Analyzing the Impact of Macro Environmental Forces on Banking

The analysis focuses on the interplay between different macro environmental forces—economic, social, legal, technological, and political—and their impact on the banking sector. Economic factors such as GDP growth and interest rates directly influence consumer behavior and business investment in banks. Social changes, including demographic shifts and cultural trends, affect customer preferences and service demands. Legal regulations shape compliance requirements and operational standards for financial institutions. Technological advancements drive innovation and efficiency in banking processes, while political stability or instability can impact market confidence and regulatory landscapes. The assignment highlights how these forces collectively influence the profitability, expansion strategies, and competitive positioning of banks. It underscores the importance of adaptive strategies to navigate these dynamic external factors effectively.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. Various forms, size as well as scope of organisations............................................................1
LO 2. Interrelationship between different functions and the way they are related to
organisational structure...............................................................................................................4
TASK 2............................................................................................................................................5
LO 3 Impact/influence of macro environmental factors on Business operations.......................5
LO4 Determining the Strength and weaknesses of NATWEST and explaining their
relationship with external macro environmental factors............................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment refers to the all circumstances and situation surrounding business.
It includes basically two terms that is business and environment. Business refers to the economic
system where products and services are exchanged for one another for earning income as well as
profit. Environment is defined as the aggregate of all surroundings of living things hat includes
natural factors' and other living organism that supports business in their growth as well as
development. In addition to this it also may lead to threats and damages. The environmental
factors emphasize on fulfilling the needs of business and assist organisation in fulling various
requirement that are essential for sustainable development. Business environment consist of both
internal as well as external forces. These variables have both positive and negative on business
operations.
The study have focus on understanding the concept of business environment and
analysing the impact as well as influence of these forces on various activities that are conducted
by enterprise. Reports also emphasizes on identifying different types of organisation and the
purpose of their establishment. It will also include the demonstration about the positive and
negative effect of macro environmental elements on various business activities. This can be
understood well in context of NATWEST company.
TASK 1
1. Various forms, size as well as scope of organisations
There are several types of enterprise all these type of commercial enterprise are
categorised into mainly three sectors such as private, public and voluntary. The objectives of
these enterprises may be different.
Public sector organisation- These firms are generally closely-held, managed and control by state
or central governments and by local authorities. The objectives of these types of business entities
is to provide common services to domestic people at reasonable price. Public organisation can be
wholly owed by government or it can also be managed and owned by private firms. In both the
case central government have control over the various business activities. Such business unit
have focus on providing utility services such as transportation, telecommunication , electricity
etc. (Adebisi, Azeez & Oyedeji, 2016)The different form of Public limited firms are
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Departmental undertakings- These types of organisation provide important services such as
postal services, broadcasting, postal services etc. The activities carried out by these type of
business unit are controlled by ministry.
Statutory corporation- It is defined as a corporate body that came into existence by the act of
various members of parliament. The functions, Power and management activities are defined by
the legislative authorities. Examples of such form of business units are state trading corporations
and insurance companies.
Government organisations-This type of business unit is wholly owned, controlled and managed
by legal authorities or central government.
Advantages of public limited companies:
It has focus on fulfilling social objective. It main aim is to provide social welfare. As it
controlled by legal authorities country can achieve its economic as well as social goals.
These types of firms are accountable for providing satisfaction to people. As ministry and
government has controlled over such organisation , it helps in preventing unfair business
practises.
Disadvantages-
Due to high involvement in organisation activities the firm faces difficulty in administrations.
Lack of flexibility.
Lack of business experience.
Private sector -Such organisation are closely-held and managed by individual person. In these
types of business unit the purpose of owner is to sell their products as well as services and earn
profit. But sometimes these business entities conduct partnership with Public sectors in to
provide joint services to people. The private limited firms that supply raw material comes under
primary sector. The business unit that manufacture goods are considered as secondary
undertaking. The investment is such types of business is made by owner. The example of private
sectors' organisation include-
Sole proprietors-Sole proprietor enterprise are also known as unincorporated companies that is
owned by single owner who are accountable for administration various business action and are
liable for compensating various taxes. In this kind of organization the goal of businessperson is
to make profits by delivering special services to consumers. Illustration of this organisation
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includes plumber, carpenter, doctor etc.”These types of undertaking are generally comes under
tertiary sectors.
Partnership organisations-It is defined as business unit which is closely-held, administered and
controlled by two or more partners. The objective of such form of partnership firm is to increase
profitability and development of enterprise.
Voluntary organisations-Voluntary firm involve group of masses who come in into a voluntary
agreement to execute actions in order to achieve common goal. Voluntary enterprise generally
involves those people who have desire to work for societal welfare. Some examples of voluntary
business unit include professional groups, environmental associations, teachers union and trade
association. These enterprises may be corporates or unincorporated. This form of enterprises
includes all types of groups small local resident group to large legal registered associations.
Charitable organisation-This type of organisation is also known as non profit organisations.
The purpose of this type of enterprise is to provide social welfare. This form of organization are
generally relies on the donations. These business units can be managed and controlled by
governments as by private companies. Some charitable organisation emphasizes on delivering
particular services such as educational, religious, other special services that may be related to
other national interest. Various functions performed by Voluntary organisation are generally
beneficent in nature. The obligation of compensating taxes based on the location or nation in
which these business are operating
Advantages :
Undisputed ownership-There is less involvement of legal authorities so management activities
can be easily managed. Such firm does not require permission from legal authorities in order to
sell their funds. Owner of business can sell their funds in order to fulfil the need of various
business operations with maintaining control on organisation.
Limited disclosure advantage
Disadvantage:
Limited capital- Private limited companies have limited potential to raise capital for fulfilling the
requirement of business operations.
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LO 2. Interrelationship between different functions and the way they are related to
organisational structure
NATWEST is considered as a large retailer and commercial bank in UK. It provides
various services such as banking and insurance facilities. Talented and skilled staff in banks
intends to provide attractive investment polices and qualities services to its client. The success
and growth of bank is mainly depended on its management and customer relationship team.
Bank generally have flat structure as this assist organisation in facilitating effective flow of
information and ensuring coordination between various functional unit. As coordination and
communication are two important element that helps firm in management of various business
activities. It provides manager and employees to work on same platform in order to achieve
organisational goals and objectives. Flat structure provide managers as well as leader to provide
guidance to workforce and support them in suggesting effective solution top clients (Caiazza,
Shimizu & Yoshikawa,2017)
Finance: The role of financial department is to manage the budget for organisation and frame
effective investment policies in order to attract more customer. The financial administrative
division of bank keep electronic records of money received and paid out by the NATWAST.
This information will then be used to produce various financial statements for tax purposes and
to follow with legal requirements. Finance department will need to take into account statutory
deductions such as tax, and employee contributions such as pension or loan repayments.
Financial department are interrelated with all other functional division and prepares budged forr
them by analysing their requirement.
Human resource:Human resource responsible for recruitment, selection, training to the
employees. The function of human resource manager is to coordinate with sales unit and to
maintain faithful personal record of the client based on the legalisation. Their function also
include encouraging staff to enhance their potential and increase their contribution in order to
achieve objective for bank. Human resource administrative division are interlinked with all other
departments. They facilitate coordination between different department which helps organisation
to work effectively (Camillus, 2016.)
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TASK 2
LO 3 Impact/influence of macro environmental factors on Business operations
Macro environmental are major elements that are uncontrollable in nature and have great
impact on various business activities. These variables also have great effect on the sustainability,
profitability and growth of Bank. It has great influence on employees, organisation policies,
strategies as well as decisions. The macro environmental elements include social, technological,
political, legal, economical and environmental forces. Macro environmental factors have great
effect on overall development and growth of organisation.
PESTLE analysis is an effective tool that can be used to determine and identify the
impact/influence of various external factors on business. It also suggests various strategies that
can be used by firm for reducing the impact of these forces on enterprise.
Economic Factors-As NATWEST is operating in banking sector it has great influenced of
economic forces on its business activities. The growth of banks and economic factors are
interrelated. The economic growth or development of country has positive impact on banks.
Other economic forces such as recession , economy breakdown, have great influence on the
investment policies that is offered by banks to its customers. It has great impact on the
profitability of firm. Change in interest as well as currency rates, level of income distribution,
individual saving habit has great effect on various decision taken by manager in order to attract
more customers (Doh, Luthans & Slocum, 2016.)
Political factors- These variables includes various boundaries, code of conduct that are
established by political parties are need to be comply by banks. As these elements support
organisations to identifying various sources of investment and allow them to increase their
profitability and enhanced growth. The involvement of legal authorities is essential as these
parties support firm in managing and establishing in their position in banking market. Various
political elements that have negative impact on enterprise are Laws, corruption, tax policies
deregulated trend etc. These variables have great influence as well as effect on business entity
goodwill and market share. It also assists business entity in reducing competition.
Technological factors-These are the supportive forces that assist banking industry in
maintaining the record of customer, recording transaction, and providing quick services as well
as additional facilities to its customer. It has provided organisation an opportunity to attract more
number of customer by providing them with online transaction facilities. These variables have
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allowed business unity to improve quality of services and enabled therm to maintain healthy
relationship with customer. Technological factors may lead to additional cost for firm and it has
great influence on employees as well. As increase in used of technology organisation may create
threat for them to lose job. The rate of technological change may have great effect on the demand
of company products as well as services.
Social factors-These factors have great effect on the firm profitability and revenue generation
capacity. The various social variables includes The growth of population, attitudes, saving as
well spending habit of individual, social and cultural changes. These forces have great influence
on various scheme formulated by bank manager in order to attract clients. Social factors have
great impact on profitability of organisation. It has also have great influence on marketing
strategy of NATWEST.
Legal factors-These forces have long termed impact on banks. These variables include trade
structure, laws related to banking practices, currency regulation, etc. These forces have great
effect on the organisation sustainability and growth. Change in various laws such as consumer,
employment legislation, health and safety law have great effect on the growth and sustainability
of firm. It also has great impact on the various banking activities and services provided by them
(Eling & Schaper,2017)
LO4 Determining the Strength and weaknesses of NATWEST and explaining their relationship
with external macro environmental factors
The swot analysis technique can be used to identify the strength, weakness, opportunity
and threats of NATWAST bank. This model will assist business entity in analysing the ways for
overcoming weaknesses, reducing threats, exploring and capturing various business
opportunities in market. It also assist bank manager in formulating suitable strategy to reduce the
impact of various macro environmental factors on their business activities (Klapper &Parker,
2011)
Strength:
 The banking company has expert team of employees that provide effective as well as
diversified solutions to its clients.
 It has attractive as well as advanced Information technological structure.
 NATWEST has focus on providing satisfaction to its customers.
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 Effective marketing strategy-marketing
 Good brand image
 It has many branches and many cash machines across Britain.
 Wide customer base
 Organisation has adopted effective marketing technique such as sponsoring big events.
This method of marketing has allowed business unit to generate brand awareness.
 It has selected enterprise and individual as a target which has support enterprise in
increasing their profitability and enhancing growth.
Weaknesses:
 Damaged brand image due to controversies.
 Do not emphasize on market penetration.
Opportunities:
 Fostering growth.
 The company has opportunity to expand its operations.
 As NATWEST has wide customer base it can enter into emerging market.
 Firm can improve its brand image by providing quality services to customer.
 It has potential to frame effective attractive investment policies as this will allow
organisation to increase their profitability and enhance growth.
Threats:
 Changes in economical, legal and social factors.
 Increase in competition.
 Fluctuation in financial market.

Relationship with external macro environmental factors:Macro Environment factors are more concerned with variables such as economic and non-
economic factors like social concerns, government policies, family that have great impact on
banks.The external factors which is present outside the bank adversely have adverse effect on its
performance and goals.
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If NATWAST bank is strong, then it can be exposed to a greater level of threats than weaker
organization.The macro factors provide the banking organisation with a way or techniques to improve its
performance and gain competitive advantage in a market.It also assist banking firm to expand its branches at more locations, such as an it can enter into
emerging market. The macro factor which include economic forces have significant impact on
the success of NATWAST. They have great impact on the conditions of buying and selling in the
market. The company's importation of input and output goods have a major dependency on
economic forces.
The laws and legal process also Have great effect on NATWAST bank. If the laws are in favour
of the businesses , then it will be very beneficial but if it is not then it will have negative impact
on the banking business.
The technological Forces are said to be the most prevalent in the environment for banking
business. It includes the latest theories technologies and science which can provide knowledge
base for banking company. It will rise the organisation and maximise the profit to a great level.
The disadvantage is that, their can be sources of information that lead to dangerous
activities of the enterprise (Hansen & et.al., 2017)
CONCLUSION
It has been concluded from the project is that banking industry is major impacted and
influence mainly by three macro environmental forces these are social, economic and legal
factors. These various have great effect on the banking operations and activities. Technological
and political forces support firm in increasing their profitability and encourage business unit to
expand their business by establishing more branches.
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REFERENCES
Books and journal
Adebisi, S. A., Azeez, O. O. & Oyedeji, R., (2016). Appraising the Effect of Boko Haram
Insurgency on the Agricultural Sector of Nigerian Business Environment. Journal of
Business Systems, Governance & Ethics.11(1).
Caiazza, R., Shimizu, K.& Yoshikawa, T., (2017). Cross‐Border M&A: Challenges and
Opportunities in Global Business Environment. Thunderbird International Business
Review.59(2). pp.147-151.
Camillus, J. C., (2016). The wicked challenge of the business environment. International
Journal of Business Environment.8(1). pp.19-31.
Doh, J. P., Luthans, F. & Slocum, J., (2016). The world of global business 1965–2015:
Perspectives on the 50th anniversary issue of the Journal of World Business:
Introduction to the special issue. Journal of World Business.51(1). pp.1-5.
Eling, M. & Schaper, P., (2017). Under pressure: how the business environment affects
productivity and efficiency of European life insurance companies. European Journal of
Operational Research.258(3). pp.1082-1094.
Hansen, M. W. & et.al., (2017). Coping with the African Business Environment: Enterprise
Strategy in Response to Institutional Uncertainty in Tanzania. Journal of African
Business. pp.1-26.
Online:
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