Impact of External Macro Factors on Tesco

The assignment examines how external macro factors influence Tesco's business environment, highlighting the company's strengths and weaknesses in relation to these factors. The report discusses the impact of stable political conditions, economic growth, technological advancements, and environmental pressures on Tesco's operations and functions. It also explores how these factors affect the company's opportunities and threats, and concludes by emphasizing the importance of considering external macro factors in business decision-making.

BUSINESS AND BUSINESS
ENVIRONMENT

INTRODUCTION
BE plays an important role in every business and it is combined with micro as well as
macro factors that affects the operation and functions of company. There are various elements
that are included in the business environment which customers and suppliers, betterment in
application, authorities act and activity, cultural as well as system direction (Calabrese and et.al.,
2018). The entire performance, growth, profitability as well as entire survival of the company is
affected by these factors. This present report is context to John Lewis company will be chosen
for assessment. It is private partnership company in UK which operates in clothing, watching,
jewellery, cosmetics, food, audio visual computing etc. Its headquarters are located in London
England UK. It was founded in 1929 by John Spedan Lewis. This present report will cover,
different types as well as purpose of organization, Furthermore, this will also explain the size as
well as scope of different types of organisation. In addition to this, Pestle analysis tool will also
use to identify external factors affecting operations of the business.
MAIN BODY
1. Different types of organisations as well as there purpose and the growth of the international
business environment.
In the business environment there are different types of organisation exist as well as these
are very essential factors in the growth of international business environment. Thus, it is very
significant to understand the actual concept of public, private and voluntary organisation that
present in the business environment.
Private Sector Organisations- The companies which are owned and controlled by
individual or groups of individual are known as private sector organisation. These organisations
are nit the part of government or state authorities. These companies are also a very important part
of the economy. The main purpose or intention of private companies are to earn high amount of
profit by increasing sales and market share. In order to start a private company the maximum
limit of members are restricted to 50 and minimum 2. The subscription of shares of private
company is not allowed for public. John Lewis company is a private sector organisation which
is operating with the intention of earning huge amount of profit by increasing sales as well as
market share (Schaltegger and Wagner, 2017). Some examples of private sector companies are
Developers, Designers, Repairmen, Accounting Tax, Dentistry, Apple, Morrison. Tesla etc. and
many other private sector companies.
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There are some benefits and drawbacks of private sector organisation which are-
Benefits
 All the members in the private organisation are known to each others.
 Owner has all the power of control of entire organisation.
 Statutory meeting are not necessary in the private organisation.
 There are two directors to run the company.
 Liability of all the members are limited.
Drawbacks
 The share of private limited company is not transferable it is restricted.
 The maximum limits of all the members are restricted which is not more than 50.
 Private organisations are nit allowed to issue any prospectus.
Public Sector Organisations- The companies which are owned as well as control by
government of country. Government includes federal, state, municipal or provincial government.
The while control of company is remained in the hands of government legal authorities. The
membership are always open to the general public. In order to start a public limited organisation,
there are totally 7 minimum number of members are requires and there is no maximum limit of
person. Prospectus is the main source of issuing shares to public. Organisations have greater
supervision as well as control in this type of organisation. All the members have limited liability
public limited company. The main purpose or intention of public limited companies are the
betterment or welfare of the communities. They generate employment in the economy. The stock
or inventory of public limited company can be acquired by any person. The formation of these
organisations are lawful (Moroni, Arruda and Araujo, 2015). Some examples of public limited
company are British Petroleum (BP), Burberry Group PLC etc.
There are some benefits and drawbacks of public sector organisation which are-
Benefits
 The liability of all the members are limited. The shareholders are free of any risk
and damages.
 Because of large number of shareholders the risk is dissolved.
 Retirement and death of any shareholder does not affect the life of organisation.
Drawbacks
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 In these companies because of huge number of shareholders it is not easy to
preserve privacy as well as secrecy.
 In order to start public limited organisation, it required huge amount of legal
formalities.
 In public limited companies there is lack of public interest.
 All the members in the company are unknown to each other.
Voluntary Organisations- The organisations which are owned as well as control by
individual or group of individual who voluntary enter into an agreement to form a company to
achieve the goals and objectives. These are organisations which are formed with the intention of
doing welfare of the society, this is the primary motive of the company. They also earn profit but
the entire profit they earned are used for the welfare of the society. These companies have there
legal status or structure by being a voluntary organisation limited by guarantee (Schaltegger,
Hansen and Lüdeke-Freund, 2016). Some examples of voluntary organisations are Welcome
Trust, Oxfam, Age UK etc.
There are some benefits and drawbacks of voluntary organisation which are-
Benefits
 These organisations are operating for the welfare and betterment of the
communities.
 These organisations are not liable to pay ant tax as they are fully exempted.
 They are also called as cost-effective organisation.
Drawbacks
 Voluntary organisation faces lack of resources.
 They also posses less reliability due to lack of fund.
Basis Public ltd Private ltd Sole trader
meaning The while control of
company is remained in the
hands of government legal
authorities. The
membership are always
open to the general public.
The companies which
are owned and
controlled by
individual or groups of
individual are known
as private sector
organisation.
These business are
easy and inexpensive
and also make
decision by their own
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Aim Their main aim is to serve
public
Aim is to earn profit Aim is to provide best
services to their
customers
Advantages The liability of all the
members are limited. The
shareholders are free of any
risk and damages.
Owner has all the
power of control of
entire organisation.
More control of an
owner
Disadvantages public limited companies
there is lack of public
interest.
The share of private
limited company is not
transferable it is
restricted.
Unlimited liability
Joint venture: It is an cooperative enterprise which is run by two or more business
entities in order to attain the specific objectives of the company.
2. Explanations of private, public and voluntary organisation.
Private Company
Background- It is a private controlled institution and also called as John Lewis
partnership (JLP). The organization owner is John Lewis and there are many employees and
mate. It was founded in 1929 by John Spedan Lewis. This is the third big institution in UK in
terms of sales (John Spedan Lewis (JLP) Organisation Structure, 2017). The revenue of JLP is
£11 billion and thee are 88,900 employees are employed in this company. The main ware of
organization is Wear, watches, adornment, decorative. Housewares, furnishing, beds, mattress,
nutrient, financial work etc.
Mission- “company main aim is to make better organization.”
Vision- “To provide best services to their customers in order to raise their loyalty and
our loyal and committed colleagues.
Business Objectives - “The main objectives of John Spedan Lewis is to supply better
customer satisfaction by maximising sales and profit of company.”
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Organisational Structure of John Spedan Lewis- The JLP company is legally formed by
the structure which is owned and controlled by two people and they had come in the agreement
to share profit and loss equally.
Public Company
Background- British Petroleum (BP) is public limited company. It is multinational gas
and oil company of United Kingdom which was founded in 1909 (British Petroleum (BP)
Organizational Structure, 2017). Its central office are placed in London and England. It is sixth
largest oil and gas institution at global level. BP is vertically integrated company operating in all
the areas of gas and oil industry that includes exploration, production of refinement, arrangement
and merchandising organic compound, time period of power as well as trading. In biofuels and
wind power BP has renewable interest (Alles and et.al., 2018). The revenue of the company is
$244.58 billion in 2017 and it employed 74000 employees in last 2017.
Mission- “To improve all the areas and stay as the leading multinational energy
organisation in the world and want to become a global energy producer across the world.
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Illustration 1: Organizational Chart of John Spedan Lewis
(Source: John Spedan Lewis Organizational structure, 2017)

Vision- “ To deliver quality products and better services to the entire world.”
Business Objectives- The main objectives of British petroleum to keep the stakeholders
of company.
Organisational Structure-
Voluntary Organisation-
Background- Welcome Trust is a voluntary organisation which has main focus on
biomedical research which was founded in 1936 by Sir Henry Welcome. It is the second largest
voluntary organisation in the world. Its headquarters are located in London, NW1, United
Kingdom (Welcome Trust Organizational Structure, 2017). The aim of this trust is to get the
exceeding better in the health by supporting extra advance technology. Welcome trust has the
giving about £23 billion in 2017.
Mission- “To deliver high quality of research and health promotion.”
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Illustration 2: Organizational Chart of British Petroleum company
(Source: British Petroleum company Organizational Structure, 2017)

Vision- “ To make the Cambridge Centre for Global Heath Research boost excellence
investigation in order to just challenges of health issues and by new and advance developed
technologies the institution can help to low and middle countries through partnership.”
Business Objectives- To make the stakeholders of company satisfied with the research
and health promotion activities.
Organisational Structure-
Illustration 3: Organizational Chart of Welcome Trust
(Source: Welcome Trust Organizational Structure, 2017 )
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3. Explain the function of organisation and its interrelations of the functions and how they are
link to organisational objectives and structure.
In an organisation there are various departments and there function they have to work
according to there roles and responsibilities within organisation (Cohen and Kietzmann, 2014).
There functions are closely interconnected with each other and they are directly linked with the
companies objectives as well as structure. In John Spedan Lewis company there are many
departments which perform there roles and they are directly attached towards the achievement of
organisational goals and objectives. Here are the description of function and there
interrelationships-
Operations Department- This is one of the most important department of company. The
entire activities are start by the instruction of operation department. The main function of this
department is to fit end and subjective as well as found plan of action of different departments.
Income prediction, preparation of sales advertisement and publicity. They make group action
with other manages and start the work as soon as possible. They are responsible for the smooth
and profitable production of the entire organisation as without the functions of operations it is
not possible to achieve the gaols and objective of company. They also ensure the quality of
products of John Spedan Lewis company.
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Illustration 4: Organizational Chart of John Spedan Lewis

Marketing Department- This is the most important department of company as entire
sales and profit of company is open-ended on the marketing functions. The marketing
department of JLP company is very efficient as the customers are largely aware of the products
of company (Langfield-Smith and et.al., 2017). If company marketing department does not work
properly than it is not possible that company can achieve its desire goals and objectives.
Sales Department- This is another the most important department where the entire sales
and profit of company id depended. Having a strong and powerful department of sales is the
crucial asserts of company. It is also fact that in the absence of sales department it is not possible
to make profit from the business. The sales department at JLP company is also very efficient as
they are gaining high profit only because of sales department.
Human Resource Department- This department is the key to achieve the desire goals
and objectives. None of the work within company is accomplished without skilled and
knowledgable employees in the organisation. It is the duty and responsibility of HR manager to
hire or select the most skilled employees in the company so that company can achieve its desire
goals and objectives. The employees at JLP company are highly skilled and knowledgable
because HR manager used many techniques to select the best and suitable candidate for the job.
Admin- The function or roles played by admin is to manage the entire equipments,
machines and tools of company. They are also responsible for maintaining the hygiene at the
workplace. In addition to this, all the external and internal communication are handle by th
admin of the company. This is also an important function to achieve the desire goals and
objectives of company.
The organizational structure of the company is flat and it assign duties to different
department of the company so that tehy will complete the work. All the department of the
company are interlinked such that production department produces the things which research and
develeopment department of the company are identify. On the other side marketing department
also uses various techniques in order to reach that new product into market.
4.Identifying and discussing the macro environmental factors that influence the retention of
business.
For track the striking of external environment on the business concern, the best tool that
is used is PESTLE analysis tool. With the help of this tool, company can identify both positive
and negative factors influencing the operations and functions of organisation (Wheelen and et.al.,
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2017). There are six factors in PESTLE analysis which are Political, Economic, Social,
Technological, Environmental and legal factors.
Political Factors- This factor includes all the policies, legislations, tax rates and some
other government intervention. It affects the entire business of JLP company but the political
stability is very good in United Kingdom. IT is also one of the famous destination for the foreign
direct investment. JLP company has also taken advantages of political stability and invested
more in the business. The present rate of corporation for company is 19%. In 2016 the
government of UK has announced to reduce the rate by 17% which is great opportunity for JLP
company to expand its business in more cities.
Economical Factor- This is an essential factor in the Pestle analysis of UK. In terms of
GDP, UK is fifth largest economy in the world which is the wonderful, opportunity for the
companies to grow and develop more. In 2008, the period of recession that put the country in
trouble but the government of UK had taken required steps in order to improve the economy.
JLP company is very attentive towards these period because it influences the buying behaviour
of customer which directly affect the company's profit ((Cai and Yang, 2014).
Social Factor- The consumer market of United Kingdom is very big and huge. The
current population of UK is 65.6 million in 2017. Social changes, trends, attitude, belief of
customers are included in this factor. UK is developed country and the fashion changes very fast
and it also comes very fast in UK. Thu, it affects the decisions of JLP company as they have to
deal in advance in order to satisfy the needs of customers. JLP company has open up many stores
in UK to increase the sales and to catch the fashion as soon as possible.
Technological Factors- In terms of technological advancement UK is one of the largest
company across the world. London is known as the hub in technological and financial institution.
To give the best product and employment to customized, JLP is adopting advance technologies.
There are unlimited opportunities available in UK to transfers the technology such as JLP has
started to sell there products through online media which is the great opportunity for company to
raise the sales of company. JLP has also now using digital payment system to make the
customers satisfied and happy.
Environmental Factors- In UK, this is one the most emerging factors as now in this
period, government has high concern about the environmental issues. Government has increases
the pressure of company reducing wastage and damage of environment. UK government has
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taken initiatives to minimise the negative impact of economic growth of the environment. Thus,
this factor also pressuring the JLP company. JLP has decided to reduce there carbon foot print in
coming days. They are also stopped cutting trees for constructing there stores. Now they are
opening there stores in complexes and malls.
Legal Factors- This is the last and the most important factor in terms of businesses. It is
somewhat close to the political factors. It included al the laws, legislation, rules, acts which is
formulated by the government to save the rights of the person. These factors also affect the
companies profit and sales. Government has make Employment laws which affects the business
in both positive and negative way (Shenkar, Luo and Chi, 2014). JLP company should have to
aware of employment law as well as al the rights of employees should be fulfiller. In addition to
this, consumer protection law, it also affects the company as they have to very convenient about
the quality and price of the products.
5. External and Internal analysis for JLP company to identify strength and weaknesses and there
impact on decision making process.
SWOT analysis is also the most important tool in order to track both internal and external
factors. JLP company is using this tool to indemnify its strength & Weaknesses, Opportunities
& threats.
STRENGTH
 JLPis the third largest private company
in UK in terms of sales.
 JLP's customer service is brilliant.
 Recognised names of brands.
 JLP is dealing in diversified products
which in turn get diversified income.
 JLP has powerful portfolio of property.
 Employees are highly skilled and
knowledgable at JLP (Simoes, Singh
and Perin, 2015).
WEAKNESSES
 Day stock is very high as compare to
other brands like Waste Side,
Pantaloons.
 In 2008, the period of recession,
company has face high fall in the profit
and sales margin.
 Lack of resources.
 Rental cost is very high.
 Fashions are come late as compare to
other brand.
THREAT OPPORTUNITIES
 There are wide-cut of opportunities for
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 High competition in the market.
 Fluctuation in currency is also very
high.
 Laws and policies are frequently
changes.
 Customers are highly innovative and
creative.
JLP company to develop and grow its
brand or businesses all over the world
by pursuing international expansion
strategy and opening more stores in
India, South Africa, Brazil, Australia
(Cai and Yang, 2014).
 Stability in political conditions.
 Offering of products are also
increasing.
 Co-branding location.
6. Explain how strengths and weaknesses interrelate with external macro factors for Tesco.
The relationship between the factors of external environment and internal environment is
very high as effective as well as positive impact of external factors on businesses become the
strength and opportunity for company while negative impact of external factors disturb the entire
internal condition of business badly and it becomes the threat and weaknesses of the business
(Huang-Horowitz, 2015). For example, UK has stable political condition which is the biggest
strength of company as well as it is the greatest opportunity for the company to expand there
business without any fear. In addition to this, UK is fifth largest economy in the world which is
the wonderful, opportunity for the JLP to grow and develop more. Moreover, in terms of
technological factors, UK is leading across the world in terms of technological advancement and
JLP is also using advance technology and gaining high profit and customer satisfaction. On the
other hand, technological advancement also leads to raise the competition among the companies
which is the biggest weakness and become the major threat of the company (Tukker, and
Tischner, 2017). Moreover, government has increases the pressure of company reducing wastage
and damage of environment which is also a threat for company and same as laws and legislation
also affects the JLP operation and functions very-badly.
CONCLUSION
The above report concluded that business environment affect the micro as well as macro
environment of the business and also affect the operation and functions of company. There are
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many factors that affects the company is both positive and negative manner was also discussed in
this report. Furthermore, this report also included that there are many organization and they also
got affected from the BE and various types of form and the development of the international
business environment. In addition to this, function of organisation and its interrelations of the
functions and how they are link to organisational objectives and structure was also understood in
this assignment. This study also identifying as well as discuss the macro environmental factors
that influence the retention of business.
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