Analysis of Business Environment and Factors Affecting Profitability

The provided document is an assignment that requires analyzing the business environment and identifying internal and external factors affecting a company's profitability and growth. The assignment mentions various sources such as books, journals, and online resources to support the analysis. A list of references is also included at the end of the document. This type of assignment is likely used in educational settings to teach students about business research methods, PESTLE analysis, and strategic management.

Business and business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 and P2: Covered in PPT ...................................................................................................1
TASK 2............................................................................................................................................1
P3: Relationship among various organisational functions.....................................................1
TASK 3............................................................................................................................................4
P4: Macro environment impacts as both negative and positive ............................................4
TASK 4............................................................................................................................................6
P5: Analysis of Internal factors to determine strength and weakness ...................................6
P6: Relation of internal factors with external factors.............................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business is the exchange of product, service and money for mutual advantages or
profitability. Every business requires several short of investment and sufficient amount of
resource are need to be required in order to earn maximum profit. Business environment means
all those factors such as internal and external that affect company’s operations which consists of
employees, customers, supply and demand, etc (Besharov and Smith, 2014). This project intent
to identify different macro-economic factors which affect business growth. An organisation can
do proper planning for the internal changes.
They have the ability to perform different activities such as increasing efficiency of
staffs, production and many more. Some other aspects of business factors are cannot control such
as regulations made by legal authorities, technology up-gradation etc. This project will discuss
various kind of organisation structures and their related scope (Business and the environment,
2017). Relation among various activities those are performed by an organisation and its
relationship by there effective objectives are also included under this assignment. Different
techniques such as SWOT, PESTLE analysis is done for the betterment of the company.
TASK 1
P1 and P2: Covered in PPT
TASK 2
P3: Relationship among various organisational functions
The objectives of company can only be attain if they are having a perfect structure. It will
help in development of each department. Overall, division are made as per their specialisation
and their ability to perform their role in the attainment of individual as well as organisation goals
(Carlin and Schaffer, 2012). They need to working according to a team so that more effective
results can be achieved. Underneath there are various function which are performed by
departments of available corporation.
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Illustration 1: Functions of department
According to the above mentioned flow diagram the organisation structure of Tesco are
explain. It consists of various department which is further sub divided into other departments.
They all are related with incurring more positive outcome to its customers and other
shareholders. The Organisation structure is operated by board of directors who is the boss of
company. The entire departments revolve around the decisions which is made by CEO and MD.
It is sun divided into five equal departments such as:
Sales and marketing: Both of them are interrelated with each other. As, Tesco is eyeing
to generate wide amount of profit with its limited resources. It all will be succeeded by using
right sales techniques. The people those are responsible for making maximum sale for company
are need to follow instruction of marketing departments (Cavalcante, Kesting and Ulhøi, 2011).
Before going into market they need to prepare a well organise plan that will make company more
profitable in future time.
Production department: The prime objective of this particular department, is to look
after all the basic requirement of company related with products are need to be fulfil by the
department at the time of product development. They produce products according to the demand
of customers. It is further categorise into two parts:
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 Component Manufacturing: This specific department in involve with product
development by using necessary requirements of customers. It is concern with a product
which is made by using various part, piece and subsystem.
 Product assembling: This sub department is related with reunite of each parts to
complete a new product. They look after all the necessary requirements which are
demanded by company with is packaging, quantity, safety and other aspects.
Human resources department: It is known as critical element of employees well-being
in Tesco (Christopher and Holweg, 2011). It is basically related with payroll, benefits, firing and
keeping records up to date with state and term related with the development of company. They
are mostly related with the problems of managing people in Tesco.
IT Department: If the company is operating in very large scale they need a perfect
system to monetary and control their business operations. IT department is responsible for
supporting helping people to make their payments for product and services in more easy manner.
If they want to book orders from suppliers they need to go through with proper techniques that
would help Tesco company to manage their operations in more quick ways.
Finance department: It is considered as one of the important department which is
responsible for arranging necessary capital and funds those are required by Tesco in order to
develop a product and services (Grimpe and Kaiser, 2010). There are various sources such as
internal as well as external sources from which they can raise capital whenever they wants. It is
also sub divided into two parts: Management accounting: It is simply considered as important provision of financial data
and provided necessary suggestion to Tesco for use in the development of its business
operations.
 Financial accounting: Recording of financial transaction in the books of accounts are
look after by this department.
R & D departments: This department role is to search around the market to find something new
ideas about product and requirements of customer that they wanted from the company. With the
use of those collected data which is presented by research team the products are prepared
according to that information.
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Purchasing: They are related with buying raw material, spare parts and other services which is
required by the company. It is considered as most crucial department in the region of material
management.
TASK 3
P4: Macro environment impacts as both negative and positive
In most of the company, it is necessary to determine the business in more effective
manner so that they would face less impact on there growth and development. In case of Tesco it
is important to resolve various problems which are arises in company mostly related with
production of product and services. It is seen that internal issues can easily be solve but outside
issues are sometime difficult to determine or solve. Some time it is difficult to reach out to those
external factors because of there impacts (Hair, 2015). That must be analyse by using PESTLE
analysis. It is vary difficult to formulated every components of an organisation. Thus, it can be
determine by other factors those are making maximum impact on the business environment of
Tesco Plc. With the use of pestle analyse a complete information related with those factors are
identified and make corrective action to solve those issues. It has been observed that company do
have both impact negative or positive. If the are able to manage and get more accurate results
they are positively good enough to manage there environment. But if not able to do so they are
having negative impacts. Those are overcome by using effective PESTLE analysis. This will
consists of :
Political Factors: It has been noticed that there are so many organisation which is having
effective support to perform well but because of bad political condition they are not able to
perform there task in more effective manner (Kolios and Read, 2013). That makes more impact
on its goal and not able to attain their set objectives in allotted time frame. It is considered as one
of the effective and most important macro economic factors that consists of various issue that
are need to be handled on such as taxation system, law of property and further rule and
regulations. This is considered as more effective factors that to be dealt with as all those factors
which are affecting the on going process of Tesco Plc. Stability is necessary for smooth working
of an organisation. As far as Tesco is concern they are facing issues such as competitors and
stability in the market. In most parts of Europe it has been gathered its roots both socially as well
as politically.
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Economical factors: It has been observed that UK is facing a problem of decent growth
rate. The main reason of such causes are related with increasing inflation and unemployment
rate. It is difficult for Tesco Plc to increase their revenues according to the economic condition of
its local market which is not able to make effective support to them. The maximum revenue is
collected from this particular areas but problem with increasing inflation will decrease the
profitability of the company (Miller, Yablonovitch and Kurtz, 2012). As, they are operating as a
retail business they need to face problem of low demand because purchasing power of customer
are also getting decline.
Social factors: According to Tesco Plc organic foods are more effective for healthy
people. They are enhancing the products in this particular sectors. By this they are able to gain
maximum customer trust. They are ready to buy those product which are made according to their
health prospective. This plan is making positive impact of the business operation of Tesco plc. A
strikes in past few year is seen from employees that make huge impact on profitability of
business. Such incidents are not effective for the company to sustain their goodwill in the
market.
Technological factors: Tesco Plc is keeping their technology in updated manner which
is setting a perfect benchmarking for the industry. Technology is an effective part for change for
an industry. Because of online marketing they are able to sell there products over internet. E-
Commerce market is increasing day by day (Teece, 2012). There is regular backup IT
department which is working day or night for providing continuous updates. The main motive is
to capture those areas which are not in reach of their range through online marketing. However,
most of the customers wants every day products at there home without making any huge efforts.
This all happen because of technology which provide them a website and mobile application to
shop online without making any extra attempt.
Legal factors: In order to maximise national output the farmers are were getting more
assistance from UK government in order to produce more crops. But in current scenario, they
have stopped paying any subsidiary to them (PESTLE ANALYSES: 6 Core Variables, 2017).
These farmers belong to Tesco Plc which is known as an important supplier of raw material for
the development of product. But, this will make negative impact on the reputation of Tesco.
Because of less complexity in the legal system they can easily come into the unexploited nations
without making any formalities.
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Environment: Because of large amount of production the chance of carbon footprints are
collected around the atmosphere. It can lead to huge issue for the people to manage their
business and there lifestyles. Tesco is decided to reduce there carbon footprints by significant
level. They are predicated to gain profitability by 2020. they have already been decided to work
on the areas and society is also making full support to them. This plan will help in assisting them
to increase their market values.
TASK 4
P5: Analysis of Internal factors to determine strength and weakness
If the Tesco Plc is not working in proper manner they need to conduct a well organise
internal analyse to remove various issues that affecting the performances of the company
(Turban, Sharda and Delen, 2011). The best source of removing those issue are determine by
using SWOT analyses. It will help to identified its strength and weaknesses of Tesco. It will help
them company to analyse new growth opportunities and thereat those are faced by company in
coming time.
Strength:
The organisation is holding maximum number of share in local reason. Because of the
popularity they are not able to allot much of funds to the marketing team to make advertising
their product and services. They believe in using latest technologies which are generating
maximum profit to the company.
Weaknesses:
In the above mention company Tesco plc, they are earning enough amount of revenue
from domestic market. Because of bad condition of European market they are facing negative
impacts on their business (Wheelen and Hunger, 2011). Some issues related with large debts are
considered as prime objective of the company.
Opportunities: For the purpose of expansion they are able to enter into new market. As
per they available sources Asian market is considered as best suitable option for the company.
This will bring effective diversity in the products which they are delivering to the customers.
Threats: It has been seen that, because of post brexit the demand of customers and
luxury goods is expected to go lower down. Domestic region as well as international
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competitions. As, there is always huge risk such as legal where company is not able to control
their set standards on various control issues.
P6: Relation of internal factors with external factors
A international association like Tesco can possibly produce thousand of employments.
European countries are hospitable them to put cash in their nation since they are adapting up to
issue of unemployment. Above mentioned organization can exploit this quality and extend their
business in various piece of this world. This help from administration of developing nations will
give some quality to the referred to company (Zeng, Li and Duan, 2012). They don't have to put
much finances in these districts and they may increase maximum income in present and coming
time. On the off chance that this undertaking will extend their business in the economies which
has high development rate then they can undoubtedly enlist more income, this will help them in
lessening their obligation. They are not kidding about natural issues and diminishing their carbon
impression by half before end of 2020 is their primary objective. These forceful targets get
consideration of open, generosity of organization increments when they give up their benefit for
sparing nature.
Tesco is known for utilizing smart and most recent innovation. Self administration
machine is the ideal case of this point. Their initial section in online market is giving them
additional edge over other player of retail and internet business industry. The greater part of their
rivals are planning to open a site yet quick reception of innovation is helping them in holding the
prime spot in retail area. MNCs don't prefer to extend their operations in a creating market in
light of analysable legal framework.
CONCLUSION
From the above project report it has been concluded that business environment is an
important part of company which is need to be taken into consideration in order to get more
effective results. This project summarises with various information related with effective
organisation system. It consists of different knowledge and skills required to identify
organisational scope and there basic purpose. Some of the main focus of company is on
increasing maximum profit for the company and other are based on delivering services to the
public at th most reasonable costs. Further, this project report summarise with PESTLE, SWOT
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analyses of departments. Analysis of all those internal and external factors which are affecting
the profitability and growth of the company are discussed under this project.
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REFERENCES
Books and Journals:
Besharov, M.L. and Smith, W.K., 2014. Multiple institutional logics in organizations: Explaining
their varied nature and implications. Academy of Management Review. 39(3). pp.364-
381.
Carlin, W. and Schaffer, M.E., 2012. Understanding the business environment in South Asia:
evidence from firm-level surveys.
Cavalcante, S., Kesting, P. and Ulhøi, J., 2011. Business model dynamics and innovation:(re)
establishing the missing linkages. Management Decision, 49.(8). pp.1327-1342.
Christopher, M. and Holweg, M., 2011. “Supply Chain 2.0”: managing supply chains in the era
of turbulence. International Journal of Physical Distribution & Logistics Management,
41.(1). pp.63-82.
Grimpe, C and Kaiser, U., 2010. Balancing internal and external knowledge acquisition: the
gains and pains from R&D outsourcing. Journal of management studies. 47(8).
pp.1483-1509.
Hair, J.F., 2015. Essentials of business research methods. ME Sharpe.Pingali, P.L. and Roger,
P.A. Eds., 2012. Impact of pesticides on farmer health and the rice environment (Vol.
7). Springer Science & Business Media.
Kolios, A and Read, G., 2013. A political, economic, social, technology, legal and environmental
(PESTLE) approach for risk identification of the tidal industry in the United Kingdom.
Energies. 6(10). pp.5023-5045.
Miller, O. D., Yablonovitch, E and Kurtz, S. R., 2012. Strong internal and external luminescence
as solar cells approach the Shockley–Queisser limit. IEEE Journal of Photovoltaics.
2(3). pp.303-311.
Teece, D.J., 2012. Dynamic capabilities: Routines versus entrepreneurial action. Journal of
Management Studies. 49(8). pp.1395-1401.
Turban, E., Sharda, R. and Delen, D., 2011. Decision support and business intelligence systems.
Pearson Education India.
Wheelen, T.L. and Hunger, J.D., 2011. Concepts in strategic management and business policy.
Pearson Education India.
Zeng, L., Li, L. and Duan, L., 2012. Business intelligence in enterprise computing environment.
Information Technology and Management. 13(4). pp.297-310.
Online
PESTLE ANALYSES: 6 Core Variables. 2017. [Online]. Available through:
<http://www.mbahelp24.com/pestle-analysis-6-core-variables/>. [Accessed on 31st October
2017].
Business and the environment. 2017. [Online]. Available through:
<https://www.imperial.ac.uk/environmental-policy/msc/msc-environmental-
technology/options/business-and-the-environment/>. [Accessed on 31st October 2017].
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