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M046004 Business Environment

M046004 Business Environment

Executive Summary

Business needs to be done within the environment. In that case, no business can avoid the stakeholders and the environmental impact. Therefore, before doing a business, people need to understand the background of the company. 

The first thing to be discussed in this report is the basic structure, types, and business environment. In addition to that, one crucial thing that will be discussed is the concept of the stakeholders and their impact on the business. In the second section, the discussion was aimed at the company’s performance in terms of the organisation of the business. It is also discussed how the organisation of the business impacts the business performance of two different organisations. 

In the third section, the fulfilment of the purpose of the business is discussed with examples. In the final area, the focus of the discussion was on the economic, social and political-legal environment and their impact on the business. After that, the report ends with the concluding remarks. 

 

Introduction

Different organisations are involved in various types of businesses. Businesses can be categorised in many ways: public or private, national or international, small or medium etc. Different companies also have other purposes, strategies, targeted consumers, stakeholders, organisational philosophy and ownership structures. Here, the above things for two separate companies, which are contrasted by nature, will be discussed.

 

1.0 Range of Different Businesses and their Ownership
1.1 Type, Purpose, and Ownership of Two Businesses

In this report, the chosen two businesses are Sainsbury’s and Ryanair. Sainsbury’s is one of the largest retail store chains in the UK, while Ryanair is a famous but cheap-rate airliner that mainly operates in the domestic-flight industry of the UK. Therefore, the industry affiliations and types of these businesses are different from each other. 

Sainsbury’s focuses on making life easier for the customers and offer them the best sales experience to become the most trusted retailer through establishing a quality and fair price. The company adopted this to generate more sales from the targeted middle-income group (J Sainsbury’s, 2016). On the other hand, Ryanair’s objective is to offer a low-cost travelling experience for the customers and generate more sales, which help it develop a low price and high sales strategy to get a handsome profit it targets (Ryanair, 2016). However, both the companies are public limited companies that are registered in the stock market.

1.2 Different Stakeholders Impacting the Purposes of Two Companies

For Sainsbury’s, the primary stakeholders are the targeted middle-income group customers, the suppliers, the employees, and the owners. For Ryanair, these are the employees, customers, pilots, sellers of the aircraft, engineers, and shareholders. However, both companies are liable to the public, the government, and society (Wall, 2016). Competitors are also some stakeholders of any company as they also impact the business of a company.

Sainsbury’s needs to ensure the quality and environment-friendly business process that benefits society. In addition to that, the suppliers play a significant role as they supply quality products. In addition to that, the company’s employees, mainly, the salespeople are the key to success for the company as they need to keep in touch with and convince the customers (J Sainsbury’s, 2016). On the other hand, Ryanair is also dependent on the staff it has. It is a service-providing company that is heavily dependent on the performance of the company’s people for success. Moreover, both the companies, being public limited companies, are liable to the shareholders.

1.2.1 Point of View of Different Stakeholders for Ryanair

Different Stakeholders have different interests in the company; the customers usually want more service from the company for the price they pay. The service, from their perspective, has to be fair and consistent. On the other hand, the employees focus on modest payment and the other benefits. In addition to that, job security and career opportunities are critical to them regardless of many different factors (Wall, 2016). However, the company owners, of course, see the growth and dividend of the company as the foremost priority.

Government looks forward to collecting tax from the profit of the company. In addition to that, the government also takes care of the interest of the other stakeholders, including the society at large. Therefore, the role that is played by the government is also essential (Kotler and Keller, 2012). Some activist groups are concerned about the practices of the company.

1.2.2 Evaluation of the Influence of Different Stakeholder Groups

It is said by scholars that a company cannot fully satisfy all of the stakeholders. Therefore, the company needs to develop strategies that ensure that all the stakeholders are best served by the resources and its operations (Raich and Dolan, 2008). In addition to that, one major problem is a company has to manage its cost in paying the employees and improving the service. Therefore, a company like Ryanair has to face many challenges in making the stakeholders happy. So, finally, it can be said that the company’s existence is ensured through the ability to serve the stakeholders.

 

2.0 Organization of Business
2.1 Organization of Two Businesses

These two Businesses are organised in different manners. Firstly, Sainsbury’s is a business that comprises as many as 161 thousand people who are the primary source of the company’s success. Most of these people are the trained salesperson and leaders who ensure direct sales and better customer service for the company in getting more deals and retaining the customers (J Sainsbury’s, 2016). In addition to that, the company’s organisation can be flat because there are fewer levels but a wide span of control. For example, a sales manager in a shop directs many salespeople, and a regional manager leads many sales (line) managers.

On the other hand, Ryanair has a comparatively low number of employees; a few thousand. However, the company needs to hire many people in peak seasons and exercise a narrow and extended hierarchy. In addition to that, the company has pilots, stewards, cabin crews, and air hostesses to achieve the company’s objective by being involved in the service providing a company model (Ryanair, 2016).

 

3.0 Impact of Economic Environment on Business
3.1 Organization and Fulfilment of Purpose

The organisation is itself a part of the economic environment with a large number of people. For example, in Sainsbury’s, the salespeople and the managers are the keys who find ways to improve the sales and the services to the customers and keep the company dynamic. On the other hand, in Ryanair, it is seen that the people in the company, the crews, staffs and the pilots try to provide the customers with a safe journey experience at a low price and also tries to maintain a good reputation so that the company can generate more leads (Bourke, 2015). 

In addition to that, the employees and the structure of both companies try to ensure that they exercise effective leadership at different levels of the organisations to fulfil the organisational goal of growth and wealth maximisation.

 

4.0 Impact of the Economic Environment on the Business
4.1 Influence of Two Contrasting Economic Environments

Firstly, the two economic environments have been selected to be a boom in an economy and a trough resulting from the business cycle, as Keynesian economics suggests. In a crash, this company will have to compete with other companies such as Tesco, WB Morrison’s etc., to get a significant share of the money people spend from their pockets. In this situation, the expenditure of the people increases, and this is the best time to make a fortune. Therefore, the company’s main challenge is to beat the competitors and generate profit through more sales.

On the other hand, in a trough situation, the company needs to find ways to serve the customer with low price and high quality. At this time, people usually do not have money to spend on secondary things (Kerin, 2006). The company then needs to sell the inventory so as if everything it sells to the customer is necessary for him. Therefore, this situation is also challenging, and competitors try to adopt innovation. However, the retailing industry was one of the survivors of the double-dip recession.

4.1.1 Challenges of Selecting Business Activities in Two Different Economic Situations

The challenges in two different economic situations are other. In the boom situation, the challenges of selecting an activity are to focus on the competition and maximise the stakeholders’ wealth. It is associated with the ability to take the opportunities. In the trough situation, the company needs to generate sales in a challenging situation and make sure that the company does not go bankrupt. In such a situation, the challenge is to ensure survival.

4.2 Impact of Political, Legal, and Social Factors
4.2.1 Impact of Political, Legal and Social Factors on Two Contrasting Organizations

In the case of Sainsbury’s, it can be said that the company has to undergo many regulations. However, as the situation of the political environment in the UK is stable most of the time, the focus of the company is not to anger the people and abide by the rules and the regulations of the government. In addition to that, the company needs to comply with the regulations regarding the environmental concerns and the other compliance regarding the assurance of quality and payment of taxes (Raich and Dolan, 2008).

In the case of Ryanair, it needs to follow international rules and regulations. In addition to that, the company needs to abide by the laws and regulations in the aviation industries made by the government, who are the people’s political representatives. Finally, both companies need to ensure that they do business closer to society and understand the people’s sentiment.

In the case of the social environment, the companies need to know the pulse of the people and avoid doing anything that goes against the interest of the people. In addition to that, the companies do a lot of CSR that helps these company to maintain a good image in people’s minds.

4.2.2 Impact of Future Changes

For Ryanair, the time has come to enter the international market and make some changes in the price and the service. Firstly, these will put the company in the face of some new regulations from the international authorities and the governments. In addition to that, setting prices and tailoring the services will require the company to go through new rules. This will also concern the political people as they will see if these impact the people’s interest.

ON the other hand, doing this will reposition the company in the minds of the people of the society. It will change the way the company is used to interact with the people in the organisation. In addition to that, the company will be able to communicate with the international community, which is an opportunity for the company to generate more sales.

 

Conclusion

Business cannot be thought of without the environment that surrounds the industry. Moreover, the environment and the people acting as the stakeholders have a more significant influence on the industry. Therefore, the management must know the implications of the business decisions on the stakeholders and the environment for the company’s greater success.

 

 

 

 

 

 

References

Bourke, J. (2015). Ryanair targets 180 million passengers by 2024. [online] The Independent. Available at: http://www.independent.co.uk/news/business/news/ryanair-targets-180-million-passengers-by-2024-a6718856.html [Accessed 20 Apr. 2016].

Grant, D. and McLarty, R. (2001). Business basics. Oxford: Oxford University Press.

Investor.ryanair.com. (2016). Ryanair | Investor Relations. [online] Available at: http://investor.ryanair.com/ [Accessed 20 Apr. 2016].

J-sainsbury.co.uk. (2016). J Sainsbury plc / Business strategy and objectives. [online] Available at: http://www.j-sainsbury.co.uk/about-us/business-strategy-and-objectives/ [Accessed 20 Apr. 2016].

J-sainsbury.co.uk. (2016). J Sainsbury plc / Company overview. [online] Available at: http://www.j-sainsbury.co.uk/investor-centre/investment-case/company-overview/ [Accessed 20 Apr. 2016].

Kerin, R. (2006). Marketing. New York: McGraw-Hill/Irwin.

Kotler, P., Keller, K. and Manceau, D. (2012). Marketing management. Paris: Pearson France.

Raich, M. and Dolan, S. (2008). Beyond. Basingstoke [England]: Palgrave Macmillan.

Sharma, S. (2008). Service marketing. Jaipur: Paradise Publishers.

Wall, R. (2016). Ryanair’s New Strategy: Being Nice. [online] WSJ. Available at: http://www.wsj.com/articles/ryanairs-new-strategy-being-nice-1457862512 [Accessed 20 Apr. 2016].

Watson, J. and Watson, J. (2002). Business writing basics. North Vancouver, BC: Self-Counsel Press.

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