From: Malaika Hussain

To:
Unit:
Unit Name: Business and the Business Environment
Submission Date:
Business and Business Environment

Business: An organization or economic system where goods and services are exchanged for
one another or for money. It is also an institution organized and operated to provide goods and
services to society under the incentives of private gain.

Business Environment: A set of condition social, legal economical, political or institutional

that are uncontrollable in nature and affects the functioning of the organization. And it’s also
the combination of internal and external factors that influence a company’s operating system.

There are two types of Business Environment, Internal and External Business Environment.

Internal Business Environment: Internal environment is a component of the business

environment, which is composed of various elements present inside the organization that can
affect or can be affected with, the choices, activities and decision of the organization.

Factors that influence internal environment are that which are under the control of the
organization, but can influence business strategy and other decisions are termed as internal. It
includes:

 Value System
 Vision, Mission and Objectives
 Organizational Structure
 Corporate Culture
 `Human Resources
 Physical Resources and Technological Capabilities
External Business Environment: External environment is composed of all the outside
factors or influences that impact the operation of business. The business must act or react to
keep up its flow of operations. The external environment can be broken down into two types:
the micro and the macro environment.

Micro Environment: consists of the factors that directly impact the operation of a company.

Macro Environment: consists of general factors that a business typically has no control
over. The success of the company depends on its ability to adapt.

KFC
KFC is a fast food restaurant chain that specializes in fried chicken and the major headquarters
are in United States. It is the world's second largest restaurant chain after McDonald's and the
company is a subsidiary of Yum Brands which is also a restaurant company that owns Pizza Hut
and Taco Bell chains. The main purpose of KFC is to deliver quality and different variety of
chicken to the customers so that they can enjoy fast food. It was one of the first fast food
chains to expand internationally and it has opened outlets in different parts of USA (Xiao and
Fu, 2009).

Learning Outcomes
LO1: Explain the different types of organizations, including their size and scope?
Different between for profit and not for profit and Non Government organizations (NGOs)

Micro, small, medium sized enterprises (SMEs). Different business purposes, objectives and
supply of goods and services. The range of legal structures associated with different forms of
business: sole traders, partnership and private limited companies.

LO2: Demonstrate the interrelationship of the various functions within an organization and
how they link to organizational structure.

The various functions within an organization:

The role of marketing, finance, human resource management and operations within an
organizational context and the interrelationships.

How functions relate to overall organization mission and objectives.

Organizational structure: Different structures depending upon the size and scope of the
organization, including bureaucratic and post-bureaucratic, parent, strategic business units
(SBUs), matrix and functional levels.

Organization structures and complexities of transnational, international and global

organizations.

LO3: Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations.

The context of the macro environment:

The application of the PESTLE framework and how organizations need to monitor and forecast
the external influences.
The impact of the digital revolution on production and consumption; the impact of the social
technologies; cyber space security; emerging BRICKS markets, the global shift in economic and
social power and ethical and sustainable growth.

LO4: Determine the internal strengths and weaknesses of specific businesses and explain their
interrelationship with external macro factors.

Framework for analysis:

Introduction to SWOT and/or TOWS analysis and how can they assist in the decision making
process within organizations.

Key external macro factors including the competitive environment and government
intervention that influence organizations and business.

Learning Outcome 1 Task 1

Organization: An organized team and different groups of people working together in a
situation to gain certain goals and to attain targets called organizations. People have experties
in their respected fields; they work together on the basis of their specialization. All people work
individually and collectedly to gain organizational outcomes.

Profit and Non Profit Organization:

Profit Organization: Any business entity, whose primary aim is to generate profit from the
regular operations, with a view to maximizing the wealth of owners, is called as a profit
organization. The profit earned by such entities is either retained in business, for future of
reserves or distributed to the owners as the dividend.

Non Profit Organization: A non-profit organization, as the name suggest is a legal

organization whose primary purpose is to promote public good rather than making profit.
These are founded by a group of people who come together for a common purpose, i.e. to
provide service to members and people.

Difference between profit and non profit:

Profit:

 A profit organization is defined as a legal organization, which is operated with the sole
of aim of earning profit from the business activities.
 A profit organization, as its name suggest, works for profit maximization of the concern.
 A profit organization can be a sole proprietorship, partnership or a body corporate.
 The management of a profit organization is overlooked by a sole proprietor in the case
of sole proprietorship, partners in case of partnership and directors in case of company.
 The major source of income, for a profit organization, is from the sale of goods and
services.
 Money earned over and above by the profit organization, i.e. profit, is transferred to the
capital account.

Non Profit:
 Non-profit organization is one that is operated with the primary objective of
benefiting the society as a whole.
 Non-profit organization work for providing service, for the well being of the
society.
 Non-profit organization is an association of a person, which can be club, trust,
public hospitals, cooperative society, etc.
 There is a board of directors, trustees, committees or governing bodies who look
after the management of a non-profit organization.
 The non-profit organization, derive a considerable part of their income from
donation, subscription, membership fee, charity and so on.
 The excess of income over expenses results in the surplus which is transferred to
the capital fund.

KFC a profit Organization

I’ve selected the KFC which is an profit organization and its main objective is to
earn profit. The main reason why I selected this organization is that it’s the
world’s second largest restaurant chain and its locations globally around 136
countries in 2018.

Micro Enterprises: Micro enterprises is a small business that employs a small

number of people. A micro enterprises usually operates with fewer that 10
people and is started with a small amount of capital advanced from a bank or
other organization.
Business Purpose of Micro: Is to create large scale employment in the
economy, separate from the formal sector. And they achieve this target with
very limited finances and investment.
Objective: Is to spread industries and trade in economically backward area.
This helps in development of the overall economy.

Small Enterprises: A small enterprise, or more simply, a small business, is one

marked by a limited number of employees and a limited flow of finances and
materials.
Business Purpose of Small:
Objective: To generate large scale employment opportunities for the
unemployed speedily with relatively low investment.To eradicate unemployment
problem from the country. And to encourage dispersal of enterprises to all over
the country covering Rural Areas, smaller towns and economically backward
regions.

Medium Sized Enterprises: A small or a medium sized enterprise, or SME, as

defined by the European Commission is a business or company that has fewer
that 250 employees.
Business Purpose of Medium:
Objective:
Three legal structures of the business:

1. Sole Traders: A sole trader is the simplest form of business structure

and is relatively easy and very cheap to set up. In sole trader you’ll be
legally responsible for all aspects of the business. You’ve to make all the
decisions about starting and running your business and after that you can
employ people.
2. Partnerships: A partnership business is own by 2 or more people to
start a business. In this business the share and income is equally divide in
the partners. All partners act on behalf of each other in business.
3. Private limited companies: A private limited company is a type of
privately held small business entity, in which owner liability is limited to
their shares. A company becomes and independent legal structure when
it incorporates.
Learning Outcome 1 Task 2
Small organizations has less objective, goals, market share, profit, and less chances of growth.
On the other hand medium organizations has more objectives, goals, market share, profit and
growth. The large organization has more goals, objectives, market share, profit and has more
chances of growth compare to the other two organizations.

The organization that I choose was KFC and it’s a large organization and it’s a second biggest
food chain in the world. The total revenue of KFC was 23 billion in 2013.

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 their size.
If the size of organization is enormous and invests huge money, then they set the big target as
their business 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 sees that, 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.

Learning Outcome 1 Task 3

Stakeholder: A stakeholder is either and individual or group of organization who is impacted
by the outcome of a project. They have an interest in the success of the project.

The three stakeholders of my organization is Shaheen Chemist, Gloria Jeans and The City
School. The responsibilities that a company has on them is that the KFC have to sell their food
in less amount so more people come and more profit will be earned. The organization should
be neat and clean. The organization should have a good staff member who knows very well
how to talk and fulfill the customer demand. The organization should have a proper sitting
system and the order should be given on time to the customer.

The influence that the stakeholders have on the company is that if the brushier of the company
is given to the stakeholder then the people coming to the stakeholders sees the brushier and
will come to the company. The company must have a good relationship with the stakeholders
so the people who go the stakeholders they refer to our company. In this way both organization
have a profit in it.

Learning Outcome 2 Task 4

Human Resources: Human resources is used to describe both the people who work for a
company or organization and the department responsible for managing resources related to
employees. Human resource management is a contemporary, umbrella term used to describe
the management and development of employees in an organization also called personal or
talent management. Human resource management involves overseeing all things to managing
an organizations human capital.

Marketing: Marketing refers to activities undertaken by a company to promote the buying or

selling of a product or service. Marketing includes advertising, selling, and delivering products
to consumers or other businesses. Some marketing is done by affiliates on behalf of a company.
Finance: Finance is a board term that describes activities associated with banking, leverage or
debt, credit, capital markets, money, and investments. Basically, finance represents money
management and the process of acquiring needed funds. Finance also encompasses the
oversight, creation, and study of money, banking, credit, investments, assets, and liabilities that
make up financial systems.

Operations: Everything that happens within a company to keep it running and earning money
is referred to collectively as business operations. Business plans often include a section
dedicated to operations so that company founders understand the systems, equipment,
people, and processes need to make the organization function.

Vision: Big picture of what you want to achieve.

Mission: General statement of how you will achieve the vision.

The mission or a vision of KFC is that to be leading integrated food services group in the world
delivering consistent quality products and excellent customer focused services. Or to sell food
in a fast, friendly environment that appeals to price conscious, health minded consumers. KFC
major competitors include Wendy’s, Subway, McDonalds and Burger King.

Learning Outcome 2 Task 5

Different structures depending upon the size and scope of the organization, including
bureaucratic and post bureaucratic, parent strategic business units, matrix and functional
levels.

Learning Outcome 2 Task 6

Transnational: With a transnational organizational structure, you generally organize your
business along several dimensions, such as geographic, product and functional level. This
means you achieve integration either within various product categories or within geographic
areas or functions.

International: International business organization structure is defined by the formal

structure, coordination and control systems, and the organization culture. It’s the formal
arrangement of roles, responsibilities within an organization.

Global Organizations: An international alliance involving many different countries.

In the macro environment, new risks are always appearing, and it became harder to identify for
an organization. In the case of retail, it is not possible for any organization to reject the change
as they raise and they have to adapt those changes. Macro environment include economic,
societal, technological, and governmental influences. Technology has several active and
negative impacts on the business operations.

The major external and uncontrollable factors that influence and organizations decision making
and affects its performance and strategies. These factors include the economic factors;
demographics; legal, political, and social conditions; technological changes; and natural forces.

A pestle analysis is a framework to analyze the key factors Political, Economic, Sociological,
Technological, Legal and Environmental influencing an organization from the outside. It offers
HR practitioners insight into the external factors impacting their organization.

Learning Outcome 3 Task 8

Political Factors of KFC: KFC is one of the only fast food restaurants with unhealthy food in
the name –unlike McDonalds or Burger King, in which burgers can be still healthy. KFC did the
smart thing; dropped the ‘’fried’’ without having to entirely overhaul their name and image. It’s
psychological change; KFC still sells the same high-calorie chicken, but eliminating the word
from consumer minds can cause them to ‘’forget’’ the connection between unhealthiness and
fried chicken. Over the last couple of years, KFC has been drawn into political drama. On the
official Twitter page, KFC mocked McDonalds mascot while simultaneously parodying President
Donald Trumps tweet, where he mentions having a ‘’bigger and more powerful’’ nuclear button
than North Korea. Mocking Mr. Trump ruffled the feathers of his supporters, and even those
who aren’t his fans weren’t thrilled with KFCs mocking tone in general. Some did see the tweet
as harmless humor, but perhaps in poor taste.

In May, KFC became the accomplish of a political dispute. Tennessee Democrat, Rep. Steve
Cohen, attempted to mock Attorney General William Barr by busting out a giant bucket of
Kentucky Fried Chicken during a hearing. This was Cohens attempt at calling Barr a ‘’Chicken.’’
In the press images, KFCs logo was clearly displayed. This wasn’t a publicity stunt with KFCs
permission (that we know of) and it could’ve easily tarnished KFCs reputation.

Economical Factors of KFC: KFC is creating vegan items to compensate for vegan and
dieting consumers. As of a few days ago, KFC started experimenting with fried chicken
sandwiches; instead of buns, doughnuts will house the fried chicken. And they’ve created two
vegan fried ‘’chicken’’ options, which are essentially boneless wings and vegan nuggets. Hordes
of people came running to the nearest KFC location just to try these new creations. Clearly,
these experiments were successful for the company, both economically and socially.
Social Factors of KFC: Fast food restaurants struggle with social issues that associate
negative feelings from consumers to the brands. Many people worry about the mistreatment of
minimum wage food workers. They also worry about how the animals used for the menu live;
many are injected with hormones, kept in cramped compartments for the entirety of their lives,
and forced to carry more fate than normal. Organizations like PETA gave raged against the
mistreatment of these animals, boycotting the companies who follow this unethical practice.

Another issue is, of course, the high calorie food. KFCs menu is filled with these foods, and with
the obesity crisis thriving in Western countries, restaurants like KFC are often blamed for the
epidemic. Offering vegan options is one way to appease people desiring healthier options; it
also introduces consumers, who otherwise wouldn’t look twice at KFCs offerings, into the
restaurants.

Technological Factors of KFC: Unlike many other fast food restaurants, KFC are adopting
the newest technology for workers. They believe that by improving the environment for
employees, customer service may improve too. It’s rather normal move considering how tech-
savvy many of the younger workers are. They’re more likely to accept and understand new
forms of technology in the workplace, such as voice activated tests for trainees.

Beyond the workplace, KFC is also offering advanced technology for deliveries, kiosks, and
easier ordering. You can now order your meal before reaching the cash register, making the
entire process much quicker for customers. This is a ‘’click-and-collect’’ feature and it’s already
beneficial for KFC restaurants in Australia; approximately 98% of locations offering click-and-
collect have witnessed a 20% profit increase.

Environmental Factors of KFC: A complicated history with KFC’s paper supplier has
affected the personal opinion of the brand. The paper company is linked to deforestation,
which negatively impacts the health of the planet. It also contributes to the endangerment of
wildlife and similar species who are already on the brink of extinction.

Legal Factors of KFC: At the moment, KFC operates in more than 120 questions around the
world. To remain operational, the company must follow the laws in each location. This includes
filing the proper amount of taxes, adhering to labor laws, and ensuring all restaurants are up-
to-code. If they fail to follow any of the legalities, they may find themselves in court or even
shutdown.

PESTLE Analysis of KFC:

In Conclusion: KFC remains a staple fast food restaurant in today’s world. Despite the latest
political stunts and debacles, the company is focusing on adopting new menu items and
technology to improve customer satisfaction. And it’s working; profits in set locations are
already on the rise. If the company can step away from questionable corporate relationships
and adhere to laws and regulations, it’ll likely continue to flourish in the fast food industry.

Learning Outcome 3 Task 9

Internal and external analysis helps the organization to identify the strength and weaknesses of
KFC. Internal analysis assists the management to identify the weaknesses of the organization as
well as it help the organization to eradicate the weaknesses by implementing the suitable
policy. The internal analysis facilitates organization to develop the internal operations of the
organization thus they are able to achieve the organizational goals. The management can
identify the internal issue with the help of internal analysis. This is effective tool that help KFC
to identify the problems of the employees and try to solve the problems. Internal analysis
reveal the reason that what are the causes of low productivity in the organization and what are
the way to improve the productivity. The analysis helps the HR department to identify the
strength of the organization thus they are able to complete in the market. External analysis
facilitates organization to identify the external weaknesses of organization by doing different
kind of analysis like PESTLE, SWOT etc. The analysis assists the organization to identify the USP
of the organization that differ the business from other competitors in the market. For instance
the business strategy of KFC is different from the other competitors in the market that
management would easily survive in the market. It can be said that internal and external
analysis is the best way to evaluate the overall performance of organization and create the
bench mark for the other organization is serving quality services.

Strength and weaknesses are linked to the external macro factors

Strength and weaknesses of the organization are linked with the external macro factors
because in some cases organization may be affected by the outside factors. Organization is not
able to identify various factors that affect the management decision making directly and
indirectly. So this macro factors can be identified with the help of external factor analysis.
Strength and weakness are the opposite factors that give power and weakness to the
organization. Proper analysis of these two factors gives different kind of achievement to the
business. Both the factors are interrelated to each other and they may increase the risk of
external macro factors in the organization. Macro factors may affect the organization from
outside boundaries of the organization and affects the business in positive and negative way.
Macro factors analyzed with the help of PESTLE analysis like political factors may affect the
organization in political ways like government pressure thus organization it increases the
weakness of business. Social factors may affect the business in negative way like CSR
responsibility of the organization thus business is liable to do social activities. Social
responsibility is the duty of every business and in financial terms it can be weakness for the
organization. PETSLE analysis facilitates KFC to evaluate the external factors and try to find the
suitable alternative in order to overcome this kind of hurdles. External factors consists
competitors policy, market changes, government policy, legal rules and regulations etc.

Learning Outcome 4 Task 10

SWOT analysis is the best way to identify strength, weakness, opportunities and threats if the
organization is not able to identify this factors then it will become serious issue for the business.
SWOT analysis is the best tool that facilitates organization to identify the internal and external
factors in the organization and to evaluate them according to the requirement of organization.
SWOT analysis is the best way to identify the opportunities in the market and try to evaluate
the issues that has been faced by the business due to achieve the desired goals.

Decision making process totally depends on SWOT analysis without finding exact facts and
figure. Its impossible to make decision in other words we can say that future planning of an
organization totally depends on SWOT analysis. Future planning belongs to making strategies.
All of strategies are being perform or design on the basis of exact fact an figure strategies are
main part of planning.

Learning Outcome 4 Task 11

KFC

Strength:

 Second best global brand in fast food industry in terms of value

 Original 11 herbs and spices recipe
 Strong position in emerging China
 KFC is the market leader in the world among companies featuring chicken as their
primary product offering
Weaknesses:
 Untrustworthy suppliers
 Negative publicity
 Unhealthy food menu
 High employee turnover
 Lack of strong marketing efforts

External macro factors

Competitive Environment: KFC is performing its economic activities in a
competitive environment where different competitors are competing in a
open market. As KFC as strong and well experienced labor force that’s why
competition is very healthy. KFC is competing in open market by fulfilling all
of its legal obligation related with transportation as well as company
operations.
With reference to weaknesses KFC is facing lots of issue related to key
external macro factors like competitive environment and government
intervention. As KFC has lengthy supply management process that’s why
competitors take benefits to compete by supplying quick orders within the
market as a result customers has late asses with KFC product and they have
the choice to purchase competitors port for your products and KFC no
entrance are relate entrance.
As KFC supplies its product across the country so that’s why governmental
intervention is a major hurdle which causes different complexities during the
trade. Along with that the country KFC operates so different rule and
regulation have to face and obviously government interments during in
different procedures.
Effects on decision making process: Micro and macro factors both intervene
and impact positively and negatively on decision making process. It also
affects on business objectives of an organization. Without considering micro
and macro factors decision making results badly even in the performance of
an organization. If micro and macro factors have been utilize positively they
will result good business objective and will support during the decision
making process.

Conclusion
The current report explains the current trend of market and various ways to
identify the strength and weakness of organization. The study identifies
different objectives of organization and tries to fulfill the demand of
customers in the organization and evaluate the overall performances of
organization with the help of PESTLE and SWOT analysis. It explains different
tools to identify the factors that affect the business internally and externally
and report explains the strategies that help the business to sustain in the
market.

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