HND Business: Business Environment Analysis of Habitat Ltd Report

This report provides a detailed analysis of the business environment of Habitat Ltd, a UK-based retail company specializing in furniture and home accessories. The report begins with an introduction to the dynamic nature of the business environment, differentiating between micro and macro factors. It then delves into the organizational structure of Habitat Ltd, exploring the interrelationships between various departments such as R&D, marketing, IT, sales, finance, production, and quality assurance, and how these functions align with the company's objectives. The report further examines the positive and negative impacts of the macro environment on the company, utilizing a PESTLE analysis to assess political, economic, social, technological, legal, and environmental factors. Additionally, a SWOT analysis is conducted to identify the company's strengths, weaknesses, opportunities, and threats, followed by an examination of how these internal and external factors are interconnected. The analysis provides insights into the strategic challenges and opportunities facing Habitat Ltd within its operating environment.

Business
Environment

INTRODUCTION......................................................................................................................3
TASK 1...................................................................................................................................3
P1 & P2 Covered in PPT........................................................................................................3
P3 Relationship between organisation function and how to link with objectives and
structure..................................................................................................................................3
P4 Positive and negative impact of macro environment on business operations...................4
P5. Internal and external analysis for identifying strength and weakness..............................6
P6 How strength and weakness interrelated with external macro factors .............................8
CONCLUSION..........................................................................................................................9
REFRENCES.......................................................................................................................................11

INTRODUCTION
Business environment is dynamic in nature it get modified because of several forces
related to the surroundings in which business exist and these changes give huge impact on
various organisations. It is of two types micro and macro: micro involves all the things which
goes at small level. On the other hand, macro includes wide factors such as competitiors,
political forces, condition of market and so on. This project is based on Habitata Ltd. which is
an retail sector enterprise founded in 1964 on 11th May as well its founder is Terence Conran
and Philip Polock. Respective organisation is serving in Only in United Kingdom and goods
offering by them are furniture, home accessories and upholstery. Below mention project is
divided in two tasks i.e. various types, size and scope of company. Instead of this
interrelationship of several function within the organisation and how they link to the same
structure. It also through light on negative as well positive impact of macro environment on
business operation. In the end SOWT and PESTEL analysis of the same organisation is done.
TASK 1
P1 & P2 Covered in PPT
P3 Relationship between organisation function and how to link with objectives and structure
Every business organization consist of numbers of departments and each departments
performs different functions in order to achieve the pre- determined goal and objectives. All
the departments in a particular organization are interlinked with each other. Further the
connectivity of each department of an organization are explained below:
 R&D department and Production department:The main purpose of R&D department
in a Habitat retail Ltd is to acquire information and knowledge about the customers
needs and preference. This department is totally linked with production department as
it give the feedback of newly information gathered about customer requirements,
accordingly the production process proceed further (Wetherly, 2014). Marketing department and IT department: Marketing department plays major role in
defining the company brand; managing social media .This department is linked with
the IT department , because for marketing there is a requirement of IT system such as,
data ware house system,customers relationship management. It is the responsibility of
the IT department to support the marketing activities.

 Information technology department and marketing department:IT department help
the Habitat retail Ltd as it ensure reliable computing environment . Along with this
ensure the effectiveness and efficiency in operating activities. IT department has a
close link with marketing department as many marketer prefer modern marketing
concept rather than traditional concept .Rapid growth in marketing has lead to adopt
the modern digital marketing in order to increase company revenue.
 Sales department and finance department: In Habitat retail Ltd company sales and
finance department together plays a vital role. Sales department rely on finance
department as it provide the company with the credit policies and quality customer
service. Also help in selling of product to the final consumer as it provide capital to
the sales department so that it can adopt different measures in order to sell product to
the final consumer (Hamilton and Webster, 2015).
 Finance department and marketing department:Both the departments are interlinked
with each other . It is the finance department which provide the funds for marketing of
products like for advertising a new product in market there will be requirement of
funds, which is supplied by finance department. Further for the promotion of new
product too there will be a requirement of capital which is raised from the finance
department.
 Production and quality assurance department:It is to be said that Production and
quality assurance department are interlinked with each other .As quality assurance
department helps the Habitat retail LTD company ,in improving the quality of the
product that are being produced by the production department .For the purpose of
achieving the ultimate aim of the company it is necessary for the company to assure
about the quality of the product and services that are being produced by the
production department (Cuervo-Cazurra, 2011).
P4 Positive and negative impact of macro environment on business operations
PESTLE Analyses- This is one of the famous tool which helps in better
understanding about the macro-environmental elements that affects the business directly or
indirectly(Harrison,2011). It further helps in making strategic decisions of the company
operations. PESTLE is an acronym of six elements which are political, economical, social,
technological, legal and environmental.

Political- The political element of the analyses studies how the government affects the
operations of the business. Moving further, lets study about the advantages and the
disadvantages our respective company have from the government regulations
(Schaltegger,Lüdeke-Freund and Hansen, 2016).
Advantages-
The current rate of corporate tax is 19% of companies profit, however the rate will
reduce to 17% from April,2020(Gov. UK, 2018). This gives Habitat a certain relief on 2%
and a future vision of the government taxes.
Disadvantages-
UK is one of the strongest countries in the world which have a stable government,
however there has been a certain doubts and political controversies after Brexit. The
instability that has been created by Brexit will take to build up the market back to its
structure.
Economical- This factor studies the economical impact on the company because of foreign
exchange rate, interest rate, employment rate and many other factors. Let us study the pros
and cons of economical factor on the company (Sodeyfi,2016).
Advantages- The wage rate did not rose in comparison to the increased prices of the
products. The minimum wage per hour was said to be £7.50 for people with the age group of
25 and below. This has increased to £7.83 since April 2018 which doesn't seem to be a big
concern for the cost of the company.
Disadvantages- Due to the rise in rate of the products, the inflation rate has increased
to 3.1% in November 2017 which the Bank of England has targeted to 2%. Due to the
increase in rate of products, customers are still adjusting according to the marketing needs.
This has resulted in turning down the graph of sales.
Social- This is consist of social conditions that affect the company. Some of the social
conditions can be described as customer's preference, affordability, lifestyle and other factors
(Liu,2013).
Advantages- With the total population of 65.6 million ,the market for Habitat
company is huge.

Disadvantages- As the minimum wages haven't raised much in contrast to the
product prices, the spending capacity of the customers is same as before.
Technological- This element overviews how technological element like digital technology,
method of distribution, etc affects the company (Yoon,2012).
Advantages- With resources like transnational website, the retail company is able to
serve various areas like UK, Germany and Republic of Ireland which has helped the company
to reach out more customers in the global market.
Disadvantages- As the technology is always updating, the company needs to stay
updated with the market trends in aspect of various technological techniques.
Legal- Legal is an important element of the PESTLE analyses which involves various laws
which the company needs to follow in order to not to face any legal consequences.
Advantages- Certain laws like minimum wages, equality act 2010 , etc will help the
company to maintain the quality of company and will keep the system hassle free
(Rose,Orrenius and Neumann,2013).
Disadvantages- The legal procedures are little complex which doesn't always work in
favor of the company. These procedures get even more complicated when the concerned
company spread its wings in international market.
Environmental- This factor studies how the company impacts the surrounding atmosphere.
Advantages- Habitat Retail have certain product range which can be recycled like
furniture, etc.
Disadvantages- Though the respective company is trying to put efforts towards
minimizing the negative impacts, there are still certain range of products which cannot be
recycled.
P5. Internal and external analysis for identifying strength and weakness
In order to know about the strength, weakness, opportunities as well as threats
associated with venture, it is essential to conduct SWOT analysis (Andersson,Forsgren and
Holm,2015). By getting familiar about such things, Habitat retail Ltd. could improve their
weak factors and can also convert those into its strength. The discussion about such aspects is
as follows :

Strength :
 Habitat is a popular organisation as their name is liked with a well known brand
which is Sainsbury's (parent firm) so large number of people get attracted from its
name only.
 It is offering best quality retail services to their potential consumers such as stylish
and durable furnitures and several house hold commodities.
 Their business had expanded rapidly in the UK at the year of 1960s and globally with
the introductory abroad outlet which was opened in 1973 in Paris.
 This corporation has also published a catalogue which is representing a range of
merchandises assembled together in pleasant environment.
 Habitat is providing their services as well as deliverables at affordable prices so that
every section of citizens either they are rich or poor could purchase the same in a
easier way.
 They are comprising of skilled and qualified work – forces who help them in
manufacturing creative as well as unique products and services (Sassen,2016).
 In addition to this, this has been surveyed that almost all of the clients of this venture
is getting satisfied from their merchandise or commodities.
 They are not having any funds regrading issues as they are working under one of the
largest retail sector company that is Sainsbury's(Vaiman,Sigurjonsson and
Davidsson,2011).
Weaknesses :
 Habitat is having single operating market that is why they are having lack of
experiences in the newer industry.
 Their commercial activities is restricted to United Kingdom only.
 The competition is increasing day on day , due to this large number of firms are
offering same productions. This as a bad result, reducing the overall consumers base
of Habitat and their users are shifting towards other ventures in search of more
cheaper goods (Teece,2012).

 There has been recorded increment in the rise of cost of raw materials associated with
their deliverables in marketplace. This is effecting venture adversely and forcing them
for selling their merchandise at higher rates.
Threats :
 Since, Habitat is offering furnitures and for this they use wood or tress as their inputs.
For producing more and more deliverables, they would cut down large number of
tress that will be considered as threat for all over the world ; since global warming
may increased a lot from such activities. This will indirectly influence to this
organisation and directly to whole globe (Zeng,Li and Duan,2012).
 The increment in the number of challengers such as Tesco, Morrison's, Asda, etc. act
as the great threats for the Habitat.
Opportunities :
 This company may enter into the market of emerging firms via joint partnership so
that they can also explore for newer (Gilboy,2016).
 There are so many opportunities existing now a days. Habitat could work in different
other sectors also like hospitality, entairment, etc. Since these fields are linked with
thier merchandises as well.
 They can work or start thier business in other areas where they are not working still so
that they could earn large sum of profits in turn.
 They can seek attention of numerous of people from delivering high service qulaities.
If they will do so then those person who have used thier products may do mouth
advertisment and newer users will created as good result.
P6 How strength and weakness interrelated with external macro factors
In this competitive era, there are several types of factors which are getting involved in
internal and external environment and put a huge impact on growth and success of the firm in
the best possible manner (Avramenko,2012). In addition, such elements also influence
decision making process of the organisation in direct and indirect manner. Internal factors are
also associated with external factors, for example - the major strength of Habitat limited is to
have large market share in national and international market. It also performs in several
countries thus as if the government of the nation regulate strict laws and legislations then it is

must to follow all business associations. An instant changes in environmental aspects hinders
managerial decisions.
Economic Factors : It involves variations inflation rate, interest rate, exchange rate and
foreign direct investment in market. Thus, if the financial capability of the organisation is
strong then it can easily overcome with all those factors and these rates will not influence the
marketing strategy and goals of the company (Kandelousi,2011).
Political and legal factors : It consists various laws and legislations which are implemented
by government authorities for importing and exporting activities of corporate association.
Any business organisation can be survive of the political condition of nation is strong and
adequate. In addition, variations in government policies forces firms to follow and it will face
different challenges in terms of reduction in sales and productivity.
Technological Factors : In this modern time, every business organisation tend to acquire
new and innovative tools of production so as to gain high competitive. If Habitat Limited has
innovation tools then it can easily compete with external environment and perform in well
being manner (Hämäläinen,Näyhä and Pesonen,2011). On the other hand, due to lack of
technological adoption companies cannot attain their goals and objectives.
Environmental factors : The organisation is having greatly impacted by the environment
since their work is related to the manufacturing of furnitures and this needs tress as an
important raw materials. If they will cut large number of tress then air pollution get increases.
This in turn impacts the health of workers as well as consumers in negative manner. Thus, it
is considered as a weak factor of Habitat and it is related to the macro environment
(Kian,Chong-Shafaghi and Leing,2011). Apart from this, globalisation is also increasing day
on day due to high rate of deforestation which lead to numerous of issues associated with the
health aspects.
CONCLUSION
From the above report it is conclude that environment is fluctating busienss need to
modify them in order to sustain for longer period of time. Through the above analysis there is
come to known various types of factors in the external environmental which impact the
busienss on the large scale. Organization have to make changes in their existing working in
order to get growth and development.There are various types of organization such as
public ,private,government ,voluntary which get affected by the outside environment in

which they sustain. By doing the market rersearch get the pestle and swot analysis of the
company which need to understand properly so it can hamper the busienss working. To grow
the organization it is necessary that deep analyses should be done of the market.

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