Business and the Business Environment: Types, Analysis, and Functions

This report provides a comprehensive analysis of the business environment, examining different organizational types, including private, public, and voluntary sectors, with specific examples such as M&S, NHS, and Cancer Research UK. It delves into the legal structures, size, and scope of these organizations. The report defines the relationships between various organizational functions, such as production, sales, finance, HR, R&D, and marketing, and explains how these interrelationships contribute to achieving organizational objectives. Furthermore, it describes the positive and negative impacts of the macro environment on businesses, supported by examples. The report also includes internal and external analyses of specific organizations, identifying strengths and weaknesses and exploring how these relate to external macro factors. The conclusion summarizes the key findings and insights gained from the analysis.

Business and the
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1 ...........................................................................................................................................3
P1 Describe different types, purposes, and legal structures of organisations; public, private
and voluntary sectors ..................................................................................................................3
P2 Size and scope of the organisations.......................................................................................5
TASK 2............................................................................................................................................7
P3. Define the relationship between different organisational functions in order to achieve
organisational objectives.............................................................................................................7
TASK 3............................................................................................................................................8
P4. Described the positive and negative effect of macro environment on the business by using
specific examples........................................................................................................................8
TASK 4..........................................................................................................................................10
P5. Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses..........................................................................................................10
P6 Explain how strengths and weaknesses interrelate with external macro factors.................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business can be understand by that activities which are conducting by a person or
organisation in order to earn profit by selling goods and services. Other, business environment
include all the internal, external factors and all the individuals which can effect the organisation
overall performance, growth and sustainability. In this report, the take organisations are M&S
which is a private organisation, NHS is public organisation, and Cancer Research UK is a
voluntary organisation. This report will defined about the different type of organisations and
their size and scope. Also, relationship between all these organisation and how the macro
environment impact on the organisational objectives and structure. At last,it will understand that
how strength and weaknesses interrelated with external macro factors.
TASK 1
P1 Describe different types, purposes, and legal structures of organisations; public, private and
voluntary sectors
In today's corporate world, businesses are divided by their purpose and structure
according to this there are various kind of organisations. There are three type of organisations
which include private, public, and voluntary(Savrul, Incekara and Sener, 2014). They all have
conducting their activities for different purpose, while conducting their activities they have to
follow a specific legal structure. Here is the brief explanation of different organisations and their
legal structure which are described below:
Private organisation in this category those organisations are included who are
conducting their activities for earning profit. This kind of organisation is generally run by
individuals and a group of people not by the government. In this report, the taken organisation is
M&S which is multinational retailer, dealing in quality clothing, home and food products. They
are operating their activities for earning profit in this they have to follow a specific legal
structure which are described below:
Sole trader in this business type the owner has unlimited liability as it is related to one
person business, that means there is no legal difference between the business and owner.
Partnership this form of business contains an association of individuals who comes
together for completing the same purpose(Cohen and Kietzmann, 2014). They all have limited
liability and specific ratio of profit which is mentioned in their partnership deed.

Private Ltd companies are established by individuals or group or people which all have
limited liabilities. In this structure company have to follow various rules like they have to formed
Memorandum of association and many others documents(Siewiorek, et. al., 2012).
Hence, M&S is included in the private Ltd company.
Public organisation (not for profit) these are those organisations who are conducting
their activities not for earning profit but for providing benefits to the public. The chosen
organisation is NHS which is owned and controlled by government of U.K and their main
purpose is providing better health services at minimum charges.
Legal Structure
Central government is responsible to form the rules and regulation for providing the
better health care services across the nation.
State government have liability to giving appropriate health care service to state level
people.
Local government is liable for those people who are covered in particular city, it is
responsibility of them to providing them heath care service at lower price.
In context of NHS the central government rules and regulations are applied on them.
Voluntary Organisation (non-governmental organisation) they are operating their
activities for welfare of the society and they are independent from government or state. In this
category the chosen organisation is Oxfam, which are working to upliftment of the society
without earning any kind of profit.
The main purpose of them is to provide service to the poor people and remove poverty.
Legal Structure
Trust is formed for the charity and others social welfare that is governed by a trust deed
which helps to made the objectives of the trust(Boons and Lüdeke-Freund, 2013).
Charity is that structure the Oxfam is operating their activities under the charity Act,
2011.
Complexities of transnational, international and global organisation structures:
These terms refers to that condition when a company wants to expand their business in
others nations. While expanding the business an organisation have to face various problem which
are defined below:

Transnational is most critical form of organisations as while expanding their business an
organisation have to follow all the rules and relation of other countries which creates big issue
for them.
International companies are only responsible for import and export so they does ot need
invest outside their country but the main loss when the import and export rates are constantly
change(IşıK, Jones and Sidorova, 2013).
Global is referred to that companies which are operating their business in more than one
country. For example M&S is included in this category as they are operating their activities in
various countries but they have to face the problem in adopting different cultures and opinions of
others countries.
P2 Size and scope of the organisations
There are various type of organisations which are different from each other in every
aspect are described below:
Basis Micro business Small business Medium-size Large enterprise
Definition This type of
business is
operating their
activities at a
small level. For
instance, Issoria
which is a
business
management
consultant(Avram
enko, 2012).
They are
operating at a
small are and earn
profit on regular
basis Like
Davison canner
which is food
manufacturer.
This kind of
organisation
conducting their
activities in more
than one area of
particular country
and earn profit.
For example
Bevy, which
serves a range of
drinks to their
customers.
In this category
those
organisations are
included who are
conducting their
activities world
wide. For
example Tesco,
they are leading
in more than one
country.
Market share As they are
operating their
They are also
operating their
As bevy is
serving its
Tesco is leading
their business

activities at a
small level hence
they are not able
to cover market
share at huge
level.
activities at small
scale but they
able to gain high
market share as
compare to micro
business.
customers across
the UK so they
able to cover
huge market share
but not more than
large companies.
world wide which
helps them to
cover huge
market share as
compare other
businesses.
Profit share Due to the small
size of business
they able to earn
only a little bit
amount of profit.
They are earning
profit more than
micro businesses
as they are
earning profit by
doing their daily
transactions(Onett
i, et. al., 2012).
.
The profit share
of this business is
not equal to large
business but they
are earning good
amount of profit.
As it is the largest
form of business
and they are
conducting their
activities at a
large scale which
helps them to
earn higher
profitability.
Growth and
sustainability
They have less
chances of growth
and sustainability
as they have
covered a lower
market and profit
share.
This company is
serving its
facilities in a
particular area so
there is less
chance for
growing and
sustaining in the
market.
They have more
chances of growth
and sustainability
as compare to
micro and small
business.
They have
covered almost
huge marketplace
which has
increased the
chances of growth
and sustainability
of them.
Size and scope of the private, public, and voluntary organisations:-
Basis Private (M&S) Public (NHS) Voluntary (Oxfam)
Scope They have great scope
in their business as
This kind of
organisation has wide
They are conducting
their activities for

they have included in
the first British retailer
in earning pre tax
profit. Also, they have
great opportunities to
expand their business
and attract various
customers as they are
leading in high quality
of products in national
and international level.
scope as they are
conducting their
activities for social
welfare. NHS is
working for reducing
the infectious disease
from the world for this
they are providing free
eye test, dental care
and mental healthcare.
removing the poverty
from all over the
world. They have great
scope because public
is always support them
because these
organisations are
working for the
benefits of the poor
people.
Size They have almost 959
outlets across UK,
from these 615 is only
leading in food
products.
They have great
presence in all over the
world as they have
give opportunity to
almost 130000 people
in their hospital.
This is group of almost
14 organisations and
working with almost
more than 3000
partners from approx
100 countries.
TASK 2
P3. Define the relationship between different organisational functions in order to achieve
organisational objectives
In any kind of organisation, different organisational functions are related with each others
as they all are conducting their activities in order to achieve the organisational goals and
objectives(Palepu and Healy, 2013). The interrelationship between all the organisational
functions are described below:
 Production and sales department: These both elements plays an important role in the
organisation because the success of the organisation depend on it. Production department
is responsible for producing those goods and services which has high demand in the
market. After completing the production process the sales department responsivity will
start which is related to the sales and inspired the customers to purchase the products.

 Finance and HR department: A healthy relationship between these both departments is
key to business success. As the finance department of M&S is concern about the capital
and profitability and HR department is concern about the human capital which is most
crucial part in the business. If the HR department will appoint the right employees in the
organisation then they will be able to earn higher profit which helps them to maintain
their finance in an appropriate manner(Schaltegger, Hansen and Lüdeke-Freund, 2016).
 R&D and Marketing: The interrelation between these two departments provide great
benefit to the M&S. As research department is responsible for generating the new ideas,
innovations, and implementing them in their production process. In this process
marketing department will help them in an effective manner as it will tell them about the
new trends, market segments, customers behaviour and preference so they able to
develop those products which will help them to satisfied the customers needs and
demands which results higher profitability and sustainability.
Hence, the interrelationship in all these departments will help the M&S to achieve their
goals and objectives in ease manner as all the departments are well-connected with each other
they can share their ideas, opinions and issues easily. It will help them to create healthy
relationship between all the departments which motivates their employees do more efforts in
order to achieve their organisational goals and objectives.
TASK 3
P4. Described the positive and negative effect of macro environment on the business by using
specific examples
The macro environment include all the external factors which can impact an
organisational overall performance in the both positive and negative manner. These factors are
non controllable, an organisation must evaluate the effect of this factors on their business. The
management of the business any of the tool for evaluating these factors, for understanding the
impact of these factors on UK retails sectors PESTLE analyse will be use which are described
below:
Political factors: These factors are related to the government policies, rules and
regulations(Rose, Orrenius and Neumann, 2013). For sustaining in the market for a longer period

of time UK retailer sector needs to consider all these rules and regulation in their operational
activities. These factor have both positive and negative impact on the business like:
Positive: It has positive impact on the operations like if the government provide some
relaxation to the UK retail sector which may reduce the cost of their production which result
lower cost and higher productivity.(Dima, Grabara and Modrak, 2014).
Economical factors: The performance of the UK retail sectors have greatly affected by
the economy of the country where they are running their business. These factors include inflation
rate, exchange rate, interest rate etc. These factors have long term positive or negative effect on
the business.
Positive: In the context of positive impact it will be understand by the example like if the
import rate will be reduce then it will be beneficial for retail sector as they are able to purchase
the products at low cost and deliver these products to the customer at reasonable prices.
Negative: If the inflation rate in UK economy will rise then it will increase the
purchasing power of customer which will increase the competition which might reduce the
demand of its customers.
Social factors: These factors includes the customers preference, cultural trend,
demographic etc.
Positive: It will help the UK retail sector like M&S to produce those products which are
high demand-able and preferred choice of the customers.
Negative: If the customers choices and market trends are constantly changing then it will
create loss and lower productivity in the organisation.
Technological: These factors are related to the innovation in technology, research &
development, automation and man others. They have some positive and negative impact on the
activities of UK retail sector:
Positive: By using the new innovative techniques they can reduce their production cost
and get the competitive advantage.
Negative: Other, if they fail to using the new innovation in their production process then
they will not be able to meet the demand of the customers and gain the competitive advantage.
Legal factors: Any kind organisation must consider all the legal regulation of
government in their business. These includes labour laws, consumer laws, and safety law.

Positive: In the UK retail sector it will have great positive impact. For instance if M&S is
following consumer law in their organisation then it will help them to attract more customers
towards their organisation(Janita and Miranda, 2013).
Negative: In UK labour rate is very law which creates problem for UK retail sector as
they have to face the deficiency of employee in their workplace.
Environment factors: These factors are related to the environment, it is essential for any
of the organisation to prevent the environment while conducting their activities. These factors
have positive and negative effect on the UK retail sector:
Positive: While operating their production activities they are using polluted free machines
then it will helps them to create good image towards their employees.
Negative: Other, if they are not concern about their environment in their operational
activities then it might cause huge loss for the organisation.(Lee, et. al., 2015).
TASK 4
P5. Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses
In order to operate the business activities smoothly an organisation needs to understand
all the strength and weaknesses in their organisation and identify opportunities so they able to
take advantage of it and threats which they have to face. For understanding all these factors, will
use SWOT analysis of M&S which are described below:
Strengths Weaknesses
 Mark & Spencer is well known brand
as they are serving high quality
products to its customers.
 M&S have huge global presence as
they have almost 900 stores in all over
the world which is the great strength of
them to earning high
profit(Schaltegger, Lüdeke-Freund and
Hansen, 2012).
 Many people considered it as a non
trendy store because they are more
focusing on the traditional clothes not
on the trendy and western clothes.
 M&S is using old techniques in their
production process due to which they
are not able to attract a large number of
customers as compare to their
competitors.
Opportunities Threats

 It is big opportunity for M&D to enter a
new market by adopting a new
technology in their production process.
 Other, by expanding their business in
Asia they can earn higher profitability
as there is a huge demand of ethnic
wear.
 Competition is major threat for M&S as
they have to tough competition from
Zara, Gap, etc.
 Implementation of new environmental
regulation in Paris create a big threat
for their existing products.
Porter's five forces analysis: This is a tool which is helps an organisation to evaluate
the competition and position of the business. In this model there are fives factors which helps an
organisation to identify the competitive strength. These factors help the M&S to formulate their
strategies according to the competition and their strength which helps them to become more
competitive and successful(Palepu and Healy, 2013). All these factors are described below:
Bargaining power of supplier: This is major factor which can effect an organisation in
an effective manner. More strong bargaining power or less number of supplier create big issue
for buying firm as they will sell their low quality products at higher price. In the case of M&s
they should their suppliers very carefully because it will direct impact on the profits and
sustainability of them.
Bargaining power of buyers- Bargaining power plays an important role in the business
as it is related to the customers. In this factors customers have power to demand high quality
products at lower price. For attaining their customers satisfaction M&S have to produce their
products at reasonable price and offering high quality otherwise their customer will go to another
business.
Threats of new entrants: This will also affect the performance of M&S as they have to
face tough competition in the market. When the barriers are industry is high then there is less
chances of enter a new business due to high case it is profitable situation and vice versa there
will be loss for the company.
Threats of substitutes: For competing this situation M&S have to offer their products at
lower price and high quality because in this situation various rivals are available in the market
who are serving same products at low price and high quality.

Rivalry among existing competitors: It focus on the how much competitors in the
market. For competing their competitors M&S needs to adopt effective market strategies and
needs to differentiate their products from others.
P6 Explain how strengths and weaknesses interrelate with external macro factors.
In this part, that how the strength and weaknesses interrelated with the macro factors can
be understand by the PEST analysis. For this chosen organisation is M&S, the PEST analysis of
M&S defined beneath:
Political: These factors are related to government innovation, rules and regulations.
These have some merits and demerits which are described below:
Strength: As M&S is leading in UK, there the government rules does not changes rapidly
due to which they can earn great profit.(Avramenko, 2012).
Weakness: In UK import give freedom to free flow of trade which creates compensation
for M&S as they have to face lower price startegies of their rivals.
Economical: These are related to the economy like inflation rate, interest rate, etc. These
provide both profit and loss to the M&S which are described below:
Strength: As competitors of M&S are serving in niche market which gives great benefit
to them as they are dealing in high quality of products which able to provide a great satisfaction
to the customers.
Weakness: In UK government is lowering their investment amount in the retail sector.
Social: It is related to the customers belief, opinion, choice and preference. Here are example of
the strength and weakness of these factors:
Strength: They are focussing on their customers preferences and smooth trading procedure which
helps them to attract various customers.
Weakness: Nowadays customers preferred trendy clothes rather than ethical clothes which
creates problem for M&S.
Technological:- Technology innovations and development of new technologies are included in
these factors which have great impact on the activities of M&S.
Strength: By implementing the innovation in their production procedure they can
products goods at lower cost which results high profitability(Cohen and Kietzmann, 2014).
Weakness: Raising in online purchasing and transaction create a big issue for M&S to
survive in the market.

CONCLUSION
As above file, it can be understood that every organisation is different according to their
size, structure and purpose. In every organisation there are various kind of department which
have great relationship with each other which helps them to attain higher profitability and
sustainability. Moreover, it can be understand that every organisation is effected by various
external and internal factors so every organisation must focus on the strength and weakness or
positive and negative of these factors on their operational activities so they able to reduce the
negative impact of these factors and able to run their smoothly.

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