Business Environment Analysis: Types, Functions & Macro Environment

This report provides a comprehensive analysis of the business environment, focusing on different types of organisations (public, private, and voluntary sectors) such as Sainsbury, Marks and Spencer, and OXFAM. It explains their size, scope, legal structures, purposes, visions, and various operational factors. The report details the functions of different departments within an organisation like Sainsbury, including finance, operations, marketing, and HR, and how these functions link to organisational objectives and structure. Furthermore, it evaluates the positive and negative impacts of the macro environment on business operations using PESTLE analysis and assesses the internal capabilities and micro-environmental factors affecting business performance. The analysis culminates in a SWOT/TOWS analysis to justify its influence on decision-making, offering a holistic view of the business environment and its impact on organisational strategy.

BUSINESS AND
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION ..........................................................................................................................4
MAIN BODY ..................................................................................................................................4
TASK 1 ...........................................................................................................................................4
P1 Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures......................................................................................................................4
M1 Analyse how the structure,
size and scope of different
organisations link to the business objectives, product and services offered by
the organisation..........................................................................................................................7
P2 Explain the size and scope of a range of different types of organisations.............................7
P3 Relationship between different organisational functions and the way they link themselves
to organisational objectives and structure...................................................................................8
M2 Analyse the advantages and
disadvantages of interrelationships
between organisational functions
and the impact that can have upon
organisational structure............................................................................................................11
LO 3...............................................................................................................................................11
P4 Positive and negative impacts of the macro environment on business operations with
examples....................................................................................................................................11
P5. Evaluate the internal capabilities and factors of micro environment that affect business
and its performance...................................................................................................................13
P6 Interrelation of strengths and weaknesses with external macro factors...............................14
M4 Apply appropriately SWOT/
TOWS analysis and justify how
they influence decision-making...............................................................................................16
CONCLUSION .............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Business environment means those aspects which is related to surroundings of business
organizations which creates impact over operations with effectiveness. Further this helps in
controlling all events and operations related to business. Under it various factors is covered like
customers, stakeholders, competitors, regulations and other governmental activities that creates
direct effect upon business operations. Business environment plays most efficient role in making
business processes affective. In business environment companies require to improve technical
and operations with capabilities. These are one of the most important part of organization
making analyses done over internal and external environment before running operations within
market. Scope of business environment is wider as it helps in forming of various process in
business that directly impacts growth of business organization. Nature is dynamic as business
environment holds tendency to uplift an business organization in right direction making business
operations done in impactful manner. Under this report organizations taken is of public, private
and voluntary sector names are Sainsbury, Marks and Spencer, OXFAM. The report explains
about scope, size, legal structure, purpose, types, vision and various factors of private, public and
voluntary organization. Further in the end PESTLE and SWOT analysis is covered.
MAIN BODY
TASK 1
P1 Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures.
In business environment there are three types of organizations which is based over
private, public and voluntary sectors. Further explanation about its scope, size, mission and
vision has been explained as follows:
Private sector organisations
Private sector these are those sectors which includes organization owned by individuals
and not government. These organizations has been operating in market with an motive to
increase profit and sales example of such organization is Sainsbury(Gao and Li, 2020).
Background details of organisation- The organization has been formed in the year 1869 by
John James Siansbury. This is an popular part of supermarket chain within United Kingdom
and has share of supermarket share. This is one of the most popular organization in UK and

sell variety of products that makes it popular all over the world. It is based upon providing
service and products to people living in particular society.
Products and Service- The organizations offers about product and services with daily utility in
relation to products, groceries, bank, magazine, clothing, etc(Le, Ling and Yau, 2018).
Vision- The vision of organization requires to increase value over product and services which
makes high quality of products provided to customers. It makes increase of customers
loyalty and leads upon improving potential within customers.
Mission- Mission of the organization is to develop values of customers in order to earn lifetime
loyalty to its potential customers.
Types-
Sole Proprietorship: These organizations are run by individual in order to earn profit. Such
organizations are oldest form of private organization and has less restrictions in its
formation process. Examples of the organization are Carpenter, Local Grocery store,
Tailor, etc.
Partnership- They are known as agreement formed with the helps of two or more individuals in
order to run private business. In relation to partnership business, profit and loss requires to
bear by the partners themselves. Generally the agreements are based over shares, authorised
capital, ownership and profits.
Joint Stock Companies- These organizations are limited to financial resources within joint stock
companies and contains heavy risk for its owners. There are different values in joint stock
which operates through partners of joint stock organization. Under the organization Board of
Director, CEO and Shareholders are major operating partners of joint stock companies.
Purpose- The main purpose of Sainsbury is to become popular retailing organization all over the
glob. This is achieved through providing high quality of products and services to its
customers.
Legal Structure- Corporate governance is used by Sainsbury as its legal structure. This helps
strategy over satisfying demands of all stakeholders.
Public sector
Public sector organisations are those organizations which is ruled by government
authorities. They are important part of economy and includes public sector industries covering

about school, electricity, emergency services, fire services with healthcare and more. Example of
such organisation are Marks and Spencer(Liu, Li, K., . and Mao, 2017).
Types-
Background details of organisation- Marks and Spencer was founded by Thomas and Spencer
in 1884. This is an private sector organization conducting operations in retail sector all over
the world. Marks and Spencer provides services to people in the form of physical and offline
stores.
Products and Service- The organizations offers about product and services with daily utility in
relation to products, groceries, bank, magazine, clothing, etc.
Vision- The vision of organization requires to increase value over product and services which
makes high quality of products provided to customers. It makes increase of customers
loyalty and leads upon improving potential within customers.
Mission- Mission of the organization is to develop values of customers in order to earn lifetime
loyalty to its potential customers.
Voluntary sector
These organizations is run through social work and main objective is based upon
improving society's conditions. They are non – governmental and non-profitable organization.
Funds is arranged through national lottery, government, rich individuals, etc. Oxfam is one of
the best example for such organization.
Background details of organisation- Oxfam is an organisation which was founded by Cecil
Jackson Cole in year 1942. This company is situated in Nairobi, Kenya. The services offered
by this organisation are mainly for poor people. This organisation wants to remove poverty
from surroundings.
Products and Service-. This organization do campaign over poverty in order to make people
aware about it. Also it provides nutritional food, shelter and clothes over needy people.
Vision- Is to fight against poverty by helping poor and providing them with means of income.
Mission- Mission of respective company makes development of effective solution in relation to
injuries, disease and poverty which makes change done in effective way.
Types-

Unincorporated Association- These are those business organizations which makes development
of groups of people come together for specific reason other than profit. Cost is not required
to be set up marketplace.
Trust- This kind of organization consider to be three party fiducial relationship within which first
party is trustor, second party is benefited for third party. It has been formed over mating
development possible to some individual.
Purpose- The purpose of an organization help society in order to offer long lasting solution of
injustice in relation to poverty. Also they wants to change world and make it better place to
livein engineering(Liu and Yang, 2019)..
Legal Structure- The Oxfam's legal structure is unincorporated which is setup along by
considering agreement with peoples. They generally conduct their business operations and
functions for society instead of making profits.
M1 Analyse how the structure,
size and scope of different
organisations link to the business objectives, product and services offered by
the organisation
It can be clearly observed that three sectors are there which makes organizations size and
scope understood in more effective manner. In relation to private organization Sainsbury has
been taken making product selling possible within market. Then comes public organization
which is Marks and Spencer dealing with selling products as overexcitement retailer. The
voluntary organization like OXFAM which covers about work done in more effective manner.
These organizations has covered wider scope making clear about the organizations working
criteria.
P2 Explain the size and scope of a range of different types of organisations
Company Type Size Scope
Private Organisation
Sainsbury is an UK based
organization that operates
across the globe and has
around 4,60,000 employees
Sainsbury is having great
opportunity within market.
This makes M&S perform
process of expansion in new

(Sainsbury) working at present. Sainsbury
has various subsidiaries that is
Ireland Stores Limited.
There are different subsidiaries
countries. They are
continuously making
involvement within market in
order to know different ways
of expansion within new
market.
Public Organisation Marks and Spencer an big
organization which makes
operating done within various
cities of UK. This is provides
product and services to lot of
people and provides services
in England, Wales and
Scotland(Lyu and Hwang,,
2017).
The scope of Marks and
Spencer big and requires to
develop capability in relation
to facilities and services to all
citizens of UK. This is involve
helping of poor and needy
people.
Voluntary Organisation The size of Oxfam is large and
medium. Such organization
has motive of offering social
services to people. It provides
help to those who are needy or
has faced disasters. Main goal
is to remove poverty.
The scope of Oxfam makes
service expansion possible to
people across the globe and to
remove poverty in various
countries. It make life of an
individual is improved in
better manner for living in
society.
P3 Relationship between different organisational functions and the way they link themselves to
organisational objectives and structure
The organisational structure is produced in an organization which makes assigning with
supervising possible in relation to roles and responsibilities of an organization. It is helpful in
smooth functioning of an organization regarding its operations and activities. There are different

department presented within an organization. They are linked with each other making
organizations goals achieved in effective manner. Following are detailed information that is
provided with various departments that is presented in Sainsbury which makes goals achieved:
 Finance Department – This department has been helping in managing and controlling
various issues related to cash. The main objective of department is based over managing
budgets in relation to different campaigns and operations run by an organization. In an
organization like Sainsbury financial department deals over budgeting, costing and
financial forecasting with various other aspect of finance. In this department manages
funds and budgets required by other department to perform functions related to marketing
and human resource(Michael, Reisinger and Hayes, 2019).
 Operations Department – The operations department of Sainsbury is related to
packaging and manufacturing process which helps in making organization improve its
supply chain management. In this departments requires to take care of delivery process in
relation to products been provided to customers within time period specified. This
department helps in ensuring about product and services offered by an organization with
high quality. It has assured major factors over operational department which makes
auditing over product development done in impactful manner. It helps in maing an
organization like Sainsbury achieve its goals and objectives within the time limit
specified for it.
 Marketing Department - In this marketing department within an organization taking
care for promotion and advertisement in relation to product or services provided by the
organization. It is special team that makes endurance developed over customers
behaviour through which product and services provided accordingly. Through this
strategies makes evaluation done over competitors by developing effective strategies in
relation to Sainsbury. Further the organization has helped various kinds of aspects
covered within an organization that makes product to be promoted within the market.
 HR Department – The HR departments of Sainsbury is included making management
done upon issues that is related to workforce management functions of an organization.
Recruitment and selection is one of the most important process have two essential
functions that is required to be focused by Sainsbury. In this basic responsibility makes
hiring of talent and skilled employees which makes goals and objectives achieved within

less time. The HR department of Sainsbury main emphasis is paid over making work
place developed in more effective manner. This makes conflict to be solved without
disturbing organisation patterns for various departments. Also it helps in making
organization like sainsbury develop strength within its employment of an organization.
 Finance and Operations Departments – The finance and operations department makes
involvements upon managing coordination in order to attain goals within an organization.
Finance department makes organization provide all budgets and funds in relation to
operations performed by various departments making activities and task completed in
more effective manner. In relation to Sainsbury operational department requires to
develop payment methods, delivery process and supply chain method etc. This makes
funds raised in order to make budget formed to complete the work over the timescale
decided for it(Poth and Wolf, 2017).
 Marketing and HR Departments – The marketing and HR department are interrelated
and they work together for attaining goals. The human resource department of Marks and
Spencer hires skilled employees who can manage the operations effectively. On the other
hand, marketing department deals in developing good marketing plan. HR managers are
given information about the skills needed in new marketing professionals. They use this
information in producing advertisements.
Illustration 1: Organisational Structure

(Source: Organisational Structure, 2019)
M2 Analyse the advantages and
disadvantages of interrelationships
between organisational functions
and the impact that can have upon
organisational structure.
As per this it can be observed that to find out advantages and
disadvantages of interrelationships
between organisational functions
PESTLE analysis is required to be done making organizations capacity to work increase.
According to this an organization requires to make focus develop upon political, economic,
social, technological, legal and environmental factor.
LO 3
P4 Positive and negative impacts of the macro environment on business operations with
examples
There are two main factors related to business environment that are macro and micro
factors which makes company analyses possible within market. These elements makes impact
created over organization by managing operations creating impact upon management and
operations within Sainsbury(Saleh and Watson, 2017). The decision making of Sainsbury is
based upon management which makes handling of business done over task required to be
completed. PESTLE analysis is utilized over various internal and external factors impacting
business organization. Both negative and positive impact is over Sainsbury due to macro
environment which has been explained as follows:
Political factors – In this various regulations is given by government, political stability of
country . There are various kinds of government policies like trade policy, tax policy with labour
law policy in various countries. Positive impact – Sainsbury conduct operations which is done within United Kingdom.
This makes political stability developed within country and makes positive effect created
upon business activities.

 Negative impact – Brexit makes negative impact over business operations that has to be
operated by Sainsbury related to shipping and taxes.
Economic factors – This is major impact related to economic factors like inflation, deflation,
economic growth, exchange rates, interest rates which have impact upon business operations on
larger scale. Positive impact – UK makes good economic condition developed over profitability in
relation to organization working within the country. This is makes Sainsbury making
huge sales through business expansion within United Kingdom.
 Negative impact – Competition in retail industry of United Kingdom is very high. This
makes Sainsbury put efforts over managing sustainability of business.
Social factors – There are various kinds of social factors which is based over consumer lifestyle,
culture, beliefs, population growth rate, career attitudes, safe emphasis and cultural barriers. Positive impact: Sainsbury makes operations in relation to business done by adapting
customers beliefs and values. This brand makes development of goodwill within market
through social factors within business.
 Negative impact: There is negative impact over organization which makes social factors
considered upon operating in relation to product and services as per social element. This
makes customers dissatisfied.
Technological factors - This is one of the most important factor in relation to Sainsbury. It
makes technical innovation and advancement which increases sustainability within market. Some
factors included within technological element that is innovation, research and development
activities, technological awareness through technological incentives(Saura, Palos-Sanchez, and
Correia, 2019). Positive impact: Sainsbury helps in establishing competitive advantage by adopting new
technology and has helped in increasing number of potential customers.
 Negative impact: The adoption of new technology makes cases of privacy issue and
hacking handled within costing for Marks and Spencer.
Environmental factors – The factor involves about various kinds of factors like weather and
climate change perused by NGO and various other factors.

 Positive impact: Sainsbury makes market operations done at different environmental
elements which makes organizations goodwill in relation to customers.
 Negative impact: There are various kinds of environmental rules and regulations within
United kingdom as per the perspective of impacting decisions making.
Legal factors – These are those factors related over discrimination law, employment law,
customers protection law, health and safety law various other law. Then under it different kinds
of policies with legislation is included. Positive impact: Respective organization makes development of strategies, plan and
policies as per the legislation that is developed by United Kingdom that makes work
conducted effective manner
 Negative impact: Sainsbury has been involved in different legal disputes and due to this
there has been negative impact on brand image. Further if laws are not followed in proper
manner makes legal issues created in future.
P5. Evaluate the internal capabilities and factors of micro environment that affect business and
its performance.
SWOT Analysis is used by an organization for evaluating strength, weakness, threat and
opportunities. It is helpful in making development of offers making competitive advantage
achieved within market. In relation to Sainsbury SWOT analysis has been done as follows:
Strengths:
 Innovation: Sainsbury makes innovation done within the business that provides help to an
organization in making sustainability in market. New and innovative preference makes
customer resulting over sales and maximizing over profit that is earned(Stransky,Huber
and Hauer, 2019).
 Market Share: Sainsbury makes large market shares which is considered to be 25%
within market. This is among one of the best supermarket all over the world.
 Strong performance during pandemic: At time of COVID pandemic Sanisbury makes
work efficiency achieved in appreciable manner in relation to profits.
Weaknesses:

 Quality control: This boosts meticulous quality control measure with low customer
satisfaction level. In this low category makes participation done in health and beauty.
 Shortage of products: Sainsbury makes conserving items in order to prevent shortage of
products making dissatisfaction created over customers.
 Food safety issues: The Scope of food products makes Sainsbury sells fault in reference
to food safety. Sainsbury has milk not mentioned upon label means product possible over
risk in relation over health which makes allergy caused to its consumers or people
consuming it.
Opportunities:
 High unemployment rates: There is massive decrease within the fall of employment of
number of people age between 16-24 years. Supermarket being one place where people
could still find job related to employment.
 Social Supermarket: It accumulation unsold inventory within the date used by it.
Supermarket sell inventory over affordable rates with food security and conserving waste.
 Growth of online grocery sale: Remedies prevents within COVID 19 stopped people
form getting out. This made groceries brought form online sale leading towards increase
in online sales of organization.
Threats:
 Economic Recession: Fall within purchasing power results in making economic recession
while raising unemployment making economy slower down. This directly impacts
growth of an organization.
 Competition: In the industries major players playing role upon increase sales and more
competitors lead to increase competition over sales in effective manner.
 Controversy: Sometimes Sainsbury make face controversy while making products within
market the makes negative impact created over paying money to suppliers upon
improving financial position. This leads over making supplier reduced through which raw
materials is not been provided for task to be completed(Trad and Kalpić, 2017).
P6 Interrelation of strengths and weaknesses with external macro factors
The PESTLE analysis is a tool which is used by the organisation to identifying the macro
factor which impact the company's functioning. While the organisation thinking to expand their
business into other markets then the organisation need to manage some factors like Political,

Economic, Social, Technology, Environment and Legal which impact the operational activities
of business-
Political Factors-
 Strengths: Sainsbury's has benefits to exports their products across the world because the
European Government grant the permission for free trade.
 Weaknesses: There are lot of Retail competitors of Sainsbury's in the market which sells
similar products at cheap prices which can be a major threat.
Economics Factors-
 Strengths: Sainsbury's has new supermarket chain in UK create a strong impact on their
business operations.
 Weaknesses: Sainsbury's totally depend on Road-based transport which is biggest
problem face in future because there is no alternative means of transport of the company.
Social Factors:
 Strengths: Nowadays, fast food is a health-conscious items but Sainsbury's shift towards
healthy food or organic foods for their customers.
 Weaknesses: Sainsbury's has high price product all over the world just because of the
rising food price. If Sainsbury does not understand about trends in market then customer
base gets disturbed making organization loose its hold within market impacting revenue
generation.
Technology Factors:
 Strengths: With good Online Shopping system increase the sales of Sainsbury's business
by 20% while analysis these factors consider the technology development in the
company(Uribe‐Bohorquez, Martínez‐Ferrero and García‐Sánchez, 2019).
 Weaknesses: The major weakness of Sainsbury's Customer's data protection and safety.
Legal Factors:
 Strengths: Sainsbury's considers all the government related rules and regulations in order
to function in an ethical manner in the global market. The company follows legal policies
related to corporate world in a precise manner to survive at the marketplace.
 Weaknesses: Any delay in regulatory approval, Sainsbury's losses the market shares and
competitors take benefits of it.

Environment Factors:
 Strengths: Sainsbury's use the Paper packaging as well as proper waste management.
This is helpful for the organisation and environment also.
 Weaknesses: This is very difficult in making Sainsbury makes implementation of
environmental programs. If no environmental structure is formed them environment
pollution lead over making organization
M4 Apply appropriately SWOT/
TOWS analysis and justify how
they influence decision-making.
Through SWOT analyse an organization is able to make its internal process improved
within an organization. This helps in making strength, weakness, opportunities and threat
understood in proper way. Further SWOT analysis makes organizations develop all kinds of
internal aspects of an organization.
CONCLUSION
From the above report it can be observed that there are essential evaluation which is done
on the basis of external and internal factors making business operations and activities achieved in
effective way. Evaluation of the above discussion shows that business environment there are
three types of organization which is private, voluntary and public. Further size, scope and
structure of an organization which makes operating in different manner. In this effective decision
makes importance of organization by using SWOT and PESTLE. While implementing
operations in market, a company must know how to tackle difficulties associated with running a
successful business. Business environment is dynamic and hence it is very important to cope up
with the present situations for overcoming all problems. Different companies evaluate economic,
political, demographic, legal and social factors that impact upon their operations.

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