Impact of Macro Environmental Factors on Business Operations: Burberry

This report provides a comprehensive analysis of the macro-environmental influences on business operations, focusing on Burberry as a case study. It begins by exploring different types of organizations (public, private, and voluntary sectors) and their purposes, as well as the size and scope of o...Read More

Macro Environmental
Influence

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Types and purposes of organizations.....................................................................................1
P2: Size and scope of the organizations.......................................................................................2
TASK 2............................................................................................................................................3
P3: Interrelationship of various functions....................................................................................3
TASK 3............................................................................................................................................5
P4: Positive and Negative impact of macro environment............................................................5
TASK 4............................................................................................................................................7
P5: Internal and External analysis................................................................................................7
P6: Interrelation of strengths and weaknesses with external macro factors................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business refers to the various types of trading activities which an organization undertakes
in order to ensure that a sustainable level of profit can be earned in an effective manner. Business
Environment refers to the sum total of different types of internal as well as external factors which
create an impact on the business activities of the organization (Alaloul, Liew and Zawawi, 2017).
The managers are required to prepare specific strategies which will be quite helpful for the
businesses to ensure that they are able to attain their goals and objectives. This report will focus
on Burberry Company. It is a British Company which deals in luxury fashion products. In this
assignment, a detailed analysis will be made on types, size and scope of the organizations,
interrelationship between various types of functions. Additionally, the impact of both positive
and negative influence which the macro environment has on business operations will be
discussed as a part of this project.
TASK 1
P1: Types and purposes of organizations
There are various types of organizations which exist within the market. Some of them are
explained as follows-
Public sector organizations- In these companies there is a major stake of the
government or they are fully owned by the government (Barr and et.al., 2018). These
organizations focus on providing of different types of goods and services to the people at
reasonable rates. They also focus on social welfare of people in the society by providing them
with the required services. An example of Public sector organizations is BBC. It is a British
Public Broadcaster which provides information-related services to the people.
Purpose- The purpose of these types of organizations is to provide goods and services to
the people at reasonable rates. BBC provides information to the people so that they can stay
informed wherever they stay in the world.
Legal structure- BBC has a legal structure of a company. Therefore the rules and
regulations of a company are applicable on it.
Private sector organizations- In these organizations the focus is on earning of profits.
Majority of stake here is held by private sector. These firms put their concentration on ensuring
that they provide good quality of products and services to the people. An example of Private
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sector organizations is Burberry. It is a British Luxury Fashion Brand which provides various
types of products to the people.
Purpose- The purpose of these firms is to ensure that they provide quality products and
services to the customers which ensures that they are satisfied and receive value for the price
which they are paying. Thus the purpose of Burberry is to make sure that the luxury products are
provided to the customers by charging them a fair price.
Legal structure- The legal structure of Burberry is of a company. Thus the rules and
regulations of a company are applicable on it.
Voluntary sector organizations- In these organizations there is a focus on providing the
required goods and services to the people without expecting to earn profits in return. Their focus
is on social welfare. Oxfam is the example of voluntary sector organizations. It is a firm which
provides charitable services and focuses on the alleviation of global poverty.
Purpose- The purpose of these firms is to ensure that they can fulfil their specific social
responsibility in an effective manner. Thus the purpose which Oxfam has is to ensure that global
poverty is alleviated.
Legal structure- Their legal structure depends upon the type of organization chosen. It
can be either of a partnership or a company. Therefore the legal rules and regulations depend
upon the whether it is a partnership or a company.
P2: Size and scope of the organizations
There is a particular impact which the size and scope of the organizations has on the
overall operations of an organization (Belás and et.al., 2019). The size and scope of the
organizations is explained as follows-
BBC-
Size- The size of BBC is of a large-sized organization. This is so because it has expanded
its operations all over the world. It has presence in different countries of the world and it covers a
wide range of audience. It has an availability of a rang of resources with it. Due to its large-size
it has a good availability of financial resources with it. Thus in this way it is able to provide its
services to the people in a highly effective manner.
Scope- BBC provides a range of information related services to the people. It includes
news, information and broadcasting services. Its aim is to make sure that it can cover a wide
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range of audience in the public. It can include news, information and broadcasting services. Thus
it has an extended scope.
Burberry-
Size- Burberry is also a large-sized organization. It has stores in U.K. as well as in many
countries of the world. Its large size allows it to make sure that the use of resources can be done
in an appropriate and proper manner.
Scope- Burberry has a large scope. It provides multiple products to its customers which
are related with luxury fashion. It charges a fair price for providing them to the customers and
ensures that they receive the desired value and satisfaction when they make the use of its
products. Thus in this way it identifies the various types of needs and requirements of the people
and tries to fulfil them by providing appropriate products which can meet these needs and
requirements in a highly effective manner for the price which the customers pay to obtain the
products.
Oxfam-
Size- Oxfam is also a large-sized organization. Due to its size, it is able to make sure that
it can provide different types of charitable activities in a highly effective manner and can also
fulfil its social responsibility by providing the required value to the society. Due to its large-size
the organization is also able to gather the funds to support the various types of activities.
Scope- Oxfam has a large scope. It provides a range of charitable services in order to
ensure that global poverty is alleviated all over the world. It receives donations from different
types of people for providing its services. Also it has different volunteers across the world who
are working for it. Thus in this way it ensures that it is able to achieve its various goals and
objectives.
TASK 2
P3: Interrelationship of various functions
In an organization, there is a strong interrelationship which is shared between different
types of functions. This can be explained as follows-
Marketing and HR- In the firms, the marketing department requires those workers who
are quite skilled and efficient in their work (Čepel and et.al., 2018). Thus for this they are
required to rely on the HR department which recruits different people for doing the job of
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marketing. Thus in Burberry the requirement is to make sure that there is a proper coordination
between both of them which will help the organization in the achievement of goals and
objectives.
Finance and HR- The Finance Department in the organizations is required to make sure
that it provides the required funds to the HR department so that they are able to effectively
conduct their operations (Chukhray and Mrykhina, 2018). In Burberry, this coordination is quite
essential to make sure that the operations of the organization are managed in a smooth manner.
Production and Marketing- In the firms, the requirement is to make sure that the
Production department can produce good quality products which meet the needs of different
customers in the market (Civelek and et.al., 2016). Also the role of Marketing department is to
ensure that the produced goods can reach the customers effectively. Therefore in the context of
Burberry it is required that both of these departments properly cooperate and coordinate with
each other so that goals and objectives are achieved.
Production and Finance- Production of goods is a process which requires a lot of funds.
This is due to the various types of requirements which this department may have. For Burberry,
the requirement is to make sure that the Finance department is able to provide them with the
funds so that it can carry on its operations in an effective manner.
Marketing and Production- In the organizations, the Production department requires
that the produced goods are effectively promoted by making the use of appropriate techniques
and methods (Virglerová and et.al., 2017). In the context of Burberry, there is a requirement that
it is able to effectively provide the marketing department is able to promote the goods produced
by the Production department in an effective manner. This requires a close cooperation and
coordination between these departments.
Operations and HR- The responsibility of ensuring smooth functioning of the
organizations lies with the Operations department of the organizations (Corradini, Polzonetti and
Riganelli, 2018). Thus the requirement in Burberry is to ensure that there is a proper cooperation
and coordination between these departments which makes sure that the achievement of goals and
objectives can be done without facing problems and issues. For this a strong interrelation needs
to be there between these departments so that functions can be carried out effectively and
efficiently in the organization by the managers.
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TASK 3
P4: Positive and Negative impact of macro environment
Macro environment refers to various types of factors which can create an impact on the
overall functioning of the company (Fabuš, 2017). For its analysis the use of PESTEL analysis is
made in the organizations. Its detailed explanation is as follows-
Political factors- Political situations are quite dynamic in nature and can change very
fast thereby creating an impact on the operations (Foss and Saebi, 2018) (Gaganis, Pasiouras and
Voulgari, 2019). Thus organizations are required to consider these factors as they can create an
influence on the overall profits earned by them.
 Positive impact- If the government policies are in the favour of the company then it can
positively impact the profits. For Burberry this can create a positive impact on the overall
operations.
 Negative impact- Constant fluctuations in the political conditions can negatively impact
the business of the company thereby impacting the profits. In the context of Burberry this
can lead towards a negative impact on its functioning.
Economic factors- In a country, there can be a change in the economic conditions and thus these
are to be considered by the managers. For the firms it is important that they can consider them so
that they properly manage the operations.
 Positive impact- Higher economic growth of the country can create a positive impact on
the operations of the firm. Thus for Burberry this can lead towards a positive impact.
 Negative impact- Economic slowdown in a country can negatively impact the operations
of the organization. Therefore this can create a negative impact for Burberry.
Social factors- There are various changes in the society and the organizations are required to
consider them. Burberry's managers are required to consider them because changes in society are
required to be taken into account by the company.
 Positive impact- A change in the lifestyle attitudes of the customers can favourably
affect the business of the companies because they may channelize the demand. Thus this
creates a positive impact on Burberry.
 Negative impact- Strict social customs can affect the business of the firms in a negative
manner by reducing the demand of the goods. In Burberry, a negative impact can be
created due to it.
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Technological factors- Technology in the market changes quickly and thus there is a
requirement on the part of the companies to make sure that these changes are considered and
implemented quickly (Głodowska, 2017). Thus Burberry's managers are required to consider
these factors.
 Positive impact- If the organizations are able to adopt to positively adopt to
technological changes then this can lead towards creation of a positive impact on the
operations of an organization. Thus in this way positive impact is created on Burberry.
 Negative impact- In case the firms are not able to adjust according to the new
technology in the market then a negative impact can be created on the operations. Thus
this leads towards a negative impact on Burberry.
Environmental factors- Nowadays, the customers are quite conscious towards the environment
(Khajeheian, Friedrichsen and Mödinger, 2018). Thus the requirement on the part of
organizations is to provide such products to them which are environment-friendly. Thus these
factors can create an impact on Burberry.
 Positive impact- If the companies provide environment-friendly products to their
customers then this creates a positive impact on the operations. Thus in Burberry this can
positively affect the operations.
 Negative impact- If the firms are not able to provide environment-friendly goods to the
customers then this can negatively affect the operations. In Burberry, a negative impact
can be created due to this.
Legal factors- The companies are required to consider the legal rules and regulations of the
countries in which they operate (Shageeva and et.al., 2017). Thus Burberry is required to
consider them.
 Positive impact- If the firms consider the laws of the countries in which they operate
then this can create a positive impact on them. Therefore positive impact can be created
on Burberry due to this.
 Negative impact- If the companies do not consider the laws of the countries in which
they operate then a negative impact can be created on them. Thus this can create a
negative impact on Burberry.
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TASK 4
P5: Internal and External analysis
For the purpose of internal analysis the organizations can consider the use of SWOT
analysis (Holotiuk and Beimborn, 2017). It is a management framework in which the various
types of Strengths, Weaknesses, Opportunities and Threats are identified. In the context of
Burberry, the SWOT analysis is as follows-
SWOT analysis
Strengths Weaknesses
 Quality products- Burberry offers
quality products to its customers. These
goods have a particular level of quality
and offer value to the customers for the
price which they are paying for
acquiring them.
 Customer base- Burberry has a large
customer base in the market. It allows
the company to ensure that it can target
the right customers and enhance its
overall level of profits.
 Marketing techniques- Burberry is
quite weak in the application of its
marketing techniques and thus this can
make it behind its competitors in the
market.
 Lack of skill development of
employees- Burberry's employees are
quite weak in the application of their
skills in an effective manner. This is
due to lack of their overall skill
development.
Opportunities Threats
 Expansion- Expansion in other
countries in the world offer Burberry an
excellent opportunity which it can use
in order to enhance its overall profits.
 Innovation- Innovation in the products
offers opportunity to Burberry so that it
is able to target more customers with
innovative products and thus can ensure
maximization of profits.
 Higher tax rates- An increase in the
tax rates by the government can lead
towards an increase in the expenses of
Burberry. Thus it can lead towards a
reduction in the overall level of profits.
 High-level of competition- Burberry is
facing high-level of competition in the
market and due to this an impact has
been created on the profits which it is
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earning.
For external analysis, the organizations can make the use of Porter's five forces model. It
is a framework in which identification and analysis of forces which impact the industry and
determine its strengths and weaknesses is made (Porter's 5 forces, 2020). The application of this
model in the context of Burberry is as follows-
Competition in the industry- It refers to the level of competition which is present within
an industry. Burberry operates in the fashion industry and here there is a high-level of
competition due to the presence of so many competitors operating within the market. Thus this
force has a high-power for the company.
Potential of new entrants- It means the potential which the new entrants have in the
industry. In the fashion industry, the new entrants can offer competition to the existing players in
the market. Thus in the context of Burberry this force has a high-power.
Power of suppliers- It refers to the power which the suppliers hold in the market to
create an influence on the prices of inputs. Fashion industry's suppliers do not hold much power
to create an impact on the prices of inputs. Thus, in the context of Burberry this force has a low-
power.
Power of customers- It means the power which the customers have in the market to be
able to influence the prices of the various goods of the organization. In the fashion industry, the
choices of the customers are given priority and preference. In Burberry this force creates a high-
power.
Threat of substitutes- It refers to the power which the substitute goods hold to create an
overall impact on the operations. In fashion industry, there are plenty of options for the
customers in the terms of substitute goods. Therefore, in the context of Burberry this force can
create a high-power because the customers can shift to other alternatives.
Justification- 4 out of 5 forces have a high power and the remaining 1 force has a low
power. Thus Burberry is required to prepare a specific strategy through which it can deal in an
effective manner with the impact which has been created by these forces.
P6: Interrelation of strengths and weaknesses with external macro factors
Interrelation of strengths and weaknesses with external macro factors
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Basis Interrelation with macro factors
Strengths-
Quality products offered by Burberry is a
strength for it and thus this helps it in
satisfying the customers in a better manner.
This strength of Burberry interrelates with
Social factors as due to quality products the
customers of the organization will be highly
satisfied and thus a good image of the company
will be created in the society.
Burberry's customer base acts as its strength
and due to it it is able to ensure that it is able to
target more profits due to it because it can
launch its new products and because of a good
customer base higher amount of sales can be
ensured by it.
This strength of the company interrelates with
the economic factors as if the country is
witnessing good economic growth it offers the
firm a chance to launch new products within its
customer base and in this way it will be able to
ensure that it can earn higher-level of profits.
Weaknesses-
The marketing techniques of Burberry are not
very effective and thus this creates a weakness
for the company as it can get behind its various
competitors in the market.
This weakness of the company interrelates with
the political factors as due to a change in the
government policy the marketing techniques of
the organization can become ineffective
thereby creating an impact on the
implementation of marketing strategies.
There is a lack of skill development in the
employees of Burberry and this is a weakness
for it because due to it an impact can be
created on the overall operations of the
organization.
This weakness of the firm interrelates with the
technological factors as the technology
changes very fast and if the organization's
employees are not able to enhance their skills
according to it then this can create problems
and issues for the company.
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CONCLUSION
From the above report, it can be concluded that Business and Business Environment
creates an impact on the organizations. There are different types of organizations which exist in
the market. There is a particular size and scope of various firms. A strong interrelationship
between business functions is required to ensure that functioning of the organization can be done
properly. There is a positive as well as a negative impact created by the macro environment on
the business operations. Internal and external analysis can be performed by the companies. The
strengths and weaknesses of the companies interrelate with the external macro factors.
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REFERENCES
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