Unit 3.23 How Businesses Operate: Business Environment Analysis

This project analyzes the operational aspects of businesses, encompassing public and private sectors, diverse business structures, and the influence of local, national, and global economic environments. It delves into the importance of accounting for business success, exploring HR functions and employment legislation. The project includes interpretation of profit and loss accounts, an examination of team dynamics and development, and an assessment of the impact of customer service and customer profiling on business success. The analysis uses Sainsbury's as a case study, providing a practical understanding of business operations. The assignment also covers the impact of different economic factors on business. The conclusion highlights the importance of management and coordination in achieving business goals.

HOW BUSINESS OPERATE

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1 ..........................................................................................................................................1
1.1 Types of organisation found in public and private sectors...................................................1
1.2 Different structures within business organisation.................................................................1
1.3 Impact of local, national and global economic environment on organisation......................2
TASK 2............................................................................................................................................2
2.1 Importance of accounting for business success....................................................................2
5.1 Functions of HR department in business..............................................................................2
5.2 Key features of employment legislation...............................................................................3
TASK 3............................................................................................................................................3
3.1 Interpret the information on profit and loss account.............................................................3
TASK 4............................................................................................................................................4
4.1 An analysis to determine own and other roles of team membership....................................4
4.2 Team development................................................................................................................4
TASK 5............................................................................................................................................5
6.1 Impact of customer service on business success...................................................................5
6.2 Benefits of customer profiling to a business.........................................................................5
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
Business operates in different sectors like private, public and voluntary sectors. They run
their business on different scales like small, medium or large with different aim and objectives
which they accomplish by performing several business activities (Boons and Lüdeke-Freund,
2013). Owners of the company develop best organisational structure and assign different
employees and employers with suitable responsibilities.
TASK 1
1.1 Types of organisation found in public and private sectors.
There are different types of organisation which are working in both, private and public
sector. United Kingdom have thousands of companies which are operating in different sectors in
order to earn money and to serve people of nation. Private companies are generally owned by
individuals or group of individuals. On the other hand, public company is governed by local,
state, regional or central government.
Different organisation running in private sector:
 TESCO (Fuel).
 Aldi (Retail).
 Virgin group (Airlines).
Different organisation running in public sector:
 DEFRA (Department for Environment, Food and Rural Affairs).
 DSTI (Defence Science and Technology Laboratory).
1.2 Different structures within business organisation
There are different structure adopted by organisation in order to perform their business
functions in a formal and ordered manner. Following are some of the structures:
 Line structure: In this, organisation have direct connection with different levels of the
firm. They have vertical relationship and are involved in accomplishing primary
objectives of company.
 Divisional structure: The organisation is classified according to division of work such
as: finance, marketing, HR, etc (Bryman and Bell, 2015). and it can also be classified
according to types of products manufactured.

1.3 Impact of local, national and global economic environment on organisation.
Sainsbury's are the second largest supermarkets, situated in United Kingdom. They have
hold on great market share which is approximately 16.5%. it has been operating in different
countries with more than 1400 stores. There are different factors like national, global and local
factors which pose great impact on the business of company.
 Local impact: Different policies and regulations formed by local or state government
can impact the profitability of business. They can also effect sales and marketing of
products into the market.
 National impact: Different laws and regulation have great impact on the business
growth and success. Fluctuation in economic situation can lead to loss or profit to
company.
 International impact: As Sainsbury's is operating globally, then they might face
different risks and threats which can posed by different competitors and markets.
TASK 2
2.1 Importance of accounting for business success.
Management of accounts are necessary for business as they help in managing funds and
income of company. Funds should be managed properly as they are indispensable part of
business and are required at every step of company. Following are some factors which shows the
importance of accounting:
 Control loss: As financial department record all transactions of company, it provides a
better idea to regulate funds of the company in order to avoid loss of money.
 Budget preparation: By preparing proper budget for activities, company can reduce loss
of excess funds.
5.1 Functions of HR department in business
HR department is one of the crucial department of an organisation. They perform
different functions for smooth functioning of organisation:
Recruitment and selection: These processes assist managers to attract, short list and hire
suitable candidates for company. Talented individuals help in maximising profits for company.

Training and development: These programs are given to those employees who lacks
certain skills and ability. With proper training, employees can improve their knowledge areas
and skill and smoothly perform their work.
5.2 Key features of employment legislation
Legal bodies of country formulate different laws and acts for organisations in order to
avoid possible illegal activities (Petri and Govern, 2012). Main aim of employment legislations
are to protect employees from exploitations and discriminations. Following are some laws that
are implemented within company's premises:
Minimum wage act: Main objective of this act is to provide mentioned minimum wage
to every employee so that it can fulfil basic need and demands of them.
Health and safety: This act provides necessary compensation and benefits to employees
at the time of emergency. It also includes several services which is given to employees by
company.
TASK 3
3.1 Interpret the information on profit and loss account
Sainsbury's profit and loss statement of 2017 is given below:
Revenue 2017
Total Revenue 41608000
Cost of Revenue 29517000
Gross Profit 12091000
Operating Expenses 588200
Selling General and Administrative 130500
Operating Income or Loss 457700

Income from Continuing Operations
Total Other Income/Expenses Net 41000
Earnings Before Interest and Taxes 777000
Interest Expense 165000
Income Before Tax 612000
Income Tax Expense 153000
Net Income From Continuing Ops 414000
Net Income
Net Income 4659000
Preferred Stock And Other Adjustments -
Net Income Applicable To Common Shares 4659000
Interpretation: From the above report, it can be analysed that, organisation has earned 4659000
in the year of 2017 and bear 457700 loss in the same year.
TASK 4
4.1 An analysis to determine own and other roles of team membership
In organisation, different employees work together as a team in order to accomplish set
targets and objectives. It increases the effectiveness of team members in achieving the goals of
company. My role in team was to lead and direct them in right direction so that they can achieve
goals on time. I assign different responsibilities to different employees in the team according to
their specialization. This help them to perform their work in better manner.

Under my guidance, employees have performed very well and completed all their tasks
on times (DaSilva and Trkman, 2014). Roles of other employees is to maintain discipline and
coordinate with each other.
4.2 Team development
Following are some team development stages:
 Forming: At this stage, most of the members in the team are excited, polite, positive and
some of them are anxious.
 Storming: In this stage, people start pushing their limits which are established in the first
stage. This stage arises at the time of conflicts between team members.
 Norming: At this stage, people start appreciating college's strength and resolve their
differences and respect their leaders.
 Performing: In this stage, hard work leads to achievement of goals without any hurdles.
Motivation Theories:
Maslow theory: It is one of the widely known theory and includes 5 elements. They are
physiological needs, safety and security, belongingness and love, self esteem and self
actualization.
Alderfer theory: This theory includes three classes of needs and they are existence,
relatedness and growth.
TASK 5
6.1 Impact of customer service on business success
It is necessary for Sainsbury to consider customer's needs and demands as they play great
role in the success of company. Sainsbury is one of the largest supermarkets and they have
achieved such success by satisfying their customers by fulfilling all their demands and
requirements (Casadesus-Masanell and Ricart, 2012). If customers are satisfied with the services
of company, then they will prefer them over others and this will increase company's profit.
6.2 Benefits of customer profiling to a business
Following are some benefits of customer profiling:
 Better communication: It is one of the effective method which allows company to
create a positive interactions with known consumers a compared to others. This will help
them in better understanding related to their choices and needs.

 Minimize the competition: Company can develop a strong connection with their users
by knowing about their demands. This will result in maximisation of profits and
decreases level of competition.
CONCLUSION
From the above report, it can be concluded that, carrying out business activities in smooth
manner is a myth and is not a easy tasks. It requires great dedication and hard works to achieve
ultimate targets. There are numerous macro factors that keep on influencing business operation
and may lead to loss to the company. By proper management and coordination, superiors can
easily operate their business and can achieve desired success.

REFERENCES
Books and journals
Boons, F. and Lüdeke-Freund, F., 2013. Business models for sustainable innovation: state-of-
the-art and steps towards a research agenda. Journal of Cleaner production. 45. pp. 9-19.
Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.
Petri, H.L. and Govern, J.M., 2012. Motivation: Theory, research, and application. Cengage
Learning.
DaSilva, C.M. and Trkman, P., 2014. Business model: What it is and what it is not. Long range
planning. 47(6). pp. 379-389.
Casadesus-Masanell, R. and Ricart, J.E., 2012. 22 Competing through business models1.
Handbook of Research on Competitive Strategy, p. 460.