Business Environment: Internal and External Factors Report - Module 1

This report delves into the multifaceted realm of the business environment, examining both internal and external factors that shape organizational success. It begins with an introduction to the business environment, differentiating between internal and external influences, and then categorizes business structures into private, public, and voluntary sectors, illustrating their unique objectives and operational dynamics. The report uses McDonald's as a case study to explore corporate responsibilities towards employees, customers, and suppliers, and analyzes its strategic approaches, including franchisee models and promotional campaigns. Furthermore, the report investigates economic systems, including free market, command, and blended economies, and assesses the impacts of financial and fiscal policies on business activities, using Tesco as a case study. It also discusses the effects of financial crises and governmental interventions, providing a comprehensive overview of business operations within diverse economic landscapes.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
1.1................................................................................................................................................1
1.2................................................................................................................................................2
1.3................................................................................................................................................2
2.1................................................................................................................................................3
2.2...............................................................................................................................................5
2.3................................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business environment is a combination of internal and external factors which influences
customer, employee etc. In business, human exercise refers to purchasing raw material,
generating income or buying of an item that are performed to obtain cash. Whereas environment
refers to condition like political, economical, social, technological etc (Gupta, 2013).
External business environment refers to the factors which are beyond the control and are
unmanageable by the firm. While, internal business environment refers to the changes which are
held in firm and they are controllable as well as manageable by the people working within
organisation. External issues involve government policy, social, political, legal factors. On the
other hand, of management changes, employee morale, different culture, financial changes.
1.1
Business environment have different association for making profits and consist of wide
range. Firm is classified under 3 main categories such as public sector, private sector and
voluntary sector and this are listed as follows:
Private organizations: Private sector companies mainly deal in earning profits for
organisation. They do not have short term vision as well as goals and targets are set on the
monthly basis. Private companies are making benefits in expanding their business and
developing goodwill. In private organisation main purpose is earn profit and maintain a standard
in the organisation.
Public organisations: Main motive of public sector organization is to serve the society. They
have short term vision and mission (Zhang and Huang, 2012). Public sector companies are
Government hospitals, Parish Council, higher education society. Main purpose of public
companies are that commanding in various industries and also focuses on build up public
companies who they provide services in affordable range.
Partnership firm: According to partnership agreement where person agree by mutual
consideration or by equal sharing. Sole proprietorship is not registered under the legal
consideration. Main purpose of partnership firms is work in the group of partner and share profit
with each other or on the basis of their set profit percentages.
Non profit organisations: If in organisation there is profit or loss then the owner is only
responsible and it is often called voluntary organizations.. Non profit organisation refers to
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where an entity have some other purpose rather than making profits for the business such as
NGO and NHS etc. Main purpose of this organisation is serve others and also provide helps as
possible as they can.
Every association have a different reason for motivating their employee. For general
population legislature is open and it is continue process. The funds are utilize for the betterment
of society areas (Augier, Dovis and Gasiorek, 2012). Main purpose for this association is to
utilize assets for group. Private firms are running by private people. Private business are
successful because for making huge benefit, expanding of their business, exceeding the price of
product in industry. Different individual are not possess for harmful gathering. Remain the things
as they are someone will guaranteed charge the target or change plan on which they are
spending. In some of the cases they try to attempt every individual like aide pooches for seeing
separately or Oxfam so forth but end goal should survive at any cost to earn original investment.
1.2
Business environment is based on three general sort of association such as Public,
Private, and Voluntary association. The main targets of these associations are distinctive in
nature. If public association is there then it will serve individual with a minimum efforts.
However, if in case private association is establish then they will serve many people they can
with maximising their efforts and by setting own benchmark. McDonald's is a private owned
firm and there targets are youngsters and kids for their best results. The firm marketing strategy
for business is famous in worldwide (Park and Kincade, 2011). The product they are serving is of
good quality. There main aim is to make client happy and attain maximum profits. Firm is
biggest in advertising or for promoting its product in market. Some of the goals that McDonald's
involve are work with morale, focus on kin, client can see the things clearly, working in a team,
constantly increasing the progress. Company has some responsibilities and objectives towards
their stakeholders and this are listed as follows:
Employees: McDonald's has some objectives towards their employee such solve their problems
related to personal issues, salary related issues, solve their conflicts. In addition to that company
also focuses on their long term stability in the organisation.
Customers: Every customer want that their needs must be completed so company set some
objective towards the customers. McDonald's always focuses on customer satisfaction and
provide new range in food items.
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Suppliers: McDonald's always focuses on its performance that is based on its business suppliers.
Company always set negotiation with their supplier in terms of price, quality and quantity.
Company should maintain loyal communities towards its supplier.
1.3
Responsibilities of McDonald's are as follows:
 Develop and produce more for the small kids and youngsters.
 Increase kid product with any fun toy inside such as Happy Meal.
 Various program should be conducted for their well being .
 Useful information should be provided i.e. nutrition value and suitable food for the
consumer.
 Communication process should be in right direction.
 Proper usage of better technology (Zhang and Huang, 2012).
 Supply system for product should be improve.
 Packaging of a product should be eco-friendly with environment.
 For selling their product environment condition should kept in mind while planning.
 Innovation in product should be their so that no kid get bored.
 Encouraging people to take part in innovating of product.
 Changing of gift will encourage kid to buy more and more.
 Outlets should be planned at right place and at right time.
 Produce more Hamburger university.
 Presentation of product should be good and workers should take responsibility.
 Quality of product also increases in time.
 Recruitment of more skilled employee so that performance will enhance.
 Training should be provided to sustain in the market.
 Increasing in charities by communicating with customer.
Strategies to be followed by McDonald's are franchisees are given to customers for
extending in marketplaces. Franchisee holder will look into administration because no
interference will be from company side. Franchisee model for McDonald's is going extremely
well in market. Firm is getting income from rent and from other benefits (Gupta, 2013). They are
providing services at your door step i.e. pick-up and delivery services are offered. For
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promotional campaign some policy are introduce such as buy 1 get 1 free or family pack, or
online recharge and get a coupon code, buy meal and get a cold drink of 250ml free etc. In
addition to that company has set some objectives and for the accomplishment of that necessary
things should be evaluate by the company.
 For satisfaction of employee company organize training and development sections.
Company has used feedback sessions to solve their employees issues and tries to clear
them. Entity use monetary and non-monetary rewards for appraise their performance.
 Entity use various discount vouchers, food combo, festive touch with their schemes to
meet with customers needs and wants. Company also organize survey to know how
about customers feedbacks related to McDonald's products.
 Supplier: In this company use innovative ideas in suppliers points of view. Company can
also provide long term cooperation. In which if a company can't maintain long term
relation with their suppliers that it will leads to the negative impact. Company should
follow a low full locality towards the supplier.
2.1
In economic system, society tries to considered people needs and wants for goods and
services and according to demand production process is accomplished. Main purpose of
economic system is proper utilisation of resources (Nattrass and Altomare, 2013). Appropriately
manage the demand and supply are important factor for production department. In Tesco, there is
a lack of management in supply and limited resources of goods and services. Government has
power to allocation of resources by which representative are associated with design of
production system such as division of services to others. It is beneficial for Tesco to better
deliver for supplier.
Different countries has adopted various economic system according to their
marketplaces. Basically there are three economic system in the and they are listed below:
 Free market economic system: In this economic system, government offers a free
environment to all buyer and seller based on their demand and supply. In a free market
economy, allocation of resources is carried out on the basis of three major factors which
are what to produce, how to produce and for whom to produce. In this a proper
interaction is necessary among the consumer and producer (Keukeleire and Delreux,
2014). Manufacturer focuses on customer preference in the free market economy that
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would raise the production and determine the best process by the producers for effort
towards the earning profits in Tesco. Consumer have power to choose the product so
produce may fill risk for shiftment of consumer that they are not shifted towards the other
available resources in the market. At that time Tesco focuses on their loyal customer and
provide them with the best so they may not purchase alternatives products and it can
reduce the purchasing power of consumer and increase the self interest towards the
products of Tesco.
 Command economy system: It is often called planned economy and in this economic
system authorities decide the total production such as requirement of labour and capital.
With the help of this economic system proper information are gathered for better decision
regarding resources (Gollier, Koundouri and Pantelidis, 2008). It results in reduction in
consumption and effectively use of resources at Tesco. Main function of this process is
encouraged the common citizen to pay their tax to government and build the government
institutions such as hospitals, roads ans so on. Allocation of resources in command
economy system play a crucial role when some natural crises are occurred and at time of
crisis, coordination of scare resources is beneficial for economy. In this involvement
 Blended economy system: Most of the companies are operating in mixed economy
system today. It is a combination of private and government body by which private
ownerships are protects by government body (Keukeleire and Delreux, 2014). Public
ownership may interfere in the economy activities of company and this is helpful for
strong economic systems in the tesco. Context of Tesco, a process where intrusions are
given regarding the product that can gain the profit in a large scale.
The impact of financial and fiscal policies on business activities and their organization. In
2008 total GDP was fall down in the UK and British economy was fall down by 7.1%. The
economy effect is totally negative and experienced was also bad. Government of uk tried to
control over the circumstance and in 2011, backed off in the economy and the result of this,
shortfalls in the financial conditions (Nattrass and Altomare, 2013). At that time company
expand their vat tax so that revenue can mange with the expansion. They were enhanced their
salary charges at the time of shortfalls and reduce their loan fees so the common people taken
more loans from the organization. When the fall down in an economy system, at that time
national organisation influenced by the financial crises. As per the given scenario, The people
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store and Sainsbury's also expand the Tax vat and pay duties so that its effects as a less of
product are supplied by the mediators.
In the context of Tesco, expansion of tax was not influenced at Tesco so the result is income of
Sainsbury's was diminished in financial crises (Claessens and et.al, 2010).
 Financial effects: Enlargement in cash supply assist for reduction in interest rate, that
affects on fall down on amount of supply. The people market and Sainsbury's influenced
by this so that negative promotion is responsible for reduction in benefits. On the other
hand Tesco, reduction in cash supply may not affected because they may borrow
financial resources from subsidiary. Tesco asking for supply products from different
clients in a alternatives nations so that company have more capacity that how to earn
more benefits. In this relation with other nations was also helpful for the organization.
Impacts of rivalry strategies on the given companies: effect of this approach on Sainsbury's,
merchandising are not available in the instance so that superior are more expert and powerful in
the organisation and they may providing products at low cost with the best quality (Gollier,
Koundouri and Pantelidis, 2008). It can assist for increasing the investment from consumers and
stakeholders. According to companies act 2006, addition of other administrative activities in
which regional managements, mechanical strategies etc.
2.2
In the businesses institutions, financial and fiscal approaches plays a crucial role in the
work culture. In this financial resources evaluate total expenses which pay to the public body and
it is also indicates the legislature formation of organisation. With the help of this activity
administrative department improve their level of expenses and less consumption of cash for
investment (Cairncross, 2013). For products and their facilities, organisation may charge duties
to consumers. Impact of this approach is effected on individuals work so that organisation needs
to focuses more towards the workers and also tries to control money related issues by the
national bank. All that financial issues directly impacted on the firm and also impact of this tools
affects on UK. Economy. With the help of this approach company can easily reduce the loan
interest and accessibility of borrowed amount. Fiscal approaches may helpful for decreasing the
monetary supply and make it suitable for obtaining finance in the firm.
The practise with both approaches are enhancing the expansion of cash and arrangement of
monetary supply (Keukeleire and Delreux, 2014).
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Government plays vital role towards the fiscal policies. In which how much government
has to invest in the economy and also monitor various tax rates that impact on the national
economy. Government monitors enhancing and reduction in tax rates. Representative of
government also focuses on employment and maintain a healthy environment in the country
(Cairncross, A., 2013). It will assist for promoting macroeconomic stability. It is focuses on
economic fluctuation and manage with the changes. In the fiscal policy government promotes
public to pay their taxes in the time so it will assist for growth in the economy. If the cash inflow
is raising so government can invest more in the economy growth. In contrary monitory policy is
control by the monitory authorities in which representative focuses on demand and supply of the
money.
Further main elements of monitory policy is assist for economic growth, reduction in
unemployment. Central banks are pillar for the economy in which they focuses on stability in
economic and financial condition of the country. At the time of financial crises, central banks
play a crucial role to manage the overall changes. Main function of central bank is achieve the
stability in the inflations (Park, H., and Kincade, D. H., 2011). With the help of open market
operations individual refers to others to purchase and sales government securities that will assist
for expanding economic growth and collections of funds. Monitory policy assist for modifying in
the interest rates as well in the money supply.
2.3
McDonald's is very famous in the segment of fast-food-in-the-united-kingdom restaurant
as well as in world. In today's time fast food industries are facing tough competition and every
industries have invested lot of amount on product or service they are offering. Rivalry companies
are comparing there product to each other to get know about competitive advantage. Competitor
approach advances rivalry and help in advertising and increases productivity for different
association. It assure that client decision are truly affected because today's business environment
is dynamic in nature (Nattrass and Altomare, 2013). Complaining about values of competitor and
suppliers. 4 approaches on which competitor strategies are depend : anti-trust, cartels, market
liberalization and merger control. That approaches should not be misuse by any other rivalry
company. If any competitor enter in market then they break off monopolistic market. In that case
the authorization is again with Govt. that result in both client and producer. Some reasonable
controls are with clients such as natural strategies, administration etc. Administration department
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looks after costs, client guidelines, contenders etc. McDonald's are facing different challenges
from different competitor such as Burger king, Subway, KFC. because all rivalry have similar
price or cost. They does not have price differentiation. Here are competition acts that must be
followed by the company and this are listed as follows:
The Competition and Market authority: Company use this act for welfare of the consumer in
which it is dominant of its competition law. In addition to that this law will use for solving
difficulties that is related to the industrial policies, for safety of the environment and regional
development.
Office of Fair Trading: In every organisation fair competition is needed and in which
development of fair practises in their work company can use this act. In this comprehensive data
is available so that McDonald's gets data for know about their competition and use this available
data as a guidelines.
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REFERENCES
Books and Journals
Augier, P., Dovis, M. and Gasiorek, M., 2012. The business environment and Moroccan firm
productivity. Economics of Transition, 20(2), pp.369-399.
Cairncross, A., 2013. Years of recovery: British economic policy 1945-51. Routledge.
Claessens, S. and et.al, 2010. Cross-country experiences and policy implications from the global
financial crisis. Economic Policy. 25(62). pp.267-293.
Gollier, C., Koundouri, P. and Pantelidis, T., 2008. Declining discount rates: Economic
justifications and implications for long-run policy. Economic Policy. 23(56). pp.758-795.
Gupta, A., 2013. Environmental and pest analysis: An approach to external business
environment. Merit Research Journal of Art, Social Science and Humanities. 1(2), pp.013-
017.
Keukeleire, S. and Delreux, T., 2014. The foreign policy of the European Union. Palgrave
Macmillan.
Nattrass, B. and Altomare, M., 2013. The natural step for business: Wealth, ecology & the
evolutionary corporation. New Society Publishers.
Park, H., and Kincade, D. H., 2011. A Historical Review of Environmental Factors and Business
Strategies for U.S. Apparel Manufacturing Industry 1973-2005.15(4). pp.102 – 114.
Zhang, A. and Huang, G.Q., 2012. Impacts of business environment changes on global
manufacturing outsourcing in China. Supply Chain Management. An International
Journal. 17(2), pp.138-151.
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