Unit 1 Business Environment Assignment – NHS vs John Lewis

Introduction 

The objective of report is to provide knowledge of business and wider business environment in which organisation operates. Business environment includes macro and micro environmental factors which affects organisation’s purpose, structure and functions. This report provides a brief summary of macro environment factors and there analysis which is required for strategic and tactical decision making of the organisation which are necessary in shaping organisation’s future.

Part 1

P1, P2, M1

Presentation

Speaker notes:-
In slide 1 Introduction is given as it include discussion over two businesses where NHS is an non-profit organization on the other hand John Lewis is an profit organization. There is effective level of differences among their size, objectives, structure and many more.

In slide 2 discussion is made over NHS, It is an public funded National Healthcare System. In the whole world it is the only oldest and largest single payer healthcare system. They provide free healthcare services including emergency treatment, infectious diseases treatment for free for everyone.

In slide 3 discussion is made over John Lewis, It is an chain of up market department store. The first store was open in 1864. Around England, Scotland and Wales there are 46 stores including 12 stores of “At Home” and “Flexible stores”.

In slide 4 Comparison is made on the basis of type of business, that NHS is rendering health and safety services. They provide free treatment to the patients. Their motive is to serve the society. Whereas John Lewis is They deal in different products. They provide quality products at reasonable rates. Their motive is to earn the profit

In slide 5 Comparison is made on the basis of purpose and objective, that NHS purpose is to serve the society. Their objective is everyone get adequate treatment. They provide free treatment. Whereas John Lewis objective is to capture the market share and increase profit ratio. Their purpose is to deliver reasonable but quality products.

In slide 6 Comparison is made on the basis of business size, that NHS are oldest and largest single payer healthcare system in whole world. They are rendering their services at large scale. Whereas John Lewis is performing at large scale. They have 46 stores and 12 “At home” Stores and Flexible format stores in UK.

In slide 7 Comparison is made on the basis of Business values, that NHS business values is to serve the society. In order to render adequate services to everyone they are giving free treatments to everyone. Whereas John Lewis business values is to render quality products to their respective users. The prices of their products are also reasonable.

In slide 8 Comparison is made on the basis of products and services, that NHS services and products include all the items included in healthcare services. They render them free of cost in order to provide treatment to everyone. Whereas John Lewis is dealing in numerous products related to the fashions (Men & women both), etc. They provide reasonable cost products to their customers.

In slide 9 Comparison is made on the basis of business structure, that NHS is publically funded national healthcare system. They get charities, governmental support in order to run their activities. Whereas John Lewis business structure is partnership basis. The partnership is between John Lewis and Waitrose

In slide 10 It is concluded that both the organizations having different functionality. There is adequate set of difference among them on the basis of their market share, their objectives, their business structure and many more. NHS is running their business activities in order to serve society whereas John Lewis is running their business in order to earn adequate profits.

P3, M2

B. Short Essay

An organisation can be designed in many ways. An organisation’s structure is designed on the basis of organisational objectives and functions. “John Lewis” is a chain of departmental store operates in retail industry in UK. It’s objectives are provide different products of higher brands to the customers and create value of their money and improve profitability to take advantages of commercial opportunities expand area of business. Purchase , sales, marketing, human resources management and arrangement of finance etc are the functions performed by retail sector organisation. Organisational structure is designed by the organisation to perform these functions (Henttonen & Kettunen, 2011). Organisational structures are of different type where powers and duties are distributed in a different way. Organisational structures include:

• Line organisational Structure: In this structure organisation has direct and  vertical  relationship between different levels in the organisation. There are departments based on functions like purchase, sales, marketing etc and they all are involved in accomplishing the main goal of the organisation.
• Functional/staff organisational structure: here positions are categorized as line and staff personnel at line position have chain of command over staff position and he is responsible for the achievement of an organisational goal. Personnel at line position possess specialization in any area.
• Line and Staff organisational structure: In this organisational structure, there is direct and vertical relationship between different level and also specialized personnel is responsible for advising and assessing line managers. Such organisations have both line and staff departments (Henttonen & Kettunen, 2011).
• Divisional organisational structure: Under these structures duties and authorities are divided in the form of divisions. Divisions are formed on the basis of functions, product, geography or project. Each division have their own structures and they work for the achievement of organisational goal.
• Project organisational structure: a project organisation structure is designed to perform specific function to achieve specific goals by using team of specialist s from different functional areas of the organisation.
• Matrix organisational structure: under this a permanent team of specialist personnel is created to achieve organisational objectives. It is the mixture of functional organisational structure and divisional organisational structure. Orders and command are flow in horizontal and vertical way (Henttonen & Kettunen, 2011).

ohn Lewis has an independent organisation structure which allow staff members to pass their and provide management certain reliable visions. There is decentralisation of powers and authority. The organisation structure consist different committees along with management team. They all work for achievement organisational objectives. Organisation performs functions in order to achieve objectives and follow suitable organisation structure.

Part 2)

P4, P5, P6, M3, M4

A. Report

Section 1: PESTLE Analysis

A business organisation is working under micro environment factors and macro environment factors. Micro environmental factors are under the control of organisation but controlling macro environmental factors is a difficult task for the organisation. Macro environmental factors refer to all external uncontrollable forces that affect positively and negatively the decision making, strategies and performance of organisation. It includes:

• Political forces: Political forces include change in the governing power of the country. Change in the political forces affects the lifestyle and trends of general public which indirectly affects the business of the organisation. John Lewis Company of UK is a departmental store considered the political forces while formulating marketing and selling strategies (John Lewis, 2012).
• Economical force: When business organisation formulate price strategy regarding its product or service than it should also considers changes in economical forces. Economical forces include change in interest rate, exchange rate and inflation rate of currency.
• Social Forces: Social forces affect the demand and supply functions of the   organisation. Social forces includes change in fashion, trend, taste and preferences of the consumer and changes in values, beliefs and attitudes of public (John Lewis, 2012).
• Technological Forces: Technology forces include change in the technology and development of skills and knowledge which are required to deliver products and services to the customer in new and improved form. While formulating marketing strategy or production Strategy Company should consider these forces.
• Environmental forces: These forces include natural resources which are used as raw material, renewal and non renewal natural resources. Organisation must ensures that it have sufficient amount of these resources. If organisation does not consider these forces than it will affect the production and supply functions of the organisation (John Lewis, 2012).
• Legal Forces: legal forces involve changes in the legal and regulatory framework, changes in the legal rules and regulations may affect organisation positively or negatively. For example if there is rates of duties and taxation decrease it provide relief to the organisation and increase its profitability.

Section 2: SWOT analysis

Every organisation has some strength and weakness on the basis of which it faces opportunities and threats from external environment. To identify strength and weaknesses organisations must have to conduct internal and external analysis. Internal analysis includes analysis of micro environmental factors which influence the operation of business organisation. Micro environmental factors include:

• Customer: organization must attract and retain customers by offering them product or services that meet their requirement and satisfaction (Nugent, and Hawkes, 2012).
• Staff/ Employees of the organisation: The Company must have adequate staff or employees who contribute in the achievement of objectives and provide competitive edge to the company.
• Suppliers: Suppliers provide organisation with the resources they need to carry out their activities. If supplier provides bad services this affects the working of organisation (Nugent, and Hawkes, 2012).
• Competitors: organisational working is always affected with competitor’s strategy so the organisation must always be aware of its competitor’s activities.

SWOT and PESTEL tools are used to conduct external analysis. External forces are also affecting the organisation. External analysis helps to identify the strength and weaknesses of the organisation. External analysis includes analysis of external factors like:

• Political factors: analysis of political factors includes environmental issues, current legislation, regulatory body and process, wars and conflict etc (Nugent, and Hawkes, 2012).
• Economic factors: Analysis of economic factors includes national economics and trends, general taxation issues, interest and exchange rates and international trade and monetary issues etc.
• Social factors: Social factors include lifestyle trends, consumer buying pattern, fashion and role model and ethnic and religion factors etc.
• Technological factors: this includes competing technology development, innovation potential, social media use and information and communications etc (Nugent, and Hawkes, 2012).

On the basis of external and internal analysis helps “John Lewis” in identifying strength and weakness. Strength includes strong brand image, strong online presence, effective employment relationships and extensive product range while weakness may includes absence of overseas business experience, recent slump in profit, lack of good marketing strategy and competitive advantage (Nugent, and Hawkes, 2012).

Section 3: Establish link between the strength and weakness and the external macro factors

Strength and weaknesses are directly related with the external environment factors of the organisation. On the basis of strength and weakness organisation can face its external forces and take strategic and tactical decisions regarding organisational activities. Interrelationship between strength and weakness and external macro factors are as follows:

• Political factor: If strength of the company is strong brand image any changes occur in the political environment of country then it will not affect the company and if company does not have strong brand image than the change in political factor affects the company negatively.
• Economical factor: organisation’s strength and weakness also related with changes in economic factors. For example, strong brand image increase loyalty of customers towards organisation, a sudden change in price policy of the product or services cannot affect the company’s brand image but it effect demand and supply of product or services in the market (Doyle, 2012).
• Social Factor: If there is lack of proper marketing strategy than organisation could not attract more customer towards its product or services and it cannot achieve competitive advantage towards competitors. So social factor is related with strength and weakness of the organisation.
• Technological Factors: These factors are also related with strength and weakness of the company. For example, Company is technology friendly and has strong online presence than it quickly adopts the changes of technological factors and can enjoy a competitive advantage (Doyle, 2012).
• Legal Factors: Legal factors are also managed by strength of the company. For example if company has specialized panel which provides guidance to company in all the legal issues then company can easily manage its business in changing legal environment and adopt commercial opportunities.

SWOT and PESTEL analysis are the business tools use by the organisation to analyse external macro factors, internal strength and weakness and external opportunities and threats for the effective decision making.

SWOT is the powerful technique which helps the organisation in identifying strength and weakness of the company on the basis of company which company take new opportunities and faces external threats. SWOT analysis includes:

• Strength: Strength includes features or qualities which an organisation posses. On the basis of strength company takes commercial opportunities available in the market.
• Weakness: Weakness includes lack of capabilities due to which company faces many types of threats from external market situations. So, the organisation always tries to improve its weakness (Doyle, 2012).  
• Opportunities: Opportunities are those chances received by the company from external environment which creates economic value of the company and improve the weaknesses.
• Threats: Threats are those problematic situations arise due to the changes in external factors of organisation which decreases economic value of the company and also affect company’s performance negatively.

PESTEL analysis is an analysis of macro level elements which impact business and the decisions that they make:

• Political Factor: Elements of political factors have impact on current performance of the organisation and also have an impact on the future performances of the organisation. Before making strategic decision management have to look on these factors includes political stability, change in the levied tax rate by the government etc
• Economic factor: This is the aspect which is analysed under PESTEL analysis. The entire business organisation should be up to date with the economic situation of the country in order to survive and earn profit.
• Social and cultural Factor: Social and cultural factors may have significant impact on the performance of the organisation (Arnold, 2012).
• Technology Factor: In all the sectors technology is taking centre stage so organisation should keep their technology up to date in order to meet needs of customer.
• Environment Factors: Organisation should be keen on the impact that their business have on the environment because this impact also affects the performance of the organisation.
• Legal Factors: There are certain legal standard that have to be met by the organisation time to time so as to avoid getting on the wrong side of the law.

D2

B. Reflective statement

Macro and Micro factors of the company are having the impact on objectives and decision making of the organisation.  Micro environment is the nearby environment in which organisation operates. Micro factors include internal factors like customer, supplier, investor, competitors, workers and employees of the organisation and they make their contribution in creating organisation’s economic value and achieving aims of the organisation. These factors are under the control of management. These factors influence the objectives and decisions of the company regularly and directly. On the other hand Macro environment is the general environment that can affect all the business organisations. Macro environment includes political forces, economic forces, technological forces, environment forces and social forces of external environment. Internal and external analyses are conducted by the organisation to know the impact of these factors on organisational decision making and objectives. SWOT and PESTEL are the business tools used for analysis. These factors affect indirectly and distantly to the organisation and are not controllable by the management (Arnold, 2012).

Analysis of macro and micro business environment of the company helps to identify strength and weakness of the organisation on the basis of which organisation is capable to adopt opportunities and faces threats of external environment. With the help of Strength it can adopts various chances available in the commercial world and due to weakness it faces multiple problems or threats from the market. If organisation is successful in taking advantages of these opportunities than it met ultimately with its objectives and attain a competitive advantage in the economic environment (Arnold, 2012).

Conclusion:

This report explains that internal and external analysis is required to carry out by the management of the organisation before strategic decision making so that organisation formulates plan which met ultimately to the objectives of the organisation. This report shows an interrelationship between micro and macro factors and objective and functions of the organisation.

References

Arnold, G. (2012). Corporate financial management. 3d. ed.Essex: Prentice Hall.
Dudovskiy, J., 2012, John Lewis SWOT Analysis, Research Methodology
Henttonen, P. & Kettunen, K. 2011, "Functional classification of records and organisational structure", Records Management Journal, vol. 21, no. 2, pp. 86-103.
John Lewis (2012). John Lewis Annual report 2011
Nugent, H and Hawkes, S (2012). George follows Jeremy Paxman as John Lewis faces another brief challenge. 
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