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


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

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1.1 Types of organisation in public and Private Sectors

In every organisation, the department is divided into different sectors and areas on the basis of which they have to decide what type of policies and functions have been conducted by the organisation. Companies engaged in different goods and services formulate various strategies in order to earn profits and fulfilling their objectives in an appropriate manner. In the corporate world, there are different types of sectors the main public and private sectors have their own functioning and types which are described below:-

  • Public company:- It includes all the governmental, public and other local authorities who formulate their own legal rules and regulations 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 the general public. Types of public company are:-
  • Departmental undertakings:- This is one the oldest forms of public organisation in which all the decisions are taken by top authority only.
  • Statutory corporations:- these are those public sector organisations which are established by the act of parliament. They are owned by the government with or without shareholders.
  • Government companies:- these are those public associations which are covered under the Companies Act,1985 and 2006. For example, British Railways are large-sized corporations that provide railway services to large audiences.

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

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

1.2 Different organisation structures within the business and reason for variations

In different organisations companies have their own organisation structure according to their working conditions and different sources of medium. Further company have their own organisation structure according to their vision and objectives. Sainsbury's is UK 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 adopts flat organisation structure because of the lower level of management and for better decision making they have to communicate with the strategic level only. Apart from this, it has been seen that companies take the initiative to induce employees to actively participate which leads to rational decision-making.

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

Every organisation is affected by macro and micro elements of the external environment so they need to make adjustment in their organisation structure which leads to an increase in profitability and market share. The 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 Sainsbury's to make updation in their working conditions so they easily grab market opportunities and reduce threats which lead to the accomplishment of targets. Further Sainsbury's expanded their supermarket branches in various sectors that are affected at local, national and global levels in the context of Sainsbury's which is described below:-

  • Local level:- At the local level there are different types of instability coming in the local market due to changes in customer taste and preferences in respect to products and services.
  • National level:- Different crises coming at the national level like inflation, deflation and changes in foreign exchange rates are hurdles in their development.
  • Global level:- when the company is planning to expand in different countries they have to comply with different legal rules regulations, and taxation policies that affect its goodwill also.

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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 conditions at the global level (Casadesus-Masanell and Ricar, 2011). The main benefit that can be earned from accounting is the reduction of waste losses, increase in profits and help in enhancing productivity and efficiency of business. The main functions of accounting are described below:-

  • Planning:- It is the first function of management in which management has to make proper arrangements for cash, and sales transactions and evaluate various strategies for implementing various projects of the organisation for increasing sales.
  • Monitoring and controlling: The second function of accounting is related to monitoring and controlling all business activities by comparing actual performance with standard performance and if any deviation arises taking corrective steps for it.
  • Budgeting: The most important thing is the forecasting of the budget which will occur in future and for which a proper framework is prepared on the basis of which all the action plans have 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 the global level.

5.1 Different functions carried out by the HR department in the business

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

  • Training development:- The HR manager of Sainsbury's has to organise various programmes related to training development in which guidance is given in relation to improving the performance of employees for effective results (Eccles and Krzus, 2010).
  • Employee engagement:- It is the utmost duty of HR managers to induce their employees to actively participate in decision-making so that better and better ideas obtained from them.
  • Conflict management:- It is the responsibility of HR managers to solve all the issues and problems faced by a workforce that help them to establish long-term relationships 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 protect the interests of employees from company exploitation. Description of legal laws are prescribed below:-

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

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


3.1 Interpret the information on the profit and loss account

It is essential for every organisation to prepare a systematic financial statement of the company that shows the true financial position I.e whether the company is liable to pay all debts and maintain a solvent position to meet regular expenses arising in business. Following is Profit and loss account of Sainsbury's in the 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 the company's total gross profit is 1988000 Income from continuing operations is 2162000 and net income is 500000 which states a stable position of the business. Although they need to make changes in their organisation structure so they improve financial performance in future.


4.1 Stages of team development

There are different stages of team development stated below:-

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

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

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4.2  Description of Motivational Theories

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

Maslow model:-

Under this theory, the first need is related to physiological needs which are considered basic needs of an individual and must be accomplished (Welford, 2013). The second is related to safety security where security is related to job and safety in life which must be fulfilled by employee from their job only. The third is related to esteem needs in which individual wants respect and recognition in respect of their work that motivates them fully and the last is self-actualisation which means the desire to achieve something.

4.3 Comparison of motivational theories

Comparisons between the two motivational theories are described below:-

Maslow hierarchy model

Alderfer's ERG model

It is basically interlinked with the self-actualisation of a person.

This model discusses the particular growth needs of the person.

Discuss the safety and security of the person

Tell about the previous needs of employees.


4.4 Different leadership styles

Various leadership styles are adopted by organisations according to their suitability are described below:-

Strategic leadership style:- In this type of leadership style leader is considered a powerful person in the organisation who takes all decisions. Although he motivated employees to actively participate and fill the gaps in relation to their unsatisfying needs.

Transformational leadership style:- Under this type of leadership person who is considered as leader takes the initiative for the changes coming in the organisation. Apart from that they guide employees that modifications are beneficial for their career growth and development.

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


6.1 Impact of customer service on business success

In today's world customers is considered the king of the market so before producing goods and services companies first scan the environment to know customer tastes on the basis of which they can make changes in their respective product segment. The different impacts that can be drawn from customer service in aspect of Sainsbury's are described below:-

  • Better customer service helps organisations to increase their brand image and goodwill in external market.
  • During customer service, if a customer faces any problems or queries then it is the duty of the manager to give solutions in respect of goods and services.
  • When customers first enter retail stores than in such case staff members describe about their products in a better manner which helps in increasing the expectations of customers and helps enhance profits.

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

6.2  Benefits of customer profiling to a business

Customer profiling is very essential for the company because it gives different advantages to target audiences. Profiling is very different for each client and in the case of the retail sector, face interviews are conducted as well as telephonic interviews to solve queries. Benefits taken by Sainsbury's are described below:-

  • Effective communication must be maintained for a better customer profile.
  • Adequate customer profiling helps in establishing long-term relations with their clients by providing price, quality and features according to their choices.

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

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