Unit 1 Business Environment Copy Assignment

 

 

Program	Diploma in Business
Unit Number and Title	Unit 1 Business Environment
QFC Level	Level 4

 

This is a solution to the Unit 1 business environment copy assignment that describes about developing a business strategy can help a company cope with ageing systems and limited resources, which can lead to fragmented business solutions.

 

Part 1

LO 1

Explanation of different types, sizes and scopes of the organisation:
 

P1: Different types and purposes of organisations

There are different types of organisations:

• Sole trading organisation: As opined by Shetzer et al. (2014), the sole trading organisation is that kind of organisation that is entirely privately owned and maintained by a single person, and that person is liable for all of the loss and profits.

• Partnership organisation: Two or more people own a partnership organisation, and they share all of the losses and profits. For example, FAB.

• Limited organisation: A limited organisation is a kind of organisation in which the ownership can be easily transferred, and it is owned by the board of directors (Schiffer and Weder, 2010). For example, Associated British Foods Plc. To complete this assignment, the learner has selected one sole trader organisation and one Limited organisation. The name of the sole trader organisation is Zaffirson Food, and the name of the limited organisation is Associated British Foods Plc, related to food safety.

The purpose of the Zaffirson food (sole trading) is:

• Increase profitability

• Provide good quality and fresh food to the customers

• Maximise the sales revenue

 

On the other hand, the purpose of Associated British Foods Plc is:

• Strong and sustainable leadership position in the market

• Serve customers by providing fresh food items at low costs

• Offer different types of food items to the customers

 

P2: Size and scope of various types of organisations

The size of Associated British Foods Plc is built with more than 10000 employees. Along with that, their revenue is £12,800 million, and their operating income is £947 million. The scope of their work is to serve nationally as well as international customers with their different business segments like Grocery, sugar, ingredients, retail and agriculture (www.abf.co.uk, 2016). The size of Zaffirson food is built with only ten employees. Their revenue is £17000, and their operating income is £950.  Their scope of work is to serve different types of food and beverage items to the national customers and earn a huge profit from them.

M1: Analysing how the structure, size, and scope of various types of organisations are linked with business objectives and the products and services offered by organisations:

Structure, size, and extent of any organisation are connected to the goal of the business organisation. It is seen that any organisation sets a huge target as their objective only when they have a good organisational structure. If the organisation have few people in their organisational structure and no one has knowledge regarding their role and subordinates, then they can't reach the target because it is impossible to achieve a because without clarity in the role. On the other hand, any business organisation sets their objective based on its size. If the size of the organisation is enormous and invests huge money, then they set a big target as their business objective (Ward et al. 2011). However, every organisation has some common objectives that are serving customers and earning profit, but the profit level differs with the size. For example, Zaffirson food will set a small target as its objective, but Associated British Foods Plc will set a huge target as its objective. 

Organisations set their business objective by reviewing their business scope. If the scope of any organisation is to serve national customers, then they will set business objectives accordingly. On the other hand, if they see that they serve international customer, then they will set their business objective accordingly. According to the product and service, an organisation sets their structure, size, and scope. If any business organisation sees, their product does not require a massive organisational structure, then they do not set that. On the other hand, if the scope of business of any product or service is vast, only then does an organisation create a massive organisation and create a scope; otherwise, they create small small-sized organisation.

 

LO 2

Interrelationship between different functions within the organisation:

P3: Relationship between various organisational functions and their linking with the structure and objectives

As stated by Alan et al. (2013), organisational structures are dependent upon the business function of the organisation because organisations make their organization structure and objectives based on the role they serve to the customers. Associated British Foods Plc. Generates objectives so they can increase productivity in the organisation, and they create an effective organisational structure so they can maintain a respectable movement of command in their organisation. The business function of Associated British Foods Plc is to serve customers with their products and services and uphold uniformity as well as control in the organisation. Consistency can be maintained in the Associated British Foods Plc through actual amount of control and organisation can monitor their business operations through their structure (Ayyagari et al. 2012). Associated British Foods Plc can achieve better functionality if everyone connected with any project has a good knowledge of their role. Therefore, effectiveness in the setting of real objectives and organisational structure can help Associated British Foods Plc to achieve organisational functions because it helps employees to know their role effectively.

M2: Advantages and disadvantages of the interrelationships between various organisational functions and their impact on the organisational structure:

Advantages:

• Inter-employee relationships  amongst different organisational functions assist any organisation in maintaining cooperation

• It also fosters association among employees and increases effectiveness in business

• It is he profit level because every employee of various functional departments shares their information.

Disadvantages:

• Every employee from various branches knows the other job responsibilities and operations of other branches, so they can utilise this information to harm that branch

• It increases competition among different functional branches.

 

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Part 2

LO 3

Positive and negative impact of the macro environment factor on the operation of any business:

P4: Identification of the negative and positive impact of the macro environment on business operations:

As stated by Child and Möllering (2013), in the macro environment, new risks are always appearing, and it becomes harder to identify for any organisation. In the case of retail, it is not possible for any organisation to reject the changes as they arise, and they have to adapt to those changes. Macro environments include economic, societal, technological, and governmental influences. Technology has several active and negative impacts on business operations. Technological

Advancements can provide different business opportunities to the Associated British Foods Plc.. if they can take them. Technology opens home shopping networks, new retail markets, web-based retailers and other online markets and provides an extra online market to any organisation (Craig and Campbell, 2012). Therefore, it increases the point-of-sale to increase sales by allowing any organisation to process cash, debit and credit card systems. However, these technological advancements have one negative impact, i.e. online customers only select those organisations that have real technological proficiencies. If Associated British Foods Plc cannot apply effective technological advancements, then it can lose its competitive advantage. Law, policies, and different governmental regulations have a positive and negative impact on the business. If governments help Associated British Foods Plc by providing different governmental assistance, loans, and subsidies and assist them to establish their organisation, then it can positively help any organisation. On the other hand, tax rates on any corporate organisation may negatively affect any organisation.

A robust economy increases the disposable income of customers, increases their sales and helps them to sell more goods and services (Demirguc-Kunt et al. 2011). On the other hand, the lethargic economy may decrease the disposable income and cause less amount of spending in the market. After that, it leads to a declining level of sales and forces retailers to lower their pricing strategy. The retail industry is always under pressure to become a socially responsible organisation if they must sell environment-friendly products, remove controversial products from the market, place warranties in the market, etc. However, there are several cases where social factors and government overlap each other in different areas and may harm different organisations.

M3: PESTLE Analysis:

Political factor	As Associated British Foods Plc is operating around the globe (they are operating in Europe, Africa, China, UK, Portugal, Spain, Belgium, US and many more countries) so their performance them are highly influenced by the politics and legislations of those countries. To employ labourers, governments encourage organisations to hire employees by providing them a flexible, locally based and average-paid jobs (Fogel, 2011). Along with that, UK government has recently developed a tax that affects the operation of Associated British Foods Plc. In the year of 2011, the VAT rate of Associated British Foods Plc. Became 20% from 17.5%, which increases the revenue of 13 billion pounds but decreases the profit of the different organisations.
Economical factor	The UK economy is now showing positive signs from the inflation and economic crisis. In recent times, their GDP was estimated to be 2.7% higher than the previous year. Therefore, this growth results in the growth of Associated British Foods Plc. However, it will take some time to increase the monthly disposable income of the citizens, so it will take time to increase a growth in their revenue.
Socio-cultural factors	In recent times, the demand of the customers has also changed, and they have started to buy more fresh and organic food. Therefore, it is important for them to fill their store with organic products (Gabrieland Rosenthal, 2013). Recently, the number of elderly people is growing and due to their mobility issues, they like to buy groceries online, so it will be better for Associated British Foods Plc to have a good online strategy to meet their needs and earn a huge amount of profit. Along with that, they can develop a good catalogue with their diverse range of products.
Technological factors	Customers give more value to the present technology, so it is important for Associated British Foods Plc to give their attention to the efficient technologies. Due to the increasing number of e-shoppers, it is important to develop some effective internet activities so that technologies can attract customers. They should utilise different technologies like wireless devices, RFID, self-checkout machines, etc.
Legal factors	There are several legislative factors that directly affect the operation of Associated British Foods Plc. The Food Retailing Commission has implemented a policy that suggests a code of practice that bans different activities in food retailing (Keiningham et al. 2013). Therefore, this law directly harms the organisation.
Environmental factors	To be environmentally responsible, Associated British Foods Plc. Must reduce carbon footprint, emissions of different greenhouse gases, etc.

 

 

 

LO 4

Internal strengths and weaknesses of the business and their relationship with external macro factors:

P5: Internal and external analysis of the specific organisation for the identification of its strengths and weaknesses:

According to Mohamed and Lashine (2012), internal and external analysis of any organisation highlights different factors that affect any organisation. It is seen from the external and internal analysis of the organisation that one of the core strengths of Associated British Foods Plc is its diverse range of products. Internal and external analysis can help Associated British Foods Plc.. to identify its strengths and weaknesses, so it can reduce its weaknesses by developing different effective strategies.

Strengths:

• They are the leading market player with a diversified product range

• They have geographic diversification

• The company has a good corporate culture that increases the loyalty of both the customers and employees towards their organisation

• They have a huge, loyal customer base.

Weaknesses:

• They invest huge money in their one business, Allied Bakeries, but due to a smaller amount of investments in other businesses, they may suffer

• They are suffering from a limited liquidity position

• They are facing some problems in implementing some common norms and standards because they do not follow the national culture

 

P6: Interrelation of strengths and weaknesses with the external macro factors:

Strengths and weaknesses of the Associated British Foods Plc have direct contact with the business, and they can directly affect their business. On the other hand, macro environmental factors affect the performance, decision-making, strategy and working of the business. Strengths and the nearby environment in which the organisation operates, but macro factors affect the entire geographic region in which a firm operates (Montazemi, 2010). Therefore, if any firm does not perform well in the home country and has different weaknesses, then it may face several difficulties in achieving global success. Therefore, the organisation must make their internationalize strategy by reviewing its strengths and weaknesses.

If Associated British Foods Plc has strength in the national market, then the management of the organisation can take an immediate decision regarding their business based on that strength. On the other hand, if Associated British Foods Plc has several weaknesses, then the management should be alert to implement a different business strategy,  and for this reason, they may face difficulties in performing well (Schiffer and Weder, 2010).

M4: Application of SWOT/TOWS analysis and justification of it in decision-making:

SWOT analysis of Associated British Foods Plc.:

Strengths: They are very prevalent brands, so they now have high customer loyalty They have a wide assortment of business operations One of the leading market players They have geographic diversification This business has a strong tradition that helps the organisation to shape the commercial culture of the organisation and develop the loyalty of both the customers and employees.

Weaknesses: They have a problem with the limited liquidity position Heavy investments in the allied bakeries reduce the investments in other business subdivisions of the company. They have some problems implementing the common ethics as well as norms that mainly arise due to the lack of national cultures in different geographical areas.

Opportunities: They can capitalise on their future growth They can invest in biofuel production because there is enough possibility for growth There is a significant growth in the new markets Entering the new market can help them to enlarge their market share globally and increase the stability in their sales and revenues They can get a steady enlargement in their brand through a merger and acquisition strategy, and products or service diversification

Threat: Enlarged level of consolidation Changing demand of the customers and the financial crisis Cut in the sugar production of the European Union. Faces a threat due to the growing level of rivalry because due to international developments, and they are facing threats from different multinational organisations. They are facing threats regarding galloping prices for foods that diminution their performance in the market.

 

SWOT analysis is one of the subjective methods that are involved in trying to attain an objective. SWOT analysis also involves the specification of the objective and identification of the external as well as internal factors that are unfavourable and favourable for the achievement of the objective of Associated British Foods Plc..SWOT analysis can be utilised as one of the business tools that can help Associated British Foods Plc.. to take advantage of one's abilities, talents, as well as opportunities (Montazemi, 2010). SWOT analysis can help Associated British Foods Plc. Organisation to summarise and clarify the key issues and opportunities regarding any business, and helps the organisation to make decisions so that it can develop new objectives and strategies.  SWOT analysis helps any business organisation to maximise its strengths and minimise its weaknesses so they can take opportunities from the market and decrease threats.
 

D2: Reflection of macro and micro factors on business objectives and decision-making:

From the external and internal factors, it is clear to me that Associated British Foods Plc has a strong strategic position and has a good set of loyal customers, so they can easily enter the new market. Along with that, they also have loyal employees, and the switching rate among employees is very less, so they can expand their business in different geographical regions. I have seen that they are operating in the market with five businesses that are Grocery, sugar, ingredients, retail and agriculture. Therefore, it is clear that they have an effective product differentiation strategy, and along with that, they follow a price differentiation strategy so they can easily grab the customers not only from the UK but also from other organisations. However, I have seen that during their operation in different countries, they have faced a wide range of competition from other organisations and along with that, different political and legislative factors of those countries affect their business in greatest extent.

I have recognised that Associated British Foods Plc has a good source of revenue because they have so many businesses, but they are suffering so much during their expansion due to tax rates, FDI from different countries. I know that in different countries rate of tax is different; in some countries, corporate tax positively influences any organisation and gives them handsome opportunities to do their business. However, in some countries government charge a huge amount of money as tax, so businesses in that country may suffer. During the inflation and economic crisis, different countries responded differently; some of the countries have recovered, but some of the countries have not. Therefore, I have gained the knowledge that monthly disposable income is different in different countries. Therefore, according to my knowledge, Associated British Foods Plc. Must invest in a different country by reviewing the monthly disposable income of the customers in that country. I have seen that Associated British Foods Plc has a business opportunity in different new markets, so they can invest money in new markets, but they must consider the culture and society before investments, because different countries have different cultures and different people like different types of products and pricing strategies. People from some developed countries want a high-quality product, while people from some countries want to get the product at a low price. On the other hand, some people want to get a superior quality product at a low cost. It is seen that Associated British Foods Plc does not have effective representation on the web, and they do not have effective technological advancements. Therefore, according to me, it is important for them to increase technological advancements in the organisation to attract the e-shoppers. I have recognised from the analysis that Associated British Foods Plc is an ethical and socially responsible organisation, but to grab the attention of the ethical customers, they can increase their sensitivity regarding the environment. According to me, every organisation must follow all of the laws implemented by the government, even if it incurs some loss. In this case, Associated British Foods Plc. Must follow all of the law.

 

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Reference list

 

 

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