Business and Business Environment Report: UK Retail Sector

This report offers a comprehensive analysis of the business environment within the UK retail sector. It begins by differentiating between various types of organizations (public, private, and voluntary), examining their purposes, ownership, and operational scales, using examples like NHS, Asda, and Oxfam. The report then explores the sizes and scopes of businesses (micro, small, medium, and large), detailing their market share, profit share, growth, and sustainability. Organizational structures, including divisional, functional, matrix, transnational, international, and global structures, are discussed in relation to their influence on market dynamics. The report also delves into the interrelationship between organizational functions (marketing, finance, human resources) and the overall mission and objectives of a company, using Asda as a case study. Finally, the report employs a PESTLE analysis to identify the positive and negative impacts of macro-environmental factors on the UK retail market.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1 .................................................................................................................................................1
P1 Types of organizations and its purposes...........................................................................1
P2 Size and scope of the organisations...................................................................................3
LO2..................................................................................................................................................5
P3 Organisation structures and functions...............................................................................5
LO3..................................................................................................................................................6
P4 Identification of positive and negative impact of Macro environment factors on UK retail
market Using Pestle analysis..................................................................................................6
P6 Internal and external assessment of UK supermarkets to identify its strength and
weaknesses.............................................................................................................................8
LO4................................................................................................................................................10
P6 Explain how strengths and weaknesses interrelate with external macro factors.............10
REFERENCES..............................................................................................................................11

INTRODUCTION
The report incorporates the micro and macro environment affecting organizations
of all sizes and types working in retail sector of the UK. Business environment
comprises of different internal and external factors which affect strategic business
decision making. Every organization has certain role or purpose or vision which it tends
to fulfil with the help of human resources and thereby, generating profit for themselves,
economy and individuals as well.
The report undertake evaluation of various retail industries and non government
sectors and their environment aspects which affects its overall performance and scale
of operations. The different size, type, and structure of retail company faces different
environment which has opportunities and threats affecting its reputation in the retail
market.
LO1
P1 Types of organizations and its purposes.
Differences between public, private and voluntary organization. To evaluate
differences three different organizations working in different sectors has been taken into
account.
Basis of
differences
Public Private Voluntary
Ownership These are mainly
owned and funded
by government. The
National Health
Service organization
of UK is wholly
owned sector of
government
providing health care
facilities to all at free
cost of charge
The private
companies are fully
owned by sole
persons, partners or
as a joint venture
who has an acute
interest in earning
profit. Asda being a
retail chain of
supermarket based
in UK has a sole aim
It is usually owned
and operated by a
group of people who
has an aim of
uplifting the society.
These are those
organizations which
contribute towards
eradication of
prejudices from the
community started at
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(Business
Environment, 2017).
of earning profit
thereby enhancing
its expansion and
becoming one of the
leading supplier of
grocery in UK.
a small platform
without earning any
basic profits. The
Oxfam is one of the
NGO working and
operating in UK.
Business Purpose The main purpose of
Public sector
organization is to
maintain well-being
of their people
thereby making little
or no profit. The
NHS looks after the
elder and younger
generations of UK
and provide health
assistance in best
way possible (Stuart
and et.al., 2010).
The motive of
private organization
is solely towards
making huge
amount of profits so
as to be distributed
among shareholders
as well as saved as
reserves for funding
future projects. Asda
has grown with time
grabbing huge
market share in
terms of profit.
The voluntary
organizations such
as Oxfam has a sole
motive of eradication
of poverty from the
UK economy
(Carlton and Perloff,
2015). It has an
objective of
sustainable use of
resources and
providing basic
amenities to all
thereby
safeguarding their
interest and securing
their lives (Business
Environment, 2017).
Meaning The public company
is able to list its
shares in the market
and on stock
exchanges for the
purpose of purchase
The private limited
companies is not
eligible for public
listing of shares
though could raise
capital from selling
The voluntary
organizations being
a non registered
company cannot
participate in these
and usually has a
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by general public. shares and
debentures to
shareholders (Stuart
and et.al., 2010).
small area of
operations which do
not requires huge
capital.
Mission and Vision The NHS being a
public company has
a vision of protecting
and safeguarding
health of people in
UK with a sole
mission of providing
regular health
check-ups so as to
maintain good health
(Business
Environment, 2017).
Asda being a profit
making organization
wants to achieve its
vision of leading
supermarket chain in
UK. The grocery
store is at 5 position
in UK competing
with Sainsbury,
Tesco etc. fulfilling
its mission.
The Oxfam being a
social service
provider has a vision
of poverty ridden UK
economy where
every one enjoys life
with best possible
amenities
P2 Size and scope of the organisations.
Difference between micro, small, medium-size and large enterprises.
Basis Micro Small Medium Large
On basis of
Turnover
These
organizations
has the smallest
amount of
turnover which
do not exceed
beyond $1
million.
The small
organizations
generates $1
million and $20
million turnover
in a particular
year (Stuart and
et.al., 2010).
The medium
size industries
generates
between $20
million and up to
$300 million
turnover in a
given year.
Large or
Corporate
business is
denoted by
businesses
where the
turnover
exceeds $300
million.
On the basis of The micro The small The medium The corporate
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Employees businesses is
operated either
by sole person
or family
members and
generally has no
employees
(Carlton and
Perloff, 2015).
businesses
tends to have
20-50
employees
working at a
particular time
and at a
particular place.
sized firms has
approx 100
employees
working at a
particular time
on a single
project (Stuart
and et.al., 2010)
level
organizations
has more than
100 employees
working under it
having a
common goal of
achieving
organizational
objective
(Business
Environment,
2017).
On the basis of
scale of
operations
The micro firms
uses small
capital and thus
have a small
size of
operational
platform.
The size and
scope of these
concerns is
small as they
are owned
privately as
proprietorship or
corporation
thereby
generating
smaller revenue
(Business
Environment,
2017).
Medium
organisations
have a
moderate scale
of operations
and an average
size employing
minimal
employees
necessary to
carry out
operations.
They have
usually greater
investment of
capital which
generates
Big
multinationals
has a large
scale of
operations with
huge mount of
investment
thereby
generating
ample profits
both in form of
incentives and
funding future
projects.
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higher revenue.
A brief description of market share, profit share, growth and sustainability of
different organizations based on size and scale of operations (Chandler, Hikino and
Chandler, 2009).
The Market Share of Asda has seen an increase to 17% of total retail market share
becoming amongst the top five retail supermarket stores ion UK. The term market share
refers to a portion which has been grabbed by a retail sector company or in other words
loyal customers of a company residing in a particular market is known as market share.
Asda has thus, at an increasing rate of expansion of its business in order to grab
market.
The Profit Share on the other hand refers to the total revenue earned by a company in
a particular span of time. Asda being a private owned company has strategic plans to
earn profit in order to compete with others. Asda has a profit share of approx 25% in the
last year. Though on the contrary Oxfam and NHS has no big profit share as they work
for uplifting public (Stuart and et.al., 2010).
The Growth and Sustainability factor is vital for every organization whether making
profit or not. It mainly refers to the increment in sales margin of a company irrespective
of its size, scale or type for a particular range of years . The UK based retail store Asda
has focused on growth of its supermarket chain thereby maintaining environmental
balance (Daft, Murphy and Willmott, 2010).
LO2
P3 Organisation structures and functions
Structures on basis of size and scope of operations – The main three types
of structures which differentiate organizations of different size and scope are Divisional
structure, Functional structure and Matrix structure. Asda has a matrix type of structure
which has functions and divisions both being a multinational retail market. It is a hybrid
form of organizational structure which has benefits of both functional and divisional
structures. Asda has different departments selling different products and managers
assisting wide range of services needs to have a matrix kind of structure so as to
perform activities in a structural manner. Every organization has a specific structure
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which tends to differentiate it from other firms irrespective of the level of scale of
operations (Business Environment, 2017).
Transnational, International and Global organisation structures – The other
type of organizational structures being transnational, international and global firms
influences market of a particular segment which decides market and profit share of
domestic companies. The International structure of firms includes import and export
business with no investment outside domestic country. The global enterprises refers to
firms which has invested globally operating worldwide (Carlton and Perloff, 2015).
These companies has head office in a particular place and operates under one brand
name having global strategies. The transnational structure is a complex type of
organization which have invested in foreign operations, have a central corporate facility
but give decision-making, R&D and marketing powers to each individual foreign market.
Interrelationship between functions and organisation mission and
objectives – The mission and vision of Asda, is to become a leading retail store in UK
which tends to be undertaken through several functions (Stuart and et.al., 2010). The
functions taken into consideration are:
Marketing - This being one of the most important function of almost all sort of
organisation evident the growth of a business, as in the case of Asda. Marketing needs
to bring in customers thereby enhancing sales and overall revenue for the firm.
Finance – Every company irrespective of size and scale needs to plan budget in order
to carry out operations (Kohonen, 2012).
Human resources – It is a vital part of an organization engaged in managing resources
both human and natural so as to maintain quality of production as in case of Asda.
LO3
P4 Identification of positive and negative impact of Macro environment factors on UK
retail market Using Pestle analysis.
The retail market is one of major contributor in the growth and development of
economy and GDP of UK market. It is one of the major player and generate vast
quantity of revenue. But the retail market in UK is been deeply impacted by the macro
environmental factors that prevails there (Demil and et.al., 2015). The impact of
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PESTLE analysis that is been used for the assessment of UK's retail market is as
follows:
 Political: The political factors is the major element that impact the operations of
a retail firm in UK market. The political instability will cause the major firm like M
& S, Asda, Tesco plc and Sainsbury's to mitigate their operation and control the
functionality of the firm in a very adverse manner. Thus, in this case the retail
market has to look after the better management of its organisational actions and
control them to gain a good sustainability. The conditions like Brexit will create
and environment of instability in market.
 Economic: it is the major factor due to which the firms like M & S and Asda to
cut off their work force or reduce the functional capability to manage the cost
requirements of the operations and handle the business operations in a better
way. The positive economic conditions help in better growth and development of
an enterprise while the depressive environment will impact its core
competencies in a very unfavourable manner. The unstable economic factors in
UK has also caused M & S to shut down it outlets, impacting its revenue
generation.
 Social: the social condition too lay an influence on basic functionality of the
organisation and the core operations of firm. The social corporate factor's have
impacted the structural functioning and reshuffling of management at
Sainsbury's that will lay an impact on its work force and functionality and created
a risky condition for the employee's of retail firm to face a job cut. This will also
impact the overall actions of the enterprise (Caiazza, Shimizu and Yoshikawa,
2017).
 Technical: The advancement of technology will lay an impact on production
capacity and running of a retail organisation. In order to implement the latest
technological tool and measures in the firm, Tesco plc cropped the 17,000 jobs
that has not only influenced its functionality but also the work force of the retail
entity. However, this will help in rise in operational capability of firm.
 Legal: The proper following of legal obligation by a retail firm in UK market will
help the organisation to function effectively. This will help the firm to build a good
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customer and stake holder trust level and will support the firms like Tesco or
Asda to give a good financial performance in the market.
 Environmental: With the rise in environment concerns, customers prefer better
and nature friendly products and services. This will make the retail firm to come
up with effective and innovative products and services (Cai and Yang, 2014).
P6 Internal and external assessment of UK supermarkets to identify its strength and
weaknesses.
The internal assessment of UK supermarkets are:
SWOT Analysis
Strength Weaknesses
 With the rise in technological
stability and improving of economic
conditions will lay an impact on
operations of a retail firm. In the
past years, the retail organisations
have seen larger growth and
increase in revenue level.
 The convenience of shopping and
getting all the services under one
roof approach acted as catalyst for
supermarkets in UK. This is the
main reason customers are
attracted towards retail firms (Sila,
2015).
Although, the retail firms lay very deep
impact on operation of economy of nations
by catering a wide range of their
requirements, still they lack a structural
setup to carry out the products and
services that act as the major loop hole for
retail entities. Many retail organisations still
used manual approach of working which
makes the actions slow and increase the
chances of errors.
Opportunity Threats
The retail firms have a very good
opportunity of improvising it services by
adopting latest and innovative measures
like using technology to maintain their
operations or increasing the capability of
The lack of innovation and reluctant of
adaptability of technical advancement can
prove a fatal threat for retail firms,
impacting its revenue generation and
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organisation to meet requirements of their
clients and stake holders.
customer satisfaction level.
The external assessment of UK's supermarkets is as follows:
Porter's Five force model:
 Bargaining power of suppliers: The retail firms are deeply dependent on their
suppliers, who provide them with better services and products, to cater
customer's needs and requirements. The better management of bargaining by
suppliers and their interests will help the organisation to gain a better
sustainability (Gillanders and Whelan, 2014).
 Bargaining power of Buyers: The buyers and customers play a very deep and
crucial role in functionality of organisation. They are the major cause behind the
revenue generation of firm. Thus, in this case, the firm has to provide its products
and services to the client and manage the requirements and bargains in a better
way to sustain its profit margin.
 Threat of new entrant: With the globalisation of UK retail market, many new
firms have emerged and are now operating in business environment. This has
lead to rise in competition and thus has influenced the profitability of retail firm
like Tesco or Asda. However, the established firm like M & S are least affected
by these factor.
 Threat of Substitution: This is the factor that will impact the retail organisation
that are not established in UK market and thus requires to innovate a products
and service that will be able to meet the requirements of the customer sand stake
holders in a better way. The established firm are unaffected but the enterprises
which are in their initial stages will be deeply impacted by development of
innovative products and service.
 Competitive rivalry: the competition is now all time high in the UK's retail
market, impacting its growth and development. The rise in rivalry will cause the
prices to fall down and thus this will cause the business operation's of the firm to
inhibit the financial operations. Apart from this, it will influence the revenue
9

generation of retail organisation (Schaltegger, Hansen and Lüdeke-Freund,
2016).
On the basis of above analysis this can be aid that the operation in UK retail
market will impact the growth and development of a retail entity in a better way. The rise
in economic conditions and customer base is major strong point of a firm while the lack
of innovative approach and stiff competition is the major factor that is required to be
taken in consideration by UK market.
LO4
P6 Explain how strengths and weaknesses interrelate with external macro factors.
The strength and weaknesses of UK's retail market is deeply impacted by the
external factors too. The strength and weaknesses are closely related by a firm and
thus will impact its growth and development in a very significant manner. The political
and social factors will determine the customer base of the retail firms that will support
the management of these firms to make strategic plans to fulfil their competitive need
and cater the requirements of their stake holders and clients in a much better way
(Wheelen And et.al.., 2017). Beside this, the improvement in economic stability of
market will lead to the rise in its potential customer base and will thus lay a very deep
influence on its revenue generation. The legal and environmental obligations will cause
the firm to gain a better market share, carry out its trade operations in much effective
manner and come up with innovative and better services that will lay a very deep
influence on overall capability of a business organisation. Other than this, it will help the
firm to gain a good competitive advantage over its rivals. Apart from this, the
technological factors that are been taken in consideration by firm will lay a very
significant and deep influence on a retail firm. This factors will help in better adoption of
innovative services that will influence the operational capability of an organisation in a
larger way (Schaltegger, Hansen and Lüdeke-Freund, 2016).
CONCLUSION
Thus, this can be concluded on the basis of that the business is deeply impacted
by its operational environment. The assessment of various organisations, their scope
and functions helped in better handling of operational capability of firm. Other than this,
the assessment of impact of internal and external factors will lay a deep impact on the
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growth and development of a retail firm and their interrelatedness with the strength and
weaknesses is been considered.
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