Unit 1 How Business Operate HND Diploma in Business Level 5 Regent College


Business environment compromises of all internal and external factors that affect overall function and operation of company. It refers to the collection of individual, entities and other factors which are may or may not be under the direct control of company, but can influence the its profitability, performance, growth and even survival (Casadesus-Masanell and Ricart, 2011). For running business in a successful manner, it is primary important to discover all essential elements that is required in carrying out business activities and operation. It encompasses physical, human and financial resources. In order to determine how company like TESCO which is a leading British Supermarket store operates their business function throughout the year, a report has to be produced that outlines all essential aspects related with it. The report describes different types of organisation, their structure, impact of customer services, team work, various leadership and motivational style, and benefits of customer retention.

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Task 1

1.1 Classification of different types of Private and Public organisation

Public organisation are normally run, managed and controlled by Government Body of respective country. Public sector companies mainly classified into departmental undertaking, government companies and statutory companies. They all run with an aim of providing benefit to society and its members. Their source of raising money include public revenue like tax, duty, penalty etc. On the other hand Private sector companies are owned and controlled by private individuals. It can be classified as Sole Proprietorship, partnership, multinational corporation, co-operative society etc. Private Players arrange their funding through issuing debentures and shares or by taking loan. The main objective of companies under private sector is to earn higher profits and revenue and also capture high market share in overseas market (Trevino and Nelson, 2016). Voluntary Organisation are mainly run with an aim of providing benefit to society and its members. They are managed and controlled by their volunteers who willingly associated with such organisations.

1.2 Structure of different types of organisation

Each company is having its own different structure. For example the structure of public organisation is large as compared to private one. Private only aims at increasing their market share and profitability ratio. Public limited focuses on providing benefit to society and its members.

1.3 Impact of national, local and global on economic environment

TESCO is a leading British multinational grocery and merchandise retailer, headquarters in England, UK. The company mainly deals in selling food and non-food item all across the globe. In UK, the market share of TESCO is near about 28.4%. It was founded in the year 1919 and from past 99 years they aims at meeting customer requirement in an effective and efficient manner (Werbach and Hunter, 2012). The perform their business operation in other countries as well like Ireland, Thailand and Hungry. As they are performing their business operation in both national and international, their overall performance also gets affected by the business environment in which they are currently running. Following are the key areas of policy that influence TESCO's business are as follows:

Economic Policy: The economy of UK showing positive response in the form of recovering from the financial crises. This means that there is an increase in the growth rate and gross domestic product by 2.7%. This comes out as an advantage for the company. As a result, there is an increase in the purchasing power of customer which ultimately increases the profitability ratio of TESCO.

Legal Policy: UK Government is thinking to change or reform the common agricultural policy. It means that they are revising the way in which direct subsidies are allocated to farmers (Parsons, Lacey and Moffat, 2014). Due to this, there might be chances that government may provide lower subsides to farmers which indirectly affect overall operation and function of TESCO.

Task 2

2.1 Significance of accounting for business success

For running business in a systematic manner, it is important for every company to record data concerned with assets, daily transaction, liabilities, invest, debt and more. With the help of these record, one can easily figure out how company perform throughout the year in terms of earning profit and facing loss. These can accurately be prepared by the account department of particular company. But for this, TESCO is required to provide timely data regarding daily transaction so that account department can prepare financial statement accordingly. With the help of financial statement, it become easier for stakeholder to measure the performance of company throughout the accounting and financial year. In addition to that, information related with profit or loss incurred can also be attained.

5.1 Functions of HR Department

HR Department of any organisation focuses on finding and hiring most talented and suitable candidate for the company who with their effective skills and knowledge so that organisational objective can be achieved in an effective and efficient manner (John Walker, 2014). Apart from there are others functions that HR needs to perform such as training and development, compensation and benefits induction and orientation etc. Following are the brief explanation of HR Function:

Training and Development: The main role of HR Department is to arrange training and development session for their employees so that their overall productivity and efficiency can be increased. As a result, trained employee work incredibly hard and attain organisational objective and goals in an effective and efficient manner (Bryman and Bell, 2015).

Recruitment and Selection: One of the primary role of HR manager is to recruit most talented and competent candidate who aid in accomplishing pre-determined goals in a cost effective and timely manner.

5.2 Key elements of employment legislation

Equality: Equal and fair opportunities should be given to all employees so that everyone can get the chance of to grow and develop themselves both personally and professionally. Any citizen of UK is liable to work who have legal work permission must get the opportunity to work. TESCO is selecting candidate on the basis of their skill and knowledge instead of discriminating among them on the basis of sex, gender etc.

Data Protection: Any employee of TESCO is not allow to share their confidential data with any third person who does not belong to the company. If in case they found doing so then the employee will have to face consequence for the same.

Minimum Wages: Each and every company is liable to pay their employees as per the minimum wages act defined by the UK Government.

Task 3

3.1 Interpretation of Profit and Loss of TESCO

Profit and Loss Statement of TESCO for the year 2017 is given below:



Total Revenue


Cost of Revenue


Gross Profit


Operating Expenses


Research Development


Selling General and Administrative


Total Operating Expenses


Operating Income or Loss


Income from Continuing Operations


Total Other Income/Expenses Net


Earnings Before Interest and Taxes


Interest Expense


Income Before Tax


Income Tax Expense


Minority Interest


Net Income From Continuing Ops


Non-recurring Events


Discontinued Operations


Extraordinary Items


Effect Of Accounting Changes


Preferred Stock And Other Adjustments


Net Income Applicable To Common Shares


Interpretation: From the P&L account of TESCO it can be interpreted that total revenue earned by TESCO is 55295000 and Gross Profit is 2363000. It can be clearly seen that company is doing well in the market and having strong market base that gives them high competitive edge over their rivals.

Task 4

4.1 Roles of team members

It has been believed that if employees work collectively, chances of accomplishing goals increased tremendously. Working collectively means employees are sharing ideas and doing collective efforts in order to achieve business objectives in an effective manner (Mason and Spring, 2011).. With the help of this, TESCO can formulate best possible strategies with the mutual consent of all staff members. In addition to that when workers work together the relationship they share gets stronger that ultimately benefits the company only. Each employee is having its own specialised skill that makes distinctive from others. Taking the advantage of this, TESCO can set best policies and strategies in association with the creative mind set of different personnel. Along with this, chances of dealing with uncertainty in an effective and efficient manner also gets increase.

4.2 Stages of team development

Team Development plays crucial role in TESCO as it help in attaining pre-determined goals and objectives within the stipulated time frame (Porter, 2016). Chances of attaining success increases when employees work together or collectively. Following are the various stages of team development:

Forming: It is the first stage, that laid stress on influencing team members to put extra efforts towards achieving business objectives and goals.

Storming: At this stage, brainstorming activity among team members takes place because the thinking and view point of every employee or team members is different. Chances of arising conflict is high at this stage.

Norming: At this stage team members take an initiative regarding start solving their conflict or differences and also focuses on appreciating the work and strength of other co-worker. The main aim of this encourage team building.

Performing: This is the last stage, where work is executing in TESCO in proper manner and there is no friction exist among employees. In-fact they start considering other workers as their colleagues not as competitors. At this stage, TESCO can achieve their business goals and objectives in an effective and efficient manner.

4.3 Three motivation theory

  1. Maslow Motivation Theory: The theory was framed by Abraham Maslow in 1943 and he classified the need of individual into five categories:
  • Physiological Needs: These needs are basic physical requirement for the survival of human. It include air, water, food, shelter
  • Safety Needs: It includes needs related with job security, financial security and personal security
  • Social Needs: Needs at this level states that it is essential to feel sense of belongingness and acceptance (Hills and Pfitzer, 2013) .
  • Self-Esteem Needs: At this stage, individual needs to develop a concern regarding getting recognition, sense of accomplishment, importance among others.
  • Self-Actualization Needs: This level of need refers to what an individual's full potential is and the recognition of that potential.
  1. Two Factor Theory: The theory was proposed by Frederick Herzberg in 1959. According to his theory there are two types of job factors that present in workplace and possess great impact on the performance and productivity of employees. Job Factor categorise into

Hygiene Factors: These job factors are important for existence of motivation at workplace. But they do not provide long term benefit (Patscheke and Hawkins, 2011). It includes company policies, pay, fringe benefits, status, job security etc.

Motivators Factors: These job factors provide long term benefits to workers. Such factors motivate or encourage employees to work for a superior performance. It encompasses sense of achievement, growth, responsibility, meaningfulness of the work etc.

  1. Theory X and Theory Y: It was given by McGregor in 1960. He believes that there are two aspect of human found at work place one is negative and other is positive. Theory X deals with negative factor where employees run out from work. On the other hand, Theory Y deals with such factors that provide motivation to workers and they willingly take more work.

4.4 Different types of leadership style

Participative: Under this leadership style, leaders involve followers in their decision making process which makes them feel valued and important. It also promote motivation among employees which encourages them to work incredibly hard towards achieving business objectives and goals.

Autocratic: Under this style of leadership, leaders are often considers as the boss as they impose work or task on others. Their followers needs to follow what their leader is saying. No one can challenge their decision (McGrath, 2013).

Task 6

6.1 Impact of customer Service

It refers to the process of services given by every company to its target customers so as to make them satisfied in an appropriate manner. These services are given by company to its potential buyers in order to provide them their goods and services in an effective and efficient manner. With the help of these services company can generate more loyal customers that further contributes in earning higher profitability ratio for them (Gibson-Graham, Cameron and Healy, 2013). It employees are satisfied firm’s goodwill gets increases and as a result new customers are automatically attracted.

6.2 Benefits of customer retention

It has been believes that if company is able to retain 5% loyal customers, then its profits gets increase up to 125%. Retained customer brings new customer that indirectly raise the overall profitability of the company(Porter and Hills, 2014). If customers are happy with the product or services provided by the company it will improve company’s brand image in the market. As a result, firm’s customer and market base becomes much stronger.

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From the above mentioned report it can concluded that in order to run and operate an organisation in an effective manner it is primarily important for every company to assess the impact of both micro and macro factors in which the company is mainly operating. It will help the company in preparing themselves for future contingencies in a systematic manner. Also, managers need to emphasize on providing training and development to employees so as to make them motivated and productive. As a result, overall organisational performance and productivity increases.

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