Business Management and Regulatory Environment Analysis

This assignment involves a comprehensive review of various articles related to business management, including strategic decision-making processes, supply chain management, business intelligence, and regulatory reforms. The student is expected to analyze the impact of these concepts on economic growth and business operations, as well as provide an overview of essential research methods in business. The assignment also touches upon the legal and regulatory environment of business, dynamic capabilities, and critical success factors in business process management.

Business and Business
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Purpose and different forms of organisations........................................................................1
P2 Size and scope of different organisation................................................................................5
P3 Interrelation between organisational function and their link with objective of the company
...................................................................................................................................................11
TASK 2..........................................................................................................................................13
P4 Affect of macro environmental factors on Tesco................................................................13
P5 Analysis of strength and weakness......................................................................................15
P6 Relation of strengths and weaknesses with external factors ...............................................16
CONCLUSION .........................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Business environment deals with various external and internal factors which is significant
for the success or failure of an organisation. An enterprise can do planning for the inner changes,
they have capacity to do different task like improve efficiency of the employees, increase their
production etc. But they cannot control some important elements like regulations made by
government, up-gradation in technology etc. (Cavalcante, Kesting and Ulhøi, 2011). The
significance of favourable business environment is increasing because, now, firms understand
that they can only attain their goals if internal as well as external factors support them. An
organisation can make effective plans, they may hold strong position in the market but if they do
not get positive surrounding conduction the business operations than they can face huge loss in a
financial year. Tesco Plc hold a top spot in the retail industry of UK. They are also present in
other nations like Asian and European countries. This file will discuss about different kind of
organisations and their legal structure. Their size and scope will also become part of this report.
Connection between activities performed by an enterprise and its relationship with their
objectives will be included in this assignment. Various significant analyses like SOWT and
PESTLE will come under this file.
TASK 1
P1 Purpose and different forms of organisations

2

3

The reason of existence of every business entity is different. Some firms operates at small level,
they have limited employees and their turnover is also less (Haidar, 2012). But there are many
big corporation who have capacity to make a huge impact on the complete industry.
4

Sometime government also take their assistance for making important decisions. Their are
basically three forms of organisations, private, public and voluntary. They also have various
parts, their objectives are very different from each other.
Private entities include three types, first is sole proprietor, second is partnership and last
one is company. A business which is run by one person is known by the name of sole traders.
They earn less amount and their prime goal is to earn money for fulfilling own and families basic
needs. They do not have any legal binding and their registration is also not compulsory. Plumber,
small grocery store owners, electrician etc. are some of the example of sole proprietor. Limited
resources is not a big issue for them because they do not have any aggressive plan for expansion
of their business. In partnership, minimum two and maximum twenty people run an organisation.
They make a partnership deed (a written agreement) which provide them legal existence.
1

Formation of this document is not compulsory, partners can also create an oral contract. This
form of organisation has more reach compare to previous one. Some partners do not perform any
task in the firm, they just invest their fund.
2

Generally the roles and rule of enterprise is written in the partnership deed. Their main aim is to
earn profit but some partners on salary basis so they do not care about revenue. Recently some
regulations in this field has changed, it is compulsory for limited liability partnership to register
their business with the appropriate government authority.
3

Company is considered as one of the most popular form of organisation, it has sound legal
existence because their registration is compulsory. Tesco also comes under this segment. Their
area of operation it much higher than other two type of business and they have more resources
compare. These enterprise basically have two targets, first is expansion of their corporation and
other is increasing more and more profit. They can easily operate in more than one nation but
they have to follow all the formalities that is present in these countries. Organisational structure
of these firms is very complex because millions of employee work in these corporation.
Companies have to submit some important documents like financial statement to the government
authorities.
Public organisation aims at providing various kind of services and the goods to the public
at a cheap rate or without charging any money. Profit is their secondary objective and some of
the firm are dependant on the grants of government. Their is no question mark on their legal
structure because these companies are made by governing bodies. They hold significant amount
of shares in the corporation and play crucial role in the decision making process. Some people
4

think that these enterprises only operate in domestic states or country but this trend has
completely change. They are now becoming prime source of revenue for the government and
they are running business is various part of this world. NHS is the perfect example for this type,
they provide medical services to the public for an economic price. Voluntary organisation never
focus on earning profits. They work for a particular cause and those people who agree with their
idea, join the enterprise. Some of them work against social problems while other try to promote a
new thinking in the society. If they register themselves with appropriate government authority
then they can get some financial assistance from them. Registration is not small firms is not
compulsory but big corporation have to follow some rules like reporting of their financial
statements. Cancer Research UK is an example of this voluntary organisation. They have more
than 40000 volunteers and they are trying to find the cure of cancer.
The international business environment has seen impressive growth in last two decades
because major countries in Asia like China and India are opening their economy for foreign
investment. They are also increasing their production level and selling huge amount of good to
developed economy like USA and UK. Advancement in technology is another factor which is
making a positive impact on the business environment, companies do not have to buy huge
amount of fixed assets in a country for running their operations. They can do most of the work
by using latest technology.
P2 Size and scope of different organisation
5

When an enterprise tries to expand their reach they face various problems. This trouble happen
due to the enhancing business complexity. Sole traders do not face have any issue relating to size
because one person is responsible for making all the calls. The chances of conflicts is not
possible in this kind of private organisation. They do not have much scope of growth, they just
try to earn money on daily basis so they can live a normal life. Size of partnership decide the
orbit of firm. Their mission is to get a decent amount of revenue and they have limited scope of
expansion. Tesco is a private corporation whose vision is to gain the loyalty of the shareholders
by providing the quality goods and services. They are current operating in 12 nation which
reveal the all the necessary information about their size. Almost 476000 people are working in
this company. The scope of their growth is very high because they have not exploited the future
big market like India and China. They have sound presence in retail sector and they are very
6

strong in food segment. This enterprise try maintain their top spot and they also want to increase
their market share in non-food retail section (Cantwell, Dunning and Lundan, 2011).
Government, suppliers, customers, employee etc. are their prime stakeholder. They have
capacity to hamper the growth of Tesco. Because of their huge size, mentioned corporation has
to cope up with issues like delaying in taking decision etc. Public organisation like NHS has a
clear mission i.e. keep people healthy. They are operating in UK, they do not have presence in
other nations. The size of this organisation is no less than Tesco. Almost 14,00,000 employee
work in this enterprise and according to the Telegraph, they are one of biggest employer in the
world. This public company deals in medical field and they provide quality services at an
affordable rate to the public. Government, patients and employees are their prime stakeholders of
NHS.
Their scope will increase in upcoming time because people are getting more health
conscious and number of new types of diseases is also enhancing. Cancer research UK is a
voluntary organisation, their mission is to find a sustainable and effective cure of cancer. This
enterprise started in 2002 and now almost 4000 people are working in this corporation. Staff
members, government and cancer patients are their stakeholders. They are dependent on charity
and do not charge money amount for services which they are proving to the society. When an
organisation take any kind of assistance from the public or government then they have comply
with various norms relating to this matter. Their size is expanding as the number of cancer
patients is enhancing. Their area of operation will rise in upcoming time because this issue is
gaining more popularity in present era.
7

8

9

10

P3 Interrelation between organisational function and their link with objective of the company
Tesco has various department, these divisions are made according to their specialisation.
They do not interfere in each others operations but when a wing need support of other then they
help in order to attain objectives of the organisation as a whole (Pingali and Roger, 2012). Below
are some functions performed by major departments of mentioned corporation:
(Source: Functional activities. 2017)
Finance – This division manages monetary resource of the organisation. They allot funds
to all the division. Formation of financial statements and determining the appropriate source of
money is also their duty. Tesco open stores in different part of this world, it is the function of
finance wing to evaluate the profitability of the outlets. If they say no to an investment then
management has to give second thought to an idea.
Marketing – Importance of this division is continuously enhancing. They have huge
functional area, people work in this department conduct market research and at the same time
they also provide facilities like after sale service to the customers. All the important call relating
to advertisement are taken by this unit.
Production and procurement – If an enterprise will not offer quality products then they
will fail to attract new and existing buyers. Procurement division perform significant function of
11

finding the best vendor who can provide goods at low rate without hampering the quality of the
commodity (Reed and et. Al, 2013).
Following are interrelation between two departments and their connection with the firm's
objective:
Finance and marketing – Finance team is responsible for maintaining the financial
resources of the company. They make crucial decisions regarding investment. Finding best
source of loan is another important task which is performed by this wing (Chen, Chiang and
Storey, 2012). Marketing division provide them vital information about the future market trends.
This data assist finance department in selecting right region to invest. In present case, marketing
team of Tesco help other division by asking them to invest in Asia because this market have
capacity to generate billions of pound in next five years. Mentioned company want to expand
their business and this strong relation will help them in attaining this objective (Functional
activities, 2017). Cited firm is targetting 6.5% market share before 2020, they need right source
of finance and marketing team can perform this task. They conduct different type of research, by
finding the loan provider of ASDA and other leading company of retail sector this department
can provide significant information to finance division. This will help them in getting more debt
at less interest rate, it will make a positive impact on their business in forthcoming time (Trkman,
2011).
Production & procurement relation Human resource management – HR department
perform one of the most important function i.e. to hire right people in the organisation. Tesco is
trying to enhance their output by around 20% in next two years. They are going to pay more
attention to non-food segment. Production wing can ask HR team to recruit people according to
the need of manufacturing unit. Strong relation between these two division can increase the
efficiency of workers, providing training to the workers is another important function of HR
team and they can help production department regarding above issue.
Production & procurement relation with marketing – Marketing division are remain n the
touch of customers. They understand their needs and take reviews from them in regular interval
of time. Manufacturing unit require crucial information about the number and type of goods that
they arrange for the stores. On the other hand, procurement wing can also help marketing
division by telling them various quality of the items which company is offering in the market.
12

This help sales team in solving more queries of the buyers (Wheelen and Hunger, 2011).
Customer stratification is one area where Tesco is working from a long time, their prime
objective is to make loyal consumers and better link between production and marketing wing
help in reaching this goal.
TASK 2
P4 Affect of macro environmental factors on Tesco
It is easy to solve the problems which is happening because of insiders but if someone
from outside made an impact on the company then management have to face different kind of
troubles as most of the things of external environment are out of their reach. Below is the
PESTLE analysis of Tesco:
Political – Their are many companies who have potential to perform well but because of
poor political condition they are failing to for ward towards their goals. Mentioned enterprise
will also face negative impact of the Brexit, demand of their commodities will go down as
purchasing power of domestic buyers is decreasing. Prior to Brexit, they did not had any problem
in expanding their business in European countries but now they have follow all the regulation
that is present in many European nation (Christopher and Holweg, 2011).This will increase the
complexity in the organisation it will also make a negative affect on the operational cost. Their
are many countries in Asian region who want Tesco to operate in their nation. They understand
that this corporation can solve their problem of unemployment and infrastructural development.
This is the prime reason that they are ready to provide special assistance to firms like Tesco.
Some of the states are providing them land at cheaper rate, they are also giving significant
amount of deduction in taxes. These political conditions will make a positive impact on the
business of cited enterprise.
Economical – UK is struggling to get a decent growth rate, they are coping up with
problems of increasing inflation and unemployment. It is difficult for a Tesco to enhance their
profit because economic condition of their domestic country is not supporting them. This
company earn most of the revenue from this region and problems like enhancing inflation will
make a negative impact on their profit. Enterprises operating in retail sector has to face issue of
low demand because of decreasing purchasing power of buyers (Ullah and Lai, 2011). This
13

corporation is also investing in China, this nation has impressive economic growth and this will
help cited firm in gaining more revenue in forthcoming time.
Social – Tesco understand that organic food is good for the health of public. They are
increasing the number of products in this section. This is helping them in earning trust of
customers. People like to buy goods from a retail company who are concerned about their health.
This strategy is making a positive impact on the business operation of the enterprise. Employee
of mentioned corporation is has done strikes in past several years. They were complaining about
the poor working environment and many other issues. These incidents are not good for the image
of Tesco because send a message that this organisation do not care about their workers (Turban,
Sharda and Delen, 2011). They are leading enterprise of this sector and unsupportive staff
members make an indirect negative impact on the performance of firm.
Technology – Adoption of technology can be considered as one of the most successful
decision which this company has taken in last 3-4 years. They are offering their products online
and this move is playing significant role in enhancing their revenue. They are targetting
untouched region by taking online orders. Nowadays, costumers want every commodity at their
home. They do not want to spend their time on travelling, buyers also get more choice when they
place order through website or mobile application. But implementing new technology is
increasing the burden on financial resources of this corporation. In present scenario, they are
fighting to recover the investment which they have done of adopting new technology.
Legal – Farmer in UK were getting assistance from government in order to produce more
crops and increase national output (Besharov and Smith, 2014). But in recent years government
decided to stop this subsidiary. These farmers were suppliers of Tesco, if they will not get grants
from governing authorities then they will reduce the quality of raw material. This will make a
negative influence on the image of cited firm because they are known for selling high standard
goods. Some nations in Asian regions are reducing complexity in their legal system. This is a
good news of mentioned organisation because they can easily enter in these unexploited nations
without fulfilling various formalities relating to market penetration and pollution.
Environmental – Tesco is planning reduce their carbon footprint by significant amount.
They are gaining to attaining this goal before 2020. This organisation has already started work in
this area and they are earning appreciation from the society. This strategy is assisting them in
increasing their valuations (Hair, 2015). People who are concerned about environment argue they
14

cited company has missed their environmental goals in last two years, they are likely to miss
their target in 2020. These kind of information made an indirect negative impact on the goodwill
of Tesco.
P5 Analysis of strength and weakness
If a company want to know analyse their current position then should conduct SWOT
analysis because it reveal all the strengths, weaknesses of the organisation. It also assist in
determining the opportunities and threats which they are facing or they may face in upcoming
time. Below is the SWOT analysis of Tesco and its impact on decision making process:
Strengths – This enterprise hold highest amount of share in their domestic reason
(Marino, 2014). Their popularity is so high that they do not need to allot much funds to the
marketing wing for advertising their brand name. This organisation believes in adopting latest
technology. They took an important decision about opening their online store. This is strategy
helped them in maintaining a decent amount of revenue which was support to plunge. Tesco has
entered in China, they are also planning to commence their business in India. These two nations
have unorganized market and cited corporation can take benefit of this situation. Early invest
will keep the competitive in the industry. These strengths provide them confidence for aggressive
expansion.
Weakness – Mentioned enterprise earn significant amount of revenue from domestic
region. Economic condition of UK is in a bad shape and this situation is making a negative
impact on their business. This firm is facing issues relating to high debt (Teece, 2012). Their
share prices is continuously going down and this is making a negative impact on their valuation.
Some of their buyouts did not perform according to their expectation, they are becoming major
reason for their losses. These weakness are main reason behind delaying of various crucial
decision like investment in India.
Opportunities – Asian market is the currently the best option for them. They can also
think about opening their online store all the countries where they are already operating or
planning to start their business. They can also bring diversity in the products which they are
offering to the public, this unexplored segment of can help them in earning significant amount of
profit. They can increase the number of organic item in the stores, demand of this section is
continuously enhancing because people want to eat healthy food (Zeng, Li and Duan, 2012). In
present scenario, they are offering limited products on their online store. They can offer variety
15

of range on their website and application. The buying trend is changing and this firm has to take
decisions according to the new business environment.
Threats – Dependence of Tesco on their domestic market is a severe threat for them
because post Brexit, the demand of consumer and luxury goods is expected to go down.
Domestic as well as international competitors of this firm is capturing significant amount of
share in their respective market. Their sound financial position and aggressive expansion plan
can become the prime reason behind future failure of Tesco. This organisation has not make an
impressive impact in the international market and their presence in developing countries like
Brazil, India, China etc. is also very weak (Yoon, 2012).
P6 Relation of strengths and weaknesses with external factors
A multinational organisation like Tesco has potential to generate thousand of jobs.
Developing nations are inviting them to invest money in their country because they are coping
up with problem of unemployment. Mentioned company can take advantage of this strength and
expand their business in different part of this world. This support from government of
developing countries will give some strength to the cited corporation. They do not need to invest
much funds in these regions and they may gain huge revenue in upcoming time. If this enterprise
will expand their business in the economies which has high growth rate then they can easily
register more revenue, this will help them in reducing their debt (Carlin and Schaffer, 2012).
They are serious about environmental issues and reducing their carbon footprint by 50% before
end of 2020 is their main goal. These aggressive targets get attention of public, goodwill of
company increases when they sacrifice their profit for saving nature.
16

(Source: PESTLE ANALYSES: 6 Core Variables. 2017)
Tesco is known for using smart and latest technology. Self service machine is the perfect
example of this point. Their early entry in online market is giving them extra edge over many
other player of retail and e-commerce industry. Most of their competitors are planning to open a
website but fast adoption of technology is assisting them in holding the prime spot in retail
sector. MNCs do not like to expand their operations in a developing market because of complex
legal system. They have to wait to years in order to get a single approval for conducting
business. High tax rate is another big trouble for them. Nowadays, there are many nations in
Africa and Asia who are entering reducing their tax rate and working on ease of business so they
can attract foreign capital. Tesco can easily use their dominant position and gain majority of
shares in these region.
Besides these strengths, there are some weaknesses which are related to external factors.
Political incidents like Brexit derailed the operations of mentioned firm (Zsambok, 2014). They
were already facing the pressure of huge debt and now for at-least 5 years they have to survive in
17
Illustration 2: PESTLE ANALYSES: 6 Core Variables.

a market where demand of good will go down (PESTLE ANALYSES: 6 Core Variables, 2017).
Tesco is not very aggressive in expanding their business in developing nations, their global
competitors like Walmart has already captured decent amount of share in unexploited market.
Growing market like India and China are not allowing them to enter in these nations without
have a partnership with domestic firm. Mentioned corporation cannot hold more than 49% share
in this partnership. These tuff rules are creating hurdles for cited company. The cost of adopting
new technology is very high, Tesco is facing various kind of financial troubles and now business
like online store and self service machines is not giving them desired return.
CONCLUSION
From the above report, one can conclude that management of an organisation should not
ignore the impact of business environment. Factors like technology, political conditions can
derail the operation of an enterprise. Private, public and voluntary are three popular form of
organisation. Some of them focus on profit while others concentrate of providing different type
of service to the public at affordable price. SWOT and Pestle analyses are significant for
analysing the present position of a firm. They can help a corporation in attaining their mission
and vision in an effective manner.
18

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.
Cantwell, J., Dunning, J.H. and Lundan, S.M., 2011. An evolutionary approach to understanding
international business activity: The co-evolution of MNEs and the institutional
environment. Journal of International Business StudiePESTLE ANALYSES: 6 Core
Variables. 2017s. 41(4). pp.567-586.
Carlin, W. and Schaffer, M.E., 2012. Understanding the business environment in South Asia:
evidence from firm-level surveys.
Carroll, A.B. and Shabana, K.M., 2011. The business case for corporate social responsibility: A
review of concepts, research and practice. International journal of management reviews.
12(1). pp.85-105.
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.
Chen, H., Chiang, R.H. and Storey, V.C., 2012. Business intelligence and analytics: From big
data to big impact. MIS quarterly, 36.(4). pp.1165-1188.
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.
Haidar, J.I., 2012. The impact of business regulatory reforms on economic growth. Journal of the
Japanese and international economies, 26.(3).pp.285-307.
Hair, J.F., 2015. Essentials of business research methods. ME Sharpe.
Marino, R., 2014. Introduction. In The Future BRICS (pp. 3-18). Palgrave Macmillan UK.
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.
Reed, O.L and et. Al ., 2013. The legal and regulatory environment of business (p. 328).
McGraw-Hill/Irwin.
Teece, D.J., 2012. Dynamic capabilities: Routines versus entrepreneurial action. Journal of
Management Studies. 49(8). pp.1395-1401.
Trkman, P., 2011. The critical success factors of business process management. International
journal of information management. 30(2). pp.125-134.
Turban, E., Sharda, R. and Delen, D., 2011. Decision support and business intelligence systems.
Pearson Education India.
Ullah, A. and Lai, R., 2011. Modeling business goal for business/it alignment using requirements
engineering. Journal of Computer Information Systems. 51(3). pp.21-28.
Wheelen, T.L. and Hunger, J.D., 2011. Concepts in strategic management and business policy.
Pearson Education India.
Yoon, J., 2012. Detecting weak signals for long-term business opportunities using text mining of
Web news. Expert Systems with Applications. 39(16). pp.12543-12550.
Zeng, L., Li, L. and Duan, L., 2012. Business intelligence in enterprise computing environment.
Information Technology and Management. 13(4). pp.297-310.
19

Zsambok, C.E., 2014. Naturalistic decision making. Psychology Press.
Online
Functional activities. 2017. [Online]. Available through;
<http://www.bbc.co.uk/bitesize/higher/business_management/business_enterprise/
internal_organisation/revision/2/>.
PESTLE ANALYSES: 6 Core Variables. 2017. [Online]. Available through;
<http://www.mbahelp24.com/pestle-analysis-6-core-variables/>. 2017].
20