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Businesses are becoming complex day by day because different types of organizations are offering diverse products and services which is becoming the business world complex for the organizations. The business environment is becoming complex day by day and as a result it the businesses needs to manage all the things effectively (Adeosun, and Shittu, 2021).
This report will focus on explaining different concepts related to the business and business environment. This report is being divided into two different parts among which the first part focuses on explaining the types of businesses. The businesses can be classified into different types based on the objectives, size, and scope. In the present report, the researcher would offer better knowledge related to the types of businesses and will discuss the similarities and differences among these businesses. Along with this, the report will also focus on explaining the different concepts related to the types of businesses in detail.
In the second part of the report, the researcher would focus on explaining the impact of the different factors of the macro-environment on the business operations. The report will also focus on analyzing the internal strengths and weaknesses of the company in detail. The research report will focus on conducting a detailed analysis of the internal and external business environment in which the company is operating with the help of better evaluation tools.
The report will analyze the business environment of the company by applying SWOT and PESTLE analysis on the company and later on will develop TWOS evaluation for recommending the company that how they can bring changes in the company and can use their strengths and opportunities for leading the firm towards success and development. For explaining all this the Tesco which is a multinational retail company in the UK would be considered as a case company.
Part One: Blog- Different Types Of Businesses
Lo1 Different Types, Sizes And Scope Of Organisations
The businesses can be classified on the basis of different parameters. Businesses are being generally classified on the basis of the ownership and the size of the business and the businesses are being classified on the basis of these parameters in detail below:
Types of Businesses on the basis of ownership
On the basis of ownership, the businesses can be broadly classified into three different types which are explained below in detail such as:
Public organization: The businesses which are being owned by the government are being termed as public organizations and the major objective of these types of businesses is to offer high-quality products and services to the public. These type of businesses are generally the non-profit organizations which are not working for generating profit because these firms are run by the taxes collected by the government and they are working for offering different types of services to the public such as healthcare, education, transportation, and others. If we consider NHS as an example that it is a public organization that offers healthcare services to the public. The vision of the company is to improve the health and well being of the peoples and to offer high-quality healthcare facilities to all.
Private organizations: these types of businesses are owned by individuals or groups and the main purpose of these types of businesses is to generate higher profit (SANTOS, et. al. 2018). These types of businesses are having a well-defined organizational structure and need to work in a legal and appropriate manner while considering the benefit of all the stakeholders. The private organizations can be small scale, medium scale, or large scale organization and these firms are having stakeholders which include their customers, suppliers, investors, government and the stakeholders as well. For example, Greenergy is a privately owned company operating in the UK and is a fuel supplier.
Voluntary Organisations: the businesses which are being owned by the volunteers are being referred to as the voluntary organizations and these types of businesses are the non-profit organization which is offering services for the welfare of the society. These types of businesses are working for the welfare of society and these firms run from the funds collected from donations and charity (Malik, et. al., 2017). For example, Save the children is a voluntary organization operates in the UK which is working for saving the children and offering a better life to the children.
Type of businesses on the basis of size
If we classify the businesses on the basis of size then there are three types of businesses which are explained below in detail such as:
Small Businesses: small businesses are the businesses which are having a lesser number of employees in the company approx. 10-50 employees in the company. These types of small businesses are generally owned by single individuals and are privately owned businesses that aim at earning profit (Hillary, 2017). For example, CafePod Coffee Co. is a coffee business that is offering coffee to its customers and is having a unique idea for offering coffee to their customers. This company is working at a small scale but is having a better scope to expand more if the company gets better revenue and works effectively in the market.
Medium Businesses: medium-size businesses are the one which is having around employees between 50-250 and these types of businesses are generally owned by single individuals or is in partnership. These types of firms are profit-oriented businesses that are working for generating better profits. Example: Verdant Leisure is a holiday park company which is a medium-sized company and operates in the UK.
Large Businesses: the large size businesses are the ones which are having more than 250 employees in the company and they operate at a large scale. These types of businesses are operating at the national or international level and work for generating higher revenue for the company and add value to the economy of the country as well (Dias, et. al., 2019). For example, Tesco one of the largest retailers in the UK is a large-scale company that is offering a wide range of products and services to customers across the globe.
Lo2 Interrelationship Between Organisational Functions And Structures
Relationship between different organizational functions and organizational objectives and structure
The effectiveness of the company depends on the ways in which the company is managing the business operations and delivering high-quality products and services in an effective manner. For managing the business operations in an effective manner it is important for the company to focus on managing all the different business functions efficiently. It is important for the company to have well defined organizational structure so that all the employees of the company should have clear roles and responsibilities and if all the individuals would perform their roles in an effective manner then it will have a positive impact on the business performance (Joseph, and Gaba, 2020). Business needs to do different business functions such as marketing, sales, operation management, strategy formation, finance and human resource management for which the should have diverse departments. The company needs to have a different department and all the departments should have clear roles and responsibilities assigned to all the employees belonging to the particular department and all should work in a systematic manner.
Different departments of the company have different functions to do for instance the human resource management of the company needs to manage the business operations in an effective manner. Then the finance department is responsible for managing all the financial resources of the company then the marketing department needs to manage all the marketing functions of the company and is responsible for doing effective marketing of the products and services offered by the company (El Talla, et. al. 2018). All the different department needs to work in an effective manner and needs to create better interconnectivity among all the departments of the company which would help them in managing all the business operations in an effective manner and leading the firm towards success and development.
Advantages and disadvantages of the interrelationship between organizational functions and their impact on organizational structure
For running the business in an effective manner it is important for the company to focus on developing a better interrelationship between the organizational functions of the company and between the organizational structure of the company. One of the important advantages of having a better interrelationship between organizational culture and structure is that it develop effective communication, cooperation, and collaboration among all the different departments of the company and all the employees working in the organization. When the company is having better cooperation and collaboration then it would help the businesses in working effectively towards the aims and objectives of the company and lead the company towards success and development (Omondi, et. al. 2017).
Along with this better interconnectivity and relations help the company in improving the overall performance of the company. In contrast to this if we consider the disadvantages of the interrelationship between the different department of the organization increases the risk of conflicts among the employee increases and this would have a negative impact on the organizational culture and employee behavior in the company which leads to a negative impact on the performance of the company. It can be said that it is important for the company needs to focus on managing healthy and positive relations between the organizational structure and functions and also among all the employees of the company belonging to all the different departments.
Complexities of different types of business structure and types of organizational functions
Defining all the business functions clearly as per the organizational structure is important for the businesses because if the roles and responsibilities are not clearly mentioned to the employees of the company then it would create issues and complexities for the management in managing the firm in an effective manner. It can be said that the different departments should work effectively as per the roles assigned to them and the subsections and the department should also have clear roles which are required to be performed by the company (Dedahanov, et. al., 2017). If all the different departments work in an effective manner then the firm can work in an appropriate manner.
Task Two: Written Report Swot And Tows
This section of the report focuses on explaining how the different factors of the business environment are having an influence on the businesses operating in it and how the businesses need to react to these factors. The business environment analysis of the case company is being described below in detail.
Lo3: Impact Of Macro Environment On The Business Operations
The external business environment in which the company is operating is having both positive and negative impacts on the company and the business operations and it is important for the businesses to focus on analyzing the macro environment in an effective manner. In the present study, the researcher would focus on applying the PESTLE analysis for analyzing the external business environment of Tesco and how the different factors of the external business environment are affecting the company (Perera, 2017). PESTLE analysis is an effective tool that is used by the majority of businesses for analyzing the external business environment in an effective manner. This model focuses on analyzing how the six different factors of the macro-environment are affecting businesses. PESTLE analysis for the case company is mentioned below such as:
Political Factors: the case company is operating at an international level and as a result of its political stability and all the different factors of the political environment of the company are having an higher influence on the case company. Brexit is one of the most important political events which had affected all the businesses operating in the UK and the retail sector is also highly affected due to Brexit (Hoinaru, and N?stase, 2019). Along with this the tax policies of all the different countries in which Tesco is operating are also having a significant impact on the business operations of the company. The case company is generating better job opportunities and also adding value to the economy due to this reason the government supports the company.
Economic Factors: the economic factors of the country in which the company is operating are having a significant impact on the businesses operating in the county. The stable economic growth of the UK is supporting all the businesses in growing and operating in an effective manner and generating higher profits as well. But in the present era of the COVID-19, the world is facing an economic crisis and as a result, businesses are also facing the negative impact of it. Along with this, the exchange rates are also affecting the case company and due to the economic crises, the spending is also decreasing which is affecting the sales and profitability of the company (Adamyk, 2019).
Social Factors: the society in which the company is operating is also having a significant impact on the businesses. The buying patterns of the customers, buying pReferences, income level, and the shifting customer preferences and trends are having a direct impact on the sales of the products and services offered by the company. Tesco is focusing on bringing innovation in the products and services offered by them and are focusing on satisfying the needs of the customers which is helping the company. In the current era of COVID-19, the customers are more concerned for their safety, and for this, the company is ensuring the customers that they are focusing on all the safety measures while offering the products and services (Soon, et. al. 2021).
Technological Factors: technological factors also play an important role in the success of the company. Tesco is a technologically advanced company as it is investing better capital in the research and development department for bringing better innovation in the company. In the digital era, the company is making effective use of social media platforms for marketing and is also offering products and services to customers through an online mode of shopping (Jones, and Comfort, 2020).
Legal Factors: the legal factors are having a greater impact on the company as the organization needs to focus on all the rules and regulations made by the government because if the company does not follow the legal rules made by the government then the government would take legal action against the company (Adamyk, 2019). The case company needs to focus on all the rules and regulations related to the customers' protection, employability, discrimination, and all the other rules related to the employees, customer, and the entire society to which the products and services are offering.
Environmental Factors: the case company needs to focus on all the environmental rules and should develop effective CSR activities which can help them in reducing the negative impact of business operations in the environment. Tesco is having effective strategies for reducing their carbon footprints and they are also working for minimizing the usage of non-renewable sources of energy and non-renewable plastic and they are also focusing on renewable products. Along with the company is also recycling, it can be said that the company had taken better initiatives for protecting the environment.
Lo4: Internal Analysis Of The Case Company
Swot Analysis Of Tesco
The internal analysis of the company is important for developing effective business strategies and for leading the company towards success. If the company is having better knowledge related to their strengths and weaknesses, then it would help them in managing the factors of external factors in an effective manner (Gürel, and Tat, 2017). SWOT analysis is one of the most appropriate tools for analyzing the business environment of the company, SWOT analysis of Tesco is mentioned below as:
Strength: the effective market presence of the company is an important strength of the company. Along with this the product differentiation strategy and offering products and services from both online and offline are the important strengths of the company. Effective supply chain, better technological advancement, and better financial resources are also considered as the strength of Tesco (Fatricia, 2017).
Weakness: if we consider the weakness of the company then the errors in the financial records of the company and the issues related to the frauds are a weakness of the company. Along with this the low-cost strategy of the company is also a weakness of the company and poor performance of the company in some of the market is the weakness for the company.
Opportunities: one of the biggest opportunities for the case company is to expand by entering the new markets for doing trade and the company can easily enter into new markets by forming joint ventures. In the present era of COVID-19, the case company is having a better opportunity to expand its online shopping service and this would help the company in increasing the sales (Rosnizam, et. al., 2020).
Threats: competition from the biggest competitors is an important threat for the company. Along with this, the company is also facing threats from the rules and regulations made by the government related to the products and services offered by the company.
The interrelation between strength and weakness of the company and external macro factor
Both the internal and external factors of the company are interconnected with one another and if the company analyses the strengths and weaknesses in an effective manner then it helps the company in developing better strategies for the company. Along with this if the strategies are being conducted on the basis of the internal analysis then it would help the company in minimizing the negative impact of some of the external business factors in an effective manner.
Developing business strategies on the basis of the business environment analysis
Businesses need to develop effective strategies on the basis of the business environment analysis. TWOS analysis is an effective tool that is used by businesses for developing better strategies on the basis of the internal analysis of the company (Gottfried, et. al., 2018). TWOS analysis for the case company is mentioned below:
TWOS MATRIX FOR TESCO
In the above-mentioned report, the researcher had provided detailed knowledge related to the different types of businesses in detail. Along with this, the report had analyzed the business environment in an effective manner in the context of the case company Tesco and then had also prepared the strategies on the basis of the analysis which can help the company in gaining advantages and leading the firm in an effective manner. It can be concluded that the above-mentioned report had provided better knowledge related to the businesses and the business environment in detail.