Global Business Environment

This report discusses the global business environment and its impact on companies. It includes a SWOT analysis of TESCO, a leading British retailer, and examines the key drivers affecting its operations and finance. The report also highlights the opportunities and threats in the global business environment.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
SWOT Analysis......................................................................................................................1
Key drivers impacting upon Operations and Finance............................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Global business environment can be referred to as the interface of the environments of several
nations which affect the functioning and operations of companies along with their overall
decision making procedure (Ismail, 2017). It is important for a company to analyse the global
business environment for identification of opportunities that can be leveraged by them along
with the threat that pose them to the risk of substitution. The following report is carried out upon
TESCO in continuation with CW1. TESCO is a multinational retail corporation which is
headquartered in United Kingdom. The report consists of SWOT analysis together with impact
of key drivers on operations and finance.
MAIN BODY
SWOT Analysis
Micro environmental screening is regarded to be important for each and every company so as to
ensure the long term sustainability in market place. For this purpose, companies across the globe
make use of an exceptional business management model named SWOT analysis. This is an
analytical framework which provides aid to an entity to gain an insight into the internal working
and functioning of the business. As a result of this, the entity is able to identify the strength,
weakness, opportunity and threat for the corporation which may be placing positive or negative
impact over the business (Coe and Wrigley, 2017). This helps the business to create and
implement sound strategies with the help of which it can overpower the rival firms functioning
within the same sector. TESCO is a market leading British retailer which is evaluating its
internal environment through the application of SWOT analysis as follows:-
TESCO’s Strengths
Leading British retailer:
TESCO is the leading company functioning within the confines of UK retail market. As a result
of this, entity has effectively built its separate customer segment that is not ready to substitute the
offerings of this company by those of any other organisation.
Highest Market Share:
TESCO at present holds the highest share in retail market of United Kingdom accounting to
almost 27%. This implies the strength of the company in capitalising upon its competencies and
capabilities in the long run to gain fruitful outcomes. Quality is considered as one of the most
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crucial aspects behind the success and market leading position of this retailer within domestic
market.
TESCO’s Weaknesses
Reduction in profits owing to cost leadership:
Over the course of years, TESCO has been using cost leadership strategy to enjoy the position of
cost leader at retail marketplace (Coe and Wrigley, 2017). This is a strategy whereby the entity
ensures the most competitive pricing model, implying the provision of its products at low cost.
However, when this is done by the organisation, it automatically leads to decrement in the profits
for the company in the long run. This even poses risk to the dominant market share captured by
TESCO within UK.
TESCO’s Opportunities
Organic food offerings:
TESCO has the competency as well as the resources to tap the purchase behaviour of consumers
in a positive manner by expanding its food product portfolio. The growing health consciousness
of people presents opportunity to this firm to launch organic offerings and thereby expand its
already existing food products range (Guo and Wang, 2019). This will help the entity in
strengthening its financial position in the market for long run.
TESCO’s Threats
Hyper competitive retail market:
It is analysed that there are several market players operating within the retail sector across the
globe. Although TESCO enjoys market leadership within UK, it still lacks behind a number of
retailers at the global level. This pose threat to the sustainability and loyal customer base of the
company in case sound strategies are not adopted by the retailer in rapid course of time.
Advertisement controversies:
TESCO has faced social media back lash as soon as the company launched its Christmas advert
few years back. It was seen that public boycotted their outlets on the basis of the premise that the
entity engaged in a disregarding act against the faith and beliefs of Christians. This developed
negativity for the entity in the minds of customers (Chowdhury, 2016). Thus, entity faces threat
of any such controversy dampening its image in future also.
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Key drivers impacting upon Operations and Finance
The key drivers identified as per the environmental analysis tend to place a substantial impact
over the functions of the company. In this relation, such impact on the functions of TESCO is
discussed as follows:-
Operations:
This is a management area concerned with design as well as control of production process along
with redesign of operations related to production. The key drivers tend to mould the operations
of TESCO in a manner such that the adversities can be lowered. For instance: Whereby TESCO
is faced by the threat of sugar tax being imposed upon its food products and it plans to expand its
food portfolio by launching more of organic offerings, it will have to alter its operations
(Fatricia, 2017). The raw organic materials would have to be procured and put to production to
develop offerings which can meet the demands of market.
Finance:
This is the functional department which holds the responsibility of managing the money vested
in the hands of company. The key drivers identified by TESCO would lead to increment in the
cost of company. Considering the same example as taken above, it can be said that launching
organic offerings would lead to increment in the overall cost for the retailer. Thus, the finance
function of TESCO would have to handle the budget in a manner that no financial burden gets
levied upon the retail corporation. s
CONCLUSION
On the basis of above discussion, it can be said that global business environment tends to consist
of a number of opportunities and threats that need to be duly taken into account by organisations
operating at an international scale. In addition to this, it has been identified that the key drivers of
the business tend to place significant impact over the organisational functions, especially upon
operations and finance.
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REFERENCES
Books and Journals
Fatricia, R.S., 2017. STRATEGIC ANALYSIS OF TESCO SUPERMARKET. Jurnal
Manajemen Terapan dan Keuangan, 6(02), pp.69-86.
Guo, L. and Wang, Z., 2019. Ratio analysis of J Sainsbury plc financial performance between
2015 and 2018 in comparison with Tesco and Morrisons. American Journal of Industrial
and Business Management, 9(2), pp.325-341.
Chowdhury, B.N., 2016. A critical analysis of customer loyalty and customer satisfaction-a case
study on Tesco Club Card (Doctoral dissertation, University of East London).
Ismail, I.N., 2017. The Roles of Corporate Governance and its Influances on Risk and
Performance: Tesco Plc.
Coe, N.M. and Wrigley, N., 2017. Towards new economic geographies of retail globalization.
In The new Oxford handbook of economic geography. Oxford: Oxford University Press.
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