Business Environment: Organizational Structures and Macro Factors

This report provides a comprehensive analysis of the business environment, focusing on different types of organizations, including public, private, and voluntary sectors. It explores the growth of the international business environment and examines the functions of the John Lewis Partnership, illustrating their interrelation with organizational structure and objectives. The report further delves into the macro environmental factors impacting business operations and conducts internal and external analyses, including a SWOT analysis of Tesco. The study concludes by discussing the interrelationship between strengths, weaknesses, and macro environmental factors, offering insights into how these elements shape business strategies and outcomes. The report utilizes examples from the UK market, focusing on retail businesses and their responses to various market dynamics.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Different types of organisation and the growth of international business environment.....1
2. Explanation of chosen organizations..................................................................................2
3. Explain functions of John Lewis Partnership and how they interrelate with organizational
structure and objectives..........................................................................................................5
4. Different macro environmental factors that have their impact on business operations.....6
5. Internal and external analysis of Tesco .............................................................................9
6. Interrelationship of strength and weakness with macro environmental factors...............10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
This study will be based on business and business environment. Business is related to
buying and selling of products to earn profits. Business environment is includes internal and
external factors which have their impact on the working of business operations. This assignment
will include Tesco as part of different tasks. Tesco is involved in a retail business and serve its
products in supermarkets, hypermarket, superstore etc. Products consists of clothing, furniture,
software etc. This assignment will include different types of organisations such as public ,
private and voluntary and their size and scope . This study will also explain about relationship
between different organisational functions and their link with organisational structure. This tasks
will discuss about different macro- environment factors that have their influence on business
activities. It will also include SWOT analysis to identify the strength and weakness of firm.
MAIN BODY
1. Different types of organisation and the growth of international business environment
Public sector
Public sector organisation are owned and controlled by government. This organisation
performs different activities to provide its products and services to the public at reasonable prices
For example: NHS is a public sector organization operating in England. NHS does not work to
generate profits. Public sector organisations includes department undertakings, public
corporations, government company. Departmental undertaking is one of the department of
government which is controlled by department of government. Public corporations is formed by
an act of parliament (Kazancoglu and Ozturkoglu, 2018). This corporation is financed by
government. NHS is financed by various taxes collected by government and different funding
from institutions. The legal structure of public sector organisation is governed by the government
of that country and is funded by government institutions and various taxes collected from
different individuals.
Private sector
Private sector organisation are those which are established with the motive to earn profits.
For example: John Lewis Partnership is a privately owned partnership organization in UK
John Lewis Partnership is run by individuals and groups. John Lewis Partnership operating in
private sector are free from government control. John Lewis Partnership produces different types
of products and services in order to sale them to customers to generate profits (Ali, Miah and
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Khan, 2017). Private sector organisation consists of Sole proprietors, partnerships, small and
medium – sizes business, trade unions etc. John Lewis Partnership perform various operation s in
order to satisfy customer’s wants and provide them with high quality products and services. The
legal structure of private sector companies is governed as separate legal entity that means the
legal identity of organisation is different from owners.
Voluntary sectors
Voluntary sectors organisations consist of those firms which are established in order to
provide social services to public. For example: National trust is a charity organization operating
in UK. National trust are formed by group of individuals to work towards the welfare of society.
National trust are known as not for profit companies which motive is to serve people and not to
generate profits. National trust consist of charitable trust, Community group, and social welfare
organisations etc. The legal structure of National trust is governed by the rules which are set out
in a constitution. The legal structure adopted by Voluntary sectors consist of unincorporated
associations, a trust and a company limited by guarantee.
Sole proprietorship
It is the form of business organization under which the individual owner operates the
business activities and is not a separate legal entity where the person is responsible for its debts.
The advantage of sole proprietorship is that it is simple form of organization and owner has
freedom to take decisions. The disadvantages are limited resources and unlimited liabilities thata
re to bared by the owner. John Lewis Partnership can use sole proprietorship for entering into
new markets for starting business operations.
Partnerships
It is the formal arrangement in which two or more parties cooperate to manage and
operate a business by agreeing to share profits and losses with a limited liability. The advantages
of partnership are it involves more capital of business and limited external regulation. The
disadvantages of this form of business is that unlimited liability and risks of disagreements. John
Lewis partnership is such a form of business organization.
2. Explanation of chosen organizations
Public Sector: Public sector is also known as the state sector which is part of the
economy that comprises both public services and public enterprises. Public Sector are
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organizations that are usually controlled and managed by government and renders services to the
public without seeking to generate profit (Teece, 2010.).
Background details of NHS
National Health Service are the public health services in United Kingdom that comprises
of NHS England, Scotland, Wales and Health and social Care in Northern Ireland and was
established together in 1948 following the world war.
Products and services rendered
Services offered by NHS involves primary care, urgent and emergency care, cancer,
mental health, diabetes prevention programmes, nursing, midwifery and care staff rendering,
technology systems and data, partnerships and commissioning services.
Size and scope of NHS
NHS is the name used for public health services in UK that has operations in England,
Wales, Scotland and Northern Ireland which is the part of parent department of health and social
care. It renders majority of healthcare in England and has a employee strength of 1.4 million.
Vision: “The vision of NHS is to deliver better health and better care services to all people of
England and render better value”
Mission: “John Lewis partnership’s mission is to provide quality health care services to
everyone every day”
Business objectives:
 John Lewis partnership major business objective is listening to all of its stakeholders to
better understand their requirements and render them with their needs to preserve them
with business to attain objectives effectively.
 John Lewis partnership aims to contribute respect in treating its customers, partners, and
other stakeholders. John Lewis Partnership intention is to treat people with dignity to gain the fair brand
image and render a choice to become associated with the brand
Organizational and legal structure
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NHS is managed by a Board of Executive and non-executive directors accountable to
Scottish government through Cabinet Secretary for health and well-being (Commander and
Svejnar, 2011). The board governs the performance and accountability and non-executive
directors are appointed by Cabinet Secretary
Stakeholder information
NHS works with stakeholders including people, groups or organizations and sustainable
and transformation partnership and also works closely with voluntary sector and patient groups.
Private Sector: It is the part of the economy that comprises businesses or organizations
that are run and operated by private individuals which works with a motive of generating profits.
Private sector organizations is created by forming new enterprise or privatising a public sector
firm.
Background details of John Lewis Partnership
John Lewis Partnership is an employee owned UK firm that operates John Lewis and
partners department stores and Waitrose and partners supermarkets, banking services and retail
related activities and was founded in 1929.
Products and services rendered
John Lewis Partnership renders clothing, accessories. Cosmetics, watches, jewellery,
furniture, computing, food, financial services and audio visual products and services.
Size and scope of John Lewis Partnership
John Lewis Partnership is the third largest private firm in UK by sales and employs
around 88,900 individuals with a revenue of £11 billion.
Vision: John Lewis Partnership was founded by John Spedan Lewis which was started with the
vision of allowing future generations of employees take forward the experiment in industrial
democracy. Establish a better form of business and happiness of members is the ultimate vision
of John Lewis Partnership (Cantwell, J., Dunning and Lundan, 2010).
Mission: Mission Of John Lewis Partnership is to render happiness to all of its members and
partners through satisfying and rendering worthwhile employment in a successful business.
Business objectives
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 John Lewis Partnership aims at developing innovative and unique products and services,
create strong brands and attain growth and competency through offering quality
offerings.
 John Lewis Partnership’s major purpose is to provide better employment opportunities,
get involved with potential performing partners and render better pay to their valuable
workforce John Lewis Partnership’s objective is to attain a strong financial sustainability by
ensuring effective production with lesser costs and develop quality sustainable products
and services to consumers
Organizational and legal structure
John Lewis Partnership is a partnership company which is company owned by a trust on
behalf of all its employees and operates through a delegated authorities and mechanisms
ensuring assurance of partner’s viewpoints. The partnership council is unique in corporate
governance which are directly elected by partners and holds a chairman who appoints directors
to partnership board.
Stakeholder information
John Lewis Partnership company is the largest partnership firm in UK where the partners
shares their views about business and partnership model sets aspirations for co ownership
culture. The employees owned sector promotes interest of government and other stakeholders
and considers employees and stakeholders as the major element in their business.
Voluntary Sector: It is also known as service or community sector that works or operates
to render social activities undertaken by organizations that are non-profit and non-governmental
which are aimed at developing community and society rather creating profits.
Background details of National trust
The national trust for places of historic interest or natural beauty is a conservation charity
organization in UK formed in 1895. It works to preserve and protect historic places and spaces
for everyone.
Products and services rendered
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It renders services to look after places of historic interest or natural beauty for the benefit
of the nation across England, Wales and Northern Ireland (Carroll and Shabana, 2010.).
Size and scope of National trust
National Trust owns over 350 heritage properties including houses, gardens, monuments
and historic sites with a staff of 5,899 and volunteers of 62,000.
Vision: To preserve and protect historic places and spaces for the benefit of England
Mission: To trust and empower staff and volunteers to make right decisions
Business objectives To give people, physical and spiritual refreshment, encourage them to come, visit,
explore, respond, join, donate, and volunteer by suggesting, enabling and inspiring.
Organizational and legal structure
National Trust is managed and controlled by the board of trustees who are responsible for
ensuring and meeting statutory purposes. The council is responsible for appointing members of
board of trustees which comprises of 36 members.
Stakeholder information
National trust works with dedicated and talented volunteers and employees who are keen
to preserve and protect the historical places and spaces who are the major strength of the trust.
3. Explain functions of John Lewis Partnership and how they interrelate with organizational
structure and objectives
Organizational structure is the way for understanding responsibility, roles, power and
delegation of authority within a business organization. It also shows how information is shared
among different levels of management. John Lewis Partnership performs various functions like
Finance and accounts, Human Resources, Marketing and sales, IT support, Purchasing,
Distribution and Customer services. These functions and departments are interconnected with
each other and identifies the chain of command flow throughout the organizational structure and
helps in attaining objectives of John Lewis Partnership by performing respective functions and
responsibilities.
Finance:
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Finance and accounts department performs functions and responsibility of managing cash
inflows and outflows, reporting, analysis and budgeting. This department is responsible for
allocating funds for investment and all other departments of John Lewis are associated with this
unit (Zalengera and et.al., 2014). This functional department keeps manual or electronic records
of money received or generated through business of John Lewis partnership and expenses made
to conduct operations. It produces information’s in form of financial statements for the purpose
of tax payments and complying legal requirements which will be used to render management
accounts that will enable senior managers and strategic decision makers to plan and review
organization and its business objectives.
Figure 1: Organizational Structure of John Lewis partnership
Marketing:
Marketing and sales department of John Lewis partnership performs the sales and
promotions of its products and services to the public. John Lewis Partnership conducts various
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marketing campaigns to unveil rebrands with new visual identities that will help in reinforcing
the difference in challenging potential retail markets to render effective brand promotion. John
Lewis partnership’s marketing department conducts various research and development strategy
to develop products and services and understand market or economy for rendering offerings as
per the needs and demands of the customers in an effective and economic manner. This
department is also responsible for leading customer to make the purchase of John Lewis
partnership’s goods and services with a strategic selling and promotional actions which involves
advertisements, telephonic sales, mail shots etc.
Human resources:
Human resources department of the John Lewis partnership is the responsible unit which
recruits, selects, render training and development for new as well as existing employees of
organization. This department of John Lewis partnership also develops staff by motivating and
rendering them with necessary benefits both financially and by complying employment
legislations and health and safety laws. HR of John Lewis partnership ensures employee welfare
by creating policies to balance the organizational needs with those of workforce by complying
required legal compliances.
4. Different macro environmental factors that have their impact on business operations
There are different macro environmental factors which have their impact on the working
of organisations activities. Pestle analysis is conducted to identify various macro environmental
factors:
PESTLE Analysis
This factors have their influence on the working environment of the organisations. Pestle
analysis consist of factors such as political, environmental, economical, technological, social and
legal.
Political factor
Political factors consist of rules and regulation which are imposed by the government.
This factors include various policies formulated by government which affect the working
environment of Tesco (Sarathe and et.al.,2018). This factors include changes in tax rate, changes
in regulation etc. Tesco is affected by factors as changes in policies will affect the various
operations of organisations. There are various advantages and disadvantages relating to political
factors .
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Advantages
 Political factors such as political stability is beneficial for Tesco as it will positively
affect the business operation of the firm and organisation will be able to attract more
profits and thus enterprise will grow and increase its productivity.
 Decrease in tax will support Tesco in generating more revenues and increase their
profitability level.
Disadvantages
 Negative impact of political factors include increase in tax rate which will hampers the
various activities of Tesco due to which cost of Tesco product will increase and fewer
customers will purchase those products (López and Ferrándiz, 2016). Changes in the government regulation affect the working environment of Tesco due to
which organisation is not able top perform different activities of business relating to
productions of goods and services.
Economic factors
These factors are present in the macro environment which affect the various activities of Tesco.
These factors consist of inflation rates, interest rates, economic growth, exchange rates etc.
which have their influence on various operations of firm.
Advantages
 There are various economic factors which affect the business positively such as economic
stability which helps Tesco in economic growth and increase their productivity level.
 Tesco is benefited by decrease in inflation rate due to which prices of the product reduces
and thus more customers are attracted towards the brand which assist Tesco in building a
strong relationship with customers.
Disadvantages
 Increase in inflation rate will increase the prices of products and thus the demand of that
product will reduce because the purchasing power of the customer will be reduced in high
inflationary conditions. Fluctuations in exchange rate will cause a great impact on the working environment of
organisation and thus Tesco will not be able to perform different function properly.
Social factors
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This factors include the belief and culture of the population which affect the functioning
of organisation activities (Torres‐Rouff and et.al., 2015). Social factors are related to customer
views and taste and preferences. These are various social factors which affect the working of
Tesco such as population growth, age distributions, health consciousness and taste and
preferences of population etc.
Advantages
 Tesco in order to attract customers provide products and services according to their
demands and taste and preferences using social media marketing.
 Social factors which have positive impact on the various operations of business includes
producing healthy products as people are becoming more conscious about their health
will increase profitability of Tesco.
Disadvantages
 Social factors affects business profitability if organisation is not following the current
market trend it will cause a reduction in their customers and thus profitability also
decreases. Products are not according to the demands of customers and their needs will affect the
profitability of organisation.
Technological factor
Technological factors are those which are relating to product innovation and various
marketing styles using different technologies. This factor affects the business environment
positively and negatively (Zalengera and et.al., 2014). Technological factors includes
technological advancement adopted by Tesco to improve their product style in order to increase
their customer base.
Advantages
 High systems are implemented by the organisation to increase their customer base. Tesco
is using social sites to increase its customer base and provide their customer with an
opportunity of online shopping and home delivery of products (Tesco SWOT Analysis,
2017).
 Tesco have implemented self service checkout points which have provided ease to
customers and have also assisted in reducing the labour cost.
Disadvantages
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 There are various factors which affect the working of Tesco such as technology
advancement by competitors will affect the customer retention. New product innovation and style launch by the rival firm will reduce the profitability
and market share of Tesco.
Environmental factors
These are those factors which are related to natural resources and pollution etc.
Environmental factors considers factors present in the environment which naturally affect the
business environment such as flood, drought etc.
Advantages
 These factors assist in reducing the population by increasing awareness among public
regarding safety and various disadvantages of having pollutions. Tesco in order to reduce
pollution minimised its waste produces (Hussain, Rahman and Shah, 2016) .
 Tesco have adopted environmental friendly policy in order to reduce environmental
issues.
Disadvantages
 Increasing scarcity of resources affect the business operation due to which less resources
are available to Tesco to produce products.
 Environmental factors affect negatively to the business environment if various regulation
relating to environmental policies are not followed.
5. Internal and external analysis of Tesco
Internal analysis External analysis
Strengths
 It is one of the largest retail
organisation.
 Tesco have skilled workforce as it
invest huge amount training and
development programs.
 Tesco provide its customers with high
satisfaction by providing them with
high quality products and services.
Weakness
 The profitability ratio and net
contributions are below the industry
average.
 Investment in research and
Development is low as it is a weakness for
Tesco (Tesco SWOT Analysis, 2017).
 Lack of innovation and product style.
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 Tesco is serving in different countries
and have good technical skills which
assist in increasing their profitability
level (Pryce, 2016).
 Tesco is highly dependent of UK
market due to which other market
where Tesco is operating is having
low profits.
Opportunity
 There are various opportunities laying
ahead for Tesco in order to increase
their market share such as those
countries were Tesco is
underperforming , there are chances of
joint venture in order to increase its
customer base.
 There are opportunities to grow its
market online to attract more customers
towards the brand.
 Opportunities to increase its product
line to attract potential customers.
Threat
 There are various competitors which
are growing their market share in
industry.
 New environment regulation affect the
working operation of Tesco.
 New technologies adopted by
competitors to increase their
profitability affected the cutomer
retention power of Tesco.
 Changing habits of customers is a threat
for Tesco which leads to reduction in
the demand of products.
6. Interrelationship of strength and weakness with macro environmental factors
Macro- Environmental factors and strength and weakness of the organisation are
interrelated. Macro- environmental factors such as political factors, economic factors,
technological factors, social factors etc. are related with strength and weakness of Tesco.
Political stability in political factors is a strength for the organisation which helps Tesco in
smooth functioning of its various operations.
Decrease in tax rate act as strength for organisation which helps in increasing profitability
level of firm, Whereas increase in tax rate act as a threat for organisation which hampers various
activities of enterprise (Korcsmáros and Šimova, 2018). Social factors are related to lifestyle,
taste and preferences of public. Social factors act as a strength for organisation if products are
designed according to their customer taste and preferences and market trend, Whereas products
are not designed according to customers demands it will act as weakness due to which Tesco will
be unable to retain its customers.
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Macro environmental factors are related with strength and weakness of Tesco. Positive
impact of macro – environmental factors act as strength for organisation, whereas negative
impact of macro – environmental act as weakness for firm (Ansah and Chinomona, 2017).
Positive impact of these factors include political stability, economic growth, decrease in
inflation rate, increase in customer purchasing power, technological advancement by Tesco,
implementing environmental friendly policy etc.
Negative impact of these factors include Political instability, high interest rate, high
fluctuation in exchange rate, economic instability etc.
CONCLUSION
From the above study it had been concluded about business and business environment.
Business environment consist of those external forces which have their impact on the working
condition of organisation. This study has provided with different types of organisation such as
public, private and voluntary with their size and scope and their legal structure. This study has
also explained about different functions of organisation and their relationship with organisation
structure. This study has also discussed about different macro – environmental factors using
PESTLE analysis which include factors such as Political, economic, environmental, legal, social
and technological. This assignment has also provided with SWOT analysis of Tesco in order to
identify its Strength and weakness. This study has also explained about the interrelationship
between macro environmental factors and strength and weakness.
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Online
PESTLE Analysis for Tesco discusses its Business Environment . 2015. [Online]. Available
through :<https://pestleanalysis.com/pestle-analysis-tesco/>
Tesco SWOT Analysis. 2017. [Online] Available through
:<https://businessteacher.org.uk/swot/tesco.php>
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