Business Environment Analysis: HND 1 Unit 01 Report, Pakistan

This report provides a comprehensive analysis of the business environment, specifically focusing on cottage industries in Pakistan. It begins by defining the purpose, sector, goods produced, organizational structure, legal framework, and key stakeholders of cottage industries. The report then delves i...Read More

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that the work is their own.
Student name: Hamid ali Assessor name: Maham Hashmi
Issue date: Submission date: Submitted on:
Programme:
PEARSON BTEC HIGHER NATIONAL DIPLOMA IN BUSINESS (RQF)
Unit: 01
Assignment number and title: BUSINESS ENVIRONMENTAL ANALYSIS
Internal Verifier : Muhammad Ali Iqbal Raja
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Student signature: Hamid ali Date:12/24/2020

Unit no.01 Business & The Business Environment Maham Hashmi
Business & the business environment
Hamid Ali |HND 1 1
HND 1
HAMID ALI

Unit no.01 Business & The Business Environment Maham Hashmi
Table of Contents
Task 1- [Lo1 & Lo2] 3
[a] 1. Purpose of cottage industry 3
2.sector they operate in 3
3.Different types of goods produced in the cottage
industry...............................................................3
4. Organizational size and scope of operation………………………………………………………………………………...
4
5.Legal structure of cottage
industry ...................................................................................................4
6. Key stakeholder of cottage
industry.................................................................................................4
7.
Conclusion........................................................................................................................................5
[b]..........................................................................................................................................................6,7
1.Function of leather garment industry..............................................................................................8
2.Interrelationships of function..........................................................................................................8
3.Advantage and Disadvantages of interrelationship of
function.......................................................8
4.Effect of interrelationship of function on business structure..........................................................9
Task 2- [LO3 & Lo4] 10
1. Impact of macro environment on business operation 10
2.Pestle analysis of chosen firm 10
3. Swot analysis of chosen
firm.........................................................................................................10
4. Interrelationship of swot and Pestle
analysis................................................................................12
5.Impact of macro and micro factors on the business decision
making...........................................12
Reference......................................................................................................................................13
Hamid Ali |HND 1 2

Unit no.01 Business & The Business Environment Maham Hashmi
1. Purpose of cottage industry
A cottage industry is a small-scale manufacture often operated out of a home with less investment. The
main objective is to earn profit with less investment and some cottage industry is set by NGOs the aim is
also profit but the main aim is to give jobs to disabled people and to women’s to increases woman
power in a society. In Pakistan cottage industries help to create opportunities for employment for many
people in rural and urban areas. This helps to reduce the unemployment rate in a country from which
helps to increase the income level of people by which people purchasing power increases which result in
an increase the GDP of a country. Pakistan cottage industry product is highly demanded in the
international market. According to some estimates, Pakistan receives one-third of its total foreign
exchange from the manufacturing sector only through the export of the cottage industry.
Woman in Pakistan mostly remain idle and unproductive at home in rural areas, but they can be
involved in cottage industry which can be established at
home easily, and they can earn huge economic benefits to
the whole family by selling the product in the local market or
international market by exporting them. By selling the
product in the local market it will fulfill the local needs
peoples by which demand for imported product will reduce
which help to decrease import burden and will save much
needed foreign exchange.
2. Sector they operate in
The cottage industry is mostly operated in the private sector. The Private sector is part of the economy
that is run by a single owner or more than one owner. Cottage industry in the private sector is usually
free from state ownership and control. The Cottage industry plays an
important part in the private sector due to the input it makes to the
national income and it gives job employment opportunities within its
community. The cottage industry in the private sector has a goal or aim of
making money and give more jobs than the public sector. In the private
sector the cottage industry can decrease the price of the product while
competing for customer money in the private sector customer don’t want
to pay more for a product that is available at a lower price in the cottage
industry. In the private sector, there are a greater number of competitors
in the market either than in the public sector. The cottage industry in the
private sector make up a big portion of the economy.
3. Different types of goods produced in the cottage industry
There is a large variety of goods produced in the cottage industry. Some cottage industries produce
imported items Which is highly demanded in the international market, and they also serving the need of
local people. The variety includes cutlery and surgical instruments. the Cutlery industry is growing day by
Hamid Ali |HND 1 3
Depositphotos, 2020
(Role of Women in Cottage Industry »
Pakissan.com, 2020)

Unit no.01 Business & The Business Environment Maham Hashmi
day and wazirabad is a city that is well-known for its cutlery items which are highly demanded in the
international market due to their high quality.
Pakistan has fewer competitor in surgical instruments in the international market. The city of Sialkot is
very well-known particularly in Europe for its surgical instruments because firstly it is made by
handmade which has higher quality than the machine-made. No other country can match the quality of
surgical instruments that are made in Sialkot.
4. Size and scope of cottage industry
The cottage industries are mostly small-scale industry and mostly home-based units of production
which relies on human skills, and they mostly used labor-intensive which is cheaper than the capital
intensive and when people are employed in villages the migration of people from rural to urban areas
will reduce. But however, there is a large number of competitions in cottage industry because, in cottage
industry anyone can set up their business in the large scale or small scale, however small-scale business
has to face difficulties to sustain in the competition with large businesses, and they work in small market
from which there is less scope for the organization to changes their management strategy randomly. By
more competitors could damage small scale cottage industry significantly.
5. Legal structure of cottage industry
The legal structure of the cottage industry is in the form of sole trader, partnerships and private limited.
A Sole trader is a single owner who runs his business, and he doesn’t share profit with anyone.
Partnerships are a form of business where two or more people get together to start the business while
sharing capital and profit. Mostly cottage industry is set by the sole traders because the cottage industry
needs less investment and a single person can set up easily and if a person doesn’t have needed
investment than he can form a partnership with another
person in which they will be sharing the capital and profit and
sharing of responsibility between partners and something that
cannot be done in a sole proprietorship. On the other hand,
partnerships/sole trader has unlimited liability which mean if
they have taken a loan from the bank and if they are unable to
pay back a loan to bank than a bank can force them to sell
their personal assets like houses and cars to pay the loan back.
If the cottage industry owner/partner wants to expand the
business then they can form a private limited company in
which they can sell the share to family members. Moreover, the shares cannot be sold publicly, and they
cannot list their shares on the stock exchange.
6. Key stakeholder of cottage industry
A Stakeholder is a member or group that has an interest in a company, and they can affect or can be
affected by the business. The key stakeholder of the cottage industry are employees and customers. The
most important stakeholder of the cottage industry employees and customers. If the cottage industry is
Hamid Ali |HND 1 4
(- John Running your business as a company M
Taylor & Co, Chartered Accountants, 2020)

Unit no.01 Business & The Business Environment Maham Hashmi
enabled to provide better working conditions, and job security, and paying low wages then the worker
can form a trade union. A Trade union is an association of worker who come together to protect their
rights and interests, and if their right is not fulfilled then they can go on strike and all production will be
stopped and cottage industry mostly uses labor-intensive and if production is stop than all orders will be
delayed. That’s why the cottage industry should develop better relations with workers.
The customer is the most important part of the industry without the customer business can’t survive in
the market. If the industry is unable to provide what customers want than the sale will reduce that why
the cottage industry should have developed a research and development department to know what
customers want or need to fulfill the demand.
7. Conclusion
The Cottage industry is also important has much as other industry in Pakistan. Firstly, it can easily set-up
in houses and woman can be employed which help to increase active labor force in Pakistan. If the
government support cottage industries by providing subsidies from which they can expand the business
and more people can be employed by which total income level would increase from which they have to
pay income tax which will help increase the total tax revenue. By giving the subsidies to cottage industry
will help to improve the quality of products like cutlery and surgical instruments and sports goods, etc.
Which will make them more competitive in the international market, and it will boost the total sale.
More sales will help to increase the export of Pakistan, and it will fulfill the demand of local people as a
result export will improve and imports will decrease which will lead to improve balances of trade.
Hamid Ali |HND 1 5

Unit no.01 Business & The Business Environment Maham Hashmi
B]
There are many types of cottage industry in Pakistan. The main type of cottage industry are sport,
woodwork and embroidery. In Pakistan sports goods industry play a vital role in international trade and
highly demanded in the international market due to his better selection of raw material, designing of
goods. In Pakistan, Sialkot is well known for its sport goods industry and they are exporting a large
portion of its sports goods to famous brands like Nike and Adidas.
The sport industry in Sialkot is mostly small-scale and some of them are large scale industry. In sports
industry, the main product are hockey sticks, polo sticks,
cricket bat, and football. The small-scale goods industry
mostly uses labor-intensive because it much cheaper than
the capital-intensive and it also helps them to reduce the
cost of production on other hands large scale sports
industry use a combination of both labor-intensive and
capital intensive and the large scale mostly use capital
intensive because they have large investment and capital
to use capital intensive. The sport industry all structure
sole trader, partnership and private limited company.
The second cottage industry is the woodwork industry in Pakistan which helps to fulfill the demand of
Pakistan and it represents 95 percent of the total market in the country. In Pakistan Chiniot, Gujrat is
well known for its wooden furniture and it is highly
demanded in the international market due to its past
craftsmanship history and innovation in the field of wooden
furniture. Wooden furniture is the main item which is made
in the woodwork industry. The woodwork industry is mostly
in small scale industry because in Pakistan the woodwork is
done hand and mostly use labor-intensive and there is less
use of machinery. Labor cost is less than the woodwork
done by the machine. In Pakistan woodwork industry is
mostly owned by a sole trader or partnership. It is not
owned by the private limited company because
woodwork does not need that investment to set up it can be set up with less investment.
The third cottage industry is the leather garments industry and it helps Pakistan to earn foreign
exchange from exporting leather garments. In Pakistan Karachi and Sialkot is well known for the leather
garment industry Approximately 12000 people are employed in the leathers garment industry in Sialkot
and leather garment industry is exporting garment worth of us$217 annually. The industry structures
are mostly sole trader, partnership and private limited company. (Key Industries | Punjab Portal, 2020)
All three-industry structure, size and scope are linking with business objectives. A huge target is only set
by the business which have a good organizational structure. If the industry has fewer employees and no
one knows what role they have in the industry then it is impossible to achieve the business objective
because the employees do not know about their role in the industry from which they will be less
Hamid Ali |HND 1 6
(Sports industry struggles to recover | The Express
Tribune, 2020)
(With world furniture trade at $23.2bn, Pakistan
needs to tap into this unexplored sector, 2020)

Unit no.01 Business & The Business Environment Maham Hashmi
motivated and there would be less chance to achieve the business goal. Like woodwork industry has
mostly employed less worker and they only is objective is profit. On the other hand, industry size is also
linked with the industry objective in such a way that industry with the less investment will mostly have a
small target as their industry objective and if the industry has a huge investment example sport industry
mostly need large investment then they would always set a big target for them. Like sports industry and
leather garment will mostly set huge target and on the other hand woodwork will have a small target to
archive. However, all three industries will have a common objective that is earn to profit.
Industry also set their objective by seeing their scope like sport industry and leather garment industry
mostly serve national and International consumer than they would set their objective accordingly by
seeing the scope.
Hamid Ali |HND 1 7

Unit no.01 Business & The Business Environment Maham Hashmi
Function of leather garment industry
The leather garment industry process is not that much complex. They use simple equipment and
machinery and the preparation process of leather garment are:
1. Trimming and cleaning of skin
2. Tanning
3. Washing and drying
4. Jacket design
5. Leather cutting
6. Jacket assembly
7. Molding and pressing
8. Final product.
Interrelationships of function
The function of the leather garment industry is depended on different functions such as research and
development, marketing, accounts and administration and IT, sales, and human resources. These
functions are dependent on each other in such a way that if research and development and IT team are
unable to design of leather jacket then the leather cutting can’t start the process further and then the
jacket assembly, molding and pressing process will be stopped. On the other hand, if the research and
development team is not doing the work properly or they are not seeing the changing the trend or
design of leather jacket then the production department will keep producing the outdated leather jacket
which will affect the sale of leather jacket because consumer prefers to buy trending product. If the
finance and account department is unable to provide income statement or any other report then then it
would affect the planning of the business and It can affect the objective of the business. From which we
can say that every small or big department is depended on each other and it is also linked with the
objective and structure. The other two industries are different from leather garment industry but the
interrelationship of the department is present in every industry if it is small-scale or large-scale industry
without interrelation of department industry can’t be run.
Advantage and Disadvantages of interrelationship of function
The advantages of interrelationship of function are that each department will be focus on his work and it
will create a specialization in the department and it will help in less wastage of raw material work will be
done quickly. The relationship of employees with different organizational function support any
organization to maintain the cooperation in organization. The employees will know about their role and
other employees’ role and their value in the business which will help to motivate the employees
The Disadvantages of interrelationship of function is that if the worker know other job responsibility and
operation of another branch then they can harm that branch. By interrelationship, the competition can
increase in different functional branches which will affect the production. By interrelationship of
Hamid Ali |HND 1 8
(How leather jacket is made - material, history, used, processing, steps, industry, machine,
History, Raw Materials, 2020)

Unit no.01 Business & The Business Environment Maham Hashmi
function can create a delay in decision making which mean that they can lack of coordination among the
functional executives which will create the delay the decision making in the organization,
Effect of interrelationship of function on business structure
There are two types of business structure flat and tall structure. The flat structure means less number of
level or span of management and its benefit is more job satisfaction and it will help to increase
communication between level of management. On the
other hand, a tall structure means many levels with
thesmall span of management. The benefit are more
control and better performance.
Hamid Ali |HND 1 9
(Expert Program Management, 2020)

Unit no.01 Business & The Business Environment Maham Hashmi
Task2
Impact of macro environment on business operation
A macro-environment is a situation that exists in the economy as a whole rather to any particular
business or sector. The Macro environment includes the trends in inflation, employment, spending
power, monetary and fiscal policy, and gross domestic product, and technology.
The positive impacts of macro-environment factors in the business operation are that the advancement
can give different opportunities to different businesses by the help of technological factors businesses
can open an online market from which they can target more consumers and can help to increase sales.
For Example, the leather garment can use technological factor and can sell their leather garment to an
online market or have web-based retailer which will help to boost their sales. If the government reduces
the interest rate then it will help the business in such a way that due low-interest rate people will more
spend more and will save less which will increase the spending power and business will get benefit in
increase in sales. And it will help the leather industry in increase in sales due to an increase in spending
power. Government can introduce subsidies for small-scale businesses to reduces the cost of
production. Leather garment industry are mostly are small-scale industry and they will get the benefit of
subsidy by reducing the production cost and increasing the profit.
However, the negative impact of the macro-environment on the business operation is that government
can increase the income tax which will decrease the disposal income and causes the lass amount of
spending in the market which will lead to declining the level of sales and it will force the retailer to lower
the price of the product which will reduce the profit of businesses. In the macro environment,
businesses have pressure from the government to sell environment-friendly products and giving the
warranties of their product to the consumer and it may harm some different industries. If business take
wrong analysis may affect the business profit and management can be able to find the competitors in
the market by which they will lose the market share.
Pestle analysis of chosen firm
There are many factors in pestle analysis like environmental factors, legal factors, technological factors,
socio-cultural factors, economic factors, and political factors.
1. environmental factors and legal factors
the leather garment industry should be environmentally responsible and must use cruelty-free leather in
which no animal is harmed to getting the leather. In cruelty free the leather is made from
polyurethane.by using cruelty-free leather will help the leather garment industry business to improve
their brand image in the market. The legal factor can also be that government to put a complete ban on
child labor and the small-scale leather garment industry mostly uses child labor as the main labor
because it is cheap therefore this law directly harms the leather industry.
2. technological factor
Now the consumer trend is changing day by day consumers are moving to present technology like e-
commerce so it is important for any industry like the leather garment industry should develop
impressive internet activity so that it can attract more consumers and sell their leather garments online
to consumers in an easy way.
Hamid Ali |HND 1 10

Unit no.01 Business & The Business Environment Maham Hashmi
3. socio-cultural factors
The leather garments industry should provide a better working environment for the worker because due
to not providing a batter environment to the worker. The worker is getting the cancers of nose and nasal
sinuses. It can affect the leather garment industry and affect the brand image of the business. (Effects of
Leather Industry on Health and Recommendations for Improving the Situation in Pakistan, 2020)
4. economic factors
if the inflation rate is increasing then it would affect the leather garment industry in such a way that the
now the consumer has to pay more by which their purchasing power would reduce and it will affect the
total sale of the leather product. However, if the government reduces the income tax to increase the
aggregate demand from which the disposable income will increase and it will increase the sale of leather
garments which will help the leather industry.
5. political factors
In Pakistan the leather garments are mostly exported to other country but to some political reason some
country has a ban on Pakistani import in their country by which the leather industry has less market to
sell their product.
The leather garment industry will be facing the macro environment factors but these changes are
outside of the control of the industry but it can be managed by the management of the industry by
taking good decision. Sometimes macro-environment is advantageous for the industry but on the other
hands it can be also disadvantageous for some industries
Swot analysis of chosen firm
The strengths of the leather garment industry are easy availability of cheap labor cost and easy
availability of the inputs and raw materials. Government policies are exporter-friendly for the leather
garment industry. The Government is also giving subsidies for buying the machinery.
The weaknesses in the leather garment industry are there is a low level of use of technology or
modernization and labor are not much skilled or have inadequate formal training. The leather garment
industry is not providing modern finishing facilities for leather garment industry. Some of the leather
garment industry is unaware of international standards from which they product are less demanded.
The opportunities of the leather garment industry are that in the leather industry there is a lot of scope
for diversification into other products like leather shoes. By using information technology and by the
help of the software industry can help to eliminate the length of the production cycle for product and
there are great opportunities for growth in the domestic and international market.
The threats to the leather garment industry are changing of fashion trends day by day and it is difficult
to adapt it by Pakistani industry and some developing countries are resorting more tariff barriers
indirectly which have affected the sale of Pakistani leather industry. The leather garment industry must
have to improve the product quality to adapt to the stricter standards of the international market.
Hamid Ali |HND 1 11

Unit no.01 Business & The Business Environment Maham Hashmi
Interrelationship of swot and Pestle analysis
Swot analysis focuses on the external and internal factors and pestle focuses on the external
environment factors which affect the business. The both complement each other one look into the
busines from inside and other one look into how the business is affected by the predefined factors. Swot
help the business to understand the strengths, opportunities, weaknesses and threats of the product
but the far from pestle, business can directly impact everything with the swot. The weakness and
strength and the macro-environment factor interlink with each other and will affect each other and if a
busines is unable to find the weaknesses and strength and the macro environment factors
Impact of macro and micro factors on the business decision making
The swot analysis is a useful tool for the business to make a decision and swot is more helpful if a
business conducts it with a specific objective. With the help of swot, the businesses can take advantage
of a new business opportunity which will help them to have benefit from the opportunity and the
business can respond to the new trends of consumer very quickly. Swot helps the businesses to find the
issues and solve them which will help the businesses to achieve the desired goals.
Pestle impacts the business decision making in such a way that the by the help of political factors the
business can find the political interference in the business and the business can change the decision to
overcome the interference in the business. The pestle analysis is one best tool to find the competitive in
the market and try to find another policy to overcome them and with the help of it the business can
easily compete in the market.
The micro and macro-environmental factors affect the businesses decision making policy and it has an
important effect on the success of the business. By which we can say that businesses should give the
important or considered them while deciding by the management of the businesses and if the business
unable to considered or missed one of the factors. With the help of swot, the businesses can prepare a
marketing strategy. In the end, both macro and micro will have a strong domination influence on how
businesses will be successful.
Hamid Ali |HND 1 12

Unit no.01 Business & The Business Environment Maham Hashmi
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December 2020].
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Madehow.com. 2020. How Leather Jacket Is Made - Material, History, Used, Processing, Steps, Industry,
Machine, History, Raw Materials. [online] Available at: <http://www.madehow.com/Volume-2/Leather-
Jacket.html#:~:text=Raw%20Materials,-Antelope%2C%20buckskin%2C%20lambskin&text=used%20to
%20make%20leather%20jackets,preserve%20and%20soften%20the%20hides.> [Accessed 18
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Taylor & Francis. 2020. Effects Of Leather Industry On Health And Recommendations For Improving The
Situation In Pakistan. [online] Available at:
<https://www.tandfonline.com/doi/full/10.1080/19338241003730895?src=recsys&> [Accessed 19
December 2020].
Hamid Ali |HND 1 13