Business and Business Environment: Types, Structures, and Analysis

This report provides an in-depth analysis of the business and business environment, examining various types of organizations including profit-making entities like Tesco, non-profit organizations such as the Audit Commission, and non-governmental organizations like Save the Children. The report delves into the differences between these organizations, exploring their aims, operational structures, and sizes. It also covers the application of the PESTLE model to the UK retail sector, along with SWOT and Porter's Five Forces analyses to understand the strategic decision-making processes of supermarkets. The report further investigates the relationship between organizational strengths and weaknesses within the external macro environment, providing a comprehensive overview of the factors that influence business performance and sustainability. The report also covers the organizational structures and functions of the organizations including complexities of transitional, international and global organizational structure and the relation of functions to overall organizations mission and objective.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Different types of organization........................................................................................3
Difference between profit, non-profit and non-governmental organisation......................3
Business Purpose and Supply of goods and services.........................................................4
P2. Size and Scope of the organization:.................................................................................5
Difference between micro, small and medium and large enterprises.....................................5
Market share, Profit share, growth and sustainability............................................................6
P3.Organization Structures and Functions.............................................................................6
Complexities of transitional, international and global organizational structure.....................7
Relation of functions to overall organizations mission and objective....................................7
TASK 2............................................................................................................................................8
P4 Application of PESTLE model to the sector.....................................................................8
TASK 4..........................................................................................................................................10
P5 SWOT and Porter's five force analysis ..........................................................................10
P6 Relation of strengths and weaknesses with external macro environment.......................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business and business environment are the external factors and internal factors affect the
company's performance . In this report, three types of companies are taken viz. Public, private
and voluntary. The company considered in Non-profit organization is the Audit Commission,
company considered as profit Organization is Tesco and the company considered as NGO is
Save the children. The report will cover difference between these organizations, size and scope
of these organizations and functions and structure of these organizations. Apart from that,
PESTLE is also taken into consideration to analyse the macro environment impacting the UK
retail sector. Description of SWOT and Porter's five forces model influence decision making of
the super market is also discussed here.
TASK 1
P1. Different types of organization
Difference between profit, non-profit and non-governmental organisation
There are different types of organizations which are described here:
Profit organizations:
These organizations has a single aim i.e. gaining profit as much as possible. . The
example of such company is Tesco. Tesco is a British groceries and general merchandise retailer
headquartered in Welwyn Garden city, Hertfordshire (Adeola, 2016.). This company mainly
deals in providing clothing, books, electronics, furniture, financial services, toys, petrol,
software, etc.
Non-profit organizations:
These organizations does not have any aim of making profit but these are formed for
social development (Adeola, 2015). The example of such company can be Audit Commission. It
is the statutory corporation of UK which has a main aim of appointing the auditors to audit the
local bodies in England.
Non-government organizations (NGO):
These organizations have the main aim of providing awareness in the welfare of the
society. It helps in the welfare of society in a particular field. The organization here is Save the
Children (Amit, 2017). This is an international NGO which promotes the rights of children and

helps and support the children in a hurry. It has been established in UK and now working
worldwide in the favour of children.
Difference between these organizations
Basis Profit Non-profit NGO
Aim The main aim of these
organization is to
maximize the profit
(Menychtas, 2014).
The main aim of these
organizations is the
development of society in
socially and economically.
The main aim of these
organizations is to provide
awareness for the welfare
of the society.
Handled
by
These organizations are
handled by an individual.
Proprietary of these
organizations is
government.
These organization are
handled by a legal person
who is not a part of
government.
Organizati
onal type
Decision making depends
upon an individual.
These are government
organization.
These are non-government
organization and helps in
the welfare of society.
Area of
operation
Large Limited Large
Business Purpose and Supply of goods and services
These organizations have different business purposes and have different supply of goods
and services.
Profit organizations:
In this type of organization, Tesco is taken which has a simple business purpose of
maximizing profit (Carneiro, 2014). The main purpose of Tesco is to offer goods and services
with lifetime loyalty.
Goods and Services offered
This company mainly deals in clothing, books, furniture, software and other services.

Non-profit organizations:
Audit Commission is taken in this type of organization. This organization is responsible
for auditing the local government bodies.
Goods and Services offered
This organization has the main purpose to set the standard for auditing and oversee the
work of auditors.
Non-government Organization:The main purpose of this organization is to save, improve, secure
the lives of children.
Goods and Services offered
This organization provide assistance to the children who are suffering.
P2. Size and Scope of the organization:
There are different types of organizations having different size and scope. First of all,
Tesco is a very large organization which has a market share of around 28.4% in groceries in UK.
It is the ninth largest retailer in the world. Secondly, Audit Commission which is a audit
regulatory body of England has a work of setting the standards for its auditors. It was established
under the local government finance act 1982 (Vogel, 2014). In the end, Save the Children is also
a very large organization which is performing its operations in most of the developing countries
to save the rights of the children.
Difference between micro, small and medium and large enterprises
Bases Micro Small Medium Large
Size It is smallest of
all enterprises
having 9 people
or fewer (Charter,
2017.). Example-
AM Bid services.
It is bigger than
the micro
enterprises having
people not more
than 50.
Example-Old
World Inn
It is bigger than
the small business
having number of
employees not
more than 250.
Example-Just-eat.
These are the
largest of all
having a huge
number of
employees.
Example- Tesco
Turnover It has turnover of It does not have It does not have It has a huge

less than or equal
to 2 million euro.
not more than 10
million euro.
not more than 50
million euro.
turnover.
Decision making In this decision
making is in the
hands of an
individual.
It have the
decision making
in the hands of a
few individuals.
It has group of
members having
the power of
decision making
(Cook, 2017.).
In this decision
can be made with
the help of
employees and
managers.
Place of business It can be operated
from home.
It can have its
own building
It can have a
leased premise.
It can have its
own office or
leased.
Market share, Profit share, growth and sustainability
Profit organizations:
The profit organization taken here is Tesco. In recent market, Tesco is growing its
business and it has a market share of about 28% in UK (Giessmann, 2015). Company has gained
28% rise in the profit. This help the company to grow and sustain itself in the competitive
market.
Non-profit organization:
Here Audit commission is taken as a non-profit organization. It is growing in the public
sector with 3.2% margin (Gatzioura, 2015). Hence, the market share and profit share of this
company is growing its way. The future of this company is good. As it can sustain itself in the
competitive market.
Non-governmental organization:
The organization taken here is Save the Children. As it is a NGO they does not have
market profit share (Ezenwafor, 2016). Apart from that, they have saved over 50 thousand
children from slavery in last year.
P3.Organization Structures and Functions
There are different kinds of structures of organizations which a company follows. Here,
structure of organization is explained on the companies listed above:
Bureaucratic structures:

This type of structure follows dictatorship in which all the decision are made by manager.
Functional Structure:
It is a hierarchical type of structure in which information follows steps to reach to its
destination.
Divisional Structure:
This structure divides the roles of the individual according to the expertise of them.
Matrix Structure:
It is a type of structure in which work is divided to hide weakness of the individual.
Organisation structure of Tesco
From the above organizational structures, Tesco uses Flat type of structure (Amit, 2015).
This structure type has no job titles or seniority i.e. everyone seems to be equal. This type of
structure used when there is less requirement of management between the employees and top
level so that employees participate more in decision making. This helps in increasing the job
responsibility among the employees.
For example: TESCO is a global organisation and has large size and scope in their sector. It
highly effect on organisational structure in a direct way (Apăvăloaie, 2015). The structure of a
an enterprise , nevertheless, will not modify more as the size of the enterprise maximise, since
the present organisation structure is already planned in order to accommodate a large number of
customers.
Mission :The companies mission statement states that they makes better together.
Objective: To be most highly valued business by the customers they serve, the community in
which they operate, their loyalty and committed colleagues and their shareholders.
Organisation structure of Audit commission :
There are five branches in the office of auditor general who work under the guidance of
Office executive (Belás, 2018). There are many executives in this organizational structure in
which coordination among the employees is good. This organizational structure can be modified
in future when the promotions will takes place.
Mission: To enhance the strengthening of public sector accountability, transparency and integrity
to the people through professional, independent audit services.
Objective: To be independent, competent audit office with qualified professionals to ensure
transparency and responsibility.

Organisation structure of Save the Children:
This organization is working together in 120 countries around the world (Botha, 2014).
This organization is working together for the better practices and policies, which have build
partnership and policies with civil society, government and private sector to support children.
Objective: This organization has a vision of attaining the right of survival, protection,
development and participation for the welfare of children.
Mission: To change the perception of the world so as to change the lives of children.
The size of Tesco organization is very large as it is one of the largest retailers in the
world. It has variety of scope of operations in which it can develop new ideas in order to change
the health of the nation for better. In order to check the organizational structure of non profit
organization Audit Commission is taken. It also has hierarchical organizational structure
(Pearson, 2017). In context of non-governmental organization, Save the children is taken which
has also hierarchical organizational structure.
Tesco have more complexity in the organisations. They have their central offices in other
countries but to operate freely, they gives advantage of taking self decision. Since these
companies have their offices in different countries hence they have the complexity of managing
such offices efficiently (Nyuur, 2014). For doing so, they offer their organizational structures.
Global organizations are investors and have many offices in other countries. Tesco can
market their products from their existing image which has created already. These organisation
have one corporate office to manage all the complex situations arise in the company. These
companies mostly emphasises in increasing their volume of employee, cost and management.
There are many functions which can affect Tesco's mission and objective are:
Marketing is one of the important tool of the organization to increase the overall growth.
This functions helps in promoting the products and services launched by the Tesco (Gomez,
2015). If a marketing manager requires human resource to market the product than coordination
is required between them to increase the productivity.
Human Resource is also an important feature of the organization to achieve its mission
and vision. Since HR manager of Tesco provides human resources, which requires salary for the
employees. Therefore a coordination is required between the HR and Finance.

Production is the department of managing the productivity required. This department
requires assistance from the marketing (Botha, 2015). Marketing provides information about the
number of unit to be manufactured. This information needs interrelationship between functions.
Finance is the most important asset of any organization. To examine what resource are
required to open a business, Tesco needs information from the marketing. They analyse and
calculate to know about the financial help required.
TASK 2
P4 Application of PESTLE model to the sector
There are various factors that are affecting business's macro environment, such factors
can be analysed with the help of PESTLE model as it is mainly based on external environment of
the organisations (Sekaran and Bougie, 2016). As Tesco has announced plan to simplify the
business which may result in job cutting of 1700 employees. To analyse the business
environment, organisation needs to conduct a PESTLE analysis which will help to get
information of environment. PESTLE is defined below:
PESTLE: It can be defined as the analysis of external macro environment of Tesco.
There are six different factors that are assessed under this analysis. All of them are explained
below:
Political: It can be defined as such forces that are implemented by the government of UK
in order to modify the strategies and policies that are previously induced by legal authorities. For
example: political bodies in UK has increased VAT suddenly and it has affected the operational
efficiency of Tesco and it has also increased the prices of its products.
 Positive: It help to reduce sourcing costs as government also provide free trade policies
to the businesses.
 Negative: Changers in government strategies and taxation policy can negatively affect
Tesco as it also have to modify its policies according to the change.
Economical: Such factors are related to the economic performance and directly affects
the organisational efficiency. It includes, inflation, deflation, taxation and other rates.
 Positive: Such type of factors help to increase employment in the country as well as in
Tesco that may result in improved standard of living of citizens of UK.

 Negative: Increasing taxation rates affects the purchasing power of customers and also
may result in decreased sales of Tesco.
Social: These factors are important for the companies in order to achieve their
predetermined goals. It includes opinion, taste, preferences, life style, age and paying capacity of
the customers (Schaltegger and Wagner, 2017).
 Positive: These factors help Tesco to identify and fulfil customer's needs and preferences
to acquire higher market share.
 Negative: If the education level and paying capacity of the customers are not good then it
may result in unsuccessful business.
Technological: These factors includes different type of current trends of market that are
mainly related to the development of technology (Kourie, 2015). Tesco is suggested to get
information about the technologies that are adopted by the competitors in order to enhance
effectiveness of the company.
 Positive: Adoption of effective and efficient technology can help to attract more and
higher number of customers.
 Negative: Latest technology adoption of the competitors may leave a negative impact on
Tesco and also affect the organisation's performance.
Legal: It is related to the legislation and regulatory framework of businesses and consists
consumer protections act, laws that are currently implemented or going to be implemented in
future (Kourie, 2014).
 Positive: As Tesco is following all the regulations which is introduced by legal
authorities which will help to expand the business in effective manner because this may
result in increased support of the government.
 Negative: If Tesco is not following any government rule than legal authorities mat take
strict action against the company.
Environmental: Such type of factors are related to the environment of the company and
its surroundings (Trad and Kalpić, 2016).
 Positive: Good environment at workplace help the employees to perform all the works
effectively.
 Negative: Unethical environment at workplace may affect the work quality of the
employees.

All the above factors are affecting the operations of retail industry because all of them are
related to the external environment of the market where the company operating the business
activities.
TASK 4
P5 SWOT and Porter's five force analysis
Tesco is one of the leading supermarket in UK and operating its business effectively
there. It is very important for the company to conduct a SWOT and Porter's five force analysis in
order to determine the internal and external environment of the organisation. Both are as follows:
SWOT analysis: It is mainly conducted by the companies to analyse strengths,
weaknesses, opportunities and threats (Zsambok and Klein, 2014). SWOT analysis of Tesco is as
follows:
Strengths Weaknesses
 Tesco is providing good services and
shopping experience to its customers.
 It is using improved technology that
helps to attract higher number of
customers (Apăvăloaie, 2014).
 Profitability and net contribution ration
of the company is below the industry
average.
 There is a gap in the product rage
which is provided by the company that
reduces the retention rate of customers.
Opportunities Threats
 Decreased inflation rate can help to
bring more stability in the functions of
the organisation.
 If Tesco can provide more choices to
customers than it may help to increase
number of customers.
 Increased number of competitors can
lead the company downwards.
 Changes in customer's buying
behaviour, needs and perception can
affect the profitability of Tesco.
Porter's five force model: It includes the assessment of five different forces that may
affect the performance of a company. Five force model for Tesco is as follows:
 Threat of substitute: For Tesco the threat of substitute is very high as there are various
companies who are providing same products on less prices so that they may acquire

higher number of customers. It is essential for the managers of Tesco to keep a broad
information of all the substitutes (Tesco Porter’s Five Forces Analysis, 2016).
 Rivalry among existing firms: The intensity of competitors in supermarket and retail
industry is very high. Tesco is currently dealing with various direct competitors like
ASDA, Sainsbury's etc. It is very important for the company to make effective strategies
to deal with them.
 Bargaining power of suppliers: As Tesco is a large company and have hundreds of
suppliers who are currently supplying various goods to the organisation. It is essential for
business enterprise to deal with such situations effectively so that funds can be saved for
future operations.
 Threat of new entry: Threat of a new entry in supermarket and retail chain is very low
as it is very important to invest higher amount to be more competitive in such type of
industry. There is less risk for Tesco from such type of forces.
 Bargaining power of buyers: Bargaining power in supermarkets is very high and if
another company is offering same goods on less prices then customers may switch easily
(Snyman, 2015). To deal with such type of situations, Tesco needs to set the prices for
the products according to the willing to pay of the customers.
Both the above mentioned analysis can influence the decision of supermarket as they are
the part of external environment and affects the operations of the company. If there are higher
number of competitors in the market than marketers of Tesco have to make effective judgements
and also have to make modifications in the policies (Smith, 2016).
P6 Relation of strengths and weaknesses with external macro environment
The relation of organisation's strengths and weaknesses with external macro environment
can be analysed with the help of proper research of both the elements. The relations is as follows:
Political: All these factors are related top government policies, regulations and rules that
are set by legal authorities for the business organisations like Tesco.
 Strength: As the government of UK is providing opportunities to trades after Brexit to
enhance the economy of the country which is a plus point for Tesco.
 Weakness: Frequent changes in government rules can affect negatively as organisations
also have to make modifications according to the government policies (Sassen, 2016).