Positive and Negative Impacts of Macro Environment on Business Operations

This report discusses the internal and external factors that affect the operations and activities of a business, using the example of Tesco. It covers the positive and negative impacts of the macro environment on business operations, supported by specific examples. It also conducts an internal and external analysis of Tesco to identify its strengths and weaknesses. The report explains how strengths and weaknesses interrelate with external macro factors.

Business and Business
environment

Contents
INTRODUCTION.......................................................................................................................................3
TASK 3.......................................................................................................................................................3
P4 Identify the positive and negative impacts the macro environment has upon business operations,
supported by specific examples...............................................................................................................3
TASK 4.......................................................................................................................................................5
P5 Conduct internal and external analysis of specific organisations in order to identify strengths and
weaknesses..............................................................................................................................................5
P6. Explain how strengths and weaknesses interrelate with external macro factors................................6
CONCLUSION...........................................................................................................................................7
REFERENCES............................................................................................................................................9

INTRODUCTION
The business gets affected by many factors these factors can be internal as well as
external. Internal factors are the factors which can be controlled by an organization, for example
employees, structure, values, mission, suppliers and etc. external factors are the factors which are
independent and are not in control of an organization. For reference purpose this report has taken
an example of a company, Tesco (Dahles and Susilowati, 2015). Tesco is a British company
which deals in groceries and general products. It is a multinational which has third largest chain
of retail market. This report discusses about the internal and external factors which affects the
operations and activities of a business.
TASK 3
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.
The external factors and its impact can be analyzed through PESTEL analysis. The pestle
analysis of Tesco is as follows:
Political: The degree towards which the government can control the business includes in
this factor. This factor includes stability of government, potential changes to legislation, global
influences and so on. Any change into the regulation of government does affect the working and
operations of business. As in the case with Tesco, the company experience stability in it working
as the UK has stability in its government also. The UK country in 2011 had increase the rate of
VAT which put the negative effect upon the company as it has affected its revenue. In 2016, the
company also faced many issues due to Brexit as the business doesn’t know how to operate into
new business environment.
Economical: Economic factors depict the economic condition or situation of a particular
region or country. Economic growth, employment rates, inflation rates, monetary policy,
consumer confidence are some which includes in this factor. The economy of UK is very much
strong with a GDP of 7 % (Deasy and et. al., 2016). Also the employment rate of the country is
75% which is a good sign for a developed country. Higher economic growth signs the higher

growth of the company finances also. But at the time of Brexit the company did gone through
some losses or financial crisis which had stake the company’s performance.
Social: Social factors are the cultures, attitude, behavior, taste, preferences and the like.
From these factors a company would know more about its target customers or market that what
kind of product they prefer more. As in the case with Tesco, the company realizes that now more
customers prefer online shopping via their mobile, therefore to cater the needs of market Tesco
come up at online platform where the customers can go through their products and buy them.
Technological: UK is a technologically advanced country. More the technological
awareness or advancement more will be the development into the company or country. Tesco
used the advance technology in its supply chain and in information management system.
Through the supply chain they make sure that all the products or materials supply to retail stores
at time which saves the store from lack of inventory and stock (Harrison, 2013). Whereas
information management system helps the company in saving, sharing and storing all the data
and information about operations and transactions. This helps the company in making better
decisions for the company.
Environmental: This factor includes the regulations and restrictions in the factors which
are related with environment. Tesco is very much committed towards the environment. The
company is constant in diminish the usage of energy and the use of greenhouse gases. The
company is also very keen to sustainable development of the economy.
Legal: Legal policies include factor like taxation policies, employment laws, industry
regulations, health and safety and the so on. Tesco follows all the legal obligation which it has to
follow to operate into the market. For example Tesco is also in financial services for which it
obeys the UK laws which has been set for rendering such services. The company also fulfills the
policy which the UK government released for agricultural products which gives some benefits to
the farmer, the company, Tesco, also has obey such policies and mould their prices or product in
accordance with the change.

TASK 4
P5 Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses.
Internal analysis of a company can be performed through SWOT analysis. SWOT is an
abbreviation of Strength, weakness, opportunities and threat which helps a company in knowing
more about it. SWOT also helps a company in framing its strategies accordingly (TESCO SWOT
Analysis. 2019).
Strength: Strengths are the qualities which makes an organization different from all the
available competition.
Weakness: Weakness are the points which work as an demerit for the company.
Opportunities: Opportunities are the good chances which a company can grab for its future
growth and profits.
Threats: They are the risks which are at an organization. These risks can hamper the growth and
survival of a company (Helm and Gritsch, 2014).
The SWOT analysis of Tesco is as follows:
Strengths:
 Powerful retail market globally.
 Company offers the value for money
by offering range of products.
 Used the innovative method for
performing the business.
 Big joint ventures such as with China.
 Good goodwill into the market place.
Weakness:
 Huge bad debts from financial
services and high claims for loans.
 Lack of experience in some of
diversified business plots.
 The company also uses outdated
technologies.
Opportunities: Threat:

 Expansion into digital market
 Expanding in its retails store business
 Diversification in market via bringing
smart tablets through a joint venture
 Also now business in IT sector
 Increase in competition
 Increase in the prices of materials
 Any change in the political factor can
harm the operations and activities of
business.
P6. Explain how strengths and weaknesses interrelate with external macro factors.
An organization must required to identify its own strengths and weaknesses so as to deal
with the complexities of business environment in an effective and efficient manner (Lilien and
Grewal, 2012). For this, Tesco need to interrelate its strengths and weaknesses with their external
factors in below described manner:
Political Factor
It is related with taxation and rules and regulations formed by government for
organisations operated in their nations. Tesco may affect due to changes in taxation rate made by
UK government.
 Strength: Tesco has attained strong wealth in UK market due to having income in billion
figures. It operates numerous stores in different locations of UK which made possible by
its management by following rules and regulations framed by government such as
payment of taxes on timely basis.
 Weakness: Tesco is operated in various locations of UK thus changes in government
stability in UK makes huge impact on their overall sustainability (Quinlan and et.
al.,2019).
Economic Factor
It is related with the economy which impacts the operations an organization. UK is fast
growing economic nation which makes positive impact on standard living of people. Tesco has
attained huge customer base in UK due to which generating huge revenues every year.

Strength: Increasing economy of UK makes their local people more capable to spend
money on buying different kinds of retail products and services. Thus, having customer strength
in UK increases their revenue on increment basis (Weiss, 2014).
Weakness: Tesco is operated in various nations as well where economic stability is much
fluctuated. This will lead to failure of their business operations in such nation which makes
damages on their overall market position at global level.
Social Factor
It is the factors which mainly focuses on welfare of the society by an organization due to
having intention to survive in society for longer duration.
 Strength: Tesco generates huge employment opportunities every years which helps in
increasing standard of living of people.
 Weakness: Tesco prefers to recruit local people over people of other nations as they
believe that local people can easily communicate and coordinate with upcoming
customers at their outlets. This makes negative impact of Tesco in society due to making
discrimination while recruiting employees on their basis of their nationality (Wetherly,
2014).
Technological Factor
It is related with the technological advancement which brings company ahead than their
rivals in competitive market. In the context of Tesco, it is one of the largest multinational retailer
in UK thus technological factors plays an important role in their growth and success.
 Strength: Tesco adopts digital technological including online payment facilities,
marketing their products using social media marketing, displaying LED at their outlets
etc. which easily grabs an attention of their targeted customers.
 Weakness: Investing less on adoption of digital platforms may brings loss to the
company as nowadays people are more active on internet and doesn’t willing to visit at
their physical stores to buy.

CONCLUSION
From the report discuss above, the external and an internal factor which has affected the
business performance has been mentioned. For the internal analysis SWOT analyses have been
performed, whereas for the external analysis PESTEL analysis has been performed. The report
also has provided the points of how the strength and weakness of a company interrelate with
external factors.

REFERENCES
Books and Journals
Dahles, H. and Susilowati, T. P., 2015. Business resilience in times of growth and crisis. Annals
of Tourism Research. 51. pp.34-50.
Deasy, S., and et. al., 2016.Controlling use of a business environment on a mobile device. U.S.
Patent 9,247,042.
Harrison, A., 2013. Business environment in a global context. Oxford University Press.
Helm, R. and Gritsch, S., 2014. Examining the influence of uncertainty on marketing mix
strategy elements in emerging business to business export-markets. International
Business Review. 23(2). pp.418-428.
Lilien, G. L. and Grewal, R. eds., 2012. Handbook on business to business marketing. Edward
Elgar Publishing.
Quinlan, C., and et. al.,2019. Business research methods. South Western Cengage.
Weiss, J. W., 2014. Business ethics: A stakeholder and issues management approach. Berrett-
Koehler Publishers.
Wetherly, P., 2014. The business environment: themes and issues in a globalizing world. Oxford
University Press.
Online
TESCO SWOT Analysis. 2019. [Online] Available through<https://bstrategyhub.com/tesco-swot-
analysis-2019swot-analysis-of-tesco/>./