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Unit 16 Business Environment Pearson BTEC Level 5

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INTRODUCTION

Business environment is classify as internal and external factors that affect functional and operational business approaches. For this, management of organisation requires to build impactful strategy that reduce negative impacts of such factors. Impact of these factors can be positive or negative that can affect decision making process of firm. Internal factors of firm are analyse through SWOT analysis and external factors are through PESTEL analysis. All these environmental factors can impact directly on business activities and profitability as well (Fernando, 2011). This project report is based on Aldi which is a discount supermarket chain. This organisation was established in the year of 1913 by Karl Albrecht and Theo Albrecht. Aldi has over 10000 stores in approx. 20 countries. This report includes analysis of different type of organisations, size and scope of theses firms and organisational structure as well as functional approaches. This report also include uses of PESTEL model and its positive or negative impacts, uses of SWOT model for internal analysis. At last this report includes strength and weaknesses that are interrelated with external environmental factors.

P1 Differences between profit, not for profit and non-governmental organisations

In a business environment, there are various organisations used to operate their activities. Every firm have their distinct function and purpose which need to evaluate properly so that better and signified outcome used to get drawn. It is really essential for an organisation managers to understand various kinds of enterprises working in a keen competitive environment so that beneficial gains could be opt. Thus, various working firms with signified purpose and supply of goods and services will going to evaluated as follow. This need to understand by an organisation manager for managing their work in better and signified frame (Hamilton and Webster, 2015).

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Various kinds of business which working and evaluated in dynamic environment of business are stated as follow:

  • Profit organisation: These are such kind of business whom major motive is just to earn profit. These organisations have a clear cut objective which is to ascertain more and more profit in consideration so that they could sustain at market world in more definite manner. Profit business satisfy their customers in a signified manner through better quality products and services by utilising each and every resource in better manner. One of a major profit organisation which determine as emerging company in UK business world is ALDI. This is one of a famous and good quality products deliver company of UK whom have command over on market as well as have better market share. This define that management concentrate on their working better so that effective and suitable gain get accomplish better. The major purpose of ALDI is to deliver quality products and services with signified variety so that their users get satisfied. This result in better growth at market world which further enable in accomplishing good profit rate as well. This facilitate in drawing beneficial gain so that efficiency could be maintain and manage in operations.
  • Nor for profit organisation: These are such kind of business organisation whom working with support of government. They used to work in welfare of society so that effective services could be deliver. These government organisations not want profit in frame but they just deliver their services so that an appropriate consideration or balance at society take place. They work under some higher authority of government where political interference is more in tenure (Klapper, Lewin and Delgado, 2011). Like electricity board of UK define and consider as one of a major association of not for profit which work to deliver electricity and not want to earn more and more profit. Another better example of such aspect and attribute is Crown Prosecution services whom work under the head of parliament of UK and enable in resolve cases and issues arise due to criminal offense. They work for society not for generating profit so that criminal offense could be reduce in a better manner.
  • Non government organisation: Some number of business running and operate properly and does not have any link with government regulations and interventions. These corporations work for the welfare of society and not want any kind of profit for sustaining at market world in a definite manner. Non government organisations are those whom have simple frame work to do things for society and upraise their standard only. They could gain fund from government and some other private institutes in terms of charity so that they could provide services to such groups whom are under developed and not used to gain better services (Osterwalder and Pigneur, 2010). One of a major NGO of UK is Oxfam whom operate for such groups of society which need some little care and development. Their services work as ultimate products and goods so that better significance used to maintain.

These are certain kind of business units and entities which are operating in business environment of UK. All of them have their own and signified purpose and consideration for which they used to work in a beneficial frame. This result in evaluating and gaining better outcome so that effectiveness in their operations could be maintain. Like profit generating companies have a single and clear aim and objective to generate more and more profit so that their keen position of sustainability at market world could be maintain. On the other hand, not for profit firms are those which used to earn profit but lack concentrate of customer satisfaction due to high government interference. Thus, they work simply to render services but nothing else. NGO also work in society for upraise the standard of society so that a beneficial and effective attribute could be drawn in order to maintain and maximise effectiveness and efficiency in working operations.

P2 Relationship between different organisational function

Business entities belong to different size and scope which need to evaluate by an organisation manager properly. A business environment is dynamic in nature which get changed at each and every course of time (Scheer, 2012). Thus, for management of a company it needs to better understand various firms whom belong to differ size and scope of working. Like there are certain firms which used to operate in an environment are signify as follow in terms of micro enterprise, small and medium enterprise and large enterprise. All these have differ market share as well as working abilities. This need to properly understand for analysing the market world so that various units become understandable in order to operate freely as well as for gaining and sustainability. Thus, growth and sustainability are major aspects on which such kind of entities majorly focus upon in order to gain efficacy:

  • Micro business: These are such kind of business which operate at lower level and do not refer to much market world. These business work only to a limited area or a network where small groups used to live. Thus, their market share is low with less growth and profit margin. But the chances of sustainability is high due to having good and one to one relationship with ultimate customers (Shigang, 2010). Thus, micro business is easy to operate with lower investment rate so that beneficial attribute could be assess. Thus, micro business have a small interference which required to understand properly.
  • Small enterprise: Sometimes, few business have a small working options rather than micro level operations. Small business are quite higher than the micro level business so that they used to operate in an appropriate manner. Like retail stores whom have interference for a limited area network but not able to gain suitable market world. They have maximum number of employees is 50 with limited turnover which need to understand by managers of a company. They are more able to sustain at market world because decision making authority are in hands of owner only where lack of interference of others used to determine. Market share of small business enterprises are around half of the total economy because in every street small firms get evaluated which support an economy to grow by providing appropriate job opportunities.
  • Medium enterprise: These business organisations mainly held and operated with some individuals of family (Aterido, Hallward-Driemeier and Pagés, 2011). Although, owners and some number of professional already included into such kind of business with a clear motive to provide tough competition to each and every individual. Like Taj group of Hotels of India which used to operate by family members of a company and have intervention limited to certain parts of India only. The number of employees are little high in standard which up-to 200 so that better and design services get deliver. Thus, decision making process get done by CEO or senior leaders of an association so that effectiveness could be facilitate to become sustainable in nature frame.
  • Large enterprise: These are such kind of business organisations whom have interference at vast market world. Such firms required more and more investment in nature where shareholders and stakeholders are a core part of business. One of a best example of such kind of enterprises are ALDI which operate at global level and have good command over on market. Such firm have market share in context with global level so that effectiveness could be based on delivery of products and services rather than other aspects. Thus, management need to be more concentrative towards working options.

Thus, such aspects define in an appropriate and suitable manner of interference where each and every working entity belong to distinct with each other in context with size and scope as well (Bryman and Bell, 2015). Thus, in such consideration, market share of a company also get vary from each other. Market share define the size and scope better so that an appropriate understanding get reflected. Like Oxfam is a small company where as ALDI is one of a large corporations in the world. This result in signify that such associations have limited and definite working operations area which need to better understand for managing effective operations at business environment.

P3 Relationship between different organisational function

Aldi is a discount supermarket that provide its quality services in several countries. This organisation crate proper relation between different organisational functional to getting desired and appropriate outcomes. All these business approaches are very beneficial for firm. Through this firm can easily serve their quality services in target market or to target audience as well. There are relationship between different functions are given below -

Research and development – This department of organisation is helps to analyse market condition and demand as well. Through this firm can easily analyse market condition and requirement for specific services (Carroll and Shabana, 2010). These organisational activities are beneficial to getting appropriate information related to target market and customers as well. These organisational activities are beneficial to getting proper information of customer’s requirement. Through this they can easily serve quality service to them for providing higher satisfaction easily. All these activities are beneficial; in production and manufacturing activities.

Sales and Marketing - These kind of marketing activities are based on sales and marketing activities of organisation. In this, marketing manager of Aldi provide proper information related to new products and services. For this they use promotional and advertising approaches to provide information of several organisation's approaches. Main objective of this department is to maximise sales and income of firm in proper manner. For Aldi it is require to use different marketing tool as advertising, promotions, digital marketing and online promotion through several web marketing tools. These activities maximise organization's sales and revenues in proper manner. Aldi requires to use such marketing activities to introduce their products easily in front of target market. These kind of activities are beneficial to build new image of firm in a economy (Charter, 2017).

Production – This procedure is based manufacturing and production services of organisation. This is based on customers demand and requirement for specific product and services to produce them in proper manner. Through this organisation can easily build their own image in front of target customers to getting higher benefits and growth as well. These production services are based on research department and its marketing strategy to maximise sales and revenue of firm easily. Through this Aldi can easily build their effective goodwill in target market or in front of audience. These kind of production activities consider Just in time approach to serve quality approaches on proper timing or as per the bases of customer's demand. This is help to reduce extra wastage and time factor that can consider in production approaches.

Human resource – This department of organisation is work to analyse different aspects that are based on quality and productivity development of firm. Human resource manger of firm play a most important role to analyse employees skill and working capacity that helps to maximise income and profitability easily (Chesbrough, 2010). For this they require to provide training and learning to their employees to enhance their interpersonal skills and working capacity as well. Through this firm can easily getting higher marketing approaches and productivity as well. Through this firm can achieve their target objectives and goals in appropriate manner.

Finance division - This division is work to manage accounts and financing activities of organisation to manage sources properly. For this firm require to hire an excellent talented candidate who has skill to manage accounting sources in appropriate manner. These kind of activities helps to manage organisational income and expense properly.

IT department – This department of firm is helps to build digitalisation in organisational approaches to getting higher benefits easily. Through this organisation can easily manage their resources, funds and data in effective manner.

International Business - These are basically importers and exporters. International businesses do not make direct investments in the host countries where they operate.

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Multinational Business - Often called a multi domestic strategy, multinational businesses make direct investments in host countries where they operate.

TASK 3

P4 Positive and negative impact of macro environmental factors

In a business organisation different kind of external factors affect firm's decision making process and profitability as well. Retail sector in UK provide quality service to their customers on effective and attractive cost (Commander and Svejnar, 2011). For them, it is requiring to analyse external environmental factors and its positive as well as negative impact such as -

Political and legal factors – These are based on different governmental and legal factors that impacts that implement for making effectiveness in business firms. Fir this the retail sectors requires to manage all governmental policy and procedure in their organisation to getting higher and positive benefits easily. These factors can impact positively and negatively on business organisation such as -

  • Positive Impact – Political factors has positive impact on business organisation that they provide lawfulness in a business organisation to work positively in a country by implementing legality in their firm.
  • Negative impact – For a business organisation, it is requiring to get license to implement treading services easily. These factors can impact negatively on business procedure.

Economic factors – Supermarkets in UK require to analyse different economic factors that can impact on their organisational activities. This helps to provide economy growth and development through different methods. There are different positive and negative impact of these factors such as -

  • Positive Impact – These factors impact positively when an organisation provides different employment services to individual. Through this firm can manage different marketing aspects in several economies.
  • Negative impact – Different economic elements can impact negatively on business organisation such as inflation, higher taxation rates and high monitory policy that can impact negatively on economic policy (Craig and Campbell,2012).

Social factors – These factors are based on customer’s demand and several changes in trends and policies. Different supermarkets which are part of UK always uses several policies and procedure to analyse different social factors to provide quality services to customers easily. There are various positive and negative impact of these factors on business organisation such as -

  • Positive Impact – These factors help to maximise firm's sale and revenue in effective manner. Through this firm can easily get higher growth and profitability as well. For a business organisation, it is requiring to analyse their customers demand and requirement as well.
  • Negative impact – For a business organisation it is require to analyse several social factors to provide quality services to them easily (Dahan, and et. al., 2010). If firm do not serve exact services to their customers than it can impact negatively on organisation's growth and sales as well.

Technological factors – For a business organisation, it is require to implement technological factors that helps to provide higher and effective growth easily. These technological process helps to make effective alteration and modification on the bases of customer's demand.

  • Positive Impact – Through this process a firm can easily impact positively on business organisation and its future growth. All these activities help to reduce wastages to maximise products valuation easily.
  • Negative impact – For a super market, it is requiring to implement advance technology in their business process by providing appropriate training to their customers. Inappropriate uses of technology reduce firm's growth and productivity as well.

Environmental factors – For a business organisation, it is requiting to provide quality products and services to customers that has to be eco-friendly (Drucker, 2017).

  • Positive Impact – For a firm it is require to provide effective services to their customer that should have to be beneficial for them as well environment too.
  • Negative impact – If firm produce harmful products that will directly impact negatively towards human body and environment.

TASK 4

P5 Conduct internal and external analysis

There is SWOT analysis of Aldi is given below -

Strength

Weaknesses

· Aldi provide quality services to their customers on the basis of their capacity.

· Firm uses cost effective method to attract various customers easily toward their services.

· Firm has effective resources, skilled employees and quality product that are known as their key strengths (Trkman, 2010).

· Aldi provide some of their products on high cost that impact negatively on customer’s demand and requirement as well.

· Firm do not have various stores in different location.

· Firm do not uses different advance technology and innovative ideas in their business procedure. So it can be the weakest point of firm in this new generation.

Opportunities

Threat

· If firm grab digitalisation and innovation so they can easily increase their treading process through online servicing.

· Firm requires to conduct different training program to enhance their employees interpersonal skill and working capacity as well.

 

· Tesco, ASDA and Sainsbury can be the biggest threat for organisation who also dealing in retailing sector.

· Low customer's demand and higher cost of products also can be the biggest threat.

Porter's five forces model

  • Bargaining power of customers – They are the last buyer of products. So for them firm require to use effective strategy to provide higher satisfaction to their target consumers.
  • Bargaining power of suppliers – They are the suppliers of products and services who can easily maximise products cost in appropriate manner (Zott, Amit and Massa, 2011).
  • Threats of new entry – Aldi faces strong competition from new organisations that open their new stores, build brand image and maximise customers chain toward their organisation.
  • Threats of substitute – These are the organisations that provide their services to customers ion cheapest rate to attract them easily toward their services.
  • Competitor rivalry – Aldi face strong competition from several organisation's that provide quality services to their customer on almost same price. So for this firm requires to create their new and impactful strategy to recreate their own image in target market.

P6 How strength and weaknesses are interrelated with external factors

For Aldi, it is require to analyse their strength and weaknesses that are interrelated with some external factors such as -

Political and legal factors – Aldi start their business services in several countries. For this they always implement governmental rules and regulation in their business process to getting higher advantages easily.

Social factors - In this scenario, company used to craft short term and long term objectives which need to fulfil in a define time manner so that effectiveness and efficiency in operations could be maintain and manage. This result in enable them to become sustainable at market world through providing better quality products and services on the bass of social factors.

Technological factors – Aldi requires to use advances technology in their business process to maximise their organisational structure through online dealing process. For this manager requires to maximise their organisation's level in appropriate way.

CONCLUSION

From the above report it has been summarised that environment has direct impact on organisational activities and decision making procedure as well. It consider two different factors such as internal and external that directly affect profitability of firm. This report is based on Aldi which is a discount supermarket chain and has over 10000 stores in approx. 20 countries. This report include different type of organisations, size and scope of theses firms and organisational structure as well as functional approaches. It also determine PESTEL model and its positive or negative impacts, uses of SWOT model for internal analysis and porters five forces model as well. At last is includes strength and weaknesses that are interrelated with external environmental factors.

REFERENCES

  • Fernando, A.C., 2011. Business environment. Pearson Education India.
  • Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University Press, USA.
  • Klapper, L., Lewin, A. and Delgado, J.M.Q., 2011. The impact of the business environment on the business creation process. In Entrepreneurship and Economic Development(pp. 108-123). Palgrave Macmillan UK.
  • Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.
  • Scheer, A.W., 2012. Business process engineering: reference models for industrial enterprises. Springer Science & Business Media.
  • Shigang, Y., 2010. Competitive strategy and business environment: The case of small enterprises in China. Asian Social Science, 6(11), p.64.
  • Aterido, R., Hallward-Driemeier, M. and Pagés, C., 2011. Big constraints to small firms’ growth? Business environment and employment growth across firms. Economic Development and Cultural Change. 59(3). pp.609-647.
  • Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.
  • Carroll, A.B. and Shabana, K.M., 2010. The business case for corporate social responsibility: A review of concepts, research and practice. International journal of management reviews.12(1). pp.85-105.
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