HNBS 301 BUSINESS AND THE BUSINESS

ENVIRONMENT

Assignment 2

STUDENT NAME: ALINA ANASIE

Student number :15443

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Contents
Introduction ..................................................................................................................................... 4
TASK 1............................................................................................................................................5

Task1.1 positive and negative impacts the macro environment has upon business operations ...... 5
Impact of International environment ........................................................................................... 5
Impact of Technological environment ........................................................................................ 5
Impact of sociocultural and demographic environment .............................................................. 5
Impact of economic environment ................................................................................................ 6
Impact of political and legal environment................................................................................... 6
Impact of natural environment .................................................................................................... 6
1.2 PESTLE model analysis on BBC ............................................................................................. 6
Company: BBC (British Broadcasting Corporation) .................................................................. 7
PESTLE analysis on BBC ........................................................................................................... 7
Political factors: ....................................................................................................................... 7
Economic factors: .................................................................................................................... 7
Socio – cultural factors: ........................................................................................................... 7
Technological factors: ............................................................................................................. 8
Legal factors ............................................................................................................................ 8
Environmental factors.............................................................................................................. 9
TASK 2..........................................................................................................................................9

2.1 strengths and weaknesses of BBC ............................................................................................ 9

Strengths .................................................................................................................................. 9
Weaknesses .............................................................................................................................. 9
2.2 the interrelationship of strengths and weaknesses of BBC with macro environment............ 10
Interrelationship between strengths and macro environment ................................................ 10
Interrelationship between weakness and macro environment ............................................... 10
2.3 SWOT analysis and its influence on decision making........................................................... 10
Strengths ....................................................................................................................................... 10
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Opportunities................................................................................................................................. 10
Weaknesses ................................................................................................................................... 11
Threats........................................................................................................................................... 11
2.4 Impact of external environment on business objectives and decision making ....................... 11
References ..................................................................................................................................... 13

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Introduction

The business environment, in border terms can be identified as the collection of all the internal
and external factors that affect the organization activities. This environment will cover the areas
ranging from supply chain to customers, as well as the aspects from management to employees.
Business environment today, is dynamic and highly unpredictable. Organizations cannot control
the external environment that they operate, instead they have to change their internal
environment and adapt to the external environment. Hence it is necessary to understand and
analyze the both internal and external environmental factors to survive and sustain within given
business environment. The internal environment or internal factors are generally identified as
controllable factors and include elements such as value system, vision, mission and objectives,
organizational structure, human resources etc. External environment on the other and is
uncontrollable but still influence the organization activities and decision.

As cited by Daft R.L (2017) “the external organizational environment includes all elements
existing outside the boundary of the organization that have the potential to affect the
organization”. This environment consists of two categories, micro and macro environment.
Micro environment consists of factors that are affecting regular operations and performances of
the organizations. According to Daft R.L (2017) micro or task environment is generally
considered to include competitors, suppliers, customers and labor market. Worthington and
Britton (2006) identifies this as “the immediate or operational environment, for which most firms
includes suppliers, competitors, labor, and markets and may also include trading organizations,
trade unions and possibly parent company”. Both these arguments support the fact that the micro
environment is the immediate environment of the business and comprises of actors who can
influence the performance of the organization. The macro environment in general known to have
factors such as demographic, economic, natural/physical, technological, political/legal,
sociocultural factors. However different authors have further views upon this macro environment
concept. For instance Daft R.L (2017) identifies the macro environment as “general
environment” and explains six factors as main components of the general environment namely
technological, natural, sociocultural, economic, political/legal and international. However in
general the macro environmental factors influence the business indirectly, yet known to have a
significant impact on the success of the business.

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Task 1

1.1

Macro environment has impacts on business in both positively and negatively.

Impact of International environment

International environment will expand the local companies to global markets. For an example an
international brand like Starbucks, have expanded their territories from Europe, all the way to
Asia including traditional tea drinking nations such as Japan or china by opening more than 1000
coffee shops. (Starbucks Co. Annual report, 2016) An international environment will override
the geographical limitations in a business. However the negative impact of this expansion is that
this will eliminate the native small scale business in the country of origin, which cannot compete
with global brands.

Impact of Technological environment

Technological environment consist of scientific and technological advances with respect to given
industry as well as in the society in general. Technological advancements do help innovative
businesses to gain market share as well as it enables innovative products and services. Services
such as Uber were unimaginable to the world few years ago, however they have become
revolutionary market leaders in given segments. (The guardian, 2016) These are some
advantages in technological advancements, especially the advancements of information
technology. However these advancements could also create negative impacts on some
businesses, as improved information systems could replace the human employees by means of
mobile and various applications. This will lead to unemployment as well as will eliminate the
human interaction in business which is an integral part of every business.

Impact of sociocultural and demographic environment

This environment consist of various factors such ranging from age, population density, values,
norms, customs etc. (Worthington and Britton, 2006) of a society. By analyzing the sociocultural
environment businesses can understand the nature and requirements of customer groups and
approach each group differently. Negative impact of the sociocultural environment would be that

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it will force business organization to go for customization. For an example McDonald’s beef
burger will not receive the usual positive feedback in a country like India, due to embedded
cultural values and believes, and they will have to customize their product to suit Indian market.

Impact of economic environment

The economic environment consists of forces that influence market operations, including overall
economic activity, commodity prices, interest rates, currency fluctuation, wages, competitors
actions and government policies. (Steiner and Steiner 2012) This will have an impact on
businesses positively, in terms of tax concessions, favorable government economic policies, per-
capita income of the society etc. Economic environment will negatively effect on businesses
especially when the economics of operation environment slow down and when exchange rates
are fluctuating. Economic instability resulted by poor political framework of a county will also
create negative impacts on the business.

Impact of political and legal environment

Political and legal environment includes legislation, regulation and litigation. (Steiner and
Steiner 2012) This will include activates such as bureaucracy, tariffs, trade control, law, tax
policy and etc. political environment will indirectly form the economic, social and technological
environment of a country. This will have an impact on business both positively and negatively.
I.e. tax imposes or tax relief, Import export duty schemes, nationalization policies etc.

Impact of natural environment

Natural environment includes earth’s natural elements including plants, animals, resources,
climate etc. As cited by Steiner and Steiner (2012) “economic activity is a geographical force
with power to change the natural environment’. Favorable environmental factors, and
environmental friendly initiatives that are taken by business organizations will receive favorable
customer feedback, due to increasing environmental awareness. Adverse natural environmental
factors such as floods, earthquakes will affect negatively to the business.

1.2 PESTLE model analysis on BBC

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Company: BBC (British Broadcasting Corporation)

BBC is UK based international public service broadcaster and mass media operator,
headquartered in London. The company was founded by John Reith in 1992 and currently
operating in all modes of mass media including Television, Radio and Online broadcasting.
BBC’s vision is “to be the most creative organization in the world” as they state in the vision
statement. (BBC Annual report, 2016)

PESTLE analysis on BBC

Political factors:

Political environment of United Kingdom has been turbulent in recent years with the UK voting
to exit the European Union (EU), and subsequent resignation of prime Minister David Cameron
while formation of new government under Theresa May. (The Guardian, 2017) Uncertain
political environment could be a risk to any other business, however for a broadcasting channel
like BBC would benefit out of these uncertain environment, due to frequent news generation. In
such scenario, being a reliable and quality news provider will be an added advantage, as people
will depend on such news channel.

Economic factors:

Economic environment of the country has been changing specially after the Brexit moment,
especially Britain’s trading position with EU has become turbulent. (The Guardian, 2017)
However it is evident that Britain is now looking at other trading opportunities in non EU
markets like North America and Asia. Being a news broadcaster, this turbulent environment have
positively affected BBC, as general public is keener to know the latest news updates through a
reliable source. On the other hand, being multinational organization they have the strength to
contribute to Britain’s economic activates, though information distribution.

Socio – cultural factors:

United Kingdom’s National office for statistics (2016) identifies UK as an aging and increasing
population. The country is reported to have 64.6 million population as per recent statistics, and
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the country is populated with many ethnicities, majority being White (87.2%) while rest of the
population comprises with Black and Asian. These demographic factors have influenced the
BBC as well, as it has been reported in the BBC annual report (2016) as, “in changing market,
BBC television remains very popular with vast majority of adults (84%) watching at least 15
minutes each week”. This statistics proves that irrespective of vast technological advancements,
the adult audiences still tend to stick to the traditional telecasting modes. However moving
forward, for BBC it will be a challenge to maintain same statistics with changing demographics.

Technological factors:

Rapid advancements in information technology has changed the broadcasting landscape to

greater extent. As explained in BBC annual report (2016) “Digital television took place in 2012,
listening to digital radio has grown and home internet access has increased from 64% in 2007 to
86% at the start of 2016”. Specially with increasing utilization of smart digital devices such as
smartphones, and tablets, people tend to move away from traditional broadcasting interfaces such
as TV and radio. This situation has created challenges to linier radio and television services of
BBC however they have to find innovative solutions to cope up with the situation. As per the
BBC annual report percentage audience appreciation of “BBC online” is on a declining trend
from year 2013 to date.

Legal factors

Any media organization need detailed understanding of the low of the country and how it would
affect the work of media. This will include areas of deformation, contempt, copyright and
privacy. Legal environment of United Kingdom has been stable, however it is important to
adhere to above legal bounders, otherwise it would be a costly mistake to any media
organization. On the other hand,s as cited by Hand V.P (1990) “issues of law, crime and justice
are well represented among the most popular fiction and notification television series and
movies” Hence it is important to stay updated on the legal factors.

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Environmental factors

As a country UK also faces with common environmental issues such as climate change, and
resulted floods and storms. On the other hand soil contamination, Air pollution, waste
management are few other problems that are increasingly faced by the people.
(www.azocleantech.com.2017) BBC plays a vital role with respect to this environmental aspect,
especially through generating awareness.

TASK 2

2.1 strengths and weaknesses of BBC

Strengths

 Large audience base in all three broadcasting categories, namely Television, Radio and
Online, especially due to the reputation gained over the years as the oldest public
broadcasting organization.
 Policies that state the Independence of the organization, which is vital for any media
organization. They identify themselves as a “public broadcaster” and not a “state
broadcaster” to ensure this independent nature.
 Very strong brand image around the world
 Strong performances in terms of audience reach. BBC have reported 96% audience reach
in BBC services (BBC annual repoat,2016)
 Versatile products and services range offered through Television, Radio, Web portals,
and online.
 Adaptation to latest technology in mass media, such as HD, 3D channels, Digital
television and radio etc.
 Financial stability
Weaknesses

 Raising negative customer feedback with respect to biased and controversial and
misleading news releases.

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  High operating cost resulted through excessive human resources compared to other media
operators in private sector. (Telegraph, 2017)
 Life risk to the employees especially in the areas of war reporting. (The sun,2017)

2.2

Interrelationship between strengths and macro environment

Socio-cultural aspects of United Kingdom has a positive impact on strengths of BBS, for an
example as the country is having fairly larger and aging population which comprises a major
percentage of BBC audience. An aging population generally tends to stay with the oldest
broadcasting company of the country which they find trustworthy and familiar when compared
to the competitive media operators. Technological environment on the other hand align well with
the strengths of the company, as with the advances in information technology, BBC also have
moved to innovative broadcasting techniques such as HD, 3D channels, Digital television and
radio. (BBC annual report, 2016) Changing political and economic environment has impacted
on BBC to create verity of programs that meet the needs of customer.

Interrelationship between weakness and macro environment

With changing political and economic environment there are various influences to any media
company, similarly BBC has come across many controversial issues with respect to biasness and
misleading information. (ABC, 2017) The changing and conflicting political environment has
further influenced to the company, up to the extent that it would risk the lives of employees.

2.3 SWOT analysis and its influence on decision making

Strengths Opportunities

 Large audience base  Opportunities for expansion the

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  Independent policies broadcasting worldwide, with the
 Very strong brand image advanced technologies
 Strong performances in terms of  Opportunities to approach emerging
audience reach. (BBC annual economies such as China and India,
repoat,2016) where they can target for larger
 Versatile products and services range. audience

 Adaptation to latest technology in mass  Expanding social media platforms that

media, allow companies to reach multiple

 Financial stability audience segments (www.bbc.com,

2017)


Weaknesses Threats

 Raising negative customer feedback  Competition arising from other media

with respect to biased and controversial operators (I e CNN) (www.bbc.co.uk,
and misleading news releases 2017)
 High operating cost (Telegraph, 2017)  Mature and saturated local market
 Life risk to the employees

According to SWOT analysis it is evident that even though BBC is currently in a stronger
position, being the oldest broadcaster in the media industry, they also face strong competition,
turbulent environments, when interacting with internal and external environment. The company
has been making decisions to overcome weakness as it was reported that they have apologized
form public for misleading information for several times. On the other hand it has been reported
that BBC is working on reducing workforce (Telegraph, 2017) as well. This implies the impact
of internal and external environment on organization decision making.

2.4 Impact of external environment on business objectives and decision making

To face the huge competition and diverse customer needs, BBC has formed their corporate
objectives to cover broader area. For an example BBC’s overall public purposes have been stated

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as, sustaining citizenship and civil society, promoting education and learning, stimulating
creativity and cultural excellence, representing UK, its nations, religions and communities,
bringing the UK to the world and world to the UK. (www.bbc.co.uk, 2016) BBC have set the
objectives to cover majority of socio-cultural values, as for a media organization a society and
people are the primary importance. Father, by looking at the overall company objectives, it’s
obvious that they have looked at the prevailing competition as well. www.bbc.co.uk, (2017)
states the objectives as, to make distinctive, world class content, transform our offer for younger
audiences, develop more personal BBC, and demonstrate value for money in every area of our
work. By looking at these areas, the impact of organization environment on organization
decision making, could be understand for greater extent.

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