The Business Environment: Factors and Stakeholder Analysis Report

This report provides a comprehensive analysis of the business environment, focusing on the factors that directly and indirectly influence business decisions. It examines both the macro (PESTLE) and micro environmental factors affecting organizations, using J Sainsbury plc as a case study. The report delves into the nature of the business environment, including its dynamic nature and the importance of internal and external factors. It assesses the impact of environmental forces on organizations, explores the requirements of various stakeholders (customers, suppliers, competitors, etc.), and evaluates the effectiveness of organizations in responding to policy actions. The analysis covers topics such as economic systems, customer needs, supplier power, and the role of competition. The report also highlights the significance of PESTLE analysis in identifying opportunities and threats. The study emphasizes the importance of stakeholder management and the strategies employed by organizations to meet their needs, ultimately aiming to maximize profits. Furthermore, the report discusses communication strategies, corporate social responsibility, and the influence of government policies. The report concludes with a reflection on the learning experience and the importance of understanding the business environment.

Project number: 2 of 2
The Business Environment
MODULE 401MANEL

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Nature of Business-environment............................................................................................3
Impact of environmental forces on organisations at micro and macro level..........................4
Access the significance of impact of environmental forces...................................................6
Requirements of variety of stakeholders in an organisation..................................................6
Effectiveness of organisations to policy actions taken by key stakeholders..........................7
Reflection ..............................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business-environment means the factors which directly or indirectly participate in
the decisions of business. The factors which influence the business are internal and external
factors. The environment assist the organisation to maintain stability in the competitive market
and also help the organisation to meet its objectives. The internal and external factors has a great
emphasis on the organisation. Further the environment is bifurcated into two parts:-
 Macro environment includes factors which affects the economy as whole such as trends,
monetary policy, economic etc. (PESTLE)
 Micro environment includes factors which directly affects the working of an organisation.
J Sainsbury plc which is a parent company of Sainsbury's covers the largest supermarket
business in the United Kingdom. The company focuses on the factors affecting their working in
order to survive in a tough competition. The report examines the factors involved in the business
environment which are affecting the organisation.
MAIN BODY
Nature of Business-environment
Understanding the nature of the environment in which organisation operate is of utmost
importance as it projects the organisation with the opportunities and threats in the market and
also helps in formulating strategies and policies. The company need to properly understand the
environmental factors to achieve the organisational goals effectively and efficiently (Zafari,
2019). Sainsbury's holds leading position in the supermarket in UK. The company on analysing
business-environment formulates the strategies and manages its stakeholders accordingly.
Further it help the company in forming realistic plans accompanied by their effective
implementation.
The nature of business environment are described as follows:- Dynamic: As the business-environment concept is dynamic and thus, the organisation
need to adapt the strategies keeping in view the changing environment. The Sainsbury
focuses on upcoming trend and other strategies in order to cope with the changing
environment. Internal and external Factors: The influence of internal factors can be controlled by the
organisation but there is not control over external environment. These factors highly

affects the working of an organisation. Thus, the organisation need to mould its structure
according to the external factors. The company give priorities to these factors to achieve
its organisational goals. So, the Sainsbury sometimes shifts more of its focus on
implementing strategies to cope with the changing environment (Pronk, 2018). Realistic Plans: The controlled factors and known environmental information helps the
organisation to form realistic plans that will led to achieve organisational goals
effectively. The Sainsbury believes in forming realistic plans and policies to apply such
plans as to attain desired goals (Seo and Hyun, 2019). Such realistic plans help the
management in achieving targets effectively.
 Economic System: It also affects the business environment as allocation of human
resources differs according to the economic system. These economic system includes
planned economy in which the government holds the entire resources of economy along
with the information of them, mixed economy in which fiscal and monetary policy
controls the economy. Accordingly, Sainsbury's formulate its own policies and
procedures to meet with the economic policies (Boyce and Ville, 2017).
Impact of environmental forces on organisations at micro and macro level
As discussed above, the environment consist of two factors macro environmental factors
and micro environmental factors. The Sainsbury's studies the environmental factors while
developing market strategies for the survival and growth of the organisation.
Micro Environmental Factors
They are the factors which directly affects the working of an organisation (Yang, Geng
and Feng, 2020). Sainsbury's makes effort to develop strategies keeping in view these factors so
as to meet the desired goals. These are as follows:- Customers: Customers plays a vital role in an organisation, as they help to generate
revenue of the company and thus, cannot think to operate without customers. The
company need to know their customers whether they are local or international, B2B or
B2C etc. Further it raises a question for the company about the marketing of products or
services to them. Thus, Sainsbury's determines the needs and wants of the customer and
takes measures to satisfy them with its products and services. Suppliers: The power in the hands of suppliers determines the success of an organisation.
The supplier plays an important role in providing high quality products from the

manufacturer at a reasonable price to the retailer or wholesaler for resale. As Sainsbury's
is the holding the supermarket chain in UK, thus has good number of suppliers and
focuses on fulfilling needs of the suppliers.
 Competitors: The Sainsbury holds a leading position in the supermarket of United
Kingdom has its biggest competitors, Teso and Asda. The increasing competition affects
the trade of the company. Thus, the management of the company lays the measures to
frame policies in the competitive environment in order to take lead over the competitors.
Macro Environmental Factors
Those factors which considered beyond the control of an organisation (Segura,
Morales and Somolinos, 2018). Thus, the PESTLE analysis examines complications the
company faces and the external factors affecting the brand position, are as follows:- Political Factors: The Sainsbury's was most affected when England no was a part of
European Union, which created inflation as the import price rates were increased. Further
political rivalry also affects the company's market share. Economic Factors: Cost of fuel also led an increment in the cost of products. Thus, the
company is left with another alternative means of transport. It also includes the inflation
rate, Gross Domestic Product, as they were highly affected in the recent pandemic
situation. Social Factors: During the pandemic situation, customer valued the healthy food and
thus, affected the Sainsbury's food menu. Another is the fair trade movement, which
causes high payment of prices to the producers, exporters in order to maintain the
standards and thus, affecting consumer demands. Technology Factors: For Hi tech customer Sainsbury devised the website offering fresh
product with great quality along with occasional discounts and free delivery offers. Thus,
focus on fulfilling the demographic needs of the customers. Legal Factors: Britain's political decisions caused the company to change their policies
and procedures in order to meet the objectives of the company effectively. The delay in
change may cause the decline of market share and goodwill of the company in the
market.

 Environmental Factors: The Sainsbury try attractive strategies to promote their product,
one of them is using biodegradable packaging which differs with other brand products.
Thus, using the ecological method in running the company.
Access the significance of impact of environmental forces
PESTLE analysis is a part of external analysis that gives an overview of various macro-
environmental key factors (Political, Economic, Sociological, Technological, Legal and
Environmental) used in the environment. This analysis is flexible, so organisations can use it in a
range of different scenarios and the results derived from such analysis be used to guide strategic
decision-making. The main aim of PESTLE analysis is to identify the factors which affects the
working of Sainsbury. It helps organisation to gain insight into the external factors which may
impact their strategy and business decisions (Nurmi and Niemelä, 2018). The Sainsbury remain
updated with these factors in order to attain success and growth in the market and also make
plans to cope with the unforeseen situation. Thus, these forces determines the strategies and
actions of the company towards its goals.
The positive impact of the PESTLE analysis on the company are:
 It gives the company a framework towards organisational goals.
 It provides the measures for cost effective
 Warns against future threats and help the organisation to anticipate such threats
 It helps in exploiting business opportunities.
 It help to know the conditions prevailing in the market, such are demand and supply,
policies like monetary policy, fiscal policy formulated by the government etc.
Requirements of variety of stakeholders in an organisation
The stakeholders of the company are investors, employees, customers, suppliers etc. who
has an interest in the working of an organisation. They need to entertained as either they affect or
get affected by the conduct of business. Further the stakeholders can be internal as well as
external to the organisation. Internal stakeholders are those who has a direct relationship with the
company and External stakeholders are those who indirectly form relationship with the
organisation (Zwikael and Smyrk, 2019). Thus, they play crucial role in the company as by
managing relationships with these stakeholders, the company can achieve long term success in
the market.

Stakeholder Analysis is important for the company, as the needs and expectations of
these stakeholders are prioritised in order of importance to the business. This help the company
to find out the degree of interest of their stakeholders in the company. According to the degree of
interest the company performs its activities towards stakeholders. After analysing the
stakeholders and their importance, the company formulates such strategies with an aim to meet
the needs and expectations. For example, the government expect the company to follow their
rules and protocols and pay taxes on time, likewise the customers expect to make them satisfy
with the products and services of the company (Mazza and Furlotti, 2019).
The Sainsbury has conducted the market research in order to understand the requirements
of its stakeholders and the other associated factors that will increase more interest towards the
company. Better the strategy company follows towards the stakeholders more the interest they
inherit. The concern behind fulfilling the needs and expectations of the stakeholders is to
maximise the profits. Logically, each stakeholder consist own share out of total profit of the
company so having concern for stakeholders is considerable. Thus, Sainsbury aim to satisfy its
stakeholders in order to achieve desired goals.
Effectiveness of organisations to policy actions taken by key stakeholders
The company formulates various effective strategies in order to drive stakeholders
towards them. The strategies need to be effective so that the company achieve its goals
effectively and efficiently. The Sainsbury adopted a communication strategies which comprises
the elements of effective communication methods that include magazines, formal letters,
conferences etc. The magazines published by the company help to communicate with the internal
and external stakeholders of the company. As magazines specifies the subjects related to
business which may the attract the stakeholders like investors to make investment in the
company. Company also introduced newspaper to convey current news for its stakeholders in
order to keep them inform and updated. Further the Annual Report published comprises of the
performance and future plans of the company. Also the cultural differences is taken into account
by the company to communicate with its wide spread suppliers.
The Sainsbury takes initiatives towards Corporate Social Responsibility. As the company
success depends on understanding towards social, environmental and economic responsibility.
The company focuses on strengthening relationships with stakeholders and to maintain its
position in the competitive market. Also the company forms the strategies towards government,

to regularise their policies and brings out the required changes in its conduct in order to attain its
goal effectively (Aversano and et. al., 2020). Recently, the company believes that the Britain
new coalition government will probably led a rise in VAT and likely would make strategy in
order to meet its target. The major stakeholders are customers, thus to please them the company
offered many services such as expanded the digital platform in pandemic situation, lowered food
prices, increasing the openings of new convenience store etc.
Reflection
Doing an precise research seems a daunting task, but I am feeling glad in grabbing this
opportunity of doing this report on management. As the report helped me to understand the
factors present in the environment and how they affect an organisation in a positive as well as
negative way. I have done a valuable research by taking a UK company which is, the Sainsbury,
then studied the factors by applying practically on the company. I have done a general research
in this report and have learnt a lot about the environment especially in relation with business.
The research made me learned one of the management model used in analysing these factors, as I
was unknown to the model and its application in the management issues. I felt that the research
excelled with my writing skills. It further improvised my management skills as I have never
applied such theories practically. As I am good and a quick learner, thus learnt management
theories effectively by doing research. I got enough confidence in implementing my
management skills. Also while undergoing research I got familiar with way of doing an
appropriate research which seemed helpful in my report. As the data related to the company on
which I have done research was insufficient so I have used the other browsing websites apart
from the company's official website to validate my research. The research made me learn a lot
about the company as well as the factors in the environment. Now I can apply my management
skills practically and theoretically for resolving the grievances. Even my way of looking
management problems has changed. Now I have no issues in conducting any report based on
management stream.
It gave me not only the knowledge of former factors but also about the evolving factors
and the upcoming trends in the environment. And how I can apply my management skills in day
to day life, as I used to lack with the management skills. Such skills gave me the opportunities to
explore more in the area of management, which earlier I used to hesitate. Further, the challenges
which I have faced in doing this report was the lack of management skills, insufficient

knowledge about the models used in the management and their implementation in the evolving
problems. Also the tenure in completing the project was not enough for me and the time problem
accompanied by the lack of such skills was a bad combination. But somehow I have managed in
completing my report after considering my weakness. Moreover, lot of time was consumed in
learning management theories and models. The hindrances which I have faced resulted into a
positive change in me. The outcomes behind the report was the challenges which I have
successfully overcome in completing my project. With the challenges, the lessons and models
which I have learnt is a long time achievement for me. As they enhanced my management skills
for any unforeseen problems. Thus, the report was overall beneficial and imprinted a positive
impact on me.
CONCLUSION
From the above report it is concluded that business environment accompanied by its
factors plays an utmost important role in the conduct of business. The company need to place
great emphasis on these forces in order to sustain in the challenging market. The changing fact
has a great impact on the business, as we have seen the challenges faced during the pandemic
situation. The Sainsbury analysis the factors timely and formulate the measures accordingly in
order to survive and grow in the market. PESTLE is generally used to analysis the factors which
are beyond the control of an organisation. This analysis helps to know the sustainability of the
company and its future growth in the market. Further the stakeholders analysis help the company
to know their importance and role towards the goals. And how such needs and expectations be
fulfilled in order to achieve the desired goals efficiently. Thus, to accelerate the business with the
changing environment, it is required to take measures keeping in view the factors and their
stakeholders affecting the conduct of business.

REFERENCES
Books and Journals
Aversano and et. al., 2020. Corporate social responsibility, stakeholder engagement, and
universities: New evidence from the Italian scenario. Corporate Social Responsibility
and Environmental Management. 27(4). pp.1892-1899.
Boyce, G. and Ville, S., 2017. The development of modern business. Macmillan International
Higher Education.
Mazza, T. and Furlotti, K., 2019. Quality of code of ethics: an empirical analysis on the
stakeholder employee. Social Responsibility Journal.
Nurmi, J. and Niemelä, M.S., 2018, November. PESTEL analysis of hacktivism campaign
motivations. In Nordic Conference on Secure IT Systems (pp. 323-335). Springer,
Cham.
Pronk, N.P., 2018. Building cultures of health and well-being: creating and sustaining supportive
organizational environments. ACSM's Health & Fitness Journal. 22(3). pp.40-42.
Segura, E., Morales, R. and Somolinos, J.A., 2018. A strategic analysis of tidal current energy
conversion systems in the European Union. Applied energy. 212. pp.527-551.
Seo, Y.M. and Hyun, B.H., 2019. A Study on Performance Creation through Open Innovation
with Corporate Environments. Journal of the Korea Convergence Society.10(12). pp.81-
91.
Yang, Q., Geng, R. and Feng, T., 2020. Does the configuration of macro‐and micro‐institutional
environments affect the effectiveness of green supply chain integration?. Business
Strategy and the Environment, 29(4). pp.1695-1713.
Zafari, K., 2019. Building Resilience in Turbulent Environments: The Role of Relationship
Marketing (Doctoral dissertation, University of Otago).
Zwikael, O. and Smyrk, J.R., 2019. Stakeholder management. In Project Management (pp. 85-
102). Springer, Cham.