Business and Business Environment: UBC Unit 1 Assignment

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UNIT 1: BUSINESS AND BUSINESS ENVIRONMENT (UBC)
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Table of Contents
Introduction...................................................................................................................... 3
Section 1 – Essay (LO1 & LO2).......................................................................................4
1) Different types of organizations..............................................................................4
2) Size and scope of the organizations......................................................................4
3) Organization structures and functions....................................................................5
Part 2 – Case study: ‘The UK Supermarket sector’ (LO3 & LO4)....................................7
a) Apply the PESTEL model to the sector to analyze how the macro environment is
impacting the UK retail sector.......................................................................................7
b) Apply the SWOT/TOWS analysis and also Porter's five forces analysis to any UK
Supermarket to determine how they influence the decision of the supermarket..........8
Conclusion..................................................................................................................... 11
References.....................................................................................................................12
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Introduction
Different large & small businesses are being affected by the existing business
environment including the different aspects of economic, legal, political, social &
technological factors. The term “business environment” is therefore termed as the
sum total of all the external factors prevailing outside the business organization & which
may affect the different operations of the business directly. Different business
organizations, including the public sector, private sector & NGOs face the external
factors in a different manner in accordance with their defined aims & objectives. The
complete assignment is divided into two sections, the first section includes the essay
which covers the three main areas & the second part includes the detailed analysis of
the case study for the "U.K. Supermarket Sector".
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Section 1 – Essay (LO1 & LO2)
Different types of business organizations are being found including the profit & non-
profit sectors which handles the external business factors in a different manner on the
basis of their different sizes, scopes & purposes. Also, they possess different
organizational structures. The complete section is in the form of essay which includes
the detailed description of inter-relation among different organizational functions.
1) Different types of organizations
Three main types of business organizations are being found, including profit, non-profit
& non-governmental business organizations. The main aim of profit organizations is to
earn a large number of organizational profits & business revenue. On the other hand,
enhancing the benefits to society is an essential part of the aim of non-profit
organizations, the same as in the case of non-governmental organizations. The main
difference between the non-profit & non-governmental organizations is of the scope. An
effective example of profit organization includes the leading multinational retailer
“Marks & Spencer” whose main mission is to earn huge amount of profits by selling the
multiple products of food, clothing & other home products. This is the public limited
company. The non-profit organizations work upon the major societal issues, other
than earning a large number of profits. These organizations provide effective services
through governmental bodies. Some examples of non-profit organizations include the
Charities in the country of U.K. NGOs are those organizations who work independently
from the government for promoting the change or for enhancing the development of the
society. An effective example of this includes the “Amnesty International” which is the
non-governmental business organization whose main aim is to secure the human rights
effectively & efficiently (Schaltegger, et.al. 2016).
The main purpose of the profit organizations includes the gaining of a large number of
business profits & enhancing the competitive advantage, whereas, the scope of non-
profit organizations depend upon the factors of religion, charity, scientific work, and
education. The main aim of NGOs, on the other hand, includes the enhancement of
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large chances by the way of influencing the political system. Different organizational
sectors have different strategies for supply chain for supplying the goods & services to
all the people & other potential customers. For example, "Marks & Spencer" considers
the various essential elements for enhancing the strategy of the supply chain such as
the customer, their purchasing mode, production, planning, inventory & transportation.
2) Size and scope of the organizations
Different business organizations have different sizes & scope on the basis of their
defined aims, mission & funds within the business. The size & scope of micro-sized
business organizations are very small in comparison to any other type of business
organization. These micro organizations grow & develop at very slow speed & also are
not sustainable in nature, because of which these are not able to meet up its overall
organizational cost, effectively & efficiently. The small business organizations are
wider than the micro business organizations in terms of all its activities & the defined
aims. Some of the wider activities performed by the small business organizations
include the technological requirements, retailing services, the business of wholesale &
construction, manufacturing activities, repairing & services (Cano-Kollmann, et.al.
2016). The numbers of employees in micro organizations are less than 5, on the other
hand, small-sized business organizations include around 20 to 50 numbers of
employees. Small level customer base is being found for all the small organizations,
whereas, the potential customers possess a limited base under the medium-sized
business organizations, which is very limited to the particular industry. The numbers
of employees found under medium organizations vary from 51 to 150. The large
business organizations are completely different from all other organizations; they have
large scope & also have the diversified business markets, both at the national as well as
the international level.
The market share, profitability, level of growth & sustainability of medium & small
business organizations is very limited because of the limited scope & size. On the other
hand, large organizations have a large share of market & profitability & they also lead
towards sustainable growth & development for a longer period of time. It can be said
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that the larger the size & scope of the business, the greater will be the amount of
profitability & market share. Also, the level of sustainable development & growth
depends upon the size & level of the project being executed & enhanced within the
large business organizations (Lenssen, et.al. 2013).
3) Organization structures and functions
It has found that different business organizations possess different organizational
structures depending upon the wide varieties of factors including the number of
employees, the share of the market, shareholders, owners & their legal status. Apart
from all these factors, some other necessary elements include the objectives & aims of
the business organization as well as the products offered by different business
organizations. The structure of sole-proprietorship is narrow & all the essential functions
of the organization are performed by the sole trader. On the other hand, the partnership
firms possess the horizontal structure & also the organizational decisions are being
taken by the partners, mutually. In accordance with the particular sizes of the business
organizations, the aims & objectives are being defined. A huge market is being found for
the large business organization of "Marks & Spencer" in which the company can invest
a large amount of money & earn a greater amount of profits. It has been noticed that the
organizational objectives are dependent upon the organizational size & scope & the
respective scope or different sizes depends upon the organizational products & services
(Bocken, et.al. 2014). The size & scope of the business organization is being set at a
massive level, in the case when the products & services of the organization are vast,
else the small-sized organizations are being created.
The concept of organizational structure is very essential for identifying those functions
which are very necessary to be performed by the business with the main purpose of
achieving the defined aims & objectives of different business organizations. Different
companies at the international, global & transnational level have different scope &
degree of operations. No amount of investment is being found for all the international
companies outside their home country. The companies at the Global level are located in
multiple numbers of countries. It has been identified that a huge level of complexity is
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being found for transnational companies because these companies encourage their
businesses in more than one country.
Along with the different forms of business as well as the organizational structure, the
proper identification & implementation of the organizational functions are also very
necessary. The leading business organization, “Marks & Spencer” performs the
essential functions of planning, organizing, controlling & monitoring. It has also been
identified that all these functions of the business organization are inter-related with each
& everyone & they also possess a unique relationship among themselves. The function
of planning provides the general framework to the whole business for performing the
essential activities in the organization. Planning involves the preparation of the budget
in accordance with the different business structure (Vahlne and Johanson, 2013). The
second function of organizing is being done & enhanced by the business managers for
performing the essential activities of the business by effectively & efficiently using the
limited available resources within the business. For handling & enhancing operational
management, the management team of the business organization is responsible. In
large companies, such as "Marks & Spencer" the role of the administration is being
played in an appropriate manner. Apart from all these functions, the function of
controlling is also considered as the main & core functions for having full control over all
the organizational activities, which is very essential for each & every kind of the
business organization. All these functions of the business organization are closely inter-
related & inter-connected with one another. If any of the function lacks to be performed
effectively, then it will negatively impact the working of another function, which will result
into the huge level of deficiencies & then the business organization lacks the effective
achievement of defined aims & business objectives.
The inter-relation among all these identified functions results in various favorable
advantages & disadvantages. A higher level of coordination is being enhanced among
different organizational departments. Employees also become more cooperative in
nature, while performing the essential functions within the business. The amount of
profits gets increased along with enhancing the higher level of effectiveness &
efficiency. Apart from all these things, companies are also able to enhance their
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competitive advantage in the business market. On the other hand, the inter-relation
among all these functions, sometimes result into great level of disadvantages, such as
the increasing level of complexities within the different organizational structures at the
Global, international & transnational level, along with the ineffective making of the
decisions, improper utilization of resources & misusing of the relevant information
among different departments of the business organization (Svensson and Wagner,
2015).
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Part 2 – Case study: ‘The UK Supermarket sector’ (LO3 & LO4)
a) Apply the PESTEL model to the sector to analyze how the macro
environment is impacting the UK retail sector.
Various different factors of macro-environment affect different business organizations
such as Marks & Spencer, Tesco, Sainsbury & many others in a different manner. The
PESTEL analysis was being conducted for identifying the major impacts on the retail
sector of the U.K. Following is the detailed PESTEL analysis of the sector:
Political factors: The level of profitability & the amount of organizational revenue are
being directly influenced or impacted by the changing rules & policies by the
Government. The policies are being set in terms of the changing behavior of the
economy, as a whole. Each & every sector in the country of U.K. needs to follow all the
defined rules & policies by the government in a careful manner. All the political
regulations need to be followed up strictly by the whole retail sector including the terms
of import & export, selling or purchasing of the business & other necessary health or
safety guidelines. Certain issues may affect large business organizations directly. Some
of them include the issues related to the anti-trust, along with storing, sharing or using
the relevant data in the effective as well as in an efficient manner.
Economic factors: The strong & favorable economy not only attracts large investors
but also increases the level of profitability within the retail sector. It is very difficult for
many of the industrialists to hold themselves during the period of recession. The
different industrialists under the retail sector cut down the prices for their products &
services, in the case when the economy is poor. An estimation has also been taken
place, during the period of 2020; the number of sales within the retail sector will get
increased by approximate 30 trillion dollars. In the case of the poor or unfavorable
economy, along with prices, large numbers of job opportunities are also being cut down
for all the organizational employees (Alcácer, et.al. 2016).
Social factors: These factors are very essential to be considered by the business
organizations because the certain change in the demand & preference of the consumer
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can result into the losing of the attraction of potential customers along with a reduction
in the level of organizational profits. For the purpose of analyzing & identifying the
changing trends, the organizations, such as "Marks & Spencer, Tesco & Sainsbury"
need to conduct a suitable research, effectively & efficiently. The leading businesses
should set up attractive vouchers for gathering the long term attention of various
different customers which will help the large companies to earn a large number of
profits.
Technological factors: Each & every sector, including the retail sector, needs to adapt
the current & changing advancements related to the new & unique technology so that it
can continue its business operations for the longer period of time & in a sustainable
manner. For the purpose of reaching the large numbers of customers, the effective
utilization of the trending technology is very essential. Large business organizations,
including Tesco, Sainsbury & Marks & Spencer conducts online business by selling their
products & services on their own websites or other internet applications (Chen, et.al.
2012).
Environmental factors: Involving in those activities which can preserve the
environmental resources can also help in earning a higher amount of business profits as
a maximum number of people get attracted to the business. The organizations, given in
the case study deal in the food products which possesses the direct influence on the
environmental constraints, also some of them needs to pay the standard amount of tax
on the fatty products or using the artificial flavors. Different business organizations are
essentially required to follow & implement all the rules & regulations in the strict manner,
which is set up in the context of saving the environment, not only for the current but also
for the future generation (Bocken, et.al. 2016). The retail sector also helps the farmers
along with all the manufacturers for gathering the necessary & relevant information for
all the products of food with the help of the “block-chain technology”.
Legal factors: Meeting & following up all the legal conditions are very essential for
continuing the business in the competitive business market & also for running the
organizational operations in a smooth manner at the wider scale of business (Tvedten,
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et.al. 2014). Some of the legal laws, through which the business organizations need to
comply with, including the laws related to the taxation & labor laws for not only smoothly
operating but also expanding the business at the international level.
b) Apply the SWOT/TOWS analysis and also Porter's five forces analysis to
any UK Supermarket to determine how they influence the decision of the
supermarket.
SWOT analysis
To evaluate & understand the different consequences of business in an effective
manner, the SWOT analysis is being conducted by the large retail business
organizations, including Tesco, Sainsbury & Marks & Spencer. Following is the detailed
analysis of SWOT for the retail industry:
Strengths: The financial backing is the strongest point for all the retail companies when
the lack of amount of capital is being found & there is no access to bank loans also.
Along with these, the retailers' price at the wholesale level is also included under the
strengths of the retail sector. The large companies sell innovative products & creative as
well as the unique services to all its potential customers for enhancing the competitive
advantage in the business market, effectively & efficiently.
Weaknesses: Along with various points of strengths, there are some identified
weaknesses also which are to be faced by the leading retail business organizations. A
higher level of legal rules & legislation, political instability, poor infrastructure as well as
the lack of effective supply chain of management (Khan and Quaddus, 2015). Apart
from all these weak points, there are some other areas also which are to be considered
effective by the different business organizations such as the increasing amount of petrol
or fuel, payment of the huge amount of taxes & the increasing dependency for the
transportation of road. All these weaknesses can eventually reduce the level of growth
& amount of profitability in an adverse manner.
Opportunities: Various unique & favorable business opportunities are to be identified &
grabbed so that the retail sector can enhance the competitive advantage by conducting
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the market research & understanding all the facts or other measures being existed
within the economy. The needs of customers are never filled, which is the biggest
opportunity for the retail sector. Apart from this, the large retail businessmen, like Marks
& Spencer & Sainsbury purchase different products & services from the small retailers,
with the main aim of increasing the level of market share. In all these ways, different
companies grab the favorable business opportunities to gain a higher level of
competitive advantage. In order to increase the number of sales, the retail business
organizations apply & implement the digital strategy for promoting the increasing
amount of organizational sales (Naeem and Neal, 2012).
Threats: Various business organizations need to face the great level of threats, apart
from grabbing the most favorable business opportunities. The recession period brings
down the higher level of demand of all the potential customers & the war is set for the
prices among different retailers. Another threat includes the change in the habits of
customers for shopping which can hamper the sustainable growth & development of the
business.
PORTER analysis
Apart from SWOT & PESTLE analysis, PORTER analysis is also an effective concept
which helps in determining the nature of competition prevailing within the business
market. The PORTER analysis of the retail sector is being described as below:
Bargaining power of suppliers: The suppliers possess a great level of power to
regulate the retail sector in various different ways. They are strong players in the overall
sector of retail. The higher amount of prices are being demanded by them to deliver the
goods in an effective manner. Great level of advantage is being enhanced by Tesco as
it dictates the amount over the small shopkeepers which can be paid by it to all the
suppliers, in case they don’t agree, then they quietly left the whole business market by
promoting their own produce (Nabi and Liñán, 2013).
Bargaining power of buyers: Along with suppliers, buyers/ customers also possess a
higher level of power in the business market. The lower amount of prices attracts large
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