Business and the Business Environment: A Detailed Analysis Report

This report comprehensively analyzes the business environment, encompassing public, private, and voluntary organizations, their purposes, sizes, and scopes. It delves into the interrelationships between various organizational functions, such as production, marketing, finance, and human resou...Read More

Business and The
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1 Different types and purposes of public, private and voluntary organisation..........................3
P2 Size and scope of a range of different types of organisation..................................................6
LO2..................................................................................................................................................9
P3 Relationship between different organisational functions and how they link with
organisational objective and structure.........................................................................................9
LO3................................................................................................................................................11
P4 Positive and negative impact that macro environment has upon business organisation......11
LO4................................................................................................................................................13
P5 Internal analysis of TESCO (SWOT analysis).....................................................................13
P6 Explain the strength and weakness interrelation with external macro factors.....................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
As defined by Keith Davis “Business environment is the aggregate of all conditions,
events and influences that surround and affect it”. This involves every condition and element in
business environment. Business organisation is of two types that is external business
environment and internal environment. External environment consist of factors outside business
organisation and internal environment refers to factors within business organisation. This report
will discuss about different types and purposes of public, private and voluntary organisation.
Later, size and scope of a range of different types of organisations and relationship between
different organisational functions and their link with organisation objectives and structure will be
discussed in report. Later, positive and negative impacts of macro business environment on
business will be discussed. Later report will also discuss about internal and external analysis of
Tesco and interrelation of strengths and weaknesses with external macro factors will be
discussed. Tesco is a British multinational groceries and general merchandise retailer, it was
founded in 1919 and is headquartered at Hertfordshire, England. Tesco operates at around 6800
locations in 10 countries. This report will also involve certain other organisation along with NHS
in public organisation and British Red Cross in a voluntary organisation and wll discuss about
legal structure of these organisations.
LO1
P1 Different types and purposes of public, private and voluntary organisation
There are different types of organisations that are public, private and voluntary
organisation. Different types and purposes of these organsiations are as follows-
Public organisations
Public organisations are those that are owned and operated by the government. These
organisations are operated for the purpose of providing services to society and people of
community. Organisations that are owned by local, state or national government and such
organisational are financed by sources of taxes and products and output of these is provided for
community and societal benefits.

Concerned with legal structure of public organisation, such organisations are owned and
operated by government (Canel and Luoma-aho, 2018). This means that ownership of such
organisations is either held by state government or national government, in order to maintain
their ownership, 51% or more shares are owned by government. NHS is an example of this type
of organisations. NHS is a publicly funded healthcare systems of UK this means that this is
funded out of general taxation.
Private organisations
Private organisations are those that are owned and operated by private people and these
organisations mainly operate with a purpose to generate and increase profit through business
activities. On the basis of their size and nature, these organisations might be operated by more
than one individual. Funding of these organisations is also done by private and then they share
profit earned by such organisation. On the basis of legal structure, different organisations are as
follows-
Sole Proprietorship
This organisation is owned and operated by one person and in terms of size, these
organisations are often micro and small organisations. Risk and profit generated by these
organisations solely owned by the owner of the business.
Partnership business
Partnership businesses are those organisations that are owned and operated by two or
more people and activities of business are influenced by partners of the business (Khan and
Khandaker, 2016).
Transnational organisational
Transnational organisations are those that operate in multiple countries with foreign
direct investment and such organisation has office in each country and adopts a decentralised
approach.
Global organisations

These are those companies that operate in several countries and do not follow the system
of having a head office. These organisations sell standard products and not necessarily adapt to
local consumers.
Cooperatives
Cooperatives are association of persons that are owned and controlled by people to meet
their common economic, social and cultural needs and requirements. These organisations are
jointly owned and democratically controlled.
Voluntary Organisations
Voluntary organisations are organisations of third sector and are organisations that are
non-government and non-profit organisations. These organisations are created an operated with a
purpose to make social impact. Voluntary organisations involve voluntary participation of
members who contribute in realising objectives of organisation. British Red Cross is an example
of voluntary organisation and works to provide humanitarian aid in UK and oversees. In order to
provide humanitarian aid people voluntarily participate in organisational activities. Funding of
these organisations is often done by membership fees or by other means (Jaura, 2019). These
organisations operate with a purpose to create social impact and also work for the purpose of
creating society a better place to live. On the basis of profit generating and treatment different
voluntary organisations involve-
For-Profit Organisations
These organisations are those that earn profit through their activities and this profit again
is invested in organisations. Profit earned by organisation is source of funding for organisation.
Not-For-Profit Organisations
Not for organisations are those organisations that do not generate profit from their
activities and their services are provided for betterment of society.
Non-government organisation

These are those organisation are those organisations that are free from any government
involvement in organisational activities.
P2 Size and scope of a range of different types of organisation
Previous heading discussed about public private and voluntary organisations. Difference
in these organisations was based on their ownership and purpose for which they operate.
However, there are several other organisations operating and these organisations can be a part of
any of the above discussed type of organisation (Larrucea and Santamaria, 2017). This means
that these organisations are small, medium and large organisations and these organisations can be
public, private and voluntary organisation. Main difference that exists in these organisations is
based on their size and scope of activities of these organisations.
Basis Small Medium Large
Firm Ozone Coffee
Roasters
Brightstar Financial Tesco
Size Size of these
organizations is
limited in terms of
employees and
people involved and
in terms of their scale
of operations.
These organizations
employ more
employees and
people for operations
that extend to 250
maximum. In terms
of their scale of
operations also
extends to more
cities.
These organizations
are largest in terms of
size and employ more
than 250 employees.
Size and scale of
operations also
extends to national
and international
level. Tesco is an
example of this type
of organization.
Scope Scope of these
businesses is limited
to particular activity
involving least people
and least activity.
Mainly operational
These organizations
involve more
activities extending
their scope. These
activities involve
operational and basic
These organizations
has significant scope
and involves
operational,
managerial and
several other

activities are
performed by these
organizations.
managerial activities. supportive activities.
Objective Objective of small
organisation is to
earn maximum profit
in small investment
that they made in
business
Medium
organisations tends to
seek for growth
opportunities and
increasing scale and
scope of the business
To maximise
profitability through
customer satisfaction
and customer loyalty
(Shihab and
Rahardian, 2017).
Maintaining
competitive
advantage and
performing better
than competitors.
Such organisations
also seek to increase
their market share in
their industry.
Profit Volume These companies are
not able to take out
high amount of
profits because of the
limited resources they
have to invest.
These businesses earn
profit on a substantial
scale but with
investing more
resources in their
business they will be
able to achieve
growth and earn
more.
This business earns
more and they have
to earn more as they
have no option
because if not they
will incur huge
amount of losses and
will go out of
business.
Activities Activities of small
organisations are
limited to core
business activities
Activities of medium
organisations are
more and these
organisations along
Activities of large
organisations are
more than core
business activities

and additionally only
basic financial
management in form
of recording of day to
day income and
expenditure is done
by the company (Pan
and et.al., 2017).
with core business
activities also
undertake managerial
and administrative
activities.
and administrative
activities. These
organisations also
undertake research
and development
activities and
corporate social
activities.
Tax and
employment
contribution
Small organisations
cover biggest part of
economy and
business population
but tax and
employment
contribution of small
organisations is
significantly less
compared to large
organisations.
Medium
organisations and
their population is
higher than large
organisations but
overall their
population is also
less. But even with
less population of
medium
organisations
contribute more tax
compared to overall
tax contribution by
small organisations
(Shihab and
Rahardian, 2017).
However, their
contribution in
employment is less.
Large organisations
and their population
is less than 1 percent
of total business
population in an
economy but large
organisations
contribute highest
taxation and
employment in an
economy.
Size and scope of Public, private and voluntary organisation

Public organisation and their size and scope depend on and get affected by level of
government operating organisation. This means local, state or national government. Organisation
owned and operated by local government has limited scope and organisation owned and
managed by national government has more scope.
Private organisations and their scope and size depends on the level they are operated at,
this involves small, medium and large level.
Voluntary organisation and their size and scope vary and depend on the basis of their
nature and number of people associated with organisation (Mohan and Bennett, 2019). This can
have size and scope extended to city or town and can extend to international level. British Red
Cross is a international voluntary organisation.
LO2
P3 Relationship between different organisational functions and how they link with organisational
objective and structure
There are different functions that are carried out in Tesco and these organisational
functions have their individual objectives and purposes that they fulfil within Tesco. But in order
to achieve objectives of Tesco it is very important that these organisational functions are
interrelated and work collaboratively. Tesco employs a functional organisational structure and
this is why structure and hierarchy in Tesco is based on different organisational functions. This
means that starting from top position of organisation later structure involves key functional
department (Sharmila, 2019). These departments are leaded by each functional head and
employees are grouped and organised on the basis of their skills and knowledge related to
particular organisational functions. Responsibilities and reporting relationships are clear and
each function is interrelated to other organisational function in order to achieve objectives and
goals of Tesco. Relationship between different organisational functions of Tesco is as follows-
Production and Marketing
Production department in Tesco undertakes producing products that are later sold in retail
stores. Marketing department undertakes different functions of marketing such as research,

promotion. Marketing research plays important role in success of production department in
Tesco. This means that marketing provide knowledge to production department regarding quality
and attributes of products that customers prefer. Products when are developed and produced with
right knowledge they are more likely to succeed. Marketing department also gets input from
production department regarding products and their promotions.
Finance and other departments
Finance department is one of the departments that is linked with every other functional
area in organisation. This means that financial department undertakes functions like allocation of
budget and financial reporting and analysis of performance of different functional areas in terms
of finance. Other than this, finance department also advise on better financial performance of
departments individually and help in taking better decisions (Gummesson, 2017). It is important
for all organisational departments to work with financial department in order to achieve
organisational objectives and ensure effective financial performance.
Human resource department and other department
Every organisation requires effective personnel who can carry out their respective
activities and this requirement is fulfilled by human resource department. HR department ensure
that every organisation in Tesco is resources with efficient and talented employees. This involves
qualitative hiring and training and development. Further their compensation, grievances are
solved by HR and this contributes in maintaining their performance (Valebnikova, Valebnikova
and Kalinina, 2019). This is important that Tesco employs right and efficient employees as they
are important for achieving organisational objectives. Tesco employs around 450000 employees
and responsibility to manage thee employees and their different functions like training and
development, compensation are carried out by HR department of the organisation. Like HR
department of Tesco supports other organisational department assistance and support of other
organisations is also important for effective functioning of HR department. This means that
activities like HR planning and resourcing organisation with right number and right kind of
people is possible through information given y different departments regarding their employee
requirements.
IT department and other departments

Information technology is playing centre role in overall operation of Tesco and this is
why IT has become important for ensuring all functional areas are operating without any
difficulty. Marketing function and IT function is highly interrelated because of online
promotions and E-commerce is also successfully is carried out with help of IT department of
Tesco. IT department is not only important for marketing but other organisational functions as
well. This means that majority of organisational activities are carried out with help of technology
and this requires active support of IT departments in ensuring smooth performance of every
department and functional area.
Interrelationship between organisations mainly affects structure of Tesco. Organisational
Structure is a system that outlines how different activities in organisation are directed towards
achievement of goals and objectives of the organisation. This relationship in functional areas gets
affected by type of organisational structure (Siepmann and et.al., 2018). This also differentiates
their role and system in which they contribute in achievement of organisational goals and
objectives.
LO3
P4 Positive and negative impact that macro environment has upon business organisation
Macro environment has significant influence on Tesco and its organisational functions
and their success. Macro environment consists of factors that cannot be controlled by Tesco and
requires adopting them in order to gain maximum benefit and to avoid any negative implication
of performance and success of organisation. Positive and negative impact of macro environment
can be analysed through pestle analysis (Using the PESTLE analysis model, 2020).
Political
This involves political and government influence on an organisation. Factors that impact and
influence Tesco in this environment involves political uncertainty and unrest in UK and Tesco
also become subject to political condition of the countries where it operates. Brexit has made an
impact on Tesco and this is not positive, because due to Brexit, relations of UK with EU
countries have affected and UK is no more subject to benefits of EU (Nandonde, 2019).
However as UK is no more restricted to EU regulations and it can establish relationships with

other countries and Tesco can take advantage of this. So, political environment has both positive
as well as negative impact on Tesco.
Economical
Economical environment mainly involve economic and financial regulations that affect business
organisations and their financial conditions. This also involves economic condition of a country
and impact of that on financial and economic conditions of organisation. This involves GDP,
interest rates, cost of operations, taxation policies and employment trends. Recession is also a
part of economic environment and this has made negative impact on Tesco. However, low cost
of operations in emerging economies where Tesco operate is a positive impact on Tesco.
Social
This involves consumer and customers of Tesco and impact that they have on success and
functioning of business. Changing consumer preference create difficult in coping with changes
and this is a negative impact of this environment (Adamyk, 2019). However increasing online
shopping also has a positive impact on Tesco as it can reach to bigger market and serve more
customers from different channels. Other than this, consumers changing trends and ability to
cope with these changes can also make positive impact on Tesco.
Technological
Technological environment has become centre for success of organisation. Competition in retail
organisations is mainly based on technological advancement and retail organisations are focusing
extensively on online sales and marketing as well as improving in-store experience of customers.
Increasing technological advancement is both a positive and negative impact and influence on
Tesco. This is because adapting technological advancement can provide several benefit to Tesco.
On the contrary if technological advancement is not adopted by Tesco it can also cause
competitive failure for Tesco.
Legal
This is concerned with factors and elements that govern and regulate activities and operations of
a business organisation. Legal environment involves different laws and regulations that requires

to be adopted by the company in order to avoid any kind of legal issue and complication which
can affect financial condition as well as goodwill and image of the company (Shtal and et.al.,
2018). Tesco’s image has been affected due to fraud trails and financial recordings. Other than
this, elements and factors involved are employment regulations, equality and discrimination
laws, consumer safety, adherence to accounting standards and regulations and food safety and
regulations.
Environmental
This factor involves safety and sustainability of environment. This has become very important
consideration for different organisations, government as well as consumers. Following
environmental regulations has a positive impact for Tesco as it has long term positive
implications on Tesco. Tesco is also working to reduce its carbon emission in order to reduce its
contribution in environmental issues. But doing this also involve significant cost because
conventional practices are cost friendly and are more productive which is not in environment
friendly practice. This can negatively affect financial conditions of Tesco.
LO4
P5 Internal analysis of TESCO (SWOT analysis)
Strengths
Tesco have the large network of the retail stores making up the shop convenient
regarding customers as well as making up the market share in proper manner. Currently
company have 3400 brick and stores under looking of the Tesco brand plus 2000 Booker along
in UK. this is helping out Tesco as reaching customer as possible as making finding out Tesco no
brainer task.
Company is dealing with private’s label and exclusives in house products providing up
customer with cheaper choice but with similar quality of famous brands in perfect manner.
Sales in the UK and Ireland in the fiscal year 2019 went up 3%, partially thanks to the
introduction of eight new “Exclusively at Tesco” brands, including Ms. Molly’s and Hearty
Food.

Moving out to have flexible methods of payments for customer in way of cooperating
Tesco banks. Company is trying out to get into the cashless as firms is offering up the Pay+
mobile payments application, PayQwiq digital wallet, and a new contactless Clubcard which is
providing up their customer with quick way which is convenient to pay have proper checkouts.
Weakness
There has been participating of firms in many retail types results declaring up results
in in efficiency. With addition, Tesco is also operating more of super markets and convenience
stores along with operating in the Garden Centres, Euphorbium bakeries, Giraffe restaurants,
Tesco Opticians. the firm have divested up their business in year 2017 fore freeing up different
resources along with cutting down the cost in better manner. Tesco is owning up several other
business service beside rather than retail store. but there may be guarantees to make generation
of profits
Lack of innovations which is leading to have implication of cost cutting as main
strategy in way of boosting up the firm incomes in better manner. Tesco have been
struggling up as for increase in sales up and getting up profit margin. but the culture of Tesco is
paying up major emphasis on encouragements for finding out new ways for growth rather than
looking for business aquation. Therefore, to stay afloat, Tesco announced a cost-cutting target of
GBP 1.5 billion by fiscal 2019/20, include removal of 9,000 roles, or about 4% full-time
equivalent employees. Tesco is expecting to have short term strategy around saving up with GBP
150 million. In addition, the cost cutting has not be sustainable strategy until it backfires.
Opportunities
Tesco have been increasing up the sales with help of online channels. Currently the
customer are looking up to major purchasing of groceries from the Tesco website and delivering
them as soon as possible. The company have major following up of competitive pricing in the
different variants such as electronic devices, entertainment, tools, and gardening.
The firm have expansion over the booker brand with help of cash and carry model
continuing its business operation in Brazil turning out to be successful. as cash ad carry model is

continuously looking into credit transaction exclusion as all goods and service require up front
payments.
Threat
The consequences of the Brexit are affecting the supply chain of Tesco in Europe as
well as its revenues and income. Tesco is majorly sourcing up its raw material form their EU
firms to UK As the result of Brexit, EU have imposed up with higher taxes which will be going
under the strict inspections of customer causing up delay in services. Tesco is exporting the
product to Europe looking to have similar treatments with higher tax and major inspection.
Nevertheless, the firm cannot pass out with increased cost of customers resulting in reduction of
income.
The discounts store such as the German Aldi and Lidl are taking up the British
grocery market. this is more discounted firms running out in the supermarket formats looking
out the Tesco territory. there have been major change in term of perceptions looking to higher r
ends shoppers allowing up more space in London. On the other hand, Tesco Jack brands is facing
up the major struggle in discounted store. Jack has not reached a level of momentum necessary
to be considered a serious threat to Aldi and Lidl.
P6 Explain the strength and weakness interrelation with external macro factors.
As per the political factors Tesco in this environment involves political uncertainty and unrest in
UK and Tesco also become subject to political condition of the countries where it operates. this
have created up threat for business as Tesco is majorly sourcing up its raw material form their
EU firms to UK As the result of Brexit, EU have imposed up with higher taxes which will be
going under the strict inspections of customer causing up delay in services. Economic
environment mainly involves economic and financial regulations impact of that on financial and
economic conditions of organisation. Hence as the result, company is struggling up as for
increase in sales up and getting up profit margin. it is important to note up relationship with
social factors as increasing online shopping also has a positive impact on Tesco as it can reach to
bigger market. this have turned out as opportunity as customer are looking up to major
purchasing of groceries from the Tesco website and delivering them as soon as possible..
Competition in retail organisations is mainly based on technological advancement and retail

organisations are focusing extensively on online sales and marketing as well as improving in-
store experience of customers. This is getting into the Tesco weakness as lack of innovations is
leading to have implication of cost cutting as main strategy in way of boosting up the firm
incomes in better manner. In addition, the cost cutting has not be sustainable strategy until it
backfires
CONCLUSION
On the basis of above discussion, it can be concluded that there are different types of
organisations operating in economy and factors differentiating them are their ownership, purpose
and size. Knowledge and understanding of different organisations and their characteristics can
contribute in effective decision making regarding selection of the organisation that one wants to
get associated with. This report later discussed about different organisational functions and how
they interrelate with each other. Discussion suggests that interrelationship in organisational
functions is significant for success of organisation. Later report discussed positive and negative
impact of macro environment on business and discussion suggests that every factor of macro
environment has certain positive as well as certain negative impact on Tesco and this also gets
affected by capacity of Tesco to deal with external factors and their impact. Lastly report
discussed relation of strengths and weaknesses with external macro factors.

REFERENCES
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distribution of voluntary organizations influence the likelihood of
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Online
Using the PESTLE analysis model. 2020. [Online]. Available Through: <
https://www.smartinsights.com/marketing-planning/marketing-models/pestle-
analysis-model/>.