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.

 

LO 1: Organisation types, sizes, and scopes Understanding

P1: Diverse Classifications and Organisation Functions

Organisations do show significant heterogeneity in structure and basic objectives. The primary categories are as follows:

Sole Trading Organisation: This organisation belongs to and is controlled by an individual. The owner is directly answerable for all the profits, losses, and liabilities incurred by the business. Shetzer et al. (2014) claim that this direct linkage between the owner and business financial outcomes is the inherent characteristic. For instance, Zaffirson Food is a sole trading organisation. Its main aims are to improve profitability, deliver fresh and quality food to customers, and achieve maximum sales revenue within the operating constraints.

Partnership Organisation: Two or more individuals own and operate the business collectively in a partnership. They share all the profits and losses according to the partnership deed. An example provided is FAB.

Limited Organisation: A limited organisation can be defined as a distinct legal entity from its owners, typically in the form of a corporation. Transfer of ownership is relatively easy, usually done by transferring shares, and control is by a board of directors. The owners' (shareholders') financial risk is limited to the amount of their investment in the organisation. Schiffer and Weder (2001) define the impact of the size of the firm, usually associated with limited organisations, on the landscape of their operation. Associated British Foods Plc (ABF) is a clear example of a limited organisation in the food safety sector. ABF's goals are broad, seeking to build a leading and sustainable market position, offering customers fresh foods at competitive prices, and with a large range of food products.

 

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: Range and Dimensions of Various Types of Organisations

Organisations differ in size and impact based on their category and strategic goals.

Associated British Foods Plc (ABF) is a large firm. The firm has over 10,000 employees, an annual turnover of £12,800 million, and an operating profit of £947 million. Its business coverage is extensive, selling to local and international consumers in various business segments, i.e., Grocery, Sugar, Ingredients, Retail, and Agriculture (www.abf.co.uk, 2016). Its extensive business coverage allows ABF to cater to many markets and earn multiple revenue streams globally.

Conversely, Zaffirson Food is a small sole proprietorship business. It has ten workers, generates approximately £17,000 in turnover, and has an operating profit of £950. Its range of operations is more localised, focusing on national consumers with various food and drink products, aiming to be profitable in this defined market.
 

M1: Analysis of the Interrelationship among Organisational Structure, Size, Scope, Business Objectives, and Product/Service Lines

The size, scope, and Organisation structure of a company are automatically synchronised with its corporate objectives as well as the products or services it offers.

An effective organisational structure is necessary for the realisation of lofty objectives. When an organisation has a clear hierarchy and well-defined positions, where employees understand their responsibilities and chain of command, it is in a better position to work productively towards major objectives. However, a vague structure with unspecified positions hinders the accomplishment of objectives, making it hard to achieve even small objectives.

Similarly, size influences the business ambition of an organisation directly. More ambitious are the goals of larger organisations with substantial capital expenditures. Although fundamental goals like pleasing customers and making a profit are universal, the scale of desired profit varies significantly with size. Zaffirson Food, for example, shall have a modest profit goal commensurate with its modest size, but Associated British Foods Plc, with its colossal size, shall aim at a much larger profit.

The operational scope of an organisation has a significant influence on its business goals. An organisation dedicated to national clients will frame its goals based on the domestic market. Conversely, where its operational scope is international in nature, the goals will become complex and globally focused with regard to multiple market forces.

In addition, the organisational scope, size, and nature are significantly affected by the company's products and services. If a product or service requires minimal organisational complexity or small-scale operations, the company will have a lesser, less complex setup. However, if the business scope for a product or service is large, with extensive market interaction and intricate operating procedures, the company will be larger and more complex to address that need and tap market potential. Such a relationship guarantees harmony between operating capabilities and market opportunities.

 

LO 2: Interrelationship Between Various Organisational Functions

P3: The Interdependence of Different Organisational Functions and Their Relationship to Structure and Aims

Organisational structures primarily depend on different business operations conducted by an Organisation. Organisations map out their structures and set goals in relation to the functions they serve to their customers and internal functions. As highlighted by Wahyuni and Sara (2020), it is critical to understand the interrelationship among functions in order to achieve successful business results.

Associated British Foods Plc is a good case of the establishment of goals that are centred on Organisational productivity improvement. In the pursuit of this goal, it establishes a robust Organisational structure geared towards ensuring there is a clear chain of command and control existing in its operations. The prime business function of ABF is to offer customers its array of products and services, offering consistency and control in its various sectors. The realisation of consistency in operations and effective monitoring of business activities is facilitated by a clearly defined structure with a corresponding level of control, as outlined by Alves and Martins (2025) in reference to the business environment and incorporation.

For Associated British Foods Plc to operate at maximum efficiency, it is important that all employees participating in a project know their role as assigned and what responsibility comes with it. Therefore, the establishment of clear goals and an effective Organisational structure is essential to facilitate ABF in performing its Organisational activities successfully, as these elements provide the employees with clarity regarding their roles and contributions.
 

M2: Advantages and Disadvantages of the Interrelations between Various Organisational Functions and Their Impact on Organisational Structure

The interactions between different Organisational functions pose significant advantages as well as potential disadvantages, directly affecting the overall structure and effectiveness of the Organisation.

 

Advantages:

• Augmented Collaboration: Close employee-to-employee relationships among workers in different functional departments create a collaboration spirit. This collaboration is critical in guaranteeing seamless operations and concerted problem-solving throughout the Organisation.
   
• Improved Business Efficiency: These relationships among staff result in improved efficiency in business operations. When departments work and communicate effectively, processes are streamlined, and overall productivity is enhanced.
   
• Increased Profitability: The exchange of information and knowledge between employees across functional departments can lead to improved decision-making, improved innovation, and ultimately a higher profit margin for the Organisation.

 

Disadvantages: 

• Risk of Misappropriation of Information: Too much knowledge of employees from various functional departments about the activities and functions of other departments may result in the risk of such information being misused or misappropriated, or used inappropriately and thereby become a risk for the integrity of the respective department or the organisation in general.
   
• Increased Internal Competition: Healthy competition may be good, but excessive intra-departmental knowledge at times may increase competition among various functional departments. This may result in thinking in silos, less cooperation, and working towards departmental goals at the expense of overall Organisational goals.

 

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LO 3: The Impact of Macro Environmental Factors on Business Operations.

P4: Critical evaluation of the positive and negative impacts of the macro environment on business operations

The macro environment, involving vast societal forces, continuously brings new risks and opportunities that organisations must identify and adapt to. As the authors Child and Möllering (2003) elucidate, organisational resilience in adapting to such changes is imperative, especially in fast-changing industries like retail. Macro environmental factors include economic, societal, technological, and governmental factors, each of which is critical in terms of shaping business operations.

Technological advancement has both positive and negative impacts. Positively, it provides a range of business opportunities to Associated British Foods Plc. Technological advancement has revolutionised the retail sector by enabling home shopping networks, creating new internet-based retailing markets, and providing web-based platforms (Craig & Campbell, 2012). Technological advancement expands the sales channels of ABF, improves points-of-sale, and facilitates easy processing of cash, debit, and credit card payments. On the other hand, the expectation of technological proficiency by online customers is increasing. If ABF fails to embrace advanced technological solutions, then it will lose its competitive edge to technologically superior competitors.

Government laws, policies, and regulations also have dual impacts. Government assistance in the form of loans, subsidies, and facilitative policies for establishment can significantly add to the growth and functioning of ABF. Conversely, oppressive taxation of business organisations, like the VAT increase burdened on ABF in the UK, can adversely affect profitability and business performance.

A robust economy would typically be desirable, leading to high disposable income for consumers, and therefore to high sales and to inducing the buying of more goods and services (Demirgüç-Kunt et al., 2006). A sluggish economy, however, reduces disposable income, which causes lower market spending, declining sales, and forces retailers like ABF to adopt lower prices, which could impact their margin of profit.

The retail industry is always under pressure to be a socially responsible company. This will mean selling environmentally friendly products, divesting from scandalous products, and guaranteeing products. But where social considerations and government regulations overlap can be complex challenges and even threaten organisations if not approached carefully.
 

M3: PESTLE Analysis A PESTLE analysis is a comprehensive framework for analysing the external macro-environmental drivers that influence Associated British Foods Plc.

 

Political Factor	Since ABF is a multicountry organisation with its operations spread across many countries (Europe, Africa, China, UK, Portugal, Spain, Belgium, US, etc.), its performance is extremely vulnerable to the political stability and legislative environment of these countries. Governments can create jobs through flexible, locally oriented, and average-wage employment strategies (Fogel, 2011). But legislative manoeuvres, like the VAT rate hike by the UK government from 17.5% to 20% in 2011, can hugely affect ABF's profitability, though it can raise tremendous revenues for the government.
Economic Factor	The UK economy is currently displaying strong indications of economic and inflation crisis recovery, and recent GDP estimates have indicated a 2.7% increase from last year. This is a welcome sign for ABF. But the economic recovery is not necessarily reflected in the form of higher monthly disposable income for the masses at all times, and therefore, the corresponding increase in revenue for ABF may not necessarily follow instantly.
Socio-cultural Factors	The most recent shift in consumer behaviour is a movement towards organic and fresh food products. In order to cater to this need, it is necessary that ABF make sure that its stores are well-stocked with organic food products (Gabriel & Rosenthal, 2004). Further, the growing ageing population, which normally has mobility issues, is demonstrating a high preference for online shopping for groceries. ABF might bank on this trend by creating a robust online strategy and a robust digital product catalogue to cater to their needs and gain reasonable profits.
Technological Factors	Consumers increasingly appreciate technological efficiency. Thus, ABF needs to focus on undertaking and investing in new technologies. As the number of e-shoppers increases, it is important to develop successful internet activities in order to attract and retain customers. ABF can use different technologies, such as wireless equipment, RFID for controlling inventories, and self-checkout counters to improve customer satisfaction and operational effectiveness.
Legal Factor	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 Factor	To exhibit environmental stewardship, ABF needs to be dedicated to minimising its carbon footprint and greenhouse gas emissions. This is in line with increasing consumer and regulatory pressures demanding sustainable business.

 

LO 4: Internal Strengths and Weaknesses Analysis against External Macro Environmental Factors.

P5: Internal and External Analysis to Determine the Strengths and Weaknesses

The internal and external analysis of an organisation, typically from a SWOT analysis, must be done to ascertain the determinants of its performance. As succinctly put by Mohamed and Lashine (2012), such an analysis brings forth the prevailing internal traits and external determinants that affect a business. For Associated British Foods Plc, its diversification of products is seen as its key strength, and the company can plan strategies that leverage its strengths while attempting to steer clear of its weaknesses.

 

Strengths of Associated British Foods Plc:

• Market Leadership and Product Line Diversification: ABF enjoys a market leadership role typified by a comprehensive and diversified product line that sufficiently addresses a broad spectrum of consumer tastes without relying on a single product category.
   
• Geographic Diversification: Having operations in different countries gives ABF protection against economic decline in one region and exposure to different markets.
   
• It boasts a strong corporate culture that induces loyalty between its personnel and clients, thus eliciting lasting connections and stability.
   
• Large and Loyal Customer Base: Possessing a large client base that is loyal guarantees a steady stream of revenues and acts as a deterrent to potential competitors.

 

Weaknesses of Associated British Foods Plc:

• Overinvestment in Allied Bakeries: Excessive investment in a single business segment, Allied Bakeries, can constrain investments that might be needed in other potential business subdivisions, which can restrict their growth and overall portfolio balance.
   
• Limited Liquidity Position: A limited liquidity position may hinder the company's capability to act swiftly in reaction to financial opportunities or unexpected adversity.
   
• Problems in the Implementation of Universal Norms: Equal implementation of shared ethical rules and principles in different geographic areas may be problematic due to incompatibility with local national cultures, potentially resulting in operational inefficiencies or reputational problems.

 

P6: Interaction of Strengths and Weaknesses with External Macro Factors

The internal attributes of Associated British Foods Plc, like its strengths and weaknesses, are important in its operational effectiveness and decision-making. Macro environmental factors are more extensive forces that affect the operation of companies in a specific geographical location. Montazemi (1988) found the influence of outside forces on organisational performance.

Thus, a company's internal health is central to how it can deal with the external environment. For instance, if ABF shows weakness in domestic operations, it would likely face increased difficulty in becoming successful abroad, regardless of the opportunities abroad. This makes it imperative that there be a strategically guided internationalisation plan that closely analyses the firm's existing strengths and weaknesses.

If ABF is firmly established and possesses well-documented strengths within its native market, then its management can draw on these strengths to make bold and rapid business decisions. If, however, ABF is beset by various internal weaknesses, then its management must approach new business strategies with a degree of caution. These weaknesses can be set to undermine effective performance, thus making it increasingly challenging for the firm to capitalise on outside opportunities or counter threats, as Schiffer and Weder (2001) recognise in outlining the interaction between firm characteristics and the business environment.
 

M4: SWOT/TOWS Analysis and Rationale Implementation in Decision Making

 

A SWOT analysis provides a vital framework for Associated British Foods Plc to systematically evaluate its internal strengths and weaknesses and external opportunities and threats, thus enabling strategic 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.

 

Increased food commodity prices can reduce profit margins and affect consumer affordability and consequently affecting the performance of the market. Reasons for SWOT Analysis in Decision-Making: SWOT analysis is a strategic instrument of primary importance to ABF because it enables the realisation of organisational goals through objective evaluation of internal and external circumstances. SWOT analysis defines concrete objectives while, at the same time, defining internal strengths and weaknesses and external opportunities and threats that are either beneficial or harmful to the realisation of objectives. According to Montazemi (1988), SWOT analysis enables an organisation to be in a position to leverage its strengths and opportunities. To ABF, the model defines major problems and opportunities, thereby enabling the formulation of new objectives and strategies. Fascinatingly, SWOT analysis enables the business to maximise strengths, minimise weaknesses, capitalise on market opportunities, and counter potential threats, hence enabling more strategic and informed decision-making processes.

 

D2: Reflective Account of Macro and Micro Influences on Business Goals and Decision-Making

When both the external and internal factors are taken into consideration, it is evident that Associated British Foods Plc (ABF) has a strong strategic position. Its stable customer base of loyal customers reflects a positive growth capability in other regions. Furthermore, a committed team with low employee turnover also facilitates business expansion in other geographic locations. My research suggests that ABF has five individual business segments, namely: Grocery, Sugar, Ingredients, Retail, and Agriculture. This diversified portfolio clearly demonstrates an effective product differentiation strategy. Moreover, their use of a price differentiation strategy enables them to capture a broad customer base, both locally in the UK and globally.

However, in its international operations, ABF has been confronted with severe challenges originating from intense competition in the majority of nations. Further, some of these nations have had various political and legislative challenges that have significantly affected their operations. It is indicated that despite having various sources of revenues due to its diversified operations, its expansion initiatives are largely faced with challenges resulting from inconsistent tax rates and Foreign Direct Investment (FDI) policies in various nations. Corporate tax, in some areas, will offer positive incentives, hence offering high prospects, while excessive government taxation in others will substantially limit business expansion.

The different responses displayed by nations in coming out of inflation and recessions, with some nations emerging from the two quite rapidly, while others do not, are attributed to different monthly disposable incomes among nations. This means that ABF must be cautious to deciding on the disposable incomes of the consumers in target countries before investing. ABF is well geared to grow into new markets. However, before investing, one should research and know in detail the social and cultural nuances of such nations. Cultures react differently to products and price policies; for instance, individuals in developed economies would focus on high-quality products, while individuals in other places would focus on low prices, and some would look for superb quality at reasonable prices.

One of my major findings is that ABF enjoys a relatively limited online presence and suboptimal technological innovation. To be effective in communicating with the rising population of online consumers, it is necessary for ABF to greatly improve its technological infrastructure and virtual engagement. In addition, I have discovered that ABF is a morally and socially responsible organisation. In order to increase its appeal among consumers who place importance on ethical considerations, the organisation needs to increase its awareness of environmental impacts. Lastly, all organisations, including ABF, need to comply with all applicable government regulations, even when such compliance causes short-term financial disadvantages, because adherence to regulatory guidelines is paramount to achieving long-term sustainability and upholding reputation.

 

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