BUS4007: Understanding the Business Environment Report

This report provides a comprehensive analysis of the business environment, covering key aspects such as the classification of business organizations into public, private, and voluntary sectors. It delves into stakeholder analysis, defining stakeholders and shareholders, and outlining the stakeholder analysis process. The report then applies Porter's Five Forces model to assess the competitive landscape, examining threats of substitutes, bargaining power of customers and suppliers, and competitive rivalry. The report also touches upon the use of monetary and fiscal policies to stimulate the economy. Overall, the report provides a detailed understanding of the factors influencing business operations and strategies.

Understanding the
Business Environment

TABLE OF CONTENT
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Task One .........................................................................................................................................3
Classification of Business Organizations ....................................................................................3
TASK TWO.....................................................................................................................................5
Defining the terms and analysing the stakeholders analysis process of the company.................5
TASK THREE.................................................................................................................................7
Porter’s five Forces .....................................................................................................................7
TASK FOUR ..................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Understanding the business environment is the process of identifying the surrounding
under which the business operates and establishes its working for achieving the business
objectives. It mainly helps in identifying the forces impacting the company operations.
Understanding the environment plays very important roles as it helps in identifying various
forces impacting the company operations. Business environment mainly support in identifying
the process which helps in addressing the strengths and weakness of the company and forming
various plans and strategies for achieving success by mitigating these forces. This report provide
details about the classifying types of organization under the private, public and the voluntary in
nature. It also specifies details about stakeholders, shareholders and stakeholder analysis. Also,
explains about importance of five forces model and its influences for achieving competitiveness
in the dynamic environment. Lastly defining about monetary and fiscal policy use or stimulating
country economy.
MAIN BODY
Task One
Classification of Business Organizations
Public sector: Public sector refers to the business organizations that used to includes the
public goods and the services of government. This includes the law enforcement, infrastructure,
public transit, health care and the persons who are working for the government. This sector used
to provide the important services to the public in the market in order to have good living of
standard (Lapsley and Miller, 2019). This sector basically includes the services and goods
provided by the government which used to benefit the society as a whole. The public enterprise
or state owned enterprises are basically the self-financing enterprises that are under the control of
public sector. The best example of the public sector is Armed forces that used to provide the
public services in the UK.
Advantages Disadvantages
 It is very easy to plan and have
coordination with market.
 It is very difficult to manage the finance
in the large market.
 Riskier to produce the inefficient

 It used to protect the public interest.
 Better funds help in making the better
decisions (Wirtz, Weyerer and Geyer,
2019).
 This sector can raise their fund through
private sourcing.
products.
 This used to create the financial burden
on the government.
 The interest of consumers is ignored.
Voluntary and charitable sector: The voluntary and charitable sector is the independent
sector that involves the local and national government and it is different from the private sector.
The roles in the charitable and voluntary organization are basically done from the advice
workers, youth workers and fundraisers that help in the development in the community and
international aid. This is the independent sector that used to work for the society by taking the
funds from the government or by the fundraisers in the market (LeClair, 2019). By this it helps
the society a lot as this is the non-profit organization. These sectors are basically formed for the
social purpose which is differing from the private and public sectors. The main aim of these
sectors is to manage the uncertainty if occurs and helps the people in the market. The voluntary
organization example of UK is Macmillan Cancer support who used to provide the financial
support to the cancer patients.
Advantages Disadvantages
 This sector has protection from the
personal liability.
 It used to provide the better services to
the people (Cyr, Landry and Fortin,
2021).
 This sector used to work for the Non-
profit as used to benefit the society.
 It sometimes used to face the financial
problems.
 The fundraisers are sometimes not
available in the market.
 It used to provide their records to the
government in order to take benefit.
Private sector: The private sectors are those sectors which used to work for the profits in
the market. This is basically the part of economic of the country that is run by the people or
group of people. The main intention of this sector is to make the profits and has great control in
the economy (Rashed and Shah, 2021). The examples of this sector are financial services, estate
agents, aviation, hospitality sectors, etc. This sector of the business organizations are used to run

by the single or group of persons and not controlled by the state. This states that it used to differ
from the public and voluntary sector. For example, Amazon it is the private company having the
wide market share in all over the world. The private sectors workers used to have more pay and
have many career choices that help them to lead in the market. These are more difficult and
expensive sector as the overall control is in the hands of individuals.
Advantages Disadvantages
 This sector can raise their money by
selling the shares in the market.
 It is very easy to grow and have
diversity in the market.
 This sector used to provide greater
career opportunities to the people.
 There is great threat of take- over by
another company.
 It used to create difficulty in order to
focus on objectives in order to increase
the profit (Chauhan and Marisetty,
2019).
 The retention of the employees are less
in this sector.
TASK TWO
Defining the terms and analysing the stakeholders analysis process of the company
Stakeholders: The stakeholders are the parties in the company who used to have interest
in the company and they can affect or can be affected by the operations of the business. The
stakeholders of the company basically include the investors, customers, employees and suppliers
which used to have great impact on the business activities. The organizations can also have the
internal and external stakeholders which can be affected by the operations of the business. The
internal stakeholders used to refers to those people who come by direct relationship which
includes the employment, investment or by having ownership.
Shareholders: The shareholders are the person of the company which has at least one
share in the stock of the company that is known as equity. They used to have the ownership of
the company by purchasing the shares of the company (Aslan, 2020). If the company is having
adequate profits so the shareholders are provided with the dividends that are given from the
earned profits. On the other hand, if the company used to lose the money or have decline in the
prices it has great impact on the dividends provided to the company. The shareholders of the

company are subjected with the capital gain or lose. They used to enjoy the certain rights such as
voting at the shareholders meeting in order to approve the members of BOD.
Stakeholder analysis: The stakeholder analysis is the process that helps the company to
identify the people before starting the projects. This makes them to group them according to their
interest and power in the society (Derakhshan, Turner and Mancini, 2019). The main purpose of
doing this analysis is to enlist the organizational players with their interest and powers and helps
to address the conflicts early. This analysis helps the company to increase the project visibility
and gain more support and resources.
The stakeholder analysis of Sainsbury includes the individual or group of individuals who
used to have interest in the company. The company has some internal and external stakeholders
that help them to have good profitability in the market. The stakeholders groups of Sainsbury
include the suppliers, managers, staff, customers and communities. The stakeholder analysis
process of the cited organization is as described below:1. Identify the stakeholders: The Company must firstly identify the stakeholders and their
power and interest in the company. This makes Sainsbury to have the proper work
distribution of the project before starting it (Vitolla and et.al., 2019). This can be done by
having the proper research in the company and assigning the work accordingly.2. Importance and impact of stakeholders on project: After knowing about the interest and
power the company must know about the importance of the project to the stakeholders.
This will help the cited organization to have great influence on the working of the
company.
3. Identifying to engage stakeholders: After assigning the work to the stakeholders
Sainsbury must also check the work is done accordingly or not. This will make the
stakeholders to have proper functioning of the work in the company. As there is large
stakeholder group of the company which includes the suppliers, managers, staff,
customers and communities so the work must be done appropriately in order to survive
in the market.
TASK THREE
Porter’s five Forces
Porter’s five forces is the important tool that helps the organizations to know about the
competitive forces that will used to have effect on the industry. This used to help and assess the

attractiveness of the sectors and helps to gain the profitability in the competitive market (J
Sainsbury (United Kingdom) Porter Five Forces Analysis, 2022). By this the company can
evaluate its effectiveness and have the proper analysis of the market by using the different forces.
Sainsbury can also evaluate the market by using this forces that helps them to have good
profitability and productivity in the market. The porter’s five forces of Sainsbury is as described
below:1. Threat of substitutes: The substitutes are the similar type of products that can be used in
the absence of the real product or if the prices of the real product is higher. Sainsbury has
the high threat of substitutes as there are many competitors in the market. As there is
large substitutes are available in the market so the company has to sell its products at the
affordable rates which make them to earn profits. They must have large number of target
customers which makes them to not to switch on the substitutes products. By having the
product differentiation and quality changes will help the company to have weaker threat
of substitutes in the market. This will helps them to have great productivity of new
products and will make them to get good profits.2. Bargaining power of customers: customers are the most affecting factor in the market
and have direct impact on the profits. Sainsbury must produce the better quality of
products as there are many competitors in the market. As the company used to produce
the different varieties of products that helps them to attract more customers in the market.
Sainsbury has to build the large customer base which helps them to have less bargaining
power of the customers. The company can take the advantage of product differentiation
which helps them to have cost advantage by attracting the large number of customers.3. Bargaining power of suppliers: This is also most affecting factor this used to affect the
prices of the products. As there are many suppliers in the market which make the
Sainsbury to have better production in the market. The suppliers have less control on the
prices which makes the company to have less bargaining with the suppliers in the market.
As the company used to operate in the profits so there is less bargain power of the
suppliers as they can take the raw material from the other suppliers as well. Therefore,
the suppliers in the market must have the reasonable pricing in order to supply better in
the cited organization.

4. Competitive Rivalry among existing firm: There is wide range of competitors in the
market as there are many supermarket firms in the market of UK. The competitors also
used to have the large market share that used to have great impact on the profitability of
the Sainsbury. The cited organization must focus on the product and services innovation
that helps them to compete with its competitors in the national and in international market
as well. The company must have the reasonable prices of the products which make them
to have large number of customers in the market. This will helps the company to have
greater productivity and large market share. As the exit barriers of this industry is high as
there are many competitors in the market and this used to require high capital and assets
to operate in the market.
5. Threat of new entrants: This force is the most affecting factor which used to have direct
impact on the profitability of the company. It is very difficult for Sainsbury to achieve the
economies of scale in the market where it operates. The product differentiation of the
cited organization is strong which makes the company to have the cost advantage and
have weaker entrants of the new firms. The new entrants used to require high capital that
used to have fewer entrants as everyone cannot prefer to raise large capital in the market.
From the above five forces it can be stated that the company must focus on these factors. By
having the great focus on these factors will help them to trade nationally and internationally as
well. Sainsbury must be focused In order to provide best services and products to the customers.
This will make the cited organization to have good competition in the market and helps them to
operate in the national and international market as well.
TASK FOUR
Monetary policy is mainly formed for controlling the amount of money in the country
and economy as for efficiently supplying the new money in the country. Monetary policy is
money used in the country as for achieving the full employment for improving the economic
growth and establishing the prices and the wages provide to various individuals which influences
the economy as a whole. Fiscal policy is used as for managing the economy as it helps in
adjusting the spending and revenues. it is used by the government of the county a for establishing
and adjusting the tax revenues which impact the whole economy. As these two policy mainly
used for stimulating the country economy by affecting the aggregate demand as with changing
into the government spendings and charging taxes (Aye, Clance and Gupta, 2019). These factors

mainly influences the employment and the income of household which results in impacting the
spending and the investment level in the economy. Further the monetary policy is laid by the
central banks for manipulating the supply of money this results in influencing the interest rates
inflation and the consumption level in the economy as a whole. Monetary and fiscal policy of
country is mainly defined as the rules and regulation to be followed by various individuals of the
country (Current UK fiscal rules, 2022). It helps in managing the money supply and supports in
achieving the maximum level of employment for achieving long term goals. The monetary and
fiscal policy in the UK, impacts the pricing level . By setting the monetary policy with
establishing the rate of inflation at low level at 2% it helps in stabilising the UK economy as this
supports in achieving the stable growth and better employment level with providing the stable
jobs for achieving the growth in the economy.
As with establishing the UK monetary policy it supports in motivating for achieving the
high employment rates which aid in achieving more transparency level by stabilizing the
economic growth. With establishing monetary policy in the country it helps in encouraging the
higher level of growth into the economy which supports in encouraging the spendings by
charging the low interest rates. These helps in promoting the low inflation rates which creates
better pricing stability. Whereas With using these tools in the economy it does not guarantee the
economic growth in the country as at the initial stages it gives negative impact to the economy
with rising the ates of inflation (Siddiqui, 2019). Also, it rises the risk of hyper inflation level
which lowers the growth with Rising the interest rates in the economy. Further it aid in
impacting with reducing the rate of currency which affects the import level in the economy.
Thus, it reduces the opportunities in UK for obtaining more new and innovative products by the
other country with limiting the imports.
Further with using the fiscal policy in the UK country, it helps in managing all the
government debts by managing the borrowings and its investment for development and welfares
in the economy. This policy impacts the country economy by expansing and rising the demand of
products, greater the demand rising in prices with outputs. This result in Rising in the profits
level with producing in large quantities (Hantzsche and et.al., 2021). As in the UK, economy by
reducing the tax level helps the business and various organisation for investing more which
results in overcoming the budget deficit. The deficit situation occurs with rise I the expenditures
than the earning as of profits ad revenues (Monetary policy, 2022). But with using the fiscal

policy it helps in reducing the spending and expenditures results in overcoming the budget
deficit.
Thus, fiscal and monetary policy mainly used by the economy if the UK as for regulating
the growth and development level by spending and earnings. With using these policies helps in
growing and achieving the optimum employment by lowering the rate of inflation which helps in
redistributing the income (Christophers, 2019). This result in achieving the growth and
sustainability in the economy by stabilising the income and minimising the poverty which leads
towards providing stable and happily living. Thus, with establishing proper fiscal and monetary
policy in the country helps in conducting smooth business and workings of various organisations
because government uses the taxes, rate of interest and spendings of various consumers for
minimising the crises condition a of the covid pandemic as by resulting with reducing the
collapse level in the economy.
CONCLUSION
From the above report it can be concluded that various business organisation are mainly
classified into the various sectors including the private, public and voluntary sector for achieving
different objectives with establishing the business entity. This report also provided details about
the comparing the private public and the charitable organization for developing better
understanding about the organizations purpose. Further, with discussion the stakeholder,
shareholder and stakeholder analysis helps in defining about the stakeholder involved in the
company as for achieving their objectives understanding in the financial terms. With using the
porter five forces for the sainsbury helps in defining the company achieving its competitiveness
with using various strategies. Lastly it helps in developing more understanding about the role of
monetary and fiscal policy helps in supporting and stimulating the country economy with using
UK economy.

REFERENCES
Books and Journals
Aslan, H., 2020. Shareholders versus stakeholders in investor activism: Value for
whom?. Journal of Corporate Finance. 60. p.101548.
Aye, G. C., Clance, M. W. and Gupta, R., 2019. The effectiveness of monetary and fiscal policy
shocks on US inequality: the role of uncertainty. Quality & Quantity. 53(1). pp.283-295.
Chauhan, Y. and Marisetty, V. B., 2019. Do public-private partnerships benefit private sector?
Evidence from an emerging market. Research in International Business and Finance. 47.
pp.563-579.
Christophers, B., 2019. The rentierization of the United Kingdom economy. Environment and
Planning A: Economy and Space. p.0308518X19873007.
Cyr, D., Landry, S. and Fortin, A., 2021. Management of Charitable Program Expense Ratios in
the Charity Sector. Australian Accounting Review.
Derakhshan, R., Turner, R. and Mancini, M., 2019. Project governance and stakeholders: a
literature review. International Journal of Project Management. 37(1). pp.98-116.
Hantzsche, A. and et.al., 2021. Political revisions to expenditure: Five decades of real-time data
on official economic forecasts and UK fiscal policy. Designing a New Fiscal
Framework, London: NIESR Occasional Paper LXI. pp.139-70.
Lapsley, I. and Miller, P., 2019. Transforming the public sector: 1998–2018. Accounting,
Auditing & Accountability Journal.
LeClair, M. S., 2019. Malfeasance in the charitable sector: Determinants of “soft” corruption at
nonprofit organizations. Public Integrity. 21(1). pp.54-68.
Rashed, A. H. and Shah, A., 2021. The role of private sector in the implementation of
sustainable development goals. Environment, Development and Sustainability. 23(3).
pp.2931-2948.
Siddiqui, K., 2019. Government Debts and Fiscal Deficits in the United Kingdom: A critical
review. World Review of Political Economy. 10(1). pp.40-68.
Vitolla, F. and et.al., 2019. How pressure from stakeholders affects integrated reporting
quality. Corporate Social Responsibility and Environmental Management. 26(6). pp.1591-
1606.
Wirtz, B. W., Weyerer, J. C. and Geyer, C., 2019. Artificial intelligence and the public sector—
applications and challenges. International Journal of Public Administration. 42(7). pp.596-
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Online
Current UK fiscal rules.2022.[Online]. Available through:
<https://www.instituteforgovernment.org.uk/explainers/fiscal-rules>
J Sainsbury (United Kingdom) Porter Five Forces Analysis. 2022. [Online ]. Available through:<
https://embapro.com/frontpage/porterfiveanalysis/17989-j-sainsbury>
Monetary policy.2022.[Online]. Available through:
<https://www.bankofengland.co.uk/monetary-policy#:~:text=Low%20and%20stable
%20inflation%20is,supporting%20economic%20growth%20and%20jobs.>