Business Environment and Firm Performance

This assignment examines how various factors within a business environment influence both internal and external conditions affecting a firm's success. It delves into concepts like PESTLE analysis, competitive landscapes, and the role of innovation in driving business model adaptation.

BUSINESS
AND
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT...........................................................................................................................1
TASK 2............................................................................................................................................1
P3) Relationship between organisational functions and organisational structure.......................1
TASK 3............................................................................................................................................3
P4) Positive and negative impact of macro environment............................................................3
TASK 4 ...........................................................................................................................................4
P5) Internal and external analysis of organisations.....................................................................4
P6) Explain how strengths and weaknesses interrelate with external macro factors..................6
CONCLUSION ..............................................................................................................................7
REFERENCES ...............................................................................................................................9
.........................................................................................................................................................9

INTRODUCTION
A business is also known as company, organisation, firm or industry, it is a place where
people can share goods and services in terms of money. Humans are mainly engaged in various
activities, they take participate in some activities in order to satisfy their own wants and needs. In
today's scenario business is most important part of humans life, it directly and indirectly
impacted on our life as well as our needs. Business is also called economic activity which consist
of regular and continuous activities including production and distribution of goods and services.
The means of business environment is the external and internal factors that influence
organisations operating situation (Bryman and Bell, 2015). Clients, suppliers, competitors and
owners are most important factor of business environment. It is a wide collection of entities,
individuals and some other important factors which can affects its growth, success, profitability
and performance. Tesco is well known multinational retailer company, its basic purpose is to
satisfy needs and wants of customers with their services and goods. They produce products on
the basis of consumers needs. Tesco uses various marketing strategies for attract large number of
buyers and clients towards their organisation as well as products.

TASK 1
Covered in PPT
TASK 2
P3) Relationship between organisational functions and organisational structure
Business organisations are established to perform specific functions like production,
marketing, finance, sales, research and development. Companies are divided into these
functional line but production department of any company is known as most significance
function. On the other side organisational structure determines how role and responsibilities will
be allocated, coordinated and controlled on different levels to accomplish organisational goals
and objectives (Bryman and Bell, 2015). Generally functions of Tesco revolves around its
organisational structure. Some of the points which determines the relationship between
organisational function and organisational structure :
 Divisional structure : This type of construction divides different functions into different
department. For example if company have various product lines then every product will
have their own different departments like sales, marketing and production. In simple
words Divisional structure specifies that each function will have their own different
departments to carry out its operations. This construction divide line products into
different departments so that each and every product can be manufacture by smooth
functioning (Teece, 2010).
 Matrix structure : It makes organisational functions more flexible so that everyone can
understand them. In matrix structure employees can be appointed in different departments
as per the organisational changes take place. But sometimes this construction can impact
negative affect on organisation as it increase chances of conflicts. The name of matrix
structure determines that it mix all functions at all departments which can reduce the
efficiency and effectiveness of both individuals and organisation.
 Functional structure : Most of business enterprises prefer this structure because in this
each worker is centralize on specific task. This type of organizational construction have
clear authorization lines because in this specific function is done by specific department.
The advantage of this structure is that it reduce the chances of misunderstanding &
conflicts between employer and employee (Klapper, 2011).

 Organisational charts : If individuals of company get confused between company's
functions and company's structure then they can take help of organisational charts
because it shows the line authority and their control on various departments of enterprise.
An appropriate organisational chart make clear, all roles and responsibilities of each
every person within business enterprise. Generally these charts are made by top authority
so that no mistake or confusion took place.
Tesco company has functional structure because it prefer that one employee should
concentrate on a particular task because if employees will follow different managers then they
will get confused in different tasks and can not contribute their efforts to achieve organisational
success. This structure makes positive impact on employees and managers of organisation. This
construction also creates healthy relationship between employers and employees because in this
one person is assigned to single manager which reduce the work load for employee.
TASK 3
P4) Positive and negative impact of macro environment
Corporate organisations take action to consider various micro and macro environmental
factor which affects the growth and development of company. In recent times, environment of
business is becoming very dynamic and it always keep changes. So it is necessary for
enterprises to cope up with their market environment because, no company can survive in market
place without cooperating with its internal and external surroundings. Organisations get required
raw and materials from its external environment so it can be said that firms are totally depended
upon their business nature there are some macro environmental factors which influence corporate
organisations which are following as under (Klapper, 2011). Demographic environment: This factor determines the population of humans, by which
business organisation can divide their market segment to increase their potential
customers. Demographic environment determine people as in group, business, age,
location, denseness, size etc. changes in population also affects corporate companies as
according to number of people create do market segments. Economic environment: This type of environmental factors decides the purchasing
behaviour of customers and their payment pattern. It includes income factor of a person
because a person consider his financial level while purchasing any product or services.

Changes in individual income also change their purchasing behaviour and their spending
pattern ( Kolk and Van Tulder, 2010). Natural forces: Most of organisations get their required resources from natural forces but
in recent times due to weather situations and global warming natural resources are getting
minimise. Shortage of these resources is becoming huge disadvantage for many business
organisations. So to consider this business persons should be aware about natural factors
of environment. Technological forces: In present scenario, most of companies is focusing on
technological factors, because with the help of these factors company can manage their
various operations in a effective way. With the help of these forces organisations can
improve efficiency and effectiveness of its employees as well as its own performance.
But disadvantage of technological forces are that they need timely up-gradation which is
more costly. Political forces: This factor affect organisations externally, it includes various rules,
regulation and different policies of government. Various changes in government policies
like inflation rate, interest rate and custom tax also effects the functioning of any
business enterprise. These forces of government policy determine the future profit and
loss of corporate organisations.
 Social and cultural forces: In recent times, it is the social responsibility of all firms to
provide social welfare to citizens. Every company take actions to consider their society,
because it is necessary to follow sociality norms. If business organisations follow social
forces then it impact a positive effect on normal people which build strong goodwill of
that company (Hamilton and Webster, 2015).
TASK 4
P5) Internal and external analysis of organisations
In every organisation internal and external analysis is important, it consist the actual
situation of firm. These two factors influence the decision making process of an organisation.
Tesco is well known retail company. It has many stores across the globe, it has its headquarter in
UK. In terms of profit it is second largest retailer company in all over the world. Tesco is famous

for providing food and non food items such as finance, mobile, hardware, insurance etc. PESTLE
analysis is providing a better understanding about Tesco, which is describes as below:
Political factors: This factor has directly impacted on performance of Tesco. Political
factor includes acts, rules regulation, tax rates which is helpful in stability of country. In the
whole world financial condition is not stable it is rapidly changed, many governments include
retailers to provide job opportunities for domestic people. Tesco is big organisation which
provide job benefit to people who are talented and deserve job. They mainly hire skilled people
who have proper knowledge about post in which they are placed. They give various advantages
to their employees for stability in firm (Trkman, P., 2010.). Tesco plays a vital role in making
best employment opportunities, it puts all affords for improving its condition in market place
and try to increase demand of their products and services. They mainly focuses on diversify
workforce from employees.
Economic factors: These factors affect the demand, cost, price and profit of Tesco. These
are major factors which influence the decision making process of company. It plays an important
role in growth and success of an organisation. Tesco needs to aware about changes related to rule
and regulation of government, company also kelp on eyes of policies such as rate of tax. This is
the factor which directly consist accessibility of finance. The company growing in international
market but its main profit is depend on UK market where they have large number of market
share. Diversification and internationalization have been two major strategies. These two are
taking in action by Tesco over the years, this is major reason of its success and growth. Tesco
mainly focuses on advertising its brand and best value added services rather than expansive and
luxurious items. Growth in economy has a positive impact on companies condition it relates with
the growth in supermarket industry (Vitale, 2010).
Social factors: These factors have impacted on customers choice and preferences. Tesco
focuses on increasing non food items for attract large number of buyers towards organisation.
Mostly customers purchase products, they mainly offers non food items for increasing sale in
order to earn more profit. Preferences of customers are different, they demand on the basis of
their own beliefs and attitudes. Customers are mostly influenced by new trend of market and
society, they want goods as per new market trend, this has impacted on condition of organisation.
Tesco hire young people who are having proper knowledge about new trends and are aware
about taste and preference of customers, so it is easy for company to produce goods and services

as per new trend. Tesco quickly adopt changes of market by accommodating demand for food
and non food products.
Technological factors: In today's scenario organisation are focused towards adopting
new technologies for better growth and success. They try to adopt advancement and innovation
in technologies for making better and effective production. Innovation create new and efficient
opportunities for company as well as employees. Tesco start online business for providing extra
benefit to their customers. They provide home delivery service to their clients. Tesco spend huge
amount on some energy efficiency projects for achieving its long term aims and objectives. New
and advance technologies are helpful in fast and innovative production, so that company can
easily fulfil the needs and wants of their customers (Teece, 2010).
Environmental factors: Environment is important in every aspect of business. These
factors increased pressure on various firms and managers to admit their roles and responsibilities
towards society. Food retailers has to face so many environmental issues. Tesco put its all
affords to reducing carbon footprints and also it minimizing extra waste produced in their
distribution stores by developing social and cultural ethics in buyers.
Legal factors: Government rule and regulation have directly impacted on total
performance of Tesco. The operation of company is depend on government rules and regulation,
Tesco always follows policies and legislations. Food retailing organisations should follows some
acts which are important in current practices of firm. Tesco provides low price services to its
customers for attract large number of buyers towards organisation.
P6) Explain how strengths and weaknesses interrelate with external macro factors
TESCO is a leading retailer company in market which deals in grocery products and
services. As it leads market by various strengths which are its string point and it also have some
weakness. Strengths of a company are that it have a team of a company which is very
enthusiastic to supply goods and services to people who are associated with it. Weaknesses are
also their with company which leads to improve its procedure on which it is working these are
directly related to external macro factors in various ways. That implies them to work according
to them. Following is a justification to it (Tulder, 2010).
 Technological up gradation
Technological element of macro factors implies the company to use various technological
advances which are their in market according to its operations. Technology keeps on changing

and upgrading according to which TESCO also have to adopt various technological changes in
company which directly affects its internal environment.
 Deployment of resources
Resources are deployed according to external factors which are suppliers who gives raw material
for production etc. these have a role by which company plans to divide its resources into
sections. This way availability of resources outside business organisation only tells how
company will function internally in order to have successful production of product which it is
aiming to offer to buyer of the same.
 Adopting acts in its operations
Legal acts of employment while employing people and maintaining an environment according to
it has to be ensured in company which states that a company has an affect of political factors
which are made by country's government in which it is operating. This states the role of legal
factors in company which are essential to be used so as to have proper governmental norms in
company for its long term operations.
 Establishment of a ethical business
Ethical business have to be adopted by company as it is being implies by government. This is an
external macro factor which directly affects operations of a company in order to have a success
in its market by establish a positive image. As it operates globally so it is important to habve
positive image among people so that they adopt company and makes it easy for it to penetrate in
market.
 Legal laws create a problem for company
Weaknesses are affected in such a way that following all rules and regulations which established
by government is a compulsion for company which makes it difficult and complicated for it to
operate and causes a weakness for company (Hunger, 2011).
 Competency strategies
Company also adopt various strategies to meet its rivalries in order to have a control over market
and lead in it. Research of market helps in identifying available competition and various other
aspects which helps in making more strong strategies for companies internal effectiveness and
efficiency (PESTLE - Macro Environmental Analysis. 2015).
Likewise various macro factors directly effects the factors which are there in internal
business environment of TESCO. These are really essential to be identified in order to achieve

success in business and have a lead in market by a company which is operating in any sector
under any kind of country but here it is specifically considering on UK. A company have to
make its strengths more stronger and its weaknesses are to be addressed in order to have best
practices and operations of business.
CONCLUSION
From the above report it has been concluded that business are taking active part in
various activities for fulfilling need and wants of customers. Public sectors are helpful in
increasing economic condition of country. Private sectors are mainly focuses towards making
profit for their firm as well as their own. PESTLE analysis is provide detailed information about
factors that affect condition and situation of firm. These factors affect decision making process
of company. Major purpose of every firm is to earn profit in minimum period of time. Internal
and external factors are important for every business organisation, these factors influences the
inner and out side condition of firm.

REFERENCES
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