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M046001 Business Environment

M046001 Business Environment

Introduction

The writer is working as the junior journalist of a local newspaper. In this unit, the writer has written an article on business covering the following areas.  The objective of this assignment is to gather fundamental knowledge of the assortment of business organisations. This assignment also focuses on various factors that form the environment of organisations operating in the complex business world.  The writer has described the influence of stakeholders and how businesses organise themselves through strategic planning and organisational structures. After evaluating the external environment, the writer will determine how companies operate in different parts of the world and how the development of a global marketplace impacts all businesses.

 

1. Know the range of different businesses and their ownership
1.1 Type of business, purpose and ownership of two contrasting businesses 

The writer has discussed different types of business organisations conducting their operations in the United Kingdom. In this section, the writer has selected two organisations Sainsbury and RSPCA and evaluated the purpose, nature and ownership. 

Subject

Sainsbury

RSPCA

Nature of Business

The company has the most significant food retailing chain in the UK that emphasises providing fresh food through continued leadership and innovation. The company offers good quality products at fair prices, making the company different in the market (Sainsbury’s, 2016). 

The Royal Society for the Prevention of Cruelty to Animals (RSPCA) is a charitable organisation that voluntarily works to support the animals in the world (Rspca, 2016). 

Ownership 

As Sainsbury is a public limited company, its shares are sold and purchased in the stock market. 

The organisation is a charitable trust that conducts its operation through the donation of public funds. 

Purpose

The purpose of this organisation is to generate revenue and increase market share.

The purpose of this organisation is to work for the animal voluntarily. There is no intention of generating money. 

From the above discussion, the writer wants to conclude that Sainsbury is a profitable business organisation where RSPCA is a not for profit organisation. 

1.2 Stakeholders who influence the purpose of two contrasting businesses 

Bevan (2010) mentioned that Stakeholders are the entities who directly or indirectly impact the activities of an organisation. This section will assess the stakeholders and their influence on the two organisations Sainsbury and RSPCA.

Stakeholders of Sainsbury

The primary stakeholders of Sainsbury include Customers, Employees, Suppliers, creditors, media, etc. The customer is the most critical influential group as it generates profit. 

Stakeholders of RSPCA

On the other hand, the major stakeholders of RSPCA are the employees, benefactors, and government, and social activist groups, local and national communities. 

1.2.1 Points of view of different stakeholders seeking to influence the aims and objectives 

The stakeholders have a different view that influences the aims and objectives of both companies. For example, the customers want good quality products at a fair price. The supplier provides raw material promptly to achieve the goals of Sainsbury. On the other hand, the benefactors want their money to be utilised for the welfare of animals (Worthington and Britton, 2006). 

1.2.2 Influence different stakeholders exert in RSPCA.

 The activity of the RSPCA has an impact on different stakeholder groups like donors, employees, government and communities. Conversely, those stakeholders exert influence on the performance of RSPCA. The employees of the company work relentlessly without seeking any financial benefit. Therefore, the employees want good corporate culture, good behaviour from the management. The government imposes different laws and regulations that limit the work of this organisation. Thus, the government also supports those works that are beneficial for society as the organisation deals with wildlife, the community at a local and national level influences it. 

 

2. Understand how businesses are organised to achieve their purposes
2.1 How two businesses are organised 

Every organisation has its structure. Organisational structure refers to the system which determines the hierarchy of the two companies. The writer has discussed how the two organisations are organised to achieve its goal. 

There is a different organisational structure like tall, flat and matrix organisational structure. Sainsbury has a tall organisational structure because the top management can’t directly observe the activity of lower-level workers daily. So, there is a chain of command, and every manager has a responsibility to overlook the training of juniors. Sainsbury has different departments such as finance, marketing, human resource and customer service to manage activity. Sainsbury focuses on its move to achieve organisational goals (Marcousé and Lines, 2002). 

On the other hand, the Royal Society for the Prevention of Cruelty to Animals has a flat organisational structure. The power is decentralised to departments. Each department manager controls the activity of specific employees. Each department has established SMART goals that define specific, measurable, attainable, and realistic and time-bound. 

The above discussion clarifies that both the company has its vision, mission, aims, and objectives. But, Sainsbury and RSPCA have organised their structure in a different way to achieve their purpose. 

2.2 How their style of organisation helps them to fulfil their purposes

According to Marcousé (2008) stated that It is evident that Sainsbury has a tall organisational structure because the organisation size is enormous. So, the organisational structure supports the company to achieve its objectives. The top management can’t control lower-level employees’ day-to-day activity because of the organisation’s size.  As Sainsbury has a tall organisational structure, each manager has some responsibility. Each manager has a large span of control. So, the upper-level manager can influence the activity of subordinates. After the end of the day, Sainsbury can achieve its day to day targets. In the same way, the flat organisational structure of RSPCA controls the activity of departments that support the organisation’s culture. Therefore, the style of the organisations assists the two companies to fulfil their purposes. 

 

3. Know the impact of the economic environment on businesses
3.1 Influence of two contrasting economic environments on business activities

The economic environment influences the business activities of an organisation. In this case, the writer has compared the influence of the economic climate on Sainsbury and RSPCA. The economic environment consists of the economy of the local and international market. Besides, the economic environment includes inflation, tax rates, legal and financial act, unemployment rates, etc. For Sainsbury, the economic climate has a considerable impact. The increase of inflation rate and tax rate reduces the buying power, reducing the demand for products. On the other hand, raw material and labour supply decrease due to inflation and vice versa. As the RSPCA is a charitable organisation, the economic environment has less impact on the company’s activity. 

3.2 Challenges to selected business activities within an established organisation

Kaplan and Norton (2001) mentioned that The ripple effect is a situation that occurs when a person decreases spending that also falls the income of another person. The ripple effect has an impact on the production, sales and revenue of Sainsbury. When a person reduces consumption, it also decreases the sales of Sainsbury. 

When an economic downturn occurs, the number of unemployed people also increases. People have no money in hand. Therefore, they reduce consumption. Thus, it decreases the profit of Sainsbury. 

 

4. Know how political, legal and social factors impact business
4.1 How political, legal and social factors are impacting the business activities 

According to Blair and Hitchcock (2001), different macro-environmental factors influence organisations’ business activity. The major macro-environmental factors are the political, social and legal environments. The government imposes various types of policies like fiscal policy, monetary policy, and budget for the wellbeing of the society that influences the activity of an organisation. On the other hand, the legislator formulates different laws such as the consumer protection act, environmental protection act, promotional regulations, industry act, etc., that restrict the business activity of an organisation. At the same time, social factors like education, occupation, income, and ages of people influence the company’s performance. So, whenever a company formulates a strategy, it should consider the political, legal, and social factors.

4.2 How political, legal and social factors have impacted the two contrasting organisations

In this section, the author will show the influence of political, legal, and social factors on the performance of Sainsbury and the RSPCA. 

As the company is created to protect wildlife, the UK government provides financial support to the company. The government makes a budget, fiscal policy, and monetary policy that impact the activities of RSPCA. Simultaneously, the government endorses different laws such as environmental protection acts that quickly assist the company in achieving its objectives. The organisation creates awareness about protecting wildlife among the general people, which also influences people’s lifestyles. The people from the community are becoming conscious of nature and joining and supporting and providing financial support. 

On the other hand, the political instability reduces the sales of Sainsbury. The high tax imposed by the government is a barrier for a private organisation. On the other hand, the positive factors like infrastructure, transportation system and international treaty ease the business activity of Sainsbury. The government provides a framework for conducting business in the UK. Different laws restrict Sainsbury’s movement and ensure consumer and employee rights. Finally, social factors, income, age, education, etc., influences Sainsbury to market its product in different ways. 

4.3 How future changes impact the strategy of Sainsbury

In this section, the author has estimated the future changes that may impact the strategy of Sainsbury. The first impact is the change of lifestyle and fashion of people for which the company has to change its product and marketing activities (Jewell, 2000). The economic downturn and recession may occur. On the other hand, the company has to face intense competition. So, Sainsbury has to cut its strategic business unit. Besides, new laws and regulations can also impact the strategy of Sainsbury. 

 

Conclusion

In this assignment, the writer has illustrated a range of business activities considering the purposes of different organisations. The writer has explored the impact of the external environment on business activities. The political, legal, economic, social, and climate influences the action of the public, private and charitable organisation. Therefore, an organisation has to deal with those factors to do business in the macro-environment (Raffo et al., 2004).

 

 

 

 

 

 

 

 

 

 

 

 

References

Bevan, J. (2010). BTEC level 3 business. London: Edexcel.

Blair, A. and Hitchcock, D. (2001). Environment and business. London: Routledge.

Hall, D., Jones, R. and Raffo, C. (2004). Business studies. Ormskirk: Causeway.

Jewell, B. (2000). An integrated approach to business studies. Harlow: Longman.

Kaplan, R. and Norton, D. (2001). The strategy-focused organization. Boston, Mass.: Harvard Business School Press.

Marcousé, I. (2008). Business studies for A level. London: Hodder Arnold.

Marcousé, I. and Lines, D. (2002). Business case studies. Harlow: Longman.

Rspca.org.uk. (2016). What we do – RSPCA. [online] Available at: http://www.rspca.org.uk/whatwedo [Accessed 11 Apr. 2016].

Sainsburys.co.uk. (2016). [online] Available at: http://www.sainsburys.co.uk/?med=aff&esrc=phg&aid=skimlinks_phg&cmp=301249&adb_src=5_305950 [Accessed 11 Apr. 2016].

Worthington, I. and Britton, C. (2006). The business environment. Harlow: Financial Times Prentice Hall.

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