Business and Business Environment: A Comprehensive Analysis of Tesco

This report provides a comprehensive analysis of the business environment and its impact on Tesco, a leading global retailer. It explores different types of organizations, the growth of the international business environment, and the interrelationship of various functions within an organization. The report also examines the macro-environment using PESTLE analysis, identifies Tesco's internal strengths and weaknesses, and applies SWOT analysis to understand their interrelationships with external factors. The report concludes with a discussion of Tesco's future prospects in the dynamic business environment.

[Business and business environment]
2018

Table of Contents
Introduction.................................................................................................................................................3
LO1 Explain the different types, size and scope of organisations................................................................4
P1 Introduction to provide an overview, explaining of different types of organisations and the growth
of the international business environment................................................................................................4
P2 An explanation of each of the chosen organisations, including: background details of the
organisation; the products and services they supply; the size and scope of the organisation; their vision,
mission and business objectives; the organisational and legal structure; and information about their
stakeholders.............................................................................................................................................8
LO2 Demonstrate the interrelationship of the various functions within an organisation and how they link
to organisational structure.........................................................................................................................13
P3 In detail, explain the functions for one of the chosen organisations, using an organisation chart to
show how the functions interrelate and an explanation of how they link to the organisational objectives
and structure..........................................................................................................................................16
LO3 Use contemporary examples to demonstrate both the positive and negative influence/impact the
macro environment has on business operations.........................................................................................18
P4 Using PESTLE analysis, identify and discuss the various macro environmental factors that impact
on the business operations, highlighting the positive and negative impacts with specific examples to
your chosen organisation.......................................................................................................................18
LO4 Determine the internal strengths and weaknesses of specific businesses and explain their
interrelationship with external macro factors.............................................................................................20
P5 Conduct the internal and external analysis for the chosen organisation in order to identify the
strengths and weakness. Explain how they influence the decision-making process...............................20
P6 Apply a SWOT or TOWS analysis to your organisation to identify their key strengths and
weaknesses. Explain the interrelationships these have with the external macro factors previously
discussed................................................................................................................................................22
Conclusion.................................................................................................................................................24
References.................................................................................................................................................25
2

Introduction
A business can be recognized, but to effectively establish a business, it desires assets like
investment. Recognition of societal standards, for which, it has to be contingent on the society.
Suitable market environments, for which, it is based on the market conditions. The trade of
products or services, for which, it has to be determined by on the customers. The labour, for
which, it has to depend on the society.
There are natural capitals and raw material, for which, it depends on the environment. Also, the
legitimate provision of the government, for which, it has to depend on the government. These
influences are several different mechanisms of an only concept called Business Environment.
The varying desires of consumers and modernizations in the market are a share of the business
environment. The test for industries in this technical period is not to enter the market but to
endure in the market. To endure in the market means to adjust to the variations as a fast as
probable. To adjust to the fluctuations means to be conscious of the business environment
(Business Jargons, 2018).
(Source: http://www.publishyourarticles.net/knowledge-hub/business-studies/17-short-questions-
and-answers-on-business-environment/5505/)
3

LO1 Explain the different types, size and scope of organisations
P1 Introduction to provide an overview, explaining of different types of organisations and
the growth of the international business environment.
Types of organisation:
a. Line organisation:
(Source: https://managementmania.com/en/staff-line-organisational-structure)
Line organisation is the oldest type of organisation structure. Under this organisation
information flows straight and vertically from the upper of the executive hierarchy i.e.
from top management to the lower management level down in the company structure.
Line organisation classifies power, accountability at each level. The employees in line
organisation are involved in aiming organisation need (Farooq, 2012).
1. Matrix organisation:
(Source: https://managementmania.com/en/matrix-organisational-structure)
4

Matrix organisation is blend of divisional, a well-designed architecture. Inculcated in
most of the MNC’s, the matrix structure permits to have an efficient working in the
organisation. This can generate influence because most functions of the organisation
(Bazigos, 2017).
2. Functional Organisation
(Source: https://managementmania.com/en/functional-organisational-structure)
Functional structure is the hierarchical structure which aims at understanding the function
of the organisation and dividing the work according to the domain. In this type of
organisation, for example, there may be a marketing department, a sales department and a
lead generation department. However, one of the disadvantages to a functional structure
is that the synchronization and communication between subdivisions can be limited by
the organisational limitations of having the various departments working distinctly
(Rivera, 2016).
3. Divisional Organisation
5

(Source: https://www.managementstudyhq.com/types-of-organizational-structures.html)
This kind of structure usually exists in MNC’s that function extensively in most of the
regions/area or that have an isolated minor corporates to have innovation in a product and
invent according the customer need.
The advantage of this structure is that requirements can be seen more promptly and more
precisely. Divisional structure is expensive because of its scope. Small organisations can
opt divisional structure on a smaller scale, having different workplaces in different parts
of the city, for example, or allocating different sales teams to handle different geographic
areas (Alton, 2017).
Growth of the international business environment
(Source: https://www.dreamstime.com/businessman-holding-globe-hand-international-business-
environment-reservation-concept-elements-image-furnished-b-image103757471)
International Business Environment includes the governmental risks, social variances, lawful &
other issues. IBE includes the political, economic, social & traditional, legal, & high-tech
environment, IBE helps in the following area:
Sales growth
Sales through exports in one of the ways of organisational growth. The vendors who provide raw
materials also experience growth in their sales volume.
Generates Employments
6

Businesses that give rise in exports have to employee more employees face intense pressure in
the organisation. The employees in this export-related occupation spend their remunerations in
the economy, primarily to a demand for other products and generating more jobs. Employment in
IBE helps in having a job satisfaction and helps the employee to engage themselves in the
organisational affairs.
Benefit Customers
IBE helps in having competitive advantage for the company, besides lesser expenses, imports
give consumer extensive selection of products with improved quality (Slice, 2017).
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P2 An explanation of each of the chosen organisations, including: background details of the
organisation; the products and services they supply; the size and scope of the organisation;
their vision, mission and business objectives; the organisational and legal structure; and
information about their stakeholders.
About Tesco
Tesco being one of leading retailers in the work which is headquartered in UK. Tesco has a
strong brand name in the market which helps to bring a wide variety of products to its customer.
It was started in the year 1919 and it is one of the largest online supermarkets in the world.
It has 2200 stored across the world which satisfies the customer expectations. Tesco understands
that employee motivation is very important which helps to have a job satisfaction and skilled
employees in the organisation. Let’s study the motivation theory in TESCO (Tesco Plc, 2018).
Different kind of benefits/motivation to employees in TESCO
1. Working Hours: Employees in TESCO are benefited with flexible working hours.
They have a flexible work timing which helps the employee to work out of their
comfort.
2. Salary: Tesco is a brand which pays good salary to its employees; the salary is quite
higher as compared to its competitors.
3. Other Benefits: Tesco provides different kind of benefits like gym which are at a
very nominal price different kind of employee benefits like health insurance of
employee and family.
Products and services provided by TESCO
Tesco offers a wide range of products that includes carious kind of kitchen items, seasonal items,
home appliances and different kind of day to day necessities. The products are demanded by the
customers and have an increasing demand over these products which helps them to have a brand
image in the market. It has delivery from the online store which helps the customer to have a
strong rapport with Tesco.
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Tesco’s all outlets are very systematically arranged in terms of the products alignment. The
features are highlighted and arranged according to the sections. Great deals are highlighted
which helps the customer to grab the opportunity. The online marketing of TESCO is very
attractive and has great deal on it (Drennan, 2012).
Size and scope of the organisation
The prime focus of the organisation is to increase its profit margin. Increasing in the sale and
revenue is the main purpose of the organisation; boost its supply by delivering more stocks to the
shareholders in the capital market.
Vision and mission
Tesco enjoys enduring success. Tesco has core vision that is continuous while the organisation
strategies and performs constantly to adjust to a changing world.
The company’s vision highlight the strategies that are aligned to have a proper functioning of the
business. Tesco’s vision is:
 Innovation in the business
 Employment opportunities
 Competitive advantage
 Customer loyalty.
Mission:
Mission of Tesco is to satisfy the customer needs; TESCO always aims at satisfying the demand
of the customer and gaining customer loyalty and to gain the competitive advantage in the
market.
Organisational and legal structure
The organisational structure of Tesco is highly categorized and comprises many hierarchies
which include from Regional Manager who is at the top most grid and then store sales manager
who reports to the regional manager. To channelize the organisational hierarchy, the roles of
different managers are ignored or not considered and are divided according to the function. It has
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a food-beverage manger manager, and a HR manager which are categorized in to different
executive reporting under them.
Tesco has a very challenging and extremely specialized organisational structure, which is not
required. A lot of cost reduction could goal if the organisational structure of the company is
made a bit easy. A few avoidable pillars could be detached from the hierarchy. The work system
followed by the company is wide spread and adapts to the work culture.
Legal Structure:
It is a multinational organisation which requires a lot of different laws designed so that company
and the employees are functioning appropriately. One lawful construction of Tesco is the
commercial ascendancy, the individuals in this segment deal with stakeholders; Tesco is
accomplishing the policies that are being proposed by the stake holders of the company. For the
public the company has tasks that should take care of the environmental factors which do not
affect the environment.
The Licensing team makes sure that every outlet has an alcohol authorization and to make sure
that it is lawful. Tesco would have a lot of branches and subdivisions. The size of Tesco depends
on how much income the industry has if the corporate has a large amount of income the business
(TESCOSW, 2017).
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LO2 Demonstrate the interrelationship of the various functions within an organisation and
how they link to organisational structure.
Every company has list of functions which help the organisation to grow, learn and earn, the
organisations are sib divided in various functions which help the company to carry out the roles
and responsibilities in an appropriate manner, hence which helps the company to grow:
 Research and Development (R&D)
 Personnel Management
 Financial and accounting Management
 Sales and Marketing
In an organisation it is very vital to carry out the functions in an appropriate manner which help
the company to run smoothly, thus as a result different functions of the organisation helps in
having a string decision making process, which helps the organisation to run successfully and
helps the employees to co-ordinate with each other. As a result, there will be a smooth
communication in the organisation and transparency to carry out all the task effectively, below
are the few functions of the organisation which helps to understand the few areas:
 Research and Development: the motive of every organisation is to scrutinize the
requirement and necessity of the consumers on that basis they will be able to able to
design and develop a product according to the market and customer specification. The
Research and Development (R&D) function is apprehensive with emerging new products
or methods and refining current products and services. This helps to understand the
customer requirement and helps to innovate a product according to the needs and wants
of the customer and helps in understanding the customers demand which helps in
designing a product which gives best result.
 Financial Management: Financial management is one of the key function of an
organisation to perform, FM helps in understanding the current trends and the key assets
of the organisation. Financial management helps in revising the company’s budget
simultaneously understanding the customers need and demand for the product.
Understanding the tax and what will be profit from the product which the company will
be able to analyse by financial planning.
 Sales and Marketing: Sales and marketing are the key functions of any organisation,
sales helps o understand the sale and the revenue of the product. As a result, this helps in
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deciding the strategies which help in panning the product segmentation. Different kind of
activities in marketing help the product to grow and have a strong brand image in the
market. Organisation should make sure they different schemes like (e.g., offering a
discount on a product, season discount or so), Promoting the product in a different way
like online promotion, F2F selling, door to door sales helps the company to market the
product. In marketing there are different ways of marketing the product, below-
mentioned are ways:
Product: It refers to have a product and service according to the set customer
expectation, price is very essential thing in the market.
Price: Having a best price in the market helps to understand the customer demand. Price
helps to have a competitive advantage in the market
Promotion: Promotion is one of the effective way to showcase your product in the
market, it helps to highlight or characterise your product which helps to stand out from
the competitor.
Place: Place helps in market segmentation and helps to decide where can we place a
product in the market, so as to get a strong customer demand on the market. Place may
also refer to middleman and the supplier.
 Personnel management
The Personnel management function is concerned with the following:
Training and development: Training and development helps the employee to get
motivated and up skill their duties and responsibilities. T&D is one of the important parts
of HR
Employee engagement: Employee engagement helps the employee to get motivated in
different ways like wages, incentives, perks and outings.
Grievance handling: In an organisation it is important to solve disputes, which as a
result helps to run and communicate smoothly.
Other HR functions Employee should be healthy and fit in every organisation, safety
measure like providing transport facilities or cab facilities (Munroe, 2018).
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P3 In detail, explain the functions for one of the chosen organisations, using an
organisation chart to show how the functions interrelate and an explanation of how they
link to the organisational objectives and structure
Tesco monitors an elevated a strong management where the roles are precisely distributed in a
parameter of guidelines. this type of organisation helps in forming authorities and responsibilities
for each employee which helps in carrying out the work effectively and helps the employee to
have a sense of responsibility
Higher level
Higher level hierarchy is directed by the President of the TESCO who is manages the workforce
and majorly he is the one who has the authority to take actions. Other employers include the
CEO, CFO and board members of the company. There work of the top level management is to
forecast the needs of the customers, the role is to take decisions and have an authority over the
lower level hierarchy
Middle level hierarchy
The intermediate level functions between the lower level and the upper level of the hierarchy.
These include of various VP’s and other managers and their co-assistants who are working under
them. They synchronise the operational of other two levels and achieve other functions like
personnel manager, sales manager, marketing manager
Here the middle level is been divided into Marketing that i.e. the advertising team, the sales team
the lead generation and PR team here the entire marketing team is linked with it which helps in
promotion of the product.
Lower level
At the lower level of the hierarchy which is the regional manager who takes foremost choices
and there are people who are reporting under him which are mangers of the store and the
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assistants who are reporting under him, lower level comprises of all the sub section goods and
services in the organisation (Tesco Plc, 2017).
14

LO3 Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations.
The macro-environment plays a significant role in the dynamics of any Business organisation by
influencing it strategic objectives and goals. The risks around the macro factors impacting the
organisation need to be monitored in a planned manner through risk management strategies and
techniques. Corporate risk Management is a function to monitor and manage all the risks
involved so that the influence or the impact arising out of such uncertainties are eliminated or as
the least, minimized.
P4 Using PESTLE analysis, identify and discuss the various macro environmental factors
that impact on the business operations, highlighting the positive and negative impacts with
specific examples to your chosen organisation.
Political:
The Political situation within a country decides the stability of the business environment within a
nation. TESCO is one of the major retailers and it needs to analyse the Political Scenarios &
conditions before deciding upon its intent to conduct business that is establishing its retail stores.
TESCO operates majorly out of UK, keeping a close track of the political situation within UK &
its surrounding nations so as to conduct the business without any impact out of any political
situation. A strong elected Government shall prove to be a positive proposal for its sustainability
while a weak government shall create risks.
Economic:
Various Economic factors such as Inflation, Exchange rate Movements, Interest rates, Taxation
system, Monetary and the Fiscal Policies of the Government, Balance of Payment situations,
influence the demand and supply conditions. Better the economic situation better would be the
disposable income in the hands of the local Public & the higher spending power. As a result,
TESCO stand to benefit out of a better economic situation.
Socio- Cultural:
The Socio- Cultural factors such as:
- Eating habits & preferences
- Local clothing preferences
- Shopping preferences, etc.
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Within a nation may be factored in while deciding upon the important growth strategies for the
organisation. Other aspects, such as the Social unrest, political situation, and local market
conditions shall tend to prove to be beneficial or not depending upon the situation.
Technological:
Various Companies in today’s world are moving towards advanced methods of meeting the
customer needs and requirements and hence their expectations. Online shopping is providing a
great platform for shopping as it provides the most convenient form of shopping. Latest
technologies have been deployed by several organisations like TESCO to enhance the customer
experience. A highly efficient & faster billing systems to reduce the lead time. A great supply-
chain management, with support from advanced technologies enabling a lower stock
management & lower shelf like, enables a better turnover for the organisation.
Environmental:
Every Country has its own Environmental safety standards, Pollution control norms &
compliances. Consequently, every organisation needs to abide & adhere to the laws on
environmental policies prevailing in the country where it conducts business. TESCO needs to
ensure that it has a proper wastage disposal policy which is in compliance with the prescribed
environmental standards, it maintains sufficiently green environment in around its premises. It is
committed to reducing its carbon footprint. This goes a long way in creating a strong image for
itself, better quality products & efficient systems.
Legal:
TESCO is legally bound within the jurisdiction where it conducts its business. As it has majority
of its operations within UK, it shall abide by the local UK legislations. Various laws with respect
to Employees, Employee Compensation, Employee safety, Commercial compliances, Taxation
laws, etc, shall be adhered to.
16

LO4 Determine the internal strengths and weaknesses of specific businesses and explain
their interrelationship with external macro factors.
P5 Conduct the internal and external analysis for the chosen organisation in order to
identify the strengths and weakness. Explain how they influence the decision-making
process.
Internal Analysis
The internal analysis refers to the conducting a study on the inherent strengths and weaknesses
prevailing within the organisation, which essentially leads the way for the future growth of the
organisation. Following are the leading factors to be considered while doing the internal analysis:
Strong Financials:
Different accounting statements, various operating ratios, etc need to be analysed to understand
if the organisation is performing well as against its past performance. Does it have sufficient
working Capital, Fixed Asset Investments, Intangibles like Patents, Copyright to leverage its
future growth? TESCO especially needs to maintain sufficient Working Capital to provide
liquidity to its retail business. Additionally, it needs to have good profitability ratios like the Net
Profit Margin ratio to keep its shareholders happy.
Core Competencies focus:
TESCO needs to ensure that all its energy is diverted towards strengthening its core
competencies & developing technologies to enhance its core competencies. Several non-
productive activities may be outsourced or divested. For TESCO, retailing is the core business &
it should ensure that all its energy is diverted to keep its momentum growing in this particular
area.
Resource Management:
A very important part of the internal strategy for any organisation should be to manage all its
resources efficiently and effectively, be it the Human Capital, Raw Materials, Financial
resources. Talent Management is important to keep a highly effective manpower at all levels in
the organisation through various measures like providing suitable work conditions, best-in-class
pay, other perquisites and benefits, training for developing the skill sets of its employees.
TESCO keeps a tab on all such parameters to retain its best quality talent to fuel its growth.
External Analysis
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External Analysis refers to study of the outside environment to understand the impact of such
external factors on the business and its growth. It is important to study all such factors so that the
impact of any such factors if any negatively on the organisation can be eliminated or at least
minimized.
PEST Study:
It is the study of the Political, Economic, Social, Technological factors affecting the performance
of the organisation. These are all the external factors which play an important role to influence
the growth of the organisation. The political situation within a county, the Economic indicators
& economic growth story, the taxation system, the Societal & the cultural aspects prevailing
within the country & Technologies implementation to keep itself ahead of the technological
revolution are the study for TESCO for its sustainable growth.
Competition:
Competition, both direct & indirect needs to be analysed as both of them influence the
performance of the organisation. The direct competition is the competition with its competitors
which are in the process of providing the same or similar products or services. The Indirect
Competition is the competition against its competitors which are in the business of providing
substitutes, like coffee for tea. An organisation needs to ensure that its market share is
maintained for which it needs to constantly keep a tab on its competitors (Hui, 2007).
18

P6 Apply a SWOT or TOWS analysis to your organisation to identify their key strengths
and weaknesses. Explain the interrelationships these have with the external macro factors
previously discussed.
Strengths:
1. Largest profitable supermarket:
TESCO has a huge brand name in the market which helps to build a strong portfolio in the
market; Tesco diversifies its product according to the customer need and demand in the
market which helps to achieve customer need and demand.
2. Geographically diversified:
Tesco has its presence across the globe in different geographies, having a strong name in
the market TESCO has a strong positioning in the globe which helps them to diversify
geographically.
3. Strong Customer base:
Tesco serves its customers and helps in understanding the customer needs that is the reason
Tesco have a strong bond with its customer, the products are innovated and produced
according to the customer needs and requirement.
4. Strong technology:
Tesco has a very strong online marketing technique, it has an online website which delivers
the product to the customer and is technologically very advanced. This helps in customer
satisfaction and customer does not have to come to the store.
Weakness:
1. Competition pressures:
Tesco has huge competition in the market, here to have a strong brand image in the
market, it should have strong competitive advantage to reach the markets demand and
eliminate competition wars
2. Limited presence in few countries:
Tesco has limited presence, it has presence only in Europe and UK market which targets
some of the cities in the country, and it should target few other countries to have stronger
image in the market.
3. Geographic diversification:
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Business model tracked is familiar in the market, however the alteration are wanted
according to the diverse characteristics where it has its existence, in agreement with the
culture.
Opportunities:
1. Growing online technology:
Tesco has a very strong growing online shopping website; it concentrates on customer
demand and helps the customer choice the product and deliver at home. This is one of
the growing opportunities for Tesco.
2. Fair Trading:
Tesco make sure there is fair trading between them and suppliers; it doesn’t
compromises on the quality of the product. The end products that are delivered in the
market are met to the standards and expectations of the customer.
3. Customer oriented:
Tesco’s main motive and mission is customer satisfaction and to reach out to the
customer and have the product which helps in understanding the customer need and
demand.
Threats:
1. High labour cost:
Tesco has a high labour cost incurred in the employee sector, it has a huge significance
cost incurred in the process. Labour threats in terms of increases wages which further
puts pressure on pricing
2. Universal monetary environment:
Here is a definite vagueness as far as the international political, as well as monetary
situation, is alarmed. Specifically considering unpredictability in oil and gas expenses
caused majorly due to political chaos in the world. This will affect demand for Tesco.
3. Government regulation:
Government guidelines and the political background are also having an impact on
TESCO to follow to new guidelines that require them to make important deviations to
their functioning of organisation for supplementary expenditure (Mind Tools, 2018).
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Conclusion
The present business environment is more competitive in nature as compared to previous
environment. Corporate wish to be the global leader in the competitive market. Successful
companies have the capacity to adjust or innovate or invent the workflows, products, and
services. Producing inventive goods and service packages helps corporate achieve a competitive
advantage. Creative ideas and methods result in innovation. Design motivates competition and is
the connection between vision and innovation for companies that constantly seeks new and more
efficient ways to design workflows.
Tesco constantly is doing marketing investigation and try to find out of the customer demand as
well the company doing exploration to new expertise and business segment. In this way the
business can progress frequently according to market request. It can be lead in the supermarket if
it provides best product and meet customer demand. All marketing strategy should be used
efficiently which helps in improvement of the organisation. It shows the plan embraced by
company was operative in upcoming year also Tesco will introduce new products and services to
the market.
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