Business And Business Environment

Introduction

The business environment include all the factors that affect the business activity internally as well as externally. So the environment is consist of internal and external factors. Because a business is surrounded by these factors, so the environment should be favourable as per the business for performing efficiently and effectively. The report is based on Asda Stores Ltd. which is a retailer in British market.

As Asda Stores Ltd. is an organization, it is also influence by the business environment. It comes under public sector organization. This report describes the size, scope, structure and purpose of different types of organizations. It explains the interrelation of structure, size and scope of organization with the products and services providing by the organization. It also briefs about the link between functional department with the objectives and structure of the organization. In the given report, the influential factors of macro environment on business operations and its interrelationship with strength and weakness of business has also described.

TASK 1

1.1 Impact of Macro environment – Positive and Negative

Macro environment factors affect the businesses most. These are uncontrollable in nature and are not in the hands of businessman.(Teece, 2010) These can not be changed as per the need of the business. The business itself has to work according to the changing macro environment. This environment includes the following factors:

  • Political
  • Economical
  • Social
  • Technological
  • Legal
  • Environmental

The above mentioned factors are dynamic and not fixed. The business has to comply with these. As Asda Store Ltd. affected by macro environmental factors.

Positive impact: When everything is going very well and the factors of macro environment are in favour of the business like Asda Store Ltd. then the impact of macro environment is positive.
For example, policies made by the government are beneficial for the business, government is promoting the business in which Asda Store Ltd. is dealing with, then it proves good for the business, the interest rates are comparatively low so that loan can be taken easily, the climatic condition is favourable, etc (Cantwell, Dunning and Lundan, 2010).

Negative impact: The factors for macro environment affects negatively when they are not in favour. It may affects the profitability of the business. It may also happens that business have to face huge losses.(Iskanius, Page, and Anbuudayasankar, 2010)

For example, if taxation rates will be high then it will affects the profitability of the business, profit will go down, if government increases duties on imports, if interest on loan will go high then become difficult to take loan. This will negatively impact on the diversification and expansion plans of the business, etc.

Suggested: Business And The Business Environment | Along With The Organization

1.2 PESTLE model of Asda Stores Ltd. in reference to macro environment

The factors of macro environment affects the Asda Stores Ltd. which includes tax rates, interest rates, government policies, trade tariffs, changes in law, geographical changes, climatic conditions.(Xue, Shen, and Ren, 2010) These factors will affects the management of Asda in taking decision regarding expansion, diversification, modification etc. For analysing the macro environment factors, the managers of Asda has categorise these into following:

  • Political factor: Political factors include policies related to trading, corporate rate of taxation, employment law. As Asda is a large retail sector organization so the impact of taxation is more. If the rate will go up then the company has to pay more taxes and the profit will go down.(Chow, 2012) Company has to comply with the amendments in the employment law.
  • Economical factor: Economical factors are consist of interest rates, inflation, recession, foreign exchange rates, growth rate, business life cycle. If inflation rate rises then sales of the Asda will affect and go down.(Chavis, Klapper, and Love, 2011) When business is at the maturity stage then it should go for further expansion or diversification. If the interest rate is low them company can take loan easily for expansion or for any purpose.
  • Social factor: Social factors involves living standard of people, customs, traditions, welfare etc. With the changing trend in fashion Asda has to fulfil the requirements of the people in the retail sector so the customer are connected and may increase. Company has to cop-up with the societal changes in the competitive environment.
  • Technological factors: With the coming of advanced technology Asda can do better. It may happen that new form of techniques can emerge new form of products. It also focuses on IT sector which is now on boom.(Osterwalder, and Pigneur, 2010) Every business is going for online. Asda can also grow with the online business. So the customer can get their product easily.
  • Legal factor: All legal things come under this. The company must follow these otherwise any legal action can be taken against the company for the avoidance of law.(Wheelen, and Hunger, 2011)
  • Environmental factors: Under this factor company has to comply with the rules and regulation related with the environment. Asda stores has installed carbon reduction in its plant. They are also working for carbon emission while production.

If environmental issues were not taken seriously by Asda then it could have face the bad results for its reputation.

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Task 2

2.1 Internal and external analysis of Asda in order to Strengths and Weaknesses

Strengths:

  • Asda is having wide range of products and services.
  • It is popular for its marketing strategies.
  • Asda is continuously in contact with its customer through social networking.
  • It is complying with social responsibilities.
  • It has over 500 stores with more than 140000 employees. 

Weaknesses:

  • It does not having more global presence in comparing with other competitors.
  • Restricting in taking entry into few countries due to fear of competition with local seller. 

Internal analysis includes board members, managers, employee, workers, management, etc. These are the elements which affects the business internally. They are controllable in nature. The owner is having power on these.

External analysis includes customers, suppliers, competitors, debtors, stakeholders. The owner does not having power on these. Business is also affects by these elements.

2.2 Strengths and weaknesses interrelated with external factors

Strengths and weaknesses of Asda has discussed above, the strengths of the company interrelate with external factors can help to grow in the competitive environment. By doing Corporate Social Responsibilities(CSR) then political and legal factors will going to help. As it is having more than 140000 employees then it has to follow the legal requirements related to the employment law.(Aterido, Hallward-Driemeier, and Pagés, 2011) The weaknesses of the company relate with the external factors that it is lacking behind in global market. assignment writing

2.3 TOWS analysis of Asda in order to taking decisions

 

Strengths 

Weaknesses

Opportunities

Strengths

+

Opportunities

Weaknesses

+

Opportunities

Threats

Strengths

+

Threats

Weaknesses

+

Threats

Threats:

  • The changing policies of the central government.
  • Forcing for cut down the prices.
  • The price war among other retailers. 

Opportunities:

  • Expansion in the new fields of pharmacies, jewellery, opticians and photo department.
  • Start venture projects into markets which are growing like India, China etc.

Strengths:

  • Asda is having wide range of products and services.
  • It is popular for its marketing strategies.
  • Asda is continuously in contact with its customer through social networking.
  • It is complying with social responsibilities.
  • It has over 500 stores with more than 140000 employees. 

Weaknesses:

  • It does not having more global presence in comparing with other competitors.
  • Restricting in taking entry into few countries due to fear of competition with local seller. 

By doing the TOWS/SWOT analysis of Asda, managers are now able to take appropreate decisions regarding the future plans of the organization.

2.4 Impact of Macro and Micro factors upon Decision making

Micro Factors: Micro environmental factors include suppliers, resellers, customers, competitors, general public. These are the factors which affect the decision making. Manager has to consider above mentioned factors while taking decisions related to setting price of the product, customer's expectations, making of strategies etc.

Macro Factors: Macro environmental factors include political factors, economic factors, social factors, technological factors, legal factors, environmental factors. These are totally uncontrollable in nature.(Welford, 2013) So the manager must having proper understanding of these factors, which will going to help in taking important decisions. Like Asda is planning for further expansion so the managers should have proper knowledge of analysing the macro environmental factors.

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Conclusion

From the above report, it has been concluded that the purpose of organization depends upon its type and structure. Besides this, it can be inferred that the functional departments are based on the structure of the organization.

References

  • 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.
  • Cantwell, J., Dunning, J. H. and Lundan, S. M., 2010. An evolutionary approach to understanding international business activity: The co-evolution of MNEs and the institutional environment. Journal of International Business Studies.
  • Chavis, L. W., Klapper, L. F. and Love, I., 2011. The impact of the business environment on young firm financing. The world bank economic review.
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