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Diploma in Business
Unit Number and Title
Unit 1 Business Environment
This is a solution of unit 1 business environment copy assignment that describes about Developing business strategy can help company cope with aging systems and limited resources that can lead to fragmented business solutions.
Explanation of different type, size and scope of the organization:
There are different types of organizations are:
Purpose of the Zaffirson food (sole trading) is:
On the other hand, the purpose of Associated British Foods Plc. is:
The size of Associated British Foods Plc. is built with more than 10000 employees. Along with that, their revenue is £12,800 million and operating income is £947 million. The scopeof 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 type of food and beverages items to the national customers and earn a huge profit from them.
M1: Analyzing how structure, size, and scope of various types of organization are linking with business objectives and the products and services offered by organization:
Structure, size, and extent of any organization are connecting with the goal of the business organization. It is seen that any organization set a huge target as their objective only when they have a good organizational structure. If the organization have few people in their organizational structure and no one has knowledge regarding their role and subordinate then it is not possible for them to reach the target because then it is impossible to achieve this because of less clarity in the role. On the other hand, any business organization set their objective based on theirsize. If the size of the organization is enormous and invests huge money, then they set the big target as their business objective (Wardet al.2011). However, every organization has some common objective that is serving customers and earns profit, but the profit level differs with the size. For example, Zaffirson food will set a small target as their objective but Associated British Foods Plc. will set the huge target as their objective.
Organization set their business objective by reviewing their business scope. If the scope of any organization is to serve national customers, then they will set business objective accordingly. On the other hand, if they see that they serve international customers then they will set their business objective accordingly. According to the product and service, an organization set their structure, size, and scope. If any business organization seesthat, their product does not require massive organizational structure; then they do not set that. On the other hand, if the scope of business of any product or services is vast only then an organization creates massive organization size and creates a scope, otherwise, they create small sized organization.
Interrelationship between different functions within organization:
As stated by Alanet al.(2013),organizational structures are dependent upon the business function of the organization because organizationalways makes their organization structure and objective based on the role they serve to the customers. Associated British Foods Plc. Generatesobjectives so they can increase productivity in the organization, and they create an effective organizational assembly so they can maintain a respectablemovement of command in their organization. Business function of Associated British Foods Plc. is to serve customers with their product and services and upholda uniformity as well as control in the organization. Consistency can be maintained in the Associated British Foods Plc. through actual amount of control and organization can monitor their business doings through their structural structure (Ayyagariet al.2012). Associated British Foods Plc. can achieve a better functionality if everyone connected with any project has a good knowledge regarding his or her role. Therefore, effectiveness in the setting of real objective and organizational structure can help Associated British Foods Plc. to achieve organizational functions because it helps employees to know regarding their role with effectiveness.
M2: Advantages and disadvantages of the interrelationships between various organizational functions and its impact on the organizational structure:
Positive and negative impact of the macro environment factor on the operation of any business:
As stated by Childand Möllering (2013), in the macro environment, new risks are always appearing, and it became harder to identify for any organization. In the case of retail, it is not possible for any organization to reject the change as theyraise and they have to adapt those changes. Macro environments include economic, societal, technological, and governmental influences. Technology has several active and negative impacts on the businessoperations. Technological
Advancements can provide different businessopportunities to the Associated British Foods Plc. if they can take it. Technology opens home shopping networks, new retail markets, web-based retailer and other online market and provides extra online market to any organization (Craigand Campbell, 2012).Therefore, it increases point-of-sale to increasesales by allowing any organization to process cash, debit and credit card system. However, these technological advancements have one negative impact i.e. online customer’s only selects those organizationsthat have real technological proficiencies. If Associated British Foods Plc. cannot apply effective technological advancements then they can lose their competitiveadvancements. Law, policies, and different governmentalregulation have a positive and negative impact on the business. If governments help any Associated British Foods Plc. by providingdifferentgovernmental assistance, loan, and subsidiaries and assist them to establish their organization then it can positively help any organization. On the other hand, tax rates on any corporate organization may negatively affect any organization.
A robust economy canincreasethe disposal income of customers, increase their sales and help them to sell more goods and services (Demirguc-Kuntet al.2011). On the other hand, on the lethargic economy may decrease the disposal income and causes less amount of spending in the market. Afterthat, it leads to declining level of sales and forces retailers to lower their pricing strategy. The retail industry is always under pressure to become a socially responsible organizationas if they must sell environment-friendly products, removing controversial products from the market, placing 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 organizations.
M3: PESTLE Analysis:
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 the performance of them are highly influenced by the politics and legislations of those countries.
To employ labors, governments encourage organizations 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% that increases the revenue of 13 billion pounds but decreases the profit of the differentorganization.
UK economy is now showing the positive signs from the inflation and economical crisis. In the recent times, their GDP was estimated to be the 2.7% higher than the previous. Therefore, this growth results in a growth of Associated British Foods Plc. However, it will take sometimes to increase the monthly disposal income of the citizens so it will take time to increase a growth in their revenue.
In the recent times, the demand of the customers has also changed, and they started to buy more fresh and organic food. Therefore, it is important for them to fill their storewith 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 the need of them and earn huge amount of profit. Along with that, they can develop a good catalog with their diverse range of products.
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 increasingnumber of e-shopper, it is important to develop some effective internet activity so thosetechnologies can attract customers. They should utilize different technologies like wireless devices, RFID, self-checkout machines, etc.
There are several legislative factors that directly affects the operation of Associated British Foods Plc. Like food retailing Commission has implemented a policy that suggests one code of practice that bans different activity in food retailing (Keininghamet al.2013). Therefore, this law directly harms the organization.
To be environmentally responsible, Associated British Foods Plc. Must reduce carbon footprint, ejection of different greenhouse gasses etc.
Internal strength and weaknesses of business and their relationship with external macro factors:
According to Mohamedand Lashine (2012), internal and external analysis of any organization highlights different factors that affect any organization. It is seen from the external and internal analysis of the organization that one of core strength of Associated British Foods Plc. is their diverse range of products. Internal and external analysis can help Associated British Foods Plc. to identify their strength and weaknesses o they can reduce their weaknesses by developing different effective strategy.
Strength and weaknesses of the Associated British Foods Plc. have direct contact with the business and it can directly affect their business. On the other hand, macro environmental factors affect the performances, decisions making, strategy and working on the business. Strength and weaknessesaffectthe nearby environment in which organization operates, but macro factors affect in the entire geographic region in which a firm operates (Montazemi, 2010). Therefore, if any firm does not perform well in the home country and they have different weaknesses then they may face several difficulties to achieve globally. Therefore, the organization must make their internationalize strategy by reviewing their strength and weaknesses.
If Associated British Foods Plc. has strength in the national market, then themanagement of the organization can take the immediate decision regarding their business-based in that strength. On the other hand, if Associated British Foods Plc. has several weaknesses, then the managementshould be alert to implement different business strategy, and for this reason, they may face difficulties to perform 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.:
SWOT analysis is one of the subjective methods that are involved in trying for attaining an objective. SWOT analysis also involves in the specification of the objective and identification of the external as well as internal factors that are unfavorable and favorable for the achievement of the objective of Associated British Foods Plc..SWOT analysis can be utilized as one of the business tools that can help Associated British Foods Plc.to take advantages of one's abilities, talents as well as opportunities (Montazemi, 2010). SWOT analysis can help Associated British Foods Plc. Organization to summarize and clarify the key issues and opportunities regarding any business and helps the organization to make decisions so that they can develop new objective andstrategies. SWOT analysis helpsany business organization to maximize strength and minimizetheir weaknesses so they can take opportunities from the market and decreases 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 switching rate among employees are very less so they can expand their business in the different geographical region. 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 p[rice differentiation strategy so they can easily grab the customers not only from the UK but also from other organization. However, I have seen that during their operation in different countries, they have faced a wide range of competition from other organization and along with that; different political and legislative factors of thosecountries affect their business in greatest extent.
I have recognized 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 of different countries. I know that in different countries rate of tax is different, in some countries, corporate tax positively influence any organization and give them handsome opportunities to do their business. However, in some countries government charge huge amount of money as the tax so business in that country may suffer. During the inflation and economic crisis, different countries responded differently, some of the countries has recovered them, but some of the countries did not recover themselves. Therefore, I have gained the knowledge that monthly disposal income is different in different countries. Therefore, according to my knowledge Associated British Foods Plc. Must invests in a different country by reviewing the monthly disposal income of the customers in that country. I have seen that Associated British Foods Plc. have a business opportunity in the different new market so they can invest money in new markets but they must consider the culture and society before investments because different countries have a different culture and different people like different types of product and pricing strategy. People from some developed countries wants a high quality product, people from some countries want to get the product at low pricing strategy. On the other hand, some people want to get the superior quality product at low costs. It is seen that Associated British Foods Plc. do not have effectively represents in 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 organizationto grab the e-shoppers. I have recognized from the analysis that, Associated British Foods Plc. is an ethical and socially responsible organization but to grab the attention of the ethical customers they can increase their sensitiveness regarding the environment. According to me, every organization must follow all of the law implemented by the government even it incurs some loss. In this case, Associated British Foods Plc. Must follow all of the law.
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