Analysing Business and The Business Environment
The business environment is ripe with opportunity, competition and full of risk. Many overlook the importance of business environment, etiquette, especially while dealing with business shareholder and other cultures. The practice of various cultures is crucial to bring successful business environment in an organization. There are six basic rules to keep in mind while dealing with the business environment: Be prepared, respect the culture, slow down, establish trust, understand the components of culture, and understand the importance of language. These components prioritize attitudes, aesthetics, and religion, beliefs, education, material culture, societal organization, language, political structures, and legal characteristics.
Under the study, the analysis of the business environment is done by three different companies from three different domains such as public sector, the private sector and one from the voluntary sector. McDonald's, JCB, and British Heart Foundation are taken as the public sector, the private sector, and voluntary sector organization respectively. As a Business analyst of River island, a task has been assigned to investigate the three different well-known organizations from three different fields and the practice of their providing services to the consumers.
Study is made to provide overview of the selected three and explanation of the products, services they supply, their mission, vision, business objectives, their legal structures, size and scope of their activities of the selected three organizations and their two main stakeholders, objectives of these stakeholders and how the organizations try to meet their objectives. It also focuses on three positive and three negative impacts the macro environment including political, economic, social, technological, ethical, environmental or legal factors which might have affected the operations of the organization. Three strengths and three weaknesses of the organization by conducting an internal audit and by using the external analysis findings are also explained.
A business including a firm, a company, or an enterprise is an organizational entity which involves the provision of services to the consumers. Businesses aim for the sales to increase the expenditures which result in the gain or profit or surplus. Businesses can be state-owned enterprises or social enterprises govern by the government for specific economic and social objectives.
Business environment defines all external and internal factors that affect the company's functionality including customers, employees, and management, demand and supply and business regulations. The business environment is the sum of all the affairs which influence the performance, development, and growth of a business. According to Aspara et al. (2013, p.465), a business organization does not exist vacuum. It needs natural resources, living persons, things, and places to exist. The combination of all these forces and factors is better known the business environment.
The main aim of the study is to analyze the business environment of three different companies from three different domains such as public sector, the private sector and one from the voluntary sector. As a Business analyst of River island, a task has been assigned to investigate the three different well-known organizations from three different fields and the practice of their providing services to the consumers.
2. Overview of the organizations
List of organization which has been selected for the analysis of the business environment are as follows:
Public sector: “McDonald’s”
McDonald's is an American fast food restaurant chain across the world. It was founded by Richard and Maurice McDonald in 1940 as a barbecue restaurant. In Phoenix, Arizona in 1953, the first McDonald's franchise was opened with the arches logo. In 1955, Ray Kroc joined as a franchise agent and purchased the chain from the McDonald brothers. McDonald's comes under one of the world's largest restaurant chains, serving 68 million customers daily across 119 countries through approximately 36,615 outlets all over the world. McDonald's sells French fries, cheeseburgers, hamburgers, chicken products, breakfast items, milkshakes, soft drinks, and desserts (Mcdonalds.com. 2017).
The main objective of the McDonald's is to be the consumer's favorite place to eat. According to Bar-Isaac and Shapiro (2013, p.67), to achieve this objective, McDonald's corporation created a strategy called "Plan to win", which completely focuses on making an extraordinary customer experience.
Figure 1: Legal Structure of a public sector organisation
(Source: Self made)
Private sector: “JCB”
JCB is known as J.C. Bamford Excavators Limited, it's a British multinational corporation, whose headquarters are in Staffordshire and Rochester, manufacturing equipment for agriculture, construction, demolition, and waste handling. It is the world's 3rd largest construction equipment manufacturer. JCB was founded by Joseph Cyril Bamford in 1945 and it is owned by the Bamford family. It manufactures over 300 types of machines, including excavators, diggers (backhoes), diesel engines, and tractors. It has 22 factories across Europe, Asia, South America, and North America, and its products are sold across 150 countries in the world. The company has 12,000 people as its employee over four continents and sells its 1500 products to different dealer locations. JCB has also licensed its name as a consumer power tools, manufactured by Alba PLC. The products are sold through franchised dealerships which cover whole countries.
The main objective of JCB is to grow the company by providing strong, innovative, and high-performance products and solutions to meet the global consumer's needs (Jcb.com. (2017). According to Baron (2012, p.87), they support their world-class products by delivering superior customer care services for the customers. Its care extends to the community and the environment. According to their objectives; they want to build a better future, where dedication and hard work are taken as the reward.
Figure 2: Legal Structure of a private sector organisation
(Source: Self made)
Voluntary sector: “British Heart Foundation”
The British Heart Foundation is a charity organization in the United Kingdom. It's the biggest foundation of cardiovascular researches in the United Kingdom. In 1961, The British Heart Foundation was founded by a group of medical professionals (Bhf.org.uk. 2017). This group was concerned about the day by day increasing death rate by cardiovascular disease. It is a major authority and funder in education, cardiovascular research, and care, and depends on voluntary donations to fulfill its aims. According to Belás et al. (2012, p.30) in order to maximize the income and the impact of its work, it also works for disability from cardiovascular disease and combat premature death. The British Heart Foundation had an income of £133m in 2015.
The main objective of British Heart Foundation is to fund cardiovascular researches and aiming to spend £100 million funding in a year by scientists from the United Kingdom. 1000 research projects are being currently funded by them.
Figure 3: Legal Structure of a Voluntary sector organisation
(Source: Self made)
3. Objectives of the different stakeholders
Stakeholder of an organization is categorized into two type; internal stakeholder and external holder. An internal stakeholder is the employees working for achieving the objective of the organization follow a strategy. According to Besley (2012, p.111), they provide services to the customers and work for maintaining the trust of customers over the products produced by the organization. An external stakeholder is a customer which uses the customer services provided by the company.
The main objective of the internal stakeholder of an organization is to achieve customer service goals, financial goals, sales success, and any other important aspirations of the organization. The main objective of the external holder is to communicate with the organization with a needed feedback to improve the services given by the organization and to mention what exactly they want from the organization. The organizations try their best to meet the objectives of Internal stakeholder and external stakeholder by focusing on making an extraordinary customer experience and by providing strong, innovative, and high-performance products and solutions to meet the global stakeholder's needs.
Figure 4: Organizational functions chart
(Source: Self made)
4. Different organizational function and their relationship of McDonald’s
Since 1974, McDonald's is proudly running its business in the United Kingdom and recently operating 1,200 restaurants across Ireland and Britain. McDonald's main aims or organizational function are to serve good food in a fun and friendly environment and to provide good returns to its shareholders. According to Boons and Lüdeke-Freund (2013, p.14), the company focuses on the food of a high quality and standard, value for money, and quick service to the payer. McDonald's follows a strategy of "Plan to Win" which consists of five factors, products, people, promotion, price, and place. McDonald's organizational function also includes the motivating and nurturing environment for their employees. It also balances the needs of food suppliers, franchise owners, and employees for smoothly running the company. The organizing function controls a strong human resource and the leading function of the organization manages all activities to achieve effective and efficient results. Organizational function involves the establishment of the structured functional blocks of the company. This function mainly emphasizes on the coordination, division, and control of information and tasks within the organization. McDonald's has successfully built a healthy organizational culture, which encourages employees' motivation and creativity.
5. Impact of the PESTLE analysis of McDonald’s
Figure 4: PESTLE analysis
(Source: Reddick and Roy, 2013, p.7)
McDonald’s Corporation being one of the most analysed and recognised fast food Company worldwide. According to Chiuet al. (2013, p.58), the company is very favourable to various investors due to its high revenue and high returns on investment. There are various PESTLE analyses done over the company. This is the tool that is used to analyse and to monitor external environment of marketing.
Impact of political factors on McDonald’s
The company is considered over the impacts of the political atmosphere over it. There are various external factors which are very significant such as an increase in agreements of international trade. McDonald’s has scope to expand the business internationally that can do better to the global food supply chain. According to Flint and Maignan (2015, p.120), the company has the scope to reform strategies and practice which do less impact on the taxation without violating the law. The company has the opportunity for addressing the external issues by improvement in healthfulness within its products.
Impact of economic factors on McDonald’s
The analysis states the effects of the economic condition on the external environment of the company. The company has scope to grow eventually in the American market. According to Gillanders and Whelan (2014, p.542), the present economic state in Europe could be threatened by the company to grow in the region. This aspect says about the economic macro factors that mainly threatening the business.
Impact of social factors on McDonald’s
Based on external factors the company has scope to grow as its target customers are mostly of medium and fewer income publics. According to Huang-Horowitz (2015, p.348), it has the opportunity for the improvement of products mix for the satisfaction of market targets. However, the company is threatening because of its products often gets criticised for ill health effects. Thus for the development of the business, it has the social external factors.
Impact of technological factors on McDonald’s
There are opportunities in the business automation increase and increase sales using mobile devices. There is various opportunities in the moderate R&D activities in the company. According to Klapperet al. (2015, p.300), the company may improve the mobile services to gain more customers through its web and mobile applications.
Impact of legal factors on McDonald’s
The company did face the threat of higher least wages that lead to greater prices and costs. Regulations of local health do impact on food services in the workplaces and institutions could have reduced the revenue of the company from legal issues. McDonald's should locate effects on animal welfare over the supply chain. According to Menychtasat al. (2014, p.115), the company faces various effects from these legal factors.
Impact of environmental factors on McDonald’s
McDonald's can extend the strategies related to corporate social managements so as to get better performance to address the environmental policies. On the other hand, the climatic change stays a threat as its negative effect on the company. According to Nair and Paulose (2014, p.181), the environmental macro factors indicate the opportunities related to corporate social managements though the company need for more diversification in supply to locate the effects of change in climatic condition.
6. SWOT analysis of McDonald’s Corporation
Figure 2: SWOT analysis
(Source: Prajogo, 2016, p.245 )
●Brand name and advertisement successful
●Company collaborated with Coke
●Clean and tidy environment with play area for kids
●Professional employee training
●Weak development of the products
●Lack of franchise management
●Opportunity for internalisation
●Developing out market dining
●Customers are health conscious
●Local competition give threat from various countries
●Recession in the global economy
●Play in the saturated and matured industry
SWOT analysis comprises various objectives.
The company is running successfully all because it is occupying a highly recognised brand name. They do advertisements that are very successful in the marketing of the product. According to Pagani (2013, p.630), the collaboration of the company with Coke has attracted the customers in the different way which the earning raises to a higher altitude. The McDonalds franchisees are maintained in very clean and tidy environment and there are also play area for the kids. This attracts the customers to come repeatedly at the counter of McDonald's. Kids feel interested and the elders do bring then which leads a good business for the company. Employees are given professional training which helps them to perform nicely to the customers in the field of providing service and maintaining all relevant field works. The company also put prices of the products which are very competitive in the market.
There are certain weaknesses for the company as there are poor developments in the products and the same food types are received by the customers. According to Palmer and Hartley (2011, p.54), this lacks interest of the customers from visiting the counter repeatedly. There is also the lack of franchise managements and the joint venture by all the centres are not done properly. These lack the correct analysis of the business and also reduce earning from the business.
The company has various scopes of growing its business. The company is serving only 1 % of the total population of the world. This can be improved only by the internationalisation of the company and this will help in growing business and earn much more revenue than earlier from the number of franchisees. There are also opportunities to grow dining in the out markets which can help the company earn money through the attraction of the customers for coming to dinner at outings.
Customers are more conscious about their health. According to Peng and Tzeng (2013, p.652), they always think to what they are consuming before buying the same. Unhealthy and over junk foods are not accepted by most of the customers of McDonald's. Local competitors from different countries are providing threats as they compete to a high level of competition. During the global recession, there is a threat of developing poor economy through the business. The company runs its business in the common market industry. They need to develop different market structures else it is losing its business from the same old and saturated industry. This is a threat the company that can reduce the total revenue of the company from the business worldwide.
7. Interrelation the SWOT analysis with the PESTLE analysis of McDonald’s
The policy of health and safety that are from the government are to be looked for the safety of the customers. In SWOT analysis strength of the company are linked with the social environmental, technological, political, legal and as well as economic analyses of the company. Every analysis that is related to SWOT analysis is always in the linkage to that of PESTLE analysis. According to Worthington and Britton (2014, p.45), the strength of the company is proportional to the advertisements, collaboration with different companies, maintaining cleanliness is all recognised by the PESTLE analysis. Advertisement and all other activity that are done by the company are for the benefits of the company as they directly or indirectly help to grow the economic state of the company.
Political supports are the main factors that are necessary for implantation of any business in the desired area. Without the help and cooperation from the political point, the business would not stand up and hence result in the economic condition. Political support thus makes itself to be the strength of the company and the reverse of it becomes the weakness of the company. According to Smith (2014, p.16), a proper environment which may comprise of neat and clean McDonald's restaurant attract the customers and the customer's visit would result in the strengthening of the company and without the customer it becomes the weak point for the company.
In the weakness of the company, it is equipped with the poor product development and improper franchise management that are the non-profitable area of the business. The young and energetic people are influenced to get service from the company and this is the social condition of the company that gradually increases the economic condition of the company. According to Rose et al. (2013, p.375), the technology used for the activities related to promotion of brand, the products and providing services to the customers are related to the technology and the positive effect that are yielded from it make the revenue of the company reach to a higher altitude and however in case of the negative effect comes out from the technology aspect the business growth gets affected towards the loss for the company. All the analysis with respect to PESTLE and SWOT that are creating positivity to the company are the reason to raise the economic condition and the negative effects from the analysis tools may ruin the business. Thus the relation has to be maintained between the analyses of the various tools for the benefit of the company.
In the particular study, it can be analysed that the company or the companies when analysed by various analysing tools it can be stated that the up rise and downfall in the business are directly proportional to the analysis of the company. There should be looked after towards the growth of the business and rectify the faults and the gaps in the business which are creating pressure in the development of business. There should be good relation starting serially with the trainee crew to the restaurant manager for the proper business process. The analyses of the whole business are to be performed for proper growth and enhance the earning of the company.