organisations that usually run with the
objective of making profits and are usually run by the single owner. Small enterprises
consists of minimum 2 to maximum 50 employees for carrying out its business operations.
However, the organisation have comparatively less resources and hence have limited scope
(Hillary, 2017).
Medium-sized enterprises: Medium-sized organisations are those organisations that usually
run business with the primary objective of earning profits. They can have minimum 50
employees and the maximum number of employees for medium enterprises can go up to 250.
Their scope is large as they usually run to expand their business and hence the market share.
Large enterprises: The large organisations are those business organisations that consist of
minimum 250 employees in order to carry out business operations. However, the maximum
number of employees is unlimited. Their main objective is to generate huge revenues so as to
maximise their profits and to increase their market share. Their scope is limited as the amount
required to start a large enterprise is huge and hence they require large capital to be invested
(Hillary, 2017).
Other than the above, there is yet another category of business which is formed together by
micro, small and medium sized organisations. It is referred to as small medium-sized
enterprises i.e. SME’s. The annual turnover of SME’s as prescribed by the government of UK
should at least be 50 million Euros. The annual balance sheet of the SME’s in UK should be
maximum 43 million Euros.
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M1: Analyse how the structure, size and scope of different organisations link to the
business objectives and product and services offered by the organisation.
The structure of the business as well as the size and scope of the business organisation has a
direct linkage with the objectives of the business and the organisational goals. The targets are
set by the business organisation only in accordance with its organisational structure and
depending on this, the targets are set either huge or small. The size is also linked with the
goals of the organisation and their achievement as organisations having small or less number
of employees not having enough knowledge and skills for their roles cannot achieve their
organisational goals effectively. In addition to this, the organisational goals are also linked
with the size of the organisation as small organisations usually have small goals while large
organisations can set high goals in accordance with their resources and their size. Each and
organisation has some common objectives that includes earning profits in exchange for the
services and the products provided by the organisation.
The objectives of the business organisation depend on their scope as well. If the scope of the
organisation is limited and is restricted to national customers, the objectives are set by the
organisation in accordance. Similarly, if the scope is unlimited and includes international
customers as well then the objectives are set accordingly. However, the structure of the
organisation as well as their size and scope of the organisation are set in accordance with the
products and services that are being produced by the organisation (Botha, et. al., 2014).
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LO2: Demonstrate the interrelationship of the various functions within an organisation
and how they link to organisational structure.
P3: Explain the relationship between different organisational functions and how they
link to organisational objectives and structure.
In order to grow and earn profits, each organisation performs various different functions.
However, the control of the various functions and the management of the units performing
those functions depend on the organisational structure. The structure of the organisation also
facilitates the achievement of the organisational objectives by analysing the functions of the
different functional units. These functional units within an organisation are interlinked with
each other. For the effective accomplishment of the organisational objectives, the
organisational structure as well as the different functions is of great importance as effective
organisational structure enables the organisation to achieve targets in an effective manner
(Business Jargons, 2018).
Tesco is one of the leading retailers of UK and in the whole world. The multinational retailer
of grocery and general merchandise has successfully established itself as a brand name in the
market.
Tesco Organisational Structure:
(Source: Orgcharting.com)
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The organisational structure of the Tesco organisational is observed to be hierarchical. The
hierarchical structure of the organisation ensures effective working as the positions as well as
the responsibilities are divided across various hierarchies in the structure which enables the
organisation to work in a smooth manner. The person at the top of the hierarchy enjoys
maximum authority as well as responsibilities. At the top of the hierarchy is the Regional
Manager and then Store Sales Manager who enjoys the authority of the various different
managers working under him (TESCOSW, 2017).
Tesco Objectives: The main objective behind the huge success of the organisation is to
constantly innovating new things in the business and to remain focussed on its employees as
well as its loyal customers so as to remain competitive in the market.
Functions and their interrelationship: In order to achieve organisational objectives, Tesco
performs various different functions which are as follows:
 Research and Development (R&D)
 Human Resources Management
 Financial and accounting Management
 Sales and Marketing
Research and Development: For Tesco to function properly, it is very important to have the
knowledge regarding the exact needs as well as requirements of the customers so as to
provide the products and services accordingly. Therefore, research and development is of
great importance (Munroe, 2018).
Human Resource Management: For the organisational to have the control on the various
human resources, it is important to have the effective human resource management system
which looks after the recruitment as well as selection of new employees for organisation.
Finance: In order to provide the capital required by the various functional units in an
organisation to carry out their functions, the finance department is of utmost importance
(Munroe, 2018).
Sales and Marketing: The promotion of the products and services offered by the Tesco is
mainly carried out by the sales and marketing function.
All the above mentioned functional units are interlinked and works in close association so as
to increase the productivity as well as the growth of the organisation. The interrelation can be
understood as all the functional units in Tesco are dependent on the finance department as
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funds are provided by this unit for carrying out operations. Similarly, the personnel required
to carry out the operations by various units is provided by the HR department and therefore
HR is also linked with all the functional units. The promotion of the products is very
important for attracting customers and this is being done by marketing department for which
funds are provided again by finance department. Thus, all the functional units are somehow
interlinked with each other which makes it easy for the organisations like Tesco to achieve
their organisational objectives in an easy manner (Tesco Plc, 2019).
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M2: Analyse the advantages and disadvantages of interrelationships between
organisational functions and the impact that can have upon organisational
structure.
There are various advantages as well as disadvantages of interrelationships between the
various organisational functions of Tesco which are as follows:’
Advantages:
 The productivity as well as the efficiency of the organisation increases as a result of
interrelation between various functional units.
 The interrelation and dependency of various functional units on each other facilitates
cooperation between units and hence prevents conflicts.
 It facilitates the sharing of the roles and responsibilities so that goals can be achieved in
an efficient manner.
Disadvantages:
 It can hamper the productivity of the organisation as the increased cooperation between
functional units and their members can lead to long hours of break.
 Also it leads to delay in the decision making process at Tesco (Tesco Plc, 2019).
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