Higher National Diploma: Business Environment Analysis for Sainsbury's

This report provides a comprehensive analysis of the business environment, using Sainsbury's as a case study. It begins by examining different types of organizations, including public, private, and voluntary entities, and their legal structures. The report then delves into the scope and size of various organizations, categorizing them based on employee numbers and turnover. A key section explores the interrelationships between different organizational functions such as IT, production, HRM, marketing, finance, and R&D, highlighting their advantages and disadvantages. The positive and negative impacts of the macro environment on Sainsbury's are also discussed, with a focus on political and economic factors. Furthermore, the report includes an internal analysis of the company and examines the interplay between internal and external factors, offering a holistic view of the business's operational environment and strategic considerations. The report is based on the Higher National Diploma in Business unit 1 assignment brief.

BUSINESS AND BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P 1 Various types and purposes of organisations........................................................................3
P 2 Scope and size of various types of organisations..................................................................5
LO2..................................................................................................................................................6
P 3 Relationship between various organisational functions........................................................6
LO3..................................................................................................................................................8
P 4 Positive and negative impact of macro environment............................................................8
LO4................................................................................................................................................10
P 5 Internal analysis...................................................................................................................10
P 6 Interrelations of internal and external factors......................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
For any organization to function effectively it is very essential for the organization to
understand the business environment factors which have an impact on customers, technology,
suppliers, owners, clients, innovation, etc. These environments have to be controlled which are
direct and indirect in nature which helps to increase the performance of organiusation in the
market effectively. Sainsbury’s has been in the retailing industry from 151 years which is having
its headquarters in London, United Kingdom. The net income and revenue generation as of 2019
is £219 million and £29.007 billion respectively. There are total 116,400 employees working in
the company to have a stable productivity and performance. The report consists of the internal
and external analysis in the business environment which helps to formulate effective strategies to
grow in the market. There is also a discussion on the purpose and type of the businesses in the
market so that the company can plan for the future in view of that.
LO1
P 1 Various types and purposes of organisations
There are many types of organisations present in the market. For example; public, private
and voluntary. There are these organisations present for different purposes, so that these all types
of organisations have been explained below with their purposes. There is a legal structure also
has been attached below which each organisation should be considered in its operations.
Public Organisations
Public organisations always operate their business operations at the very large scale in the
market place (Berman and Dalzell-Payne, 2018). For example; Sainsburys is a popular public
retail organisation, so that this organisation has successfully expanded its business operations
across the United Kingdom. Public organisation sells their shares publicly, in which any person
can be easily purchased shares of a public organisation in the market. Most public organisations
mostly need be use large number of resources to easily run their business operations within the
selected market places. That’s why public organisations always be able for generating great
employment opportunity within the market.

Private Organisations
Private organisations’ scope is mostly less than public organisations, because many of
private organisations always capable to run their operations at the national and regional level.
Private organisations are not be capable as public organisations in the terms of producing great
employment opportunities. A private organisation not sells its shares publicly, in which no
person can be purchase shares of these private organisations in the market place. These
organisations have no need for investing huge fund to implement hi-fi technology within their
daily business operations. Reason is, most public organisations are simply able to run their daily
operations with the ordinary technology.
Voluntary Organisations
Voluntary organisation is also called as social organisation, so that these organisations
are not working in the market for earning profit, because these are just working in welfare
(Holmqvist and Ruiz, 2017). In this situation, there are charity and donation two major source for
these organisations to raise fund. Most voluntary organisations in the market are able for running
their daily operations with the ordinary technology.
LEGAL STRUCTURE
The upper management of every organisation always responsible for following all legal
and ethical considerations in its work environment. For example; there are contract law is an
important part of legal structure, in which upper management within every organisation (private,
public and voluntary) should be considered contract law for removing various conflicts from its
workplace. On the other hand, the employment law is another major term of legal structure, so
that these all organisations always need to be considered employment law as well in their
respective work environment. It is important for providing equal growth opportunities to all
employees within the workplace. There is agreement act, equality act and partnership act etc. are
also major part of legal structure, so that these acts also need to be considered within all
organisations. These organisations highly need to adhere all ethical and legal considerations in
their daily operations which has formulated by the government of UK. There are some key
ethical and legal considerations has been mentioned below, in which all organisations should be
adhered them in their daily operations.

Employment law: Companies and ventures under all sectors (private, public and social)
responsible to consider employment law within their daily operations. Generally, employment
law has passed by the United Kingdom’s government in the welfare of various employees (Kim
and Choi, 2017). So that, every organisation in the UK should be adhered this employment law,
otherwise organisations will be panelised through the local government.
Companies act 2006: This is the next key act to various organisations or ventures of the United
Kingdom. Generally, this act provides opportunity to various people to choose category of their
company or enterprise according to their respective business structure and scope. Companies act
is basically categorised different companies into two categories; private limited company and
public limited company.
Partnership act 1890: On the basis of this act, when two and more than two persons are wants to
open a new venture or organisation, then they are responsible for registering themselves legally
within the UK. It is too important act, because this provides opportunity for removing various
conflicts between business partners. Nowadays most partnership ventures and organisations are
able to systematically run their operations within the UK with the help of partnership act.
P 2 Scope and size of various types of organisations
There are organisations or businesses in the UK has categorised according to their scope
and size as well. Nowadays many types of organisations present in the UK (Madonsela,
Mukwakungu and Mbohwa, 2017). For example; small, medium, small and large-sized
businesses or organisations. These all types of organisations have been described below on the
basis of their scope and size.
Micro: Businesses or organisations which has minimum than 10 workers and employees, and
which are also generating up to €2 million turnover every year, in which these businesses comes
within the micro category. Nowadays there are lots of micro organisation or businesses exists in
the UK which produces great employment opportunity in this country.
Small: Organisations or ventures which has minimum than 50 workers and employees, and
which are also generating up to €10 million turnover every year, in which these businesses
mainly come within small category. There are small organisations also provides jobs to many of

people within the UK. Nowadays local government highly supports these organisations through
providing loans with very low rate of interest.
Medium: Organisations or ventures which has minimum than 250 employees, and which are also
generating up to €50 million turnover every year, in which these ventures come within the
medium category. There are medium-sized ventures also plays an excellent role in the growth of
UK’s economic.
Large: Large organisations or businesses always has maximum than 250 workers or employees,
and these organisations are also generating more than €50 million turnover every year. The main
aim of these businesses to achieve their decided business objectives. Generally, organisations
and ventures which comes in the large-sized category are backbone to economy system the UK.
Currently these large-sized businesses are the best source to the government of UK to gain very
high foreign exchange.
LO2
P 3 Relationship between various organisational functions
There are mostly has an effective relationship between various functions of an
organisations or business (Ren and et.al., 2017). For example; Sainsburys always operates lots of
functions in its work environment, in which these functions are fully interrelating with each
other. Sainsburys is able to gain its different objectives in the market with the help of this
interrelationship. The interrelationship between Sainsburys’ various functions have been
explained below;
Information technology (IT) and production
Production department at Sainsburys fully depends on the IT department. Basically,
information technology department always provides proper solutions to production department
of Sainsburys. For example; the production department of Sainsburys is highly required to adopt
modern and latest technological machineries, tools and gadgets in its daily production operations,
so that production manager at Sainsburys contacts to IT department of this company to
implement modern technology in the department of production. In this situation, Sainsburys’

information technology department responsible to implement modern and latest technology in
production department. IT department exists within the company to provide excellent
information technology support and solutions to many other functions and departments of
Sainsburys. So that, IT department always implements modern technology in company’s other
departments as well, like; HRM, marketing and research and development (R&D) etc.
Human resource management (HRM) and marketing
There are marketing and HRM two other major functions at company, in which both
functions are completely interrelating with each other (Zhao, Pan and Chen, 2018). Suppose
when marketing team is required some talented and skilled people, then marketing manager is
directly contacting to HR manager of company to hire talented and skilled people within the
marketing department. After this, HR manager at Sainsburys responsible for hiring people on the
basis of marketing team’s requirements. Human resource department mainly prepares a proper
plan to systematically conduct its various hiring practices. At the end, human resource
management has provided talented and skills employees to marketing team of Sainsburys, in
which these all factors have projected an effective relationship between key functions of a
company.
Finance and research & development
R&D (Research and Development) is playing an effective role within the Sainsburys in
innovating exclusive range of services and products. In this solution, R&D is mostly required a
proper fund to run its different research procedures on the progressive path. So that, research and
development manager always contact to the department of finance to fulfil its fund and budget
requirements. On the other side, finance department responsible for arranging required fund to
R&D.
There are these all mentioned factors are fully showing an effective relationship between
different functions of Sainsburys. Currently this company can easily capable for achieving its
various business targets with help of this interrelationship between functions.
Advantages and disadvantages of interrelationship

Interrelationship between functions provides opportunity to Sainsburys to achieve
business goals on time, so that this is the key advantage of this interrelationship (Schaller,
Vatananan-Thesenvitz and Stefania, 2018). On the other hand, there are too improved
communication skills in employees are highly necessary to maintain this relationship between
functions, because no organisation can be maintained effective interrelationship between it’s all
functions by using common communication skills, in which this is disadvantage of
interrelationship.
LO3
P 4 Positive and negative impact of macro environment
The customer’s needs and expectations from the market are changing and organisation
has to adopt all the changes which increase the potential to achieve objectives and grow in the
market effectively. The external factors have to be analysed so that the company can have better
planning for themselves (Reyes, Roberts and Xu, 2017). The external factors are not in control of
the businesses in the market which impact the performance of business to reduce its market share
negatively. The products and services have to match the standards of the organization which
improves the reputation of the organization and is going to be discussed in the further report.
 Political Factors
There are a lot of changes which have taken place in the market due of Brexit since the
power of the government has shifted. There has to be a good stability in the government so that
the right measures and direction can be given in the organization (Okeyo, Gathungu and Peter,
2016). Sainsbury’s has better experience to make decision which helps company to adopt
effective strategies which increase the potential to gain higher profit margins effectively. The
organization has to follow the laws and regulations which the government has made to attain
competitive advantage effectively and higher profit margins.
 Economic Factors
Economic factors are those which are being affected by Sainsbury’s in the country which are
the unemployment rates, interest rates, inflation rates, GDP rates, etc which impact the
organisation to increase their profit margins and attract more customers in the stores (Saleem,

2017). Due to large customer base which are getting a stable functioning to attain competitive
advantage effectively. The wages of the employees are fixed which can be a disadvantage for the
company as it increases the cost of operation and impact the profit margins negatively.
 Social Factors
There are different beliefs, values and cultures which have to be matched for the organization
with the customers so that there is a better satisfaction and loyalty of the customers with the
business. Sainsbury’s understand the customers well and make the changes in the products and
services according to the customers which is why the organization is having high sales and
attract the right customers in the organization (Austin, Dávila and Jones, 2017). The products are
being priced low because the customers need the best at the lowest price which can make the
organization have better functioning and processing.
 Technological Factors
Increase the rapid change in technology which are coming up in the market and has to be
maintained. The satisfaction and loyalty of the customers can be improved by using
technologies. There are a lot of online services and products which technological can get in the
company to attain competitive advantage effectively which is going to be very good for the
organization (Drucker, 2017). Innovations and productivity can be maintained with the new
innovation development by the organisation like digital technology which has made the working
easier.
 Legal Factors
Legal factors includes laws and regulations which are being effectively applied and
implemented in the organization so that there is a better operation which can take place (Civelek
and et.al., 2016). There is no discrimination and well treatment of the employees which creates a
healthy environment for the employees to work within. The customers are informed about the
products and services to attain competitive advantage effectively and sales.
 Environment Factors
Due to increase in the environmental concerns, Sainsbury’s has conducted several activities
which helped regarding the environment which is by there are zero carbon footprints measures
which has been taken by the organization. There has to be a reputation and standards which has

to be well maintained by the organization to get a profit margin. There is a portfolio which
Sainsbury’s has to maintain to attain competitive advantage effectively.
LO4
P 5 Internal analysis
Every business has internal factors which impact the performance to achieve objective as
the internal factors are under the control of the organization which gets in a better understanding
which is a very essential for business. This can help the organization can get a core competency
so that there is a loyal customer base and higher profit margins. There are a lot of decisions
which have to be made in the right aspect of the organization which is going to be very effective
for a long run in the market (Akhtar and Sushil, 2018). SWOT is a framework which can be
useful for the organization to understand the internal factors of the organization.
 Strengths
The organization has made a lot of advantages in the market which is by having a strong base
for them in the market to attain competitive advantage effectively. The organization has gained a
lot of experience and network in the market to attain competitive advantage effectively. There
are a lot of innovations and creativity which has been made by the organization which helps to
improve future opportunities and increases the loyalty and the satisfaction level of the customers
in the market (Gorla, Chiravuri and Chinta, 2017). The Brand value of the company in improved
has been improved and increased which helps to gain better brand equity to achieve objectives.
 Weaknesses
The organization ensures customers with the highest of quality of goods and services which
is very costly for Sainsbury’s at a low price so that the market share of the organization can be
increased. There are a lot of financial errors which have taken place in Sainsbury’s which can be
very harmful for the brand image and reputation of the organization in the market. It is very
important for the organization to be able to maintain that factor to attain competitive advantage
effectively which can make the organization has a better functioning (Lee, 2017). There are

switch cards which have to be accepted and implemented in the organization which is going to
be very helpful for the organization to attain competitive advantage effectively.
 Opportunities
Due to increase the in number of developing countries which are having free trade policies
which can help Sainsbury’s to increase its market share successfully in those countries so that
they can have a higher market share which helps to increase the profit margins. The countries
like South Korea, Turkey, India, etc are a great opportunity for the organization to have to attain
competitive advantage effectively so that the organization can have a competitive advantage
(Komljenovic, Loiselle and Kumral, 2017). The satisfaction level of the customers has to
increase with the increase in the satisfaction level of the employees as well so that the
organization can have a better functioning for them. There are a lot of alliances which can be
made by the organization to attain competitive advantage effectively which can make the
organization has a better competitive advantage.
 Threats
Increase in liberalisation and globalisation has impacted in increase of competition in global
market and it is very important for the organization to analyse those competitors in the market
which helps to increase the performance of organiusation in the market effectively. The
competitors in the market are Tesco, ASDA, etc which have to be understood by the organization
to attain competitive advantage effectively (Flanigan, and Obermier, 2016). There are changes
which are required because the competitors are getting a lot of changes which is why Sainsbury’s
will also have to get these changes but Sainsbury’s is not good with getting in the changes so
effectively. The operations and functioning of Sainsbury’s gets slow when any changes come in
the organization which makes the satisfaction level of the customers reduce and the organization
will not be able to get a better market place for themselves in the market.
P 6 Interrelations of internal and external factors
There are a lot of factors which are impacting the political factors of Sainsbury’s in the
country because of the changes in the laws and regulations which is implemented in the
organization. Restrictions which have been created by the organization the financial and political

factors of Sainsbury’s which is good for the reputation of the organization which is going to
make the organization have better sales (Corradini, Polzonetti and Riganelli, 2018). The
environment of the country is also going to be improved so that there is a better reach for the
customers with the organization. The trends and wants are changing which has to be accepted by
the organization effectively so that there is a better competitive advantage so that the products
and the sales of the organization can be improved. There are a lot of discounts, sales, offers; etc
which are being put out by Sainsbury’s from time to time to attain competitive advantage
effectively.
There is a use of a lot technological changes which are being using by the organization so
that there is a better productivity and investment is being done in it as well so that there is a
better balance of productivity and sales in the market. There are laws and regulations which are
being applied in the organization for the security and safety of the population which is going to
make the organization have better functioning. There is an increase in the competition which is
why the organization will have been very certain about the changes which they are getting in
(DeConinck and DeConinck, 2017). The employees have a say in the decision making so that
they can think for the best of the organization which is going to make the organization have
better quality products and more innovations which is going to be very helpful for a long run.
The portfolio of Sainsbury’s is very strong and well maintained in the market which is a great
factor for the organization. The organization to reduce the risks and harms on the organization
there has to be a better operations and functioning. This is going to take place with the help of
better planning of their strategies and measures which have to be taken so that there is a better
productivity. Internal and external factors help the company to take the correct measures which
is going to be very helpful for a long run of the business in the industry.
CONCLUSION
The conclusion from the report is that organization in market should know the
importance of for analysing the internal and external factors of the industry so that the right
measures and methods can be taken out. The rivalry in all industries is rising which is why it is
very essential for the organization to have a better understanding of the market so that the right
measures and decision can be made. There are many strategies and measures which can be taken