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The Impact of Macro Environment on Business Enterprise -Wilko

University: Imperial College London

  • Unit No: 6
  • Level: Undergraduate/College
  • Pages: 16 / Words 4029
  • Paper Type: Assignment
  • Course Code: 083296C
  • Downloads: 467
Question :

This assessment will cover following questions:

  • Wilko is the retail chain offering daily essentials. How does different functions of Wilko are interconnected?
  • How positive and negative impacts of macro environment influence the operations of Wilko?
  • Explain different types, size and scope of organisations?

 

 

Answer :
Organization Selected : Wilko

INTRODUCTION

Business is the activity where the buyers and sellers come together to buy and sell the goods and services in exchange of some value. It can be of any form like private, public or both. The motive of every organisations are different (Schaltegger, Hansen and Lüdeke-Freund, 2016). The place where the trading activities are carried on is the external business environment. It plays an important role in every business concern. It involves internal and external constituents. Both the factors has an impact on the functioning of the commercial enterprise. For the purpose of this report the private organisation Wilko is taken. It is engaged in retailing chain of consumer goods, groceries, stationery goods, bathroom and kitchen products. The headquarter of Wilko is at England, UK. Through this study the different type of organisations with various size and structure, departments role and relation with other units, the impact of macro environment on business enterprise has been discussed.

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TASK 1

P1 Various types and purposes of organisations; public, private and voluntary sectors and legal structures.

Public sector

These organisations are owned and run by the government. They are mostly not profit oriented (Quinlan and et. al., 2019). Public Health England is the example of the public organisation. Its headquarter is in London, UK. It is the agency of the Health and Social care department.

Purpose- The purpose of the public organisation is to provide various services to the public  so as to improve their standard of living. Public Health England work with partners  to provide support and make improvements in health and wellbeing of the society.

Legal Structures- It comprises:-

Central government:- It holds the supreme power in its hands and regulates the overall functioning of the country. They are funded directly from the taxes collected from the people of the country.

State government:- It is controlled by the central government and works according to the guidelines of the central government. It looks after the promotion of the economy of the state.

Local government:- This  type of legal structure of local government acts within the powers delegated to them by the legislation and higher government. Public Health England has this legal structure.

Private sector

These organisations are owned by individuals and are not controlled by the government. They are run by the need to make profit (Prajogo, 2016). The example of private sector organisation is Wilko. It is retail company which sells consumer goods in England, UK.

Purpose- The basic purpose of the private organisation is to earn profit and grow in the market. for improving their way of living. Wilco wants to sell quality products to the customer at affordable prices so as to continuously grow in the market.

Legal Structures- It consists of

Sole proprietorship:- It is owned and controlled by one person. It is not incorporated body. Owner is responsible for the liabilities of the business.

Partnership:- It is formed by two or more members. They also not incorporated body and have a separate legal entity.

Limited Company:- It involves private companies which have limited liabilities. They are generally engaged in medium and small size businesses. Wilco is a private limited company.

Voluntary sector 

They are owned and run by the individual and trustees voluntarily with or without the interference of the government (Oriesek and Schwarz, 2016). Royal Voluntary Service is example of this sector working in England, Scotland and Wales.

Purpose- They work to provide necessary welfare services to the public, to improve the community. Royal voluntary service engaged in helping people who are in need.

Legal Structures- It includes the four structures-

Trust- It involves trustees. It is not a separate legal entity. A trust deed is formed during its formation.

Unincorporated association- Here a group of people with a common interest comes together to work for the benefit of the public. The liability of the governing body is unlimited as they are not a legal entity.

Company limited by guarantee – The directors of this type of legal structure can be the trustees or other members. It is a separate legal entity.

Charitable incorporated organisation- It provides the charity and is controlled by the Charity Commission. It is legal personality and has limited liability. Royal voluntary service is Charitable incorporated organisation.

The Comparison between profit, not for profit and non- governmental organisations is given as under: -

Profit-The profit organisations are those who carry on the business activities to make profit. They are engaged in wide variety of activities like retailing, private companies, hospitals, travels, education, sports, etc. Their operation field may be Large, medium and small. Goals includes improving the standard of living of self  by earning profit. For example- Greenergy, Linpac, Unipart.

Not for profit- These organisations carry on its operation not to share profit among its members. The revenue earned is used for the improvement and functioning of the organisation. They are involved in specific activities only like for the welfare of child, charity, education,  religious activities, etc. They carry out small operations. Their objectives are to encourage art, science, history, commerce in the society. Amnesty international,  National trust, Water Aid.

Non- governmental organisations- They work for a particular cause. It may be Cancer awareness, poverty elimination, safety of girl child, etc. They generally operates on Large scale. They work on the goal to improve the quality life of people living in the country. For instance-Transparent hands, Funding circle, Kickstarter.

P2 Size and scope of different types of organisations.

There are various organisations operating in this competitive world. They all have distinct features which includes different goals and objectives, size, structure, strategies and management processes (Nohria, 2017). The size and scope of different organisations are given as under:-

Public organisation (Public Health England)

Size: Public Health England employee personnel consists of 5000-10000 employees. They work together to provide services related to health (Public Health England Overview. 2019). They offers services related with health of the public, emergency readiness, communicable diseases, medicine, protection of health, environmental danger, intellectual health and cancer detection in London.

Scope: It operates in fifteen local centres and provides health services across four regions which includes London, north England, east England and south England.

Objectives: The objective of the organisation is to protect the population from contagious diseases as well as from environmental hazards. To bring an improvement in the public health by healthcare services.

Private organisation  (Wilko)

Size: Wilko is one of the biggest retailer in UK. It has around 325 retail stores and has added one more in Asia in Hong Kong. The product range includes around 25000 different products. It has employed 337 staff in its retail (Wilko's Competitors, Revenue, Number of Employees, Funding and Acquisitions. 2019).

Scope: It hires individuals who are skilled, unskilled and semi-skilled. The company provides training to the employees so as to align them with scope of expanding business and increasing  activities globally. It provides household, homeware, cosmetics, kitchenware products in its retail chain.

Objectives:   The core objectives of the company are to grow in the market continuously and to sell products with quality to the customers at reasonable prices.

Voluntary organisation (Royal Voluntary Service)

Size: The organisation have more than 20000 volunteers and about 1250 employees working altogether in Great Britain to distribute their assistance to needy and eradicate weaknesses from the community (Royal Voluntary Service. 2019)

Scope:Royal Voluntary services makes available volunteers to move and provide help to people in need and encourages other people to provide their assistance.

Objectives: Royal Voluntary service has the objectives to provide practical support to the people in need through volunteers to lessen the sufferings of the people, to make their lives healthy, remove inequalities from the community.

Difference between micro, small, medium and large enterprises

Micro: These enterprises includes less than 10 operating individuals. They operate to earn for fulfilling their livelihood expenses. These enterprises invests from personal savings. Micro enterprises are fully managed by owners. Book stalls, Ice- cream parlours, Salon, etc.

Small: It consists of 10-50 employees .They focus on earning that much amount of profit which is required for the business. Small enterprises get the fund for their businesses through personal savings, friends, family or small business loans. These enterprises are managed by operating owners. Professional service firm, consultancies, real estate, etc.

Medium: These enterprises employs less than 250 employees. It focuses on expanding its businesses. They collect fund for investment from internal as well as external sources like trustworthy professionals. They are managed by owners and key professionals. Advertisement company, digital marketing company, etc.

Large: It hires more than 250 employees in its operational work. The objective of large business entrepreneurs is to earn more and more profit. They receive funding from investors and venture capitalists. Large enterprises are professionally managed. Microsoft company, Arcadia group, etc. 

TASK 2

P3. Inter-relationship between different organisational functions and their linkage with organisational objectives and structure

The objective of increasing profitability of business is not possible without the assistance of the other functional units and departments of the organisation (Laudon and Traver, 2016). Proper co-ordination and clear communication is required between every department to attain the business objectives. The relation among some functions of the organisation is explained below:

Marketing and Finance unit- It is essential for the marketing function to work nearly with finance unit so that the finance department supply suitable budget to the marketing department to do proper planning and enforcement of marketing plan for the achievement of the objectives of the enterprise (Kozubíková,   Homolka and Kristalas, 2017). Wilko's requirement of additional funds for tackling the competition, planning and applying a marketing plan is fulfilled by the support of the financial unit of the company, production unit and  human resource department. The structure of the organisation directs the functional activities to achieve these objectives.

Production management and Human Resource-The production management function requires the aid of the Human resource at various stages of its functioning. Both the departments work together to create strong culture and positive image of the company (Kolk, 2016).  The need of employees updated with modern skills and technology of production in Wilko is satisfied by HRM function. It ensures that the company gets the needed employees in specified time. It is the structure of the enterprise which aligns the working of the different departments with the objective of the company.

Marketing and production management- Operation department or production management department helps the organisation to achieve the productivity and effective performance by systematically organising marketing workflows and processes (Khan and Quaddus, 2015). For the attainment of competitive advantage Wilko launches a new product with discounts and offers. It will have to do adequate research. To satisfy this need it has to involve production management. All these activities are planned after considering structure and objectives of the company.

Different types of organisational structures

Various types of organisational structure are described below:-

Divisional structure: In this structure, organisational functions are bifurcated into divisions that corresponds according to product or geographic areas so as to deliver demanded varieties of products. Top level management concentrates on long term plans and strategies by distributing profits across products, markets as well as divisions (Hair and et. al., 2015). It is challenging work to organize all divisions. Henceforth, it results in conflicts between divisions regarding resource allocation and many more.  

Divisional structure

Source: Divisional structure,(2012).

Top level management of Wilco follows different structures at various locations of the stores according to the comfort of managers (Hillary, 2017). For example, divisional structure is followed in several stores and at some other stores matrix organisational structure is followed to accommodate with ability of employees to deliver their work in teams or divisions.

Matrix structure: This structure pools several function or departments with teams made for certain projects. In this employees have to work for completion of the projects in teams within their areas of function. It is beneficial in decentralising the authority of decision making. It enhances managerial motivation, problems are controlled and individuals possessing same skills are selected for one project (Ferrell and Fraedrich, 2015). This structure is difficult to apply because of overhead costs and conflicts between the employees.

Matrix Structure

Source: Matrix structure,(2019).

Wheel structure: This structure is adopted usually by the start-up companies. Here, the managers are empowered to take all the decisions. The activities are organised close to the owner of the company. The owner controls the growth with the development of enterprise. It can be applied for definite size only and the owner and operator do not always possess knowledge related with different functions of the enterprise (Evans and et. al., 2017).

 

Wheel structure

Source: Wheel structure,(2019).

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TASK 3

P4 Impact of the macro environment upon business activities of the enterprise.

A PESTEL can be used to impact of the macro-environmental factors on the performance of the organisation (Erasmus,  Strydom and Rudansky-Kloppers, 2016). The following is the Pestel analysis of Wilco:-

Wilco is one of the largest retailer who has headquarter in England, United Kingdom. It carries on business of selling home products, kitchen products, beauty products and customer based products.

Political factors

These factors includes the standards, rules, regulation set by the government for every company to enable smooth flow of the work.

Positive impact- The stable economy of UK enables Wilco to carry on its activities smoothly. The company gains the profitability with the reduction in the expenses of the operating activity.

Negative impact- Wilco do not have the personnel who can manage the CSR. Therefore, the improper adoption of CSR by the company may lead to action taken by the government.

Economical factors- Functioning of Import and export, ups and down in the  economic growth, foreign exchange rates, interest rates, inflation and monetary policies are the economic factors .

Positive impact- The favourable market condition of the country in Asia helped Wilco to open new office at Hong Kong and allowed to utilise the disposable income of the people.

Negative impact-The performance of Wilco stores in South England and Middle Eastern England was badly affected by the fall in the prices of the groceries.

Social factors

It includes different geographic population, beliefs, culture and traditions of the group, age, health factors.  These factors are uncontrollable.

Positive impact- It introduced products in its stores in various countries according to their culture and recent trends.

Negative impact- Increasing interest and demand of the customers in green and organic products made Wilco to do innovation in its products from time to time.

Technological factors- It refers to the change in technology, research and development and automation. These factors changes continuously (Bah and Fang, 2015).

Positive impact- Wilco has adopted the social marketing for promotion of the products. This resulted in increase in the sales of the company.

Negative impact-The increase in the adaptability of artificial intelligence in the stores of Wilco increased the expenses of the company, thus, affecting the profitability of the company.

Environmental factors

Factors like weather conditions, changing climate refers to  environmental factors (Bocken, Rana and Short, 2015).

Positive impact- Wilco adopted  sustainable development which ensured the usage of sustainable raw material, reuse of material, recycling and optimum use of available resources.

Negative impact- Wilco has to do analysis of every countries environment protection norms and standards before setting up  their establishment in the other country.

Legal factors- Legal factors includes the factors like consumer rights, law and protection, rules, regulations, health and safety (Deasy and et. al., 2016).

Positive impact- Wilco has changes some of the terms and conditions of products like  information, cancellation and additional  for the welfare of the consumers.

Negative impact- Wilco farm stores faced an allegation for neglecting the welfare of an employee who was engaged in dispatching products. It hampered the working of the store.

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TASK 4

P5 Internal and external analysis

A SWOT analysis is a model that can be to find out the company's internal strengths and weaknesses as well as external opportunities and threats to make best strategy to overcome the weaknesses, to utilize the opportunities available for the company and to strengthen the company to avoid threats (Epifanov and et. al., 2015). SWOT analysis of Wilco is given as follows:

Strength

Weaknesses

  • The sales of Wilco increased by 19.8% in 2018 as compared with  the large four supermarkets of the U.K., Morrisons , Sainsbury , Asda, Tesco.
  • Recently market share rose to 12% as a result of increase in new customers visit in their stores.
  • The company  has better solvency as its  asset base is large.
  • The market share of every product of  Wilco is not equal , most of the products possess low market share whereas few products possess high market share
  • The decision making process of the company is time consuming due to authority of decision making given to certain officials only. This leads to reduced flow of ideas in the company and less efficiency in its operational work.

Opportunities

Threats

  • Wilco can expand its online business with the usage of internet and can have interaction with the customers easily without much investing in meetings.
  • There has been increase in the wide usage of social media in marketing. Wilco can use Facebook, Twitter and Instagram for the promotion of its products and collection of feedback from them.
  • The competition has been increasing and therefore, the company has to reduce its products prices which results in decrease of revenue.
  • The global domination of a market by Amazon is causing Wilco to lose the market share in U.K.
  • Asda in order to increase its visibility and market share  is going to diversify its business by considering a takeover bid on British discount chain. This will lead to decrease in customers and sales of Wilco.

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P6 Relation of  strengths and weaknesses with external macro factors

Interrelation

Strength

Weaknesses

Political factors

Wilco got benefit with the stability in UK.  The sales of the company boosted  and the  profitability increased with the favourable market conditions.

Wilco did not implemented the CSR technique properly due to lack of knowledge in managers handling CSR function.

Economic factors

It opened a new store in China due to availability of good market conditions.

The decrease in the prices of some of the products in the market lead to decrease in the sales.

Social factors

The adoption of products with respect to the culture of the several countries helped Wilco  to increase their market share.

Regular need of evaluation and innovation in products increased the costs of the company.

Technological factors

It changed the promotional strategy and implemented social marketing . Hence, 5% sales of Wilco increased.

Excess fund requirement for experimentation of new technology artificial intelligence created shortage of fund.

Legal factors

The relaxation in some of the rules of the company for the goodness of customers increased greater customer satisfaction.

The dispute between the family of employee and the Wilco farm retail disturbed the relationship between customers and Wilco.

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Conclusion

From the above given subject matter it can be concluded that the  internal and external environment has an influence on the operational and functional part of the business. In this competitive world several organisations are operating like private, voluntary and public. These organisations have different goals and objectives as per their area of interest. Among them some are engaged in increasing the profit of the business, while some  have objectives of providing services to the public. Pestle and SWOT analysis is conducted to evaluate the external and internal environment for the fulfilment of business objectives.

REFERENCES

  • Andersson, U., Forsgren, M. and Holm, U., 2015. Balancing subsidiary influence in the federative MNC: A business network view. In Knowledge, Networks and Power (pp. 393-420). Palgrave Macmillan, London.

  • Bah, E. H. and Fang, L., 2015. Impact of the business environment on output and productivity in Africa. Journal of Development Economics. 114. pp.159-171.

  • Bocken, N. M. P., Rana, P. and Short, S. W., 2015. Value mapping for sustainable business thinking. Journal of Industrial and Production Engineering. 32(1). pp.67-81.

  • Deasy, S. and et. al., 2016. Controlling use of a business environment on a mobile device. U.S. Patent 9,247,042.

  • Epifanova, T. V. and et. al., 2015. Modernization of institutional environment of entrepreneurship in Russia for development of innovation initiative in small business structures.

  • Erasmus, B., Strydom, J. W. and Rudansky-Kloppers, S. eds., 2016. Introduction to business management. Oxford University Press Southern Africa.

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