Internal & External Factors Impacting Tesco

This assignment analyzes the various internal and external factors that impact Tesco's business performance. It explores concepts like SWOT analysis, PESTLE analysis, and Porter's Five Forces to evaluate Tesco's competitive landscape. The report emphasizes the importance of understanding both internal strengths and weaknesses, as well as external opportunities and threats, for effective decision-making and strategic development within the dynamic business environment.

Business and the Business
Environment

TABLE OF CONTENTS
PROJECT 2......................................................................................................................................1
INTRODUCTION...........................................................................................................................1
P4 and M3. Positive and negative impacts of macro environment on TESCO by making use of
suitable examples....................................................................................................................1
P5 and M4 Internal and external analysis of TESCO by making use of SWOT and impact of
strengths and weaknesses in decision making........................................................................3
P6 and D2 Interrelationship between strengths and weaknesses with external macro factors
along with their impact on decision-making..........................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

PROJECT 2
INTRODUCTION
There exists a number of internal and external environmental factors that impacts upon
businesses. These different components can be summed up into two major categories namely
micro and macro (Nah and Saxton, 2013). The present undertaken project will emphasise on the
analysis of these environmental factors on the selected organisation TESCO plc. Further,
different assessment tools were used in this such as PESTLE, SWOT, etc. In addition to this, it
will be moreover explored that how the selected organisation should make decisions on the basis
of the results obtained.
P4 and M3. Positive and negative impacts of macro environment on TESCO by making use of
suitable examples
There exists a range of sources that implied the pressure on the businesses and their
effective functioning. The origins of these sources may be just external or far external to the
entity. The positive and negative impacts on TESCO from different macro factors are as follows:
Far external environmental factors: The impact of macro environmental factor is least predictable
and can harm the overall effectiveness of the business (López-Gamero, Molina-Azorín and
Claver-Cortés, 2011). This analysis can be performed by making use of a most reliable tool,
PESTLE analysis. In this, all the major components that can put press on the business such as
political, technological, etc. are studied. Political factors: Some common elements of this category that can influence on business
involves the stability or instability, policies of existing administrative party, etc. With
regards to the chosen company, TESCO it has been observed that the existing place of the
entity is having stable political conditions. It assists in making the policies stable for long
term and thus, cost with the modification can be reduced. Economical factors: There are different components that comes under this category such
as growth rates, interest rates, GDP, etc. It is entailed that for effective functioning of the
entity, financial situation of the people should be strong. In context to UK, there is
effective economical condition which supports the functioning of TESCO. However, it
should be noted that a little affect after Brexit has been implied on the economy but this
is not much challenging in the growth of TESCO (Klapper and Parker, 2010).
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 Social factors: People of the present era are much influenced with the services provided
by the supermarkets. It is because of the fact that they does not need to go varied places
for the total shopping. In addition to this, the online commercing facility rendered by the
TESCO highly attracts the people. Further, entity develop products as per the varied
needs and demands which assists in satisfying the customers. Thus, the societal factor are
favourable for the chosen company. Technological factors: The present era of digital advancements demands for the hi-fi
facilities to be provided. In order to satisfy these needs, organisation is required to spend
amount on the betterment of existing tools with the highly advanced tools. This will raise
the investment of the company that will further decrease the business value. Legal factors: In order to work effectively, it is highly required to stick to the legislation.
All the business operations should be performed after assuring that either they are
following rules or not. In context to UK, there are strict laws that are required to be
follow by TESCO. Some of them are employees law, health and safety laws, quality
laws, etc. (Budhwar and Debrah, 2013).
 Ecological factors: There are different laws which are framed to save the environment
from the business activities. However, in context to TESCO, it has been observed that the
organisation follows effective corporate social responsibility that assist in sustainable
developing assuring no or less impact on environment.
Near external environmental factors: The impact of the near macro factors is what a company
is most concerned with. In context to the selected organisation, TESCO, this assessment will be
carried by making use of Porter's five force model. Bargaining power of buyers: All the organisations highly relies on the customers as their
major stakeholders. In context to TESCO, it has been observed that the bargaining power
of buyers is very high. It is because of the fact that there exists n intense competition in
the industry. Also, there are some entities that are having comparatively low pricing
structure than TESCO which influence buyers. Bargaining power of suppliers: Bargaining power of suppliers is also high in the retail
sector. As there exists a high competition in the sector, suppliers has so many options to
choose between. Thus, there is high bargaining power of suppliers for the TESCO
(Bremser and Chung, 2005).
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 Threat of substitutes: The company is growing effectively with adding every new
advancements. Online services, home deliveries, etc. are proof of it. Thus, with these
things a very low level threat of business substitution is there. In addition to this, the
concept of supermarket can never run outdates and hence, TESCO is not affected with
the threat of substitution. Threat of new entrants: The selected organisation TESCO belong to retail sector and is a
supermarket that requires a high amount of investment in setting up and functioning. This
makes the entry in the business quite challenging. Hence, there is low level of threat of
the new entrants.
 Industrial rivalry: There present a strong level of competition in the retail sector. There
are various organisations similar to TESCO having their own critical success factors.
This further raises different problems such as high bargaining power of buyers and
suppliers, etc. Some major examples are: Sainsburry, ALDI, LIDL, etc. (Björklund,
2011).
P5 and M4 Internal and external analysis of TESCO by making use of SWOT and impact of
strengths and weaknesses in decision making.
In order to perform the business operations, it is must to analyse the strengths and
weaknesses of the firm so that opportunities and threats can be dealt wisely. With regards to
TESCO, it has been observed that there are various internal factors of the business that impacts
on its value. In order to assess all these forces, the most effective tool that company can make
use of, is SWOT analysis.
Strengths Weaknesses
TESCO is having a very strong brand image.
The quality of products by TESCO is
recommendable.
The organisation have a effective global
reach.
The company also provides effective online
services.
The pricing structure of TESCO is high as
compared to the other competitors.
The human resource management department
of the entity is not much effective (Bansal and
Hoffman, 2012)
Opportunities Threats
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The selected organisation can expand
internationally by implementing effective
growth strategies.
TESCO can increase the variety of products
considering the needs and demands of
individual.
A high level of competition is present in the
retail sector.
The bargaining power of buyers is very high
which can decrease the business value.
These identified strengths and weaknesses will play a major role in the decision-making
system of TESCO. First of all, in context to the strengths, the organisation can make use of the
strong brand image in the marketing for increasing the business value. Further, by boosting the
online services with the addition of advanced payment methods, the selected organisation can
improve the process. However, on the other hand, the weaknesses of TESCO will affect the
business operations (Aterido, Hallward-Driemeier and Pagés, 2011). Firstly, the pricing structure
of TESCO will affect on the number of customers. Companies with low pricing structure can
attract them. In addition to this, it has been further observed that the organisation is having a
weak internal environment because of the ineffective human resource management. This can put
a great influence on the decision-making procedure of TESCO.
P6 and D2 Interrelationship between strengths and weaknesses with external macro factors along
with their impact on decision-making.
There are various roles of internal business environment in making the organisation
effective. This analysis also plays a significant role in the addressing various external issues
linked with the organisation. In context to TESCO, it has been observed that the quality of the
services maintained by the entity is recommendable. This does not only assure health and safety
of consumers but also satisfy them. The entity follows all the legislation settled for the quality
such as packaging requirements, preservation, etc. Further, there are different steps taken by
TESCO for corporate social responsibilities (Wheelen and Hunger, 2011). This will help in
addressing the ecological issues and move towards sustainable development. The sustainability is
highly required to allow future generations to fulfil their needs. Moreover, the strong brand
image of the entity has helped in achieving various benefits overs few of the competitors. This
will not only assist in dealing with the intense level of industrial rivalry but will also help in
increasing the business value of the selected organisation.
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It should be further noted that the chosen firm is having appreciable online services that
are designed to simplify the shopping process for the customers. This will further assist in the
enhancement of the satisfaction and thus, trust & loyalty of consumers will increase. The
company is further having effective physical evidences to support the buying process of
customers. Recent terotechnological development are also focused that makes entity to deal with
the rising technological issues (Siewiorek and et. al., 2012). These advantages further plays a
major role in decision-making system of the company. For instance, by analysing that how the
strong brand image of the company can benefit it in increasing business value TESCO can make
use of it effectively. Taken for instance, it can use this brand image in the marketing of the
business.
On the other hand, it should be recognised that there exist various flaws in the business
operations that can raise the impact of external environment. First of all, it should be noted that
the entity is not having effective management of its employees. It should be further recognised
that lack of importance given to the employees can impact on work effectiveness of the selected
organisation TESCO. This, in turn, will impact in the business performance. In addition to this,
lack of all the employees in the business decision impacts upon the motivation level of workers.
Also, this disengagement can limit the number of effective ideas that can raise the company
sales. Further, the high pricing structure of the chosen company can allow other companies to
gain the competitive advantage. It has been observed that the TESCO is having so many issues
because of its high pricing structure in terms of the customers. The consumer buying behaviour
is a key factor to consider in the business and hence, the selected firm is suggested to pay
attention this. Further, in order to boost the company sales entity should add the option of
payment through gift card at the time of online shopping . This will increase the consumer base.
This, in turn, will raise the benefits of it. Hence, in this way the strengths and weaknesses of
TESCO relates with the external environment. Further, mentioned ways states how the internal
factors plays role in gaining business objectives and decision-making procedure (Pikka, Iskanius
and Page, 2011).
CONCLUSION
From the present report, it can be concluded that there are different internal and external
factors that impacts upon an organisation. These micro and macro level factors are thus,
necessary to analyse for effective decision-making. The present report also emphasised on the
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fact that how strengths and weaknesses of an organisation impacts on its business value. Further,
what role they pays in developing strategies is accessed on the present undertaking.
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REFERENCES
Books and Journals
Aterido, R., Hallward-Driemeier, M. and Pagés, C., 2011. Big constraints to small firms’
growth? Business environment and employment growth across firms. Economic
Development and Cultural Change. 59(3). pp.609-647.
Bansal, P. and Hoffman, A. J. eds., 2012. The Oxford handbook of business and the natural
environment. Oxford University Press.
Björklund, M., 2011. Influence from the business environment on environmental purchasing—
Drivers and hinders of purchasing green transportation services. Journal of Purchasing
and Supply Management. 17(1). pp.11-22.
Bremser, W. G. and Chung, Q. B., 2005. A framework for performance measurement in the e-
business environment. Electronic Commerce Research and Applications. 4(4). pp.395-
412.
Budhwar, P. S. and Debrah, Y. A. eds., 2013. Human resource management in developing
countries. Routledge.
Klapper, L. F. and Parker, S.C., 2010. Gender and the business environment for new firm
creation. The World Bank Research Observer. 26(2). pp.237-257.
López-Gamero, M. D., Molina-Azorín, J. F. and Claver-Cortés, E., 2011. Environmental
uncertainty and environmental management perception: A multiple case study. Journal of
Business Research. 64(4). pp.427-435.
Nah, S. and Saxton, G.D., 2013. Modelling the adoption and use of social media by non-profit
organizations. New Media & Society.15(2).pp.294-313.
Pikka, V., Iskanius, P. and Page, T., 2011. The business enabling network–a tool for regional
development. International Journal of Innovation and Regional Development. 3(3-4).
pp.324-344.
Siewiorek, A., and et. al., 2012. Learning leadership skills in a simulated business environment.
Computers & Education. 58(1). pp.121-135.
Wheelen, T. L. and Hunger, J. D., 2011. Concepts in strategic management and business policy.
Pearson Education India.
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