Analysis of Business Environment, Structure and Functions Report

This report delves into the intricacies of the business environment, examining various organizational and legal structures, including private, public, and voluntary sectors, using Tesco as a case study. It analyzes the size and scope of organizations, illustrating their correlation with firm objectives. The report explores the relationships between organizational functions, such as marketing and finance, and their links to overall organizational objectives and structure. Furthermore, it assesses the positive and negative impacts of the macro environment through PESTEL analysis and conducts an internal and external analysis using Porter's Five Forces, VRIO, and SWOT models to identify strengths and weaknesses, and how these relate to macro factors. The report provides a comprehensive understanding of business operations and strategic analysis.

Business And Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Elaborate various types of organisational and legal structures..............................................1
P2 Analyse size& scope of organisations...................................................................................3
M1 Examine how scope and size of organisation are co-related with its firm objectives..........4
TASK 2............................................................................................................................................5
P3 The relationship between different organisational functions and their linkage to
organisational objectives and structure. ....................................................................................5
TASK 3............................................................................................................................................7
P4 The positive and negative impacts of macro environment on business operations ..............7
TASK 4............................................................................................................................................9
P5 Internal and external analysis of organisation in order to identify strengths and weaknesses
.....................................................................................................................................................9
P6 Strengths and weaknesses interrelate with macro factors\...................................................11
CONCLUSION..............................................................................................................................12
REFERENCES .............................................................................................................................13

INTRODUCTION
Business environment refers to the various micro and macro factors which affects the
business in its activities, operations and functions. Business environment includes employees,
suppliers, owners, technology, social trends, stakeholders, market trends, etc. in short it includes
the internal and external factors of business where internal factors are the suppliers, employees,
customers, owners and stakeholders (Abe, Bassett and Dempsey, 2012). Whereas external factor
includes technology change, market trends, social trends, economic change and condition,
political factors and so on. Internal factors of any business environment can get control by the
business but the external factors of the business are not in control by any business, they work
interdependently to business environment. This report talks about the business environment,
types and forms of business with the factors which can affect the business and business
environment. For reference this report has taken an example of TESCO company and has tried to
related the above factors with it. This report also covers the interrelations of different
departments in organisation, the positive and negative impacts of macro environment on business
(through PESTEL) and analyses of strengths and weaknesses of an organisation (through Porter's
five forces model, VRIO and SWOT analysis).
TASK 1
P1 Elaborate various types of organisational and legal structures
Organisation refers to team of people who comes together to achieve desired objectives
and goals. Organisation play different role according to their functionality and requirements. So,
there different types of organisation in business environment like voluntary, public and private. It
depends on firm to adopt which kind of organisation. Market is wide and dynamic which leads to
uncertainty of situations as well as activities and entities should acquire various forms of
business to over come with challenges (Alotaibi, 2016). Types of organisations are discussed
below-
Private organisation-
Theses are those firm which comes in market with motive of profit and revenue. There
main focus is on expanding of business and to acquire more manpower sources. Private
organisation includes huge cost, more resources and time management. In this context TESCO

can be considered as private operating sector. There are several types of private sectors like sole
proprietor, franchise,cooperatives etc (Bansal and Hoffman, 2012).
Legal structure-
 Partnership- Partnership is safest structure of business and organisation. It refers to
carrying out activities of business by two or more than two party. Partnership is of two
types ordinary and limited. Ordinary refers to paying of losses solely it is similar to sole
proprietor. Limited partnership refers to sharing of losses by both the parties according to
their mutual agreement. Example - TESCO with British heart foundation.
 Sole traders- Sole traders/ proprietors are those which runs their own business and are
solely responsible for their risk and loss bearing. These organisation perform limited
activities within their line. Types of sole traders such as cafe owners, saloon etc. Risk
level is low in this type of business and organisation. These traders can work as employee
as well as owner both or can hire other people as subordinates (Belás, 2015).
 Private limited- These are those company in which shares are limited and can be shared
between personal belongings. Public members in this form of structure are not allowed to
purchase or sell the shares of company. Private company which has limited shares such
as Virgin Atlanta. These types of companies follows the accounting principle of going
concern concept because firm can be run by solely business owner even if the employees
or board of directors/ shareholders quit.
 Public limited- This is most flexible form of structure in organisation. Members of firm
can sell and purchase the shares in market/ public to acquire more profit and expand of
business. Example -Marks and Spencer (Dahles and Susilowati, 2015).
Public organisation-
Another form of organisation structure is public organisation in which companies are
governed and registered by government with motive of serving to the welfare of society and
providing services and products such as gas, petrol, water, coal etc. They provide a huge
contribution in nation's economy. Types of public organisation such as HSBC holdings. Legal
structure is stated below-
 Central government department- These types of companies are registered and works
under government regulations.
 Local Authorities- Organisation are maintained and managed by local authorities.

Voluntary Organisation- These are play vital role in society welfare. Because in this types of
organisation people come together to achieve a common objective/ purpose. Such as NCVO
headquartered in UK (Deasy, 2016). Legal structure of this organisation has been mentioned
below-
 Trust- In these form of organisation, companies have trustees and board of directors who
assist in proper funding because main motive is to be active and provide welfare to
society as well as public.
P2 Analyse size& scope of organisations
Every organisation wants to expand their business to acquire more resources, capital and
market. So, various types of aims, objectives, mission and vision are carried out by firm on basis
of their requirement and need. Thus numerous types scope as well as size has been discussed
below-
Private limited-
Private limited companies are established aiming to earn more profit and sales revenue in
market. With profit making objective, they also focus on acquiring more customers and provide
high quality of services as well products to target market. To avail the opportunity business uses
several tactics and strategies which assist them to survive in competitive market. Private limited
company such as TESCO , has been rising as well as diversified company across the globe.
These types of firm are dynamic and active in the market.
Vision- Vision of TESCO is to become global leader and provide total satisfaction to its
customers as well as employees.
Mission- Their mission is to provide a high quality of products to customers and to create
a optimistic environment in organisation.
Objectives- To increase market share and profit scale.
Product- TESCO is diversified company and provides variety of products such as
clothes, groceries etc.
Size- TESCO ha spread its business across the globe and number of employees working
in organisation are approximately 4,50,000.
Structure- TESCO follows hierarchical (TOP-DOWN) structure which assist firm to
manage all its activities and operations at all the aspects.
Public Limited -

This is type of organisation in which public can participate in firm activities. Such types
of companies works under rules and regulations of government or as a legal entity.
 Background- HSBC is public bank which provide financial services across the
globe.
 Vision- There vision is to provide in the welfare of society development.
 Mission- HSBC mission statement is to be world largest financial service
provider.
 Products &Services- HSBC provides various types products as well as services
such as fixed deposit, credit and debit card etc.
 Size- HSBC is leading multinational bank operating worldwide with number of
employees 2,32,957.
 Structure- HSBC follows top down approach in its management.
Voluntary sector-
Theses are types of organisations who perform business activities and operations in order
to create a better society (Ferreira, 2012). They act as non- profit organisation and contribute in
growth as well as development of social welfare. Voluntary organisation such NCVO in UK.
 Vision- There vision is to create a positive environment amongst communities
and charities institutions.
 Mission- NCVO mission is to reduce the difference between religions as well as
communities.
 Objectives- To unpin the various community sector as well as voluntary
organisation.
 Structure- NCVO follows the hierarchical approach and power lies in the hands
of top members.
 Size- Company includes number of employees 200 approximately.
M1 Examine how scope and size of organisation are co-related with its firm objectives
Organisation comprises of many activities which are managed and maintained by
management at appropriate manner (Harrison, 2013). So, scope, size and structure are co- related
with business objectives because they assist firm to focus on overall formation of business. Firm
can increase their productivity, output and input efficiency. Thus, there are different types of

organisation are there under which operations are performed such as Public, private and
voluntary.
Public organisation- Structure of Marks and Spencer is top down as well as down to top
approach which means Strategies and tactics can be implemented by both level which creates
positive relationship in business. This structure increases employee morale, motivates and makes
them independent to take decisions confidently. So, by following this structure entity is able to
provide satisfaction to both employee and customers and goodwill of firm has been increased.
Thus, it is important for a firm to determine types of structure which is essential and needed by
entities. A structure includes three types such as work specialization, formulation and
departmentalization (Hillary, 2017). It depends upon firm to focus on which types of structure in
business.
Private organisation- Size of TESCO is increasing at rapid level. So, organisation
motive of achieving maximum profit with optimum use of resources is running smoothly. This
objective of TESCO is achievable due to its large activities operating worldwide with large
numbers. Increase or decrease in size of firm both affect organisation at deep level. Thus, it is
crucial to analyse and to be active towards the size of an enterprise.
Voluntary organisation- Scope of NCVO is to work for society and to bring all the
communities and voluntary organisation together for a common purpose. Scope of NCVO is at
wider level and adoption of this scope has assist entity to achieve its goals in effective manner.
TASK 2
P3 The relationship between different organisational functions and their linkage to organisational
objectives and structure.
Every organisation sets its goal which it likes to achieve. Organisational goal is usually
sets by top level management of people. Goal set is linked with the organisation mission, vision
and values. Further the goal or plan is sub divided into sub- plans which becomes targets to all
the departments say marketing department, finance department, human resource department and
the like. Then these departments work according to the target or goal given to them. The head of
these departments make plans and strategies for the people of their department ( lower level of
management) which are targets for these people. This is how organisational plan is divided and

sub divided into small plans and targets. The target of one department is interrelated with other
departments and as well as with whole organisation. Relationship between different
organisational functions and their link to organisational objective can be drawn as follows-
Marketing and finance- Every business does marketing for its products and services. The
marketing is necessary for business to position its product into customers mind. Through
marketing the business aware customers about the product, its specification, its price and how it
is different from other products or services which are available into the market at present. To do
marketing, businesses needs funds. Small level of marketing need comparatively low finances
than the finances needing in doing vast range of marketing. For marketing purpose, company
needs finances. So for raising funds the marketing department has to do contact with finance
department, there they need to present budgets for them and get it approved from finance
department. It can also be possible that finance department will try to bargain with marketing
department according top the funds they may allot for marketing purpose. In TESCO, similar
scenario can be seen (IşıK, Jones, and Sidorova, 2013). For any marketing of discounts season or
offer season or any addition of new product, they have to inform customers which can only be
done through marketing. Hence for marketing purpose they have to reach to finance department
for funds they might be needing. The finance department after going through the budgets will
sanction for funds. That's how the marketing department is linked with financial department of
an organisation.
Advantages-
 This function helps in achieving goals and objectives in appropriate manner.
Disadvantages-
 It requires cost and skilled employees to enhance productivity.
Human Resource and all departments- Every organisation needs workforce to performs their
tasks. Human resource or employees are consider as a major resource for any company because
it is they who raise the organisation to very next level. The job of HR department is to fill the
vacant spaces of an organisation. They coordinate with all the departments regarding the work
force they might be needing in future or they might need at present, what skills they are looking
for in person to hire and the like (Liu, 2013). The HR department after noting the personnels
organisation might need, they organise the recruitment process where they hire the talented
people who matches with the required skills and attitude which company is looking for. As in

case with TESCO, the HR department coordinates with other departments for employees needs
to get hired. Then accordingly they send invitation to talented people for interview. Through
interviews they hired that applicant which they think is best suited for the position or role.
Therefore, HR department is linked with all the departments of an organisation and helps in
achieving organisational goal by providing the required talent forks to the company.
Advantages-
 With help of HR department firm is able to achieve goals and objectives in proper
manner.
Disadvantages-
 Sometimes inequality and discrimination take place which disrupts the environment.
Supply chain management- Further come the supply chain management in which process
of raw materials into final product is carried out. It is crucial function of the firm because it helps
in acquiring more customers to business and increases the volume chain of business as well. In
relation with TESCO, organisation maintains and manages the process in appropriate manner so
that all activities are carried out in proper way.
Advantages-
 It helps increasing the output and provide effective results.
Disadvantages-
 As it is a process, conflicts and errors take place at wider level.
TASK 3
P4 The positive and negative impacts of macro environment on business operations
Macro environment of an organisation can be analysed by doing PESTEL analysis.
PESTEL evaluate the external factors which do affects the business activities and operations.
PESTEL analysis of Tesco is as follows-
Political- Political factors includes government policy, political stability, corruption,
foreign trade, tax policy, trade restrictions and so forth. These are the policies and rules which
are formed by political party currently running in the country. In short it tells about the degree of
control political party exercises on businesses (Prajogo and Oke, 2016). As per the article
provided, it talks about how sustainable products can benefits the company itself. Infact there are

many countries which makes its policies and plans which forces the company to opt for the
practices which encourages the environmentally friendly operation management and products.
As in case of Tesco, the followings are the positive and negative impact of political factors-
Positive impact- Tesco has its retail stores in over 12 countries across the world. It is said to be
second largest retailer after Wal-mart in revenue terms. Some countries where the company has
opened its store has political stability. Political stability helps the business to grab a solid
platforms for business activities. Apart from it there are countries which encourages such
retailers as they creates job in that country, which increases the employment rates in the country.
Apart from it, by following the plans and policies which are established by the government in
relation to sustainable practices makes the company to gain support from the government also.
Governmental support can prove to be a great help for the business. Such encouragements does
helps in business in expanding the business smoothly.
Negative impact- Political rules and regulations of the country does affect the business
workings. There are many countries in which Tesco is operating where they have political
instability. Political instability creates frequent changes into the rules and regulation which do
affect the business as they often needs to change their activities or operations. This does affects
the business negatively.
Economical- Economical factors include economic growth, exchange rates, interest rates,
inflation rates, disposable income, unemployment rates and the like. According to the article
provided, it plots the main focus on green marketing. Green marketing refers to the process of
marketing and promoting if products or services by promoting their environmental benefits
much. Green marketing is a new and trendy marketing method which is in vogue now-a-days.
Those are the products which are environmental healthy or are produced at environment friendly
way. And how the green marketing increases the sales for organisation. From economical factor
point of view, the organisation can saves more cost by proper planning and management of
natural resources. In short the factors which are related to economic conditions are included here
(Sodeyfi, 2016). The positive and negative impact of economic factor on Tesco is as follows-
Positive impact- Tesco major market share in UK is the highest with 30%. and the UK has very
good economic conditions with significant GDP rates. The people in UK has high disposable
income and half a percentage of population leads a luxurious life. This has a great positive
impact on Tesco. As in relation with the article, Tesco can saves more of its cost by properly

management of the food products it sales. The perishable food products should wisely managed
to save cost for the company.
Negative impact- There are some countries which has high taxation and exercise duties which
makes the product price quite high from the usual. This creates issue for the Tesco as they has to
sell the products at high prices which make them lose their competitive advantage. This
negatively affects the company (Yoon, 2012).
Social- Social factors include population growth rate, demographics distributions, career
attitudes, safety emphasis, health consciousness, lifestyle, behaviour, trends and preferences of
customers and so forth. Social factors tells about the attitude and behaviour people have with
reference to a particular topic. Along with this according to the article provided, the environment
issue has now become an social factor. It is in trend to produce sustainable products and follow
environment friendly procedures in their business operations. This not only help the company in
gaining confidence of general public but also in improving financial performance.
The positive and negative impact of social factors of Tesco is as follows-
Positive impact- Tesco offers variety of products which helps the company in attracting a wide
variety of customers. And according to the article provided, Tesco exercises sustainable products
and environmentally friendly approaches which helps it in gaining more and more customers.
Which ultimately advantage the company in improving financial performance because of
increase in its customer base.
Negative impact- Trends and preference of people keeps on changing which makes a lot
difficult for the company on stand at it every time.
Technological- Technological factors includes technology incentives, level of innovation,
automation, R&D activity, technology change, technological awareness and the like. This factor
includes the level of technology advancements in a country. Higher the technological
advancements, higher will be the development. According to the article provided, any company
can gain sustainable development by adopting the technology which follows the environmentally
process in its production. This will also helps the company in its cost savings.
The positive and negative impact of technological factor on Tesco is as follows-
Positive impact- With the time, Tesco has also advanced its method to reach to their customers
via technology. The company launched his own payment system name payQwid which enables
the users to do convenient and easy shopping (Zeng and Duan, 2012 ) . The company also

minimize the use of paper which ultimately results in cost savings for the company. Tesco saves
a lot by the usage of technology as they does not need to maintain paper for the accounting
purpose.
Negative impact- Technological advancement adds cost to the company. Moreover, the
company has to invest continuously in its R&D for gaining competitive advantages.
Environmental- Environmental factors includes weather, climate, environment policies,
climate changes, pressures from NGOs and the like. As in the given article, the main plot of it
was environmentally friendly products produced through environmentally friendly technologies.
The article talks about how an organisation can saves its cost and increase its profit through
green marketing. A company can also gain its customer's support when they feel that the
company does cares about our environment and is putting its step forward to overcome
environmentally products and business practices by adopting friendly procedures and producing
sustainable products.
The positive and negative impact of environmental factors are as follows-
Positive impact- The technology used by the company is environment friendly. This not only
saves cost for the company but also gains the support of its customers. Now a days people are
opting for those products which are sustainable to environment health an avoids those products
which cause harm to the environment. Therefore it has become a obligation for every company
to follow the sustainable practices to survive into the market place. Same with tesco, the
company adopts the trend of sustainable products with time. It adopts the sustainable procedure
into its process. By adoption of same it markets itself as an environmentally friendly company
which does help the organisation in gaining more customers.
Negative impact- The installation of such technology is very costly for the company.
Legal- Legal factors includes discrimination laws, antitrust laws, employment laws,
consumer protection laws, copyright and patent laws, health and safety laws and so forth. Now-
a-days countries are making rules regarding planning of natural resources, which become
obligatory for every company to follow.
The negative and positive impact of legal factors on Tesco is as follows-
positive impact- The company follows all the legal obligation which is required to be followed
by any business operates into a country (Rainer, 2013). This builds the trust of people in
company. Tesco follows all these environmental obligation which is put by government on