John Lewis: Types of Organizations and Business Environment

This report provides a detailed analysis of the business environment and organizational structure of John Lewis. It begins by defining the business environment and its components, then explores different types of organizations, including private, public, and voluntary sectors, with examples like John Lewis, sole traders, partnerships, and limited companies. The report examines the legal structures of these organizations, including state, central, and local governments, and their purposes. Task 2 focuses on organizational structure, including functional and matrix structures, and the roles of various departments such as HR, finance, marketing, and operations within an organization. The report also includes SWOT and PESTEL analyses to assess the internal and external factors influencing John Lewis's operations, concluding with a summary of the key findings and their implications for the company's performance and strategic decision-making.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................4
TASK 3............................................................................................................................................7
TASK 4............................................................................................................................................9
CONCLUSION:- ..........................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment can be defined as combination of different components which
present in the internal as well as external environment of the firm that affects the operations of
the business. John Lewis is a multinational company which is operated in the UK and its
headquarter in London and SW United Kingdom. It offers different products ranging from
clothing to kitchen appliances(Aithal 2016). This report describes about types of organisations
with their legal structure, size, scope and purpose. There are various functions that are present in
an organisation and these are interlinked with other departments. Along with this file also
includes SWOT and PESTEL analysis which helps John Lewis in determining elements that are
present in the external and internal environment.
TASK 1
Different types of organisations and their size and scope
There are different types of organisations in business environment which are varied in
their size and scope.
Organisation:- An Organisation refers to an entity that comprises of group of people
such as institutions or association, work for a common goal and their operations are linked with
external environment.
Purpose:- Main purpose of an organisation is to earn higher revenue by satisfying the
need and wants of their customers(Bah and Fang, 2015). It exists because group of people can
achieve their goals more effectively in comparison to individual person.
Organisational sectors in UK:- There are mainly three types of industries in which a
business operates i.e. public sector, private sector and voluntary organisations. These sectors
form a production chain to provide customers finished goods and services. Following are the
types of organisations:-
Private organisation:- Company which is managed and owned by an individual, an non-
governmental organisations or by small group of shareholders. John Lewis is a chain of high-end
departmental stores established in UK is taken as an example of private organisations. Its size
and scope is very wide as it has more than 85,000 staffs who owns 50 John Lewis stores
throughout UK(Andersson, Forsgren and Holm, 2015) .Their main purpose is to earn maximum
1

profit and to satisfy market demand. Its production activities are divided into three parts which
are as given below:
 Primary sector refers to the acquisition of raw materials
 Secondary sector refers to the process of assembling raw material for manufacturing the
product and services. This process involve conversion of raw material into components.
 Tertiary sector refers to the commercial services which support the manufacturing and
distribution of goods and services. For instance transport, advertising, warehousing etc.
Sole trader:- It is a type of private business enterprise where a single individual manage
its business and they are personally liable for all their debts and profits. Sole trade are easier to
set up with the nominal cost. For example: Guildford is a sole trader and provides services
related to computer repairing and maintenances for better functioning of PC. It belongs to
Tertiary sector(Berg and Kilambi, Siebel, 2014).
Advantage:- The advantage of sole trade is that legal structure can change easily and owner can
take all the profit earn during business operations.
Disadvantage:- Major drawback is that sole trader have unlimited liability for all the debts
incurred as there is no legal restrictions between private and business asset.
Partnership:- It refers to the formal agreement between two or more parties to corporate
a business together for the achievement of common goal. In partnership all the members
contribute resources, fund and skills as well share profit and loses. For example McDonald's is
an partnership business and is belongs to secondary organisational sector, as they have their own
chef who prepare food and sell them(Bryman, and Bell, 2015).
Advantage:- Partnership firms are easier to establish and its start up cost is also low as capital is
pooled by all the partners.
Disadvantage:- Major disadvantage of partnership business is that debts of all the partners in
business is unlimited.
Limited company:- Type of company is one in which the members or subscribers of the
organisation having limited liability in term of their investments or commitment. These are of
two types i.e. limited by share and limited by liability. For example, Shop direct group is a
limited company and is belong to Tertiary sector(Chang, 2016). It sell product of more than 400
well known brand online such as Vodafone, Orange, Sony etc.
2

Advantage:- one of the main benefit of limited company is that they can borrow money, raise
fund and achieve financing much easier without any personal risk.
Disadvantage:- Major drawback of limited company is that it is the more expensive to set up in
comparison to sole trader or partnership and the owner of the organisation have less control over
company as compare to sole trade because of agreement issues.
Public company:- Type of business enterprise which is controlled & managed by the
government and its main aim is to offer services for the better of citizens. Public companies can
raise capital from variety of sources such as taxes, fees and financial transfer from other level of
government(Botha, Kourie and Snyman, 2014). Environment agency is the best example for a
public sector enterprise and is belong to the Tertiary sector. It is a non departmental public body
which perform activities related to the protection and enhancement of environment which
includes protection from flood and pollution.
Advantage:- Public enterprise provides facilities like health care, education etc. in free or at
reduced price. Another advantage is that higher price caused by private monopoly can be
eliminated.
Disadvantage:- Major drawback is that government have to bear loses which might results in
higher taxation rate.
Legal structure of Public sector company:-
 State government:- A state government refers to the subdivision of country's government
in a federal form which shares political power with national government. This is
responsible for controlling the trade within state and to formulate regulations for local
corporations.
 Central government:- It is a political authority that govern the unitary state of nation.
Central government formulates rules and regulations for the country as well as state and
local government.
 Local government:- Local government is the public administrative body for a small
geographical area such as cities, country, towns and districts. They enforce law over a
specific region which do not affect other areas.
Charity and Government organisation:- These organisations perform operations for
the welfare of the society, solidarity of nation, development of the country and not to generate
profit. These corporations are managed and controlled by charity commission which is limited by
3

guarantee and not by share(Cohen and Kietzmann 2014). For example, National trust for
Scotland is taken as an example of voluntary organisation which is belong to Tertiary sector.
This trust protects and promote the natural & cultural heritage of Scotland for present as well as
future generation.
Purpose:- Main purpose of charity and government sector business is to work for the
welfare of the society and contribute for the benefit of individuals.
Conclusion:- From the above task it has been summarized that each organisations are
different in term of their size, scope and structure. These organisations are generally of three
types public, private and non-profit or charitable corporations, which exists for different purpose
like main aim of private organisation is to earn profit while the objective of charity and public
enterprise is to serve for the benefit and welfare of the society.
TASK 2
Organisational Structure:
This is the system which outlines how operations are directed to achieve the set goals and
objectives of the organisation. These activities consist of various rules, responsibilities and roles
which are followed in the company (Organizational Structure, 2018). Organisational structure
also identify how information flows from level to level with the business. For instance, in
decentralised structure the decisions are taken at various levels of company and in centralized
structure, decisions are flow from top to down level(Crane and Matten, 2016).
Organisational structure also provides defines how the activities are performed such as
coordination, supervision and task allocation which are directed towards the achievement of the
firm's goals and objectives. There are different types of organisation structure such as functional,
matrix and divisional structure.
Type of organisational structure Functional structure: It is the commonly used organisational structure in which
company group their employees as per their specialisation ans similar set of tasks and
roles. Functional structure is most suitable in stable environment where business
strategies and policies are less affected due to the changes and dynamism. So for
functional structure it is very difficult for firm to respond to changes in market
effectively(Gillanders and Whelan, 2014).
4

 Matrix structure: It is another type of organisational structure which can be defined as,
when there is more than one line of reporting managers that means employees of the
company has more than one boss(Holliman and Rowley, 2014). This type of
organisational structure is very complex in nature but it assist in achieving set
organisational goals and objectives. Matrix structure is most suitable for the firm which
have different product lines and services. Under this structure, groups are made of
individuals with diverse expertise who combine together and form a team to accomplish
desired goals.
Different types of departments in an organisation:
There are various kinds of division in the firm which helps in achieving set goals and
objectives which results in generating more profitability and productivity. There are different
sectors of company such as HR, finance, IT, operations and many more that are mentioned
below: Human resource: It is very essential function of an organisation as it helps in manage
and provide guideline to the staff members of the company. Human resource
management performs various tasks which are related to the employees of an enterprise
that are recruiting, selecting, performance appraisal, safety, compensations, benefits,
wellness, training and providing motivation to them. It is very necessary to coordinate
with other department which helps in determining the needs of firm and hire the right
individual for the job(Kolk, 2016). Human resource management helps in developing and
administering program which are developed to improve the effectiveness of the business.
This involves the entire spectrum of managing, creating and cultivating the employer and
employee relationship. Finance department: It is the another department of the company which is very essential
as it helps in preparing future budgets and also provide funds to other departments to
perform the various activities effectively and efficiently. This business function includes
the planning, organizing, accounting and auditing and controlling of the firm's fund.
Manager of finance division have to cooperate with other sectors of the enterprise such as
human resource, IT, operation, research and development and marketing department so
they have appropriate information about the finance that can be utilised by these
departments in performing their operations(Niemann-Struweg, 2014). This division of
5

organisation also helps in managing the cash flow, current assets and capital investment
of the enterprise. Marketing department: This division of the organisation plays vital role in promoting the
organisation products and services. Marketing wing helps the organisation in to
differentiate their commodities from competitors who provide similar types of product.
There are different kinds of functions that are performed by the marketing manager such
as product development, market research, preparing marketing plan and also analysis the
needs & wants of their customers. Importance of marketing segment is it position the
product and services in the marketplace effectively and efficiently which leads to increase
in the sales of the company(Savrul, Incekara and Sener, 2014). This division is useful in
creating customers, generate more income and also defines the future course of business.
Without marketing, a business is like sitting in dark and expecting customers to identify
company without a light. The job of marketing department is to reach out prospective
customers and investors to create an overarching image which develop firm's goodwill. Operation department: This is the another function which play important role in an
enterprise. It helps in managing and controlling process of creating products and services.
Operation functions is consist of planning, organising, coordinating all the resources that
are needed to develop organisation products and services(Sekaran and Bougie, 2016) . It
is the administration of business practices which provide highest level of efficiency
possible within an enterprise. This emphasis on converting material and labour into the
products and services effectively to increase the profit of firm. Manager of operation
department attempts to balance expenses with revenue to attain the highest net operating
profit.
 IT department: it is another function of an organisation which plays essential role as it
directs the installation and maintenance of computer network system. This department
must analysis and install the appropriate software and hardware that is very necessary to
keep the functions of network effectively(Siewiorek and et. al., 2012). This involves
working within the budget which allocates the amount of fund that firm can afford on
software and network devices. Responsibility of IT segment is providing infrastructure
for automation.
Conclusion:
6

From the above task it has been summarised that for the proper functioning in the
organisation, coordination and cooperation among different functions is very essential. All the
functional units are interlinked with other department which helps in performing their activities
effectively. For instance, all the divisions are required to communicate with finance department
in order to perform their operations in budgeted amount.
TASK 3
Impact of macro environmental factor over business operations
Macro environmental factor refers to the various elements that are present outside the
business environment but have an huge impact over the functioning and profitability of a
company. So it is very necessary to analyse various external factors present in company's
surrounding for the proper execution of business operations. PESTEL is a tool that help company
in analysis macro environmental factors(Wallace, 2017). It stands for Political, Economical,
Social, Technological, Environmental and Legal (PESTLE Analysis, 2018). These elements help
John Levis in identifying various threats & opportunity present in external environment of the
company and which affects its operations in marketplace.
One of the major factor which threaten the growth of John Levis is Brexit ( British exit),
as this event has affected the economy position of country. It results in decreasing the demand
for expensive products and peoples started approaching the SME's for fulfilling their basic needs.
This affects the demand for John Levis product and company faces huge loss.
 Political:- The political analysis includes several factors such as political stability, tax
policies, legislative bills, governmental stability, rules and regulation of a country in
which business operates(Cohen and Kietzmann 2014). These elements help in identifying
forces that can affect the operations and long term profitability of John Levis.
Positive:- UK government has decided to decrease the corporation tax from 30% to 28% which
have an positive impact over John Lewis as they can increase profit in future.
Negative:- Political instability may affect the functioning of company as they have to modify
their policies with the change in government.
 Economical:- These elements include inflation rate, taxes, currency exchange rate,
interest rate and economical cycle. It helps in analysing these economical factors that can
be used in enhancing the profitability of a company(Crane and Matten, 2016)Positive:-
7

John Lewis offer high quality product with high price which is a factor of attraction for
youngsters who give more preference to branded products.
Negative:- UK economy is facing recession which brings fluctuation in interest rate and
competition in retail sector leads John Lewis to cut down its prices which in turn will affect the
profit.
 Social:- Social factors includes attitude, belief and cultural value of the customers who
lives in a society in which business operates(Gillanders and Whelan, 2014). These traits
affect the demand of the product and services of the company.
Positive:- John lewis sells variety of product which includes everything from clothing to kitchen
appliances that have an positive impact over the functioning of company and help in satisfying
customer's need.
Negative:- Social factor analysis is very essential in determining current trend and changing
demand of customers as avoidance of these traits results in loss of the company.
 Technological:- These factors include new technology in market, emerging trends in
innovation, up-gradation of current technology, intellectual property issue etc. These
analysis is very essential for the company as avoidance of this may have an impact over
the survival of the company(Holliman and Rowley, 2014).
Positive:- John Lewis also provide their products online which have a positive impact on sale of
the enterprise, as customers can make purchases anytime anywhere from Company's website.
Negative:- For fulfilling the demand of customer related to new technologies, John Lewis has to
invest huge capital over employing IT team to set up and maintain host server, network, website
etc.
 Environmental:- Environmental analysis includes factors related to the ecological
aspects which have an great impact over the demand of company's product and
services(Kolk, 2016). It involves reduction of carbon footprints, change in weather,
environmental regulations etc.
Positive:- The material used by John Lewis for production process namely cotton, denim, wool
etc. are environment friendly and doesn't cause any harm to health and safety. hence company
remain away from legal penalties.
Negative:- Environmental laws must be followed by John Lewis as violation of rules may leads
to legal penalty which also have an negative impact over the goodwill of the company.
8

 Legal:- This analysis includes evaluation of several factors such as laws, regulations and
legislation that can affect the functioning and survival of the company(Ward, and et.
2011). It generally includes law related to health & safety, tax regulations, employment
etc.
Positive:- There are number of laws and legislatives which a company have to comply with for
performing their operations in a particular country. If Company follows all these rules than it will
help in building positive image of John Lewis.
Negative:- National legislations of UK related to health & safety are very rigid in term of both
production process and consumer rights which affects the operations of company to a large
extend.
Conclusion:- PESTEL is a tool which provides framework to analyse various macro
environmental factor which affects the operations and functioning of John Lewis. So this
analysis will help company in determining various opportunities to exploit and threats that need
attention. Further it help in formulating strategies so that enterprise can achieve higher revenue at
minimum cost.
TASK 4
SWOT analysis is the tool which is used to evaluate the business's competitive position
by determining its strength, weakness, opportunities and threats. These factors help in analysing
the overall strategic position of the enterprise and its environment. The main purpose of this
technique is to identifying the internal potential, limitations and opportunities, threats from
external environment. This analysis provides all positive and negative element inside and outside
the company which affects the success of an enterprise.
Four factors of SWOT analysis are as follows:
 Strength: It is the quality which helps in achieving organisation's mission. Strength of
the business either tangible or intangible. It is the beneficial component of the company
as it includes the human competencies, financial resources, process capabilities, products
and services, brand loyalty and customer goodwill. Strength of John lewis is it offers
wide range of fashion brands and also provide the option to shop online with the
international delivery(Wetherly, 2014). Another strength of company is there is good
relationship between employer and employee.
9

 Weaknesses: This factor affects the organisational growth and development. Because of
this element company do not meet the standards which are expected. Weakness of
company may be insufficient research and development facilities, narrow product range,
depreciating machinery, poor decision making and many more. Weakness are
controllable and be can be minimized or eliminated. Weakness of John Lewis is the
prices of their products and services is higher compared to grocery and supermarket
which limit the target group(Zsambok and Klein eds., 2014). Another weakness of this
company is lack of competitive advantage and also there is lack of effective marketing
strategy.
 Opportunities: It can be defined as organisation taking a benefit of the situation of its
environment to plan and implement strategies that makes company more profitable. Firm
also achieve competitive advantage by using opportunities(Bah and Fang, 2015). John
lewis has various opportunities that are there is possibility of development of new unique
selling proposition and international market expansion. Another opportunity of John
Lewis is there is chances of international market expansion and development of new
products and services.
 Threats: It is factor that present in the external environment of the company which
adversely affect the performance and reliability of an enterprise and create barrier in
achieving their goals and objectives. This factor is uncontrollable in nature. Threats of
John Lewis is there is high competition from supermarkets, grocery stores, corner
stores(Berg and Kilambi, Siebel, 2014). There is failure in new market because of the
cultural differences and emergence of new competitors with stronger competitive
advantage are also considered as a threat. In John lewis there is negative effects of new
legislation which affects the performance of the company.
SWOT analysis influence the business as it helps in formulating better strategies and
policies which assist John Lewis in achieving their set goals and objectives. It also help company
in reducing the cost and generating more revenues.
As business operates in complex and dynamic environment so it is very necessary for
firm to analysis various external factors which are present in company's surrounding. With the
10

help of PESTEL analysis company evaluate components that affects the firm and assist in
avoiding risk that can influence survival of the enterprise.
Following are the factors of PESTEL analysis:
 Political factors: The strength of political element is government of UK decided to
reduce the corporate tax from 30% to 28% which helps the John Lewis to generating
more profit in the near future(Botha, Kourie and Snyman, 2014).
 Economical factors: As UK economic is facing recession and there is rigid competition
in retail sector and other retailer offering incentives to there customers. So it is the threat
for John Lewis as the prices have to be driven down(Bryman, and Bell, 2015).
 Social factors: Shifting preferences of customers and lifestyle correspond consider as the
opportunity for the business. Therefore, John Lewis can launch more branded and latest
fashion products which satisfy the needs of the customers.
 Technological factors: There is strength for John lewis related to technological
component that is company offers wide range of product on online and also deliver
products internationally(Niemann-Struweg, 2014). It directly affects the business in
positive way as it increase the sales and profit of the firm.
 Environmental factors: Strength of John Lewis related to the environmental element is
company uses cotton and wool for manufacturing their products which are eco friendly in
nature.
 Legal factors: Threat of John Lewis is government of UK formulate very stiffen rules
related to health and safety which affects the production process of company.
These are the factors of macro environment which affects John Lewis in positive and negative
manner. With the help of PESTEL analysis, company minimizes the threats and maximizing the
opportunities.
There are various internal factors that influence the internal decisions. Customers,
employees of the company, suppliers from which firm purchase raw material are the internal
factors that directly influence the decision making process(Chang, 2016). As John Lewis deals
in fashion products so there is frequent changes in preference and demand of customer so this
affects the company in taking decisions.
Conclusion:
11

From the above task, it is summarised that it is very necessary to evaluate the external
factors with the help of PESTEL analysis. By applying SWOT analysis company can reducing
the threats and increasing the opportunities. There are various internal factors such as customers,
suppliers and employees which affects the decision making process of the John Lewis.
CONCLUSION:-
From the above report it has been concluded that analysis of business environmental factors are
very essential for proper functioning and in enhancing the profitability of a company. This
evaluation can be done using SWOT analysis which provides framework in identifying the
strength and opportunities which assist John Lewis in achieving higher profit and threats and
weakness that may affect the growth of the company. Another method of evaluating external
components are PESTEL analysis which help in determining macro environmental factors which
have an impact over the survival of the organisation.
12

REFERENCES
Books and Journals
Aithal, P. S., 2016. Study on ABCD analysis technique for business models, business strategies,
operating concepts & business systems.
Andersson, U., Forsgren, M. and Holm, U., 2015. Balancing subsidiary influence in the
federative MNC: A business network view. In Knowledge, Networks and Power (pp.
393-420). Palgrave Macmillan, London.
Bah, E. H. and Fang, L., 2015. Impact of the business environment on output and productivity in
Africa. Journal of Development Economics. 114. pp.159-171.
Berg, E. and Kilambi, K., Siebel Systems Inc, 2014. Method and apparatus to facilitate
development of a customer-specific business process model. U.S. Patent 8,639,542.
Botha, A., Kourie, D. and Snyman, R., 2014. Coping with continuous change in the business
environment: Knowledge management and knowledge management technology.
Elsevier.
Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.
Chang, J. F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Cohen, B. and Kietzmann, J., 2014. Ride on! Mobility business models for the sharing economy.
Organization & Environment. 27(3). pp.279-296.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Gillanders, R. and Whelan, K., 2014. Open for business? Institutions, business environment and
economic development. Kyklos. 67(4). pp.535-558.
Holliman, G. and Rowley, J., 2014. Business to business digital content marketing: marketers’
perceptions of best practice. Journal of research in interactive marketing. 8(4). pp.269-
293.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Niemann-Struweg, I., 2014. An integrated communication implementation model for the post-
2000 business environment. Public Relations Review. 40(2). pp.184-192.
Savrul, M., Incekara, A. and Sener, S., 2014. The potential of e-commerce for SMEs in a
globalizing business environment. Procedia-Social and Behavioral Sciences. 150.
pp.35-45.
Sekaran, U. and Bougie, R., 2016. Research methods for business: A skill building approach.
John Wiley & Sons.
Siewiorek, A and et. al., 2012. Learning leadership skills in a simulated business environment.
Computers & Education. 58(1). pp.121-135.
Wallace, D., 2017. Environmental policy and industrial innovation: Strategies in Europe, the
USA and Japan. Routledge.
Ward, P. T., and et. 2011. Business environment, operations strategy, and performance: an
empirical study of Singapore manufacturers. Journal of operations management. 13(2).
pp.99-115.
13

Wetherly, P., 2014. The business environment: themes and issues in a globalizing world. Oxford
University Press.
Zsambok, C. E. and Klein, G. eds., 2014. Naturalistic decision making. Psychology Press.
Online
PESTLE Analysis. 2018. [Online] Available through <http://pestleanalysis.com/what-is-pestle-
analysis/>./
Organizational Structure. 2018. [Online] Available through
<https://smallbusiness.chron.com/meaning-organizational-structure-3803.html>./
14