Business and Business Environment: An Analysis of UK Supermarkets

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BUSINESS AND BUSINESS ENVIRONMENT
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Table of Contents
Table of Contents.............................................................................................................................2
Section 1 – Essay (LO1 & LO2)......................................................................................................3
Introduction..................................................................................................................................3
Discussion....................................................................................................................................4
Conclusion...................................................................................................................................8
Part 2: Case study: ‘The UK supermarket’ (LO3 and LO4)............................................................9
a) The PESTEL model to analyse how the macro environment is impacting the UK retail
sector............................................................................................................................................9
b) SWOT/TOWS analysis and also Porter’s five forces analysis of Tesco influencing decision
of the supermarket.....................................................................................................................11
Reference list.................................................................................................................................15
Appendices....................................................................................................................................17
Appendix1:................................................................................................................................17

Section 1 – Essay (LO1 & LO2)
Introduction
Organisations refers to a particular entity where several peoples are working together to achieve
organisational goals and objectives. Different organisations have different purposes based on
their goals. In this paper, we will evaluate about the profit, non-profit organisations and the
nongovernmental organisations (NGOs). The study ensures the understanding on how the
organisations are differentiated by their structures, objectives, size, goals and objectives. It will
also discuss about the micro, small medium and large sized organisations and their market share,
profit share, growth and sustainability. In this paper, we will also discuss about the different
organisational structures, complexities of global market, international and transnational and
overall mission and objectives.

Discussion
The profit seeking organisations are those organisations whose main goal is to earn profit. The
shops, restaurants, real estate business, supermarkets are all for profit organisations. Their
income comes from sales. An example of the profit organisation is BP (British Petroleum). It is
one of the biggest deliveries of energy products and services in the global market. The not for
profit organisations are those organisations that runs on charity. All the money, which they get
from charity or donations they use it to achieve their organisational objectives. Their main goal is
to help the needy in the society. They are been exempted from most of the taxes (Bryce, 2017).
Cancer Research UK is one of the non-profit organisations in UK. It provides medical
treatments, surgeries, and cure to the needy cancer patients. The Nongovernmental organisations
are those organisations, which works independently without any government pressures. Their
purpose is to help the society and work upon the social, political, and environmental issues by
raising awareness among people in the society. Oxfam is one of the UK’s NGOs, which is been
known for its work and progress in the society, all over the world.
The purpose of profit organisation is doing a business on the purpose of making profit and
enhancing its economical value. They want to outreach their goods and services and try hard to
compete in the competitive market. There are rights and obligations for supply of goods and
services for profit seeking organisation where rules and regulations are stated. Taxes are been
also imposed on the supplies. There legal structures are such that they cannot always raise funds
and loans without any legal procedures.
The purpose of not for profit organisations is that they work upon the social issues. They work
for the betterment of the society. Their supply of goods and services comes from the charities
and donations so that they can provide services to the needy peoples in society. Their legal
structure allows them to raise funds and soft loans (Iwu, et al., 2015).
The purpose of Nongovernmental organisations is to address social, political and environmental
issues and raise voices as well as awareness into the society. Their objective is to work upon the
human rights, education, women empowerment, global warming and many more independently
without any governmental pressure. The supply of goods and services for NGO is tax exempted

even if they are been used for the charities and welfare of the society. They also have such legal
structure, which allows them to raise funds and loans.
To understand the Size and scope of the organisations the micro enterprises are those
enterprises, which have less than 10 employees, and the turnover is less than 2 million Euros and
do not exceeds that. The scope of these enterprises is that government encourages these
enterprises, as they are the trademark of the country’s economy. These enterprises also help to
fill up the gap of unemployment in the economy. Issoria is one of the micro enterprises of UK,
which provides management consultancy.
The Small enterprises are those enterprises, that have less than 50 employees and it have a
turnover, which does not exceeds 6.5 million Euros. The scope of small enterprises varies from
country to country depending upon its government policies and area of development (Cowling et
al., 2015). Birchbox is one of the small enterprises of UK, which provides beauty treatments.
The medium size enterprises are those enterprises that have equal or less than 250 employees. In
addition, their turnover do not exceeds 50 million Euros. The scope of medium enterprises is that
they play an important role to boost up the country’s productivity and economy. However, they
need the country’s support to increase their impact and expand their business (Afrifa and
Tauringana, 2015). One of the medium enterprises of UK is Captify, which is an ad-tech
company.
The Large enterprises are those enterprises that have more than 250 employees and their
turnover exceeds 50 million Euros. The scope of large enterprises is that they play an important
role in the country’s development and economy. They build their standards and goodwill in the
global market. SEGRO is one of the large enterprises of UK. It has real estate business
(Simonova et al., 2017).
The Market share, profit share, growth and sustainability of these enterprises are such-
according to the reports of UK in the year 2018, the market share were around 96% of micro
enterprises, which include 33% of employees and 21% of turnover. Coming to the small
enterprises in UK there are 4% small enterprises with 15% of the employees and have 15% of
turnover. Medium sized enterprises only have 1% of business with 13% of employment and
15% of the turnover. There are 8 thousand large enterprises with 40% of employment and 48%

turnover. Coming to the profit sharing of these different enterprises, they use different profit
sharing schemes in the form of shares to the employees out of their profits in their enterprises.
This profit sharing scheme also saves tax. They organize it as per their profits. The scope of
growth is different in these different types of enterprises as per their country’s economical and
political pressures. Some are favorable which tends their growth and the unfavorable on makes
them difficult to run into competitive market (Appendix 1).
To acknowledge different kinds of structures relating to size and scope of operations there
are three types of organisational structure. First, one is the Functional structure where there are
different department, which works independently and separately from one another but for the
same kind of product or services in an organisation. This is best suitable for micro and small
enterprises. Second, is the Divisional structure suitable for enterprises, which works on vast
geographical area. It is suitable for large enterprises. The Third is the Matrix Structure that is the
mixture of both functional and divisional structure. This is very much suitable for the companies,
which have different divisions of products and services as well as different departments
(Maduenyi et al., 2015).
In order to understand the complexities of transnational, international, and global
organisation structures - Transnational organisations are those organisations, which have
much more complex than others are. These types of organisations are those, which invest in
foreign markets but do not have decision making powers and marketing powers in foreign
markets. International organisations are those organisations who only imports and exports but
have not invested in foreign markets. They only invest in their home country. The global
organisations are those organisations, which have invested in different countries. They are
available in many countries. They operate in larger volume. They use to build their brand name
and goodwill all over the world. These types of organisations have some complexities in
managing the costs and efficiency of the organisations (van der, 2016)
There are different functions that relate to overall organisation mission and objectives,
therefore, the functions involve many people of the organisation, which have very little interest
with the organisational goals. Moreover, the mission and objective on the other hand creates an
interest to achieve them. An organisation without its mission and objective cannot achieve
anything and cannot compete in the competitive market. Organisational functions include the

production of goods and services so that they can achieve organisational mission and objectives.
There is an inter relation between functions and mission and objective because (Berry et al.,
2016).The correct use of resources and work force leads to achieving the organisational mission
and objective effectively and efficiently.

Conclusion
It can be concluded that there are different types of organisations but they all want their growth.
Their purpose are different some seeks for money and some seeks for society’s welfare but they
all want the smooth running of their organisations. It is been analyzed from the proper evaluation
that the enterprises are of different sizes and structures and scope. They have different market
share, profit share and sustainability depending on the area of political and economical pressures.
They have different organisational structures, which help the organisation for smooth
performing. There are some complexities of global transnational and international organisational
structures. However, the overall aim that the organisation focuses is interrelated with the
functions of the organisations.

Part 2: Case study: ‘The UK supermarket’ (LO3 and LO4)
The UK supermarket identifies the macro and micro environmental factors, which affect the
industry and success rate to establish and enhance the market in retail sector. The supermarkets
in the UK are affected due to several product developments and expansion of others in recent
times. PESTLE as macro environmental analysis and SWOT and porter’s 5 forces as micro
environmental analysis of UK supermarkets are done to identify the influencing factors
(Hammad, 2015).
a) The PESTEL model to analyse how the macro environment is impacting the UK retail
sector
Political ● Government policies
● Impact of Brexit
● Global trade agreement and restrictions (Reuer, 2019)
Economic ● Economic rate and globalisation
● More disposable income on friverous products
● Inflation and interest rate
Social ● Consumer buying habit
● Lifestyle factors (Islam, 2017)
● Population demographics
Technological ● Disruptive technologies
● Digital catalogue for easy
Environmental ● CSR and environmental restrictions
● Contamination and blockchain technology
Legal ● Employment law
● Health and safety regulation
Table 1: PESTLE analysis

(Source: Created by Author)
Analysis
Political:
The Brexit has an impact on making pound weaker and uncertainty in trade restrictions in
Europe. Impact of Brexit and political instability are bound to affect the profit margins in the
UK. Many stores for Retail Industry in the UK have been affected for government tax and
consumer protection rights (Onyusheva and Seenalasataporn, 2018). The revenue and
profitability of the UK retail sectors are majorly affected by its government policies and
regulations. The Retail Industry including e commerce retail like Wal-Mart and Amazon have
been affected for antitrust issues for the government (Walmart.com, 2019). The political
decisions cause interest rate, which is low at all the time affecting the sector such as Next, is
efficiently able to develop the capital expansion in lower rates. The political situation in the UK
includes several political turmoil and invasion of terrorism.
Economic:
A strong economic can be allowed to buy the products for the customers which affect the
economy rate in that industry. The retail industry successfully fights during the recession. The
retail industry by 2020 can see the sale nearing $30 trillion. Globalisation and rate of interest are
affected due to invasion and recession, which affects the UK retail sector. Exchange rate
uncertainty in the UK businesses prevails for the investors due to UK leaving EU. The retail
corporations in the UK focus on the pricing strategies to operate in the budget of the market for
developing the level of unemployment and household income (Onyusheva and Seenalasataporn,
2018).

Figure 1: sales value of all retailing in UK
(Source: Statista.com, 2019)
Social:
There are many social changes in the UK retail market as the performance of retailers such as
Tesco, Sainsbury focus on the essential fashion trends in today's generation (Sainsburys.co.uk,
2019). The European markets including the general aging population and young age generation
are the main issue, which has been found by the most of retailers. Retailers can collect data to
monitor the buying habit and shaping the current demographics in society. Investment in the
market is required for developing a move towards inclusive approach, which includes the
original local geographic labour market and living wage for them.
Technological:
E-Commerce industry in retail sector is underdeveloped and overshadowed. In store by buying
overshadows the E-Commerce retail sectors, as they are more popular. According to Hammad
(2015), most more of UK supermarket sector is included such as the Marks and Spencer, ASDA
enhance their online stores to make popular their online stores equally. Websites and disruptive
technologies by the retailers are important to improve the customer reliability and retention
nowadays. Websites with the technological development for ordering goods are being popular in
recent times.

Environmental:
Environmental restrictions and ethical sourcing affect the pricing and buying behaviour of
customers. Customer relationship through ethical policy and CSR intentions has been improved
to introduce eco friendly approaches to the society. Actions for environment are to maintain as
the UK retail sector are influenced to develop the ethical and legal development in the stores. As
an instance, Wal-Mart is using block chain technology to allow the manufacturers and farmers
for inputting information about particular food products so that customers can locate and know
the details about contamination of food (Walmart.com, 2019).
Legal:
Retail stores need some legislative conditions and maintaining the regulations for enhancing the
business (Onyusheva and Seenalasataporn, 2018). The national minimum wages are increasing
so, the contractual flexibility and other laws and regulations should be maintained with
workplace. Employment law health and safety regulations are being maintained by the retail
sectors in the UK state and copyright laws are applied in store as well as e-commerce retail.
Figure 2: Market share of grocery stores
(Source: Statista.com, 2019)
b) SWOT/TOWS analysis and also Porter’s five forces analysis of Tesco influencing
decision of the supermarket
SWOT analysis: