H/508/0525 How Businesses Operate Unit 2 Level 5

Answer :


Business environment consist of both macro and micro factors which need to be consider at the time of running business effectively (Baden-Fuller and Morgan, 2010). Further, different types of changes coming in external market in relation to choices, preferences and perception of customers so it is important for all the businesses to make alteration in their organisation structure so they easily grab all the market opportunities and remove threats coming in this market. Therefore, for all the organisation it is important to scan all the external conditions and make innovation in their products and services which satisfy the customer most. Under this assignment the company which is pre-freed i.e. Sainsbury's  that is UK based retail organisation deals in grocery and clothing industries require to formulate such type of policies that help them in gaining competitive advantages over competitors.


1.1 Types of organisation in public and private sector

In every organisation department is divided into different sectors and area on the basis of which they have to decide what type of policies and function has been conducted by organisation. Company engaged in different goods and services formulate various strategies in order to earning profits and fulfilling the objectives in appropriate manner. In corporate world there are different types of sector the main is public and private sector who has their own functioning and types which describe below:-

  • Public company:- It includes all the governmental, public and other local authority who formulate their own legal rules regulation for the conducting of business. Further, they set the price of their product according to the purchasing power of customers. The main objective of this company is to serve general public. Types of public company are:-
  • Departmental undertakings:- This is one the oldest form of public organisation in which all the decision are taken by top authority only.
  • Statutory corporations:- these are those public sector organisation which are establish by the act of parliament. They are owned by government with or without shareholders.
  • Government company:- these are those public association which are covered under companies act,1985 and 2006. For example British Railways are large sized corporation provide railway service to large audiences.

Private company:- These type of organisation are owned, controlled and  managed by general rules regulation of private persons only (Carroll and Shabana, 2010). Further these company have their own rules regulation and policies which are made according to the vision mission of organisation. Different types of private companies are described below:-

  • Sole proprietorship:- These type of organisation are owned and controlled by one individual only. They come with their own capital and share profit losses and take risk for earning more returns.
  • Partnership:- Under this type of organisation more than two partners are coming in partnership and all terms conditions are prescribed in partnership deed. In that deed all the things include profit loss, capital ratio and working hours.
  • Limited liability:- A new concept coming known as limited liability partnership in which partners enjoy limited liability I.e. there are not liable for losses of business.

1.2 Different organisation structures within the business and reason for variations

In different organisation company have their own organisation structure according to their working conditions and different source of medium. Further company have their own organisation structure according to the vision and objectives. Sainsbury's which is UK based retail sector dealing in clothing and luxury items. For effectiveness in both production and manufacturing company has to arrange optimum funds for proper conducting of business.

From research and observation it has been concluded that Sainsbury's adopting flat organisation structure because of less level of management and company has for better decision making they have to communicate with strategic level only. Apart from it, it has seen that company take initiative to induce employees for active participation that leads to rational decision making.

1.3 Describe how the local, national and global economic environment impact Sainsbury's business

Every organisation is affected by macro and micro elements of external environment so they need to make adjustment in their organisation structure which leads to increase in profitability and market share. Retail market is highly affected by changing conditions and dynamic situations in the form of innovation and digitalisation in their products and services. Therefore, it is essential for Sainbury's to make updation in their working conditions so they easily grab market opportunity and reduce threats which lead to accomplishment of targets. Further Sainsbury's expand their supermarket branches in various sectors that affected in local, national and global level in context of Sainsbury's which described below:-

  • Local level:- In local level there are different types of instability coming in local market due to change in customer taste and preferences in respect to products services.
  • National level:- Due to different crises coming at national level like inflation, deflation and change in foreign exchange rate are hurdles in their development.
  • Global level:- when the company is planning to expand in different countries they have to compile with different legal rules regulation, taxation policy that affect their goodwill also.


2.1 Importance of accounting for business success

Company has to formulate different accounting principles in their organisation structure which they have to follow in order to maintain all the data and accounting information that facilitate good financial condition at global level (Casadesus-Masanell and Ricar, 2011). The main benefit that can be earned from accounting is reduction of wastage losses, increase profits and help in enhancing productivity and efficiency of business. The main function of accounting are described below:-

  • Planning:- It is first function of management in which management has to make proper arrangement of cash, sales transactions and evaluate various strategies for implementing various projects of organisation for increasing sales.
  • Monitoring and controlling:- Second function of accounting is related to monitoring and controlling of all business activities by comparing actual performance from standard performance and if any deviation arises take corrective step for it.
  • Budgeting:- Most important thing is forecasting of budget which will occur in future and for which proper framework is prepared on the basis of which all the action plan has been made for better results in future.

Therefore, Sainsbury's has to consider all the above points for more profitability and better market share at global level.

5.1 Different function carried out by HR department in business

Their are different types of HR function which has been executed in every organisation for better performance of employees are stated below:-

  • Training development:- HR manager of Sainsbury's has to organise various programmes related to training development in which guidance given in relation to improving the performance of employees for effective results (Eccles and Krzus, 2010).
  • Employee engagement:- It is utmost duty of HR manager to induce their employees for active participation in decision making so that better and good ideas obtained from them.
  • Conflict management:- It is an responsibility of HR manager to solve all the issues and problems faced by workforce that help them to establish long term relationship and retention with employees.

Therefore, Sainsbury's has to consider all the above points in order to regulate the business effectively.

5.2 Features of employee legislations

Employee legislation means various types of legal regulation that help in protecting the interest of employees from company exploitation. Description of legal laws are prescribed below:-

  • Minimum wages act:- This act states that employees in organisation must enjoy minimum wages that satisfy the basic needs requirement of them. Further, if employee discriminated in such thins then he or she has right to sue against company.
  • Anti discrimination act:- This act states that no employee can be discriminated on the basis of caste, creed, racism and gender inequality. Inequality arises in the form of promotion, demotion and transfer of employee.

Therefore, Sainsbury's has to adhere with all legal laws and regulation that enforced by UK government for the benefit of company.


3.1 Interpret the information on profit and loss account

It is essential for every organisation to prepare systematic financial statement of company that shows the true financial position I.e whether company is liable to pay all debts and maintain solvent position to meet regular expenses arises in business. Following is Profit and loss account of Sainsbury's in year 2017 are stated below:-

Profit and loss Account of Sainsbury's (2017)



Total Revenue


Cost of Revenue


Gross Profit


Operating Expenses


Research Development


Selling General and Administrative


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


Net Income From Continuing Ops


Non-recurring Events


Net Income


Net Income


Preferred Stock And Other Adjustments


Net Income Applicable To Common Shares




From the following P&L account of Sainsbury's it has been evaluated that company total gross profit is 1988000 and Income from continuing operations are 2162000 and net income is 500000 which state stable position of business. Although they need to make changes in their organisation structure so they improve financial performance in future.


4.1 Stages of team development

Their are different stages of team development stated below:-

  • Forming stage:- It is first stage in which employee enter into company for first time and not familiar with internal rules (Prno and Slocombe, 2012).
  • Storming stage:- Under this stage individual feel excited and have joy because of expierence in job at first time.
  • Norming stage:- Employee is appreciated by team members in respect of their skills and talent they had.
  • Performing stage:- In this stage employee are familiar with legal rules regulation and adopt that style and approach that improve their performance.
  • Adjourning stage:- In this stage team members are separated from each other after completing the particular project of company.

Therefore these stages helpful in knowing the theories applicable in organisation which Sainsbury's need to apply in their working style.

4.2  Description of motivational theories

Mostly in every organisation various motivational theories are adopted according to their vision and objectives of company but Sainsbury's adopt Maslow motivational theory in order to motivate employee which described below:-

Maslow model:-

Under this theory first need related to physiological needs which consider as basic needs of individual which must be accomplished (Welford, 2013). Second related to safety security where security is related to job and safety from life which must fulfil by employee from their job only. Third related to esteem needs in which individual want respect and recognition in respect of their work that motivate him fully and last is self actualisation which means desire to achieve something.

4.3 Comparison of motivational theories

Comparison between two motivational theories are described below:-

Maslow hierarchy model

Alderfer's ERG model

It is basically interlinked with self actualisation of person.

This model discuss about the particular growth needs of person.

Discuss about the safety security of person

Tell about the previous needs of employees.


4.4 Different leadership styles

Various leadership styles are adopted by organisation according to their suitability are describe below:-

Strategic leadership style:- In this type of leadership style leader is consider as powerful person of organisation who take all decision. Although he motivated employees for active participation and fill the gaps in relation to their unsatisfying needs.

Transformational leadership style:- Under this type of leadership person who is consider as leader take the initiate for the changes coming in organisation. Apart from it they guide employees that modification are beneficial for their career growth and development.

So, Sainsbury's need to adopt these styles according to their suitability and outcome they get from such style.


6.1 Impact of customer service on business success

In today world customer is consider as king of market so before producing goods and service company first scan the environment to know customer taste on the basis of which they can make changes in their respective product segment. Different impact that can be drawn from customer service in aspect of Sainsbury's are described below:-

  • Better customer service help organisation to increase their brand image and goodwill in external market.
  • During the customer service if customer faces any problems and query then it is an duty of manager to give solution in respect of goods and services.
  • When customer firstly enter in retail stores then in such case staff members describe about their products in better manner which help in increasing the expectation of customer which help in enhancing profits.

Therefore, Sainsbury's has to adopt such measures and recruit such staff which satisfy the needs of employees.

6.2  Benefits of customer profiling to a business

Customer profiling is very essential for company because it give different advantage to target audiences. Profiling is very different for each clients and in case of retail sector face to face interview are conducted and also telephonic interview to solve query. Benefits taken by Sainsbury's are described below:-

  • Effective communication must be maintain for better costumer profile.
  • Adequate customer profiling help in establishing long term relation with their clients by providing price, quality and features according to their choices.


It has been concluded from above report that business which are operate in large and small scale required to operate all the conducting of business in such manner which help them in accomplishing objectives of business. Further establish such strategies that help in gaining competitive advantage over co

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