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Understanding Business Environment- River Island

University: Lancaster University Management School

  • Unit No: 6
  • Level: Post Graduate/University
  • Pages: 12 / Words 3086
  • Paper Type: Assignment
  • Course Code: MOD003353
  • Downloads: 642
Organization Selected : River Island


Business Environment refers to the sum total of all internal and external factors such as employees, suppliers, customers, market trend, laws and government activities etc. that have positive or negative influence on overall operation and performance of the company (Adeoye and Elegunde, 2012). In other words, it is a collection of all entities, individuals and other factors which are may or may not be under the control of the company but can affect its profitability, performance, growth and even survival. The report is based on River Island which is an UK based high street fashion brand. This report covers size, scope of different size of organisation, linkage between organisational function with business objectives and inter-relation between macro factors and strength and weakness of the firm.

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P1 Type and purpose of different type of organisation.

There are different types of organisation that exist in the market place. Each one is distinctive from one another on the basis of size, scope, structure etc. Some of the common type of organisation along with its different size, scope, objectives are discussed below:

Public: These enterprises are run, managed and controlled by Government of respective country. Profit maximization is not only their main purpose as they also laid stress on promoting country's welfare and development by making it a better place to live. Public sector company issue their shares to general public so that they can get significant amount of fund which aid in running their business in an effective and efficient manner. For example: TESCO.

  • Company Overview: TESCO is a leading UK-based grocery and merchandise retailer that deals in selling all food and non-food items. It is the 3rdlargest company in terms of earning revenue after Walmart. The company was founded in the year 1919.
  • Size: TESCO is mainly operating in seven big countries such as Asia, Europe, Ireland, Thailand, Hungary and UK. In-fact majority of its market share is covered by UK near about 28.4%. They haver strong market and customer base in the market of United Kingdom. Presently, there are more than 476,000 employees are working with TESCO (Al-Debei and Avison, 2010).
  • Scope: The company mainly deals in selling products like electronics, toys, furniture, clothes, petrol and software, telecom and internet services and financial services. They offer high value products that meet customer requirement in an effective and efficient manner.
  • Structure: It can be classified as:
  1. Central Government: It is an apex body that monitor and control all issues or problems of the country. They mainly emphasize on collecting tax and print currency.
  2. State Government:It mainly deals in handling issues or affairs of respective state. All activities concerned with state are regulated by State Government (Aula, 2010).
  3. Local Government: Such Government Body mainly deals handling and monitoring affairs related with specific area, town or city. They haver less power as compared to state government.
  • Business Objectives:
  1. To contribute significantly towards growth and development of society and its members.
  2. To generate maximum profits and revenues.
  • Product & Services Offered: TESCO is popular for selling food and non-food items.

Private: These companies are controlled, managed and run by private individuals. There is less involvement of Government in Private companies and moreover they work with an aim of earning high profitability and attaining high competitive edge in overseas market. For example: River Island.

  • Company Overview: It is a London-headquartered high street fashion brand that practices their business operation all across the world. It was established in the year 1948 by Bernard Lewis and his brother. The company is wholly owned by Lewis Company.
  • Size: The company is operating all across the globe and has more than 350 stores in UK, Europe, Middle East, Ireland, Asia etc. Along with that, it has online presence as well in the form of 6 online websites that operate in 4 currencies which ship their products to more than 100 countries worldwide (Bill Pasmore and CMC, 2011).
  • Scope: It deals in providing women's, men's and children's clothing. Along with this they also deal in selling footwear and accessories.
  • Structure: It includes:
    -Partnership: It is an agreement where two or more people enter into a contract for common purpose or to advance their mutual interest. All partners possess equal share in profit and loss.
    -Sole Proprietor: Such type of businesses are wholly run and managed by one single person known as Sole Proprietor. They are solely responsible for all functioning and operation of the company. Being a single owner of the company, they take decision on their own regarding functioning of the company (Brannon, 2010).
    -Limited Companies: Under this, firm is classified into two categories one is Limited by share and one is Limited by Guarantee.
  • Business Objectives:
    -To maximize profitability ratio
    -Strong market and customer base
    -To gain high competitive edge in the market
    -Higher sales generation
  • Product & Services Offered: The company mainly deals in providing clothes, footwear and accessories to men, women and children.

Voluntary: These are also known as Non-Profit Organisation who runs with a purpose of promoting society welfare and development and making country a better place to live. For example: Oxfam

  • Company Overview: It is charitable based organisation that mainly focuses on eradicating poverty from all across the globe. It was founded in the year 1942 with an aim of addressing the cause of poverty and tries to remove it permanently from the country.
  • Size: It's business operation and functions are carried out by its members or volunteers who contributes significantly towards achieving their pre-defined goals and objectives.
  • Scope: Oxfam normally operate with an aim of removing the cause that generates poverty, increase literacy rate of the country, disaster relief, advocacy, policy research and pro-migration (Cantwell, Dunning and Lundan, 2010).
  • Business Objectives:
    -To make country a better place to live
    -Poverty Eradication
    -Provision of food to relieve extreme condition of food scarcity (Cassell and Blake, 2012).
  • Product & Services Offered: Oxfam works on education, debt, gender equality, poverty eradication, democracy and human rights and natural disasters.
Types of organisation Definition Goals Market share and Profit Share Growth and Sustainability
Small Such types of companies are run and owned by family member or single person. Their goal is to yield maximum profit so that their business operation can run smoothly. Their market share is low because they generally deal in local market only. Growth and sustainability of small scale enterprises is directly proportional to the needs and wants of customer
Medium These are mostly privately held companies. Their goal is to earn high profits and revenues which gives them high competitive edge in the market. Their market and profit share is relatively low as compared to large firms because they limited customer base particularly limited to industry or geographic niche. Their growth and sustainability depends upon how effectively they meet diverse requirement of potential buyers.
Large These are usually operated and managed by two or more than two players. Their goal is to capture large market share. Large companies are having high growth and market share as compared to others because they carried out their operation in many countries. Growth and sustainability of large firm is directly proportional to its competitor's performance.
Micro These are usually run by single person or a family member. Their goal is to earn adequate profit so that they can fulfil the needs and wants of their family members. Low market and growth share as compared to small enterprises. Growth and sustainability of micro firm lasts until and unless they are carrying out their business operation for fulfilling the needs and wants of both customer and family members.

Stakeholders are one who are affected or can be affected by the actions, policies and objectives of organisation. Some of the key example of Stakeholders are government, employees, owners, suppliers, creditors, director etc. They are basically consider as an investor in a company whose actions shape the outcome of business decision (CGA, 2010).

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P2 How organisational function is linked with organisational department

An organisation is consist of several departments such as human resource, marketing, operation, finance etc. that are inter-linked with organisational objectives.

Human Resource Department:The primary role of HR Department is to hire most talented and suitable candidate for the company who with their skills, knowledge and ability achieve organisational objectives in an effective and efficient manner. Contribution of this functional department is high in terms of organizational growth and success. It has been believed that chances of attaining higher profitability increases when task or work is assigned to employee on the basis of their skills, competency and qualification. Employees are considered as the main assets of the River Island and play key role in achieving business goals and objectives within the stipulated time frame.

Marketing Department:The main function of marketing department is to increase company's sales and profit by attracting large number of customer through various promotional activities (CGA, 2010).Every company aims at offering high quality product or services to target customer but for this they need to determine current market trend and likes and dislikes of customer prevailing in the market. With the help of marketing function, company can easily seize the attention of target customer by providing them such goods and services that meet their requirement in an effective and efficient manner. This organisational function also help in increasing overall sales of the company that ultimately leads to achieve business objectives and higher profitability ratio. River Island is extensively using social networking sites that help them in capturing large market share and make their customer and market base stronger.

Finance Department:Finance is considered as the main lifeblood of the company as execution of whole business operation and activities depend upon the availability of the funds. Normally, there are two sources that are available for generating adequate funding are namely Internal and External. Internal means when funds are available within the company only such as retained earning, profits, long terms assets that are no longer in use etc. On the other hands, external sources of funding means when funds are available outside the company such as bank, creditors, individual donors, angel investors etc. The main objective of River Island is to earn maximum profits and for this they require extensive amount of fund in order to carried out their business operation and activities in an effective and efficient manner (Charter, 2014).

Organisational Structure:The company is mainly following hierarchical organisational structure which means every entity in the company except one is sub-ordinate to a single other entity. The main benefit of this organisational structure is that all roles and responsibilities are clearly defined and thus, executing properly and systematically. In addition to that, it also aid in developing employees as specialists which is beneficial for their both personal and professional development.

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P3 How organisational strength and weakness is inter-related with macro factors



  • The company has won many awards for providing excellence customer service and overall shopping experience.
  • Strong market and customer base

  • Highly dependent on UK market
  • High competitive pressure that may cause situation like price wars that possess negative impact on TESCO's profitability and margin ratio.

  • Great opportunity in terms of strategic alliance with an aim of expanding market share and operations.
  • Opportunity to grow their business operation via online platform.

  • Excessive pressure of strong competitors.
  • Any increase in food price of the product directly impact customer purchasing power.

TESCO gained popularity for delivering better customer services and providing complete shopping experience to customer where they get a chance to fulfil all their needs and expectation in an effective manner (Craig and Campbell, 2012). This can only be possible if the respective country is having political stability. In addition to that, they even have strong market and customer base as well because of they are well aware of social-cultural factors that exist in market.

Private:River Island


  • Strong parent company
  • Well established and popular brand name

  • Rapid change in market trend
  • Tax reforms

  • Strong market presence in UK
  • Expand business operation in developing countries.

  • Strong threat of competitors.
  • Political instability due to Brexit

The company is a sub-brand of already established and famous Lewis Company. Along with this, company is highly dependent on UK market for its profit and revenue which signifies that there is a political stability in UK due to which company is achieving their business objectives and goals in an effective manner (Chavis, Klapper and Love, 2011). In addition to that, they are taking the advantage of using high end technology which assist the firm in gaining high competitive edge in overseas market.



  • Strong funding source
  • Strong volunteer base

  • Lacks someone who can effectively manage and control budget operational funds

  • Making country a better place to live
  • Improving living standard of people

  • Aggressive competition
  • Rapid change in laws and regulation of respective country.

Oxfam has a strong volunteer base that help in executing their business operation in an effective manner. In addition to that, their government is very supportive and providing them ample amount of funding so that they make society a better place to live (Craig and Campbell, 2012).

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According to the above mentioned report it can be conclude that business operation and functioning can be affected by presence of both micro and macro factors exist within the surrounding. Such factors either have a direct or indirect impact on overall operation of the company. Therefore for smooth running of organisation it is better to analyse such factors and its impact on company. There are certain tools that help in measuring the influence of both micro and macro factors are PESTLE, SWOT etc. In addition to that, size, scope and structure of organization vary from another depending upon their nature and functions.


  • Adeoye, A. O. and Elegunde, A. F., 2012. Impacts of external business environment on organisational performance in the food and beverage industry in Nigeria.British Journal of Arts and Social Sciences. 6(2). pp.56-65.
  • Al-Debei, M. M. and Avison, D., 2010. Developing a unified framework of the business model concept. European Journal of Information Systems. 19(3). pp.359-376.
  • Aula, P., 2010. Social media, reputation risk and ambient publicity management. Strategy & Leadership. 38(6). pp.43-49.
  • Bill Pasmore PhD, S. V. P. and CMC, T. O. S., 2010. Leadership agility: A business imperative for a VUCA world. People and Strategy. 33(4). p.32.
  • Brannon, N., 2010. Business intelligence and e-discovery. Intellectual Property & Technology Law Journal. 22(7). p.1.
  • Cantwell, J., Dunning, J. H. and Lundan, S. M., 2010. An evolutionary approach to understanding international business activity: The co-evolution of MNEs and the institutional environment. Journal of International Business Studies. 41(4). pp.567-586.
  • Cassell, M. A. and Blake, R. J., 2012. Analysis of Hofstede's 5-D model: the implications of conducting business in Saudi Arabia. International Journal of Management & Information Systems (Online). 16(2). p.151.
  • CGA, H. C. B., 2010. External environmental analysis for small and medium enterprises (SMEs). Journal of Business & Economics Research. 8(10). p.19.
  • Charter, M. ed., 2017. Greener marketing: A responsible approach to business. Routledge.
  • Chavis, L. W., Klapper, L. F. and Love, I., 2011. The impact of the business environment on young firm financing. The world bank economic review. 25(3). pp.486-507.
  • Craig, T. and Campbell, D., 2012. Organisations and the business environment. Routledge.
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