Porter's five forces analysis of Tesco

BUSINESS AND
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
Types of Companies-..................................................................................................................3
Scope, size, mission, vision, objectives, legal structure of the company...................................4
P 3 Functions of organizations-...................................................................................................7
LO 2.................................................................................................................................................8
PESTLE of Tesco-......................................................................................................................8
SWOT analysis and Pestle of Tesco-..........................................................................................9
PORTER’S FIVE FORCE MODEL OF TESCO..........................................................................11
Interrelationship between SWOT and PESTLE of Tesco.........................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business environment consists of factors that are internal and external that influences the
operations and smooth flow of the company. These factors can includes factors such as their
suppliers and clients, competition from other businesses, technological improvement, activities
which affect to law and government and trends such as economic and social. This report puts a
emphasis on types of companies, their scope, size, objectives and their legal structure. Also brief
analysis is done of Tesco, NHS and Oxfam with the pestle, SWOT, and porter's five forces of
Tesco.
LO 1
Types of Companies-
Public Limited Company- To make a company public a minimum of 7 minimum members is
required with a object that is lawful that company is known as a public company. Securities of
public companies are listed on the stock exchange and their shares can be transferred easily. In a
public company there is no limit for maximum no. of members in a company. And if the public
company have any subsidiaries then that company will also be considered as subsidiary
company. Every public company generates and collects capital by selling their shares to different
shareholders. Only the board of directors of the company can take major decisions for the
company no shareholders is involved on the table of management and they cannot take any
decisions for the company. They don' have the authority to do that.
Purpose- National Heath Services is a publicly funded healthcare organization for England.
Their purpose is to provide free health care services for those who need emergency treatment for
infectious diseases including their visitors. They want to increase more of their services for
general public. It will also help to analyze the health information of citizens residing in UK and
NHS is also planning to provide and enable their services in every part of UK.
Private Limited Companies- In this type of company minimum of two persons are required to
register the company under the companies act. Private companies do not list their securities for
trade on the market of stock exchange. Also they don't have the power to invite the public to buy
their shares or debentures. Only their members can buy it. Private companies can't even transfer
their shares and the limit for one company to enroll members is 200 not more than that. Private
companies can commence their operations with just after receiving the certificate of

incorporation. As compared to public limited company many rules are exempted for private
limited company. Most start ups prefer to register in the category of private limited company.
Purpose- The purpose of Tesco is to be the champion for their customers, so that they can enjoy
and live an easy life with better quality. Tesco is making sure to improve the experience of
customers on every visit by providing better services. Tesco has made sure that they are aware of
their purpose and work towards achieving it.
Voluntary company- Companies who believes in working and put their efforts for the
improvement of social welfare as these companies don't work for profits. They focus on
providing help to people who are in need of it. These type of companies has a different source of
capital. They invite investors or businessman who are interested in donating some of their money
for the welfare of people who are in need. One of those companies who is working for removal
of poverty and helping the poor is Oxfam. The company is old, it was established in the year
1942 and Oxfam has consolidated themselves as one with 20 different companies who were
interested to serve in this section.
Purpose- Oxfam's purpose is to provide solutions regarding poverty and injustice which lasts.
Oxfam has aimed their goal to be served for betterment of society and not working for profits.
Oxfam believes in peace and supports everyone to follow the same path.
Scope, size, mission, vision, objectives, legal structure of the company
NHS Tesco Oxfam
Size NHS has around
150,000 doctors in
their hospital and more
than 320,000 nurses
and midwives working
for them and still have
put advertisements for
40,000 nurses and
20,000 clerks. They
have a large
Tesco serves in
supermarket brands
and has employees
more than 500,000
people worldwide.
Tesco owns 7,000
stores around the
world. Talking about
the market share Tesco
has the biggest market
Oxfam has
confederated with 20
organizations. They all
are working together
and serving together in
94 countries and their
focus is to address and
solve the issues of the
needy and reduce

requirement for more
ambulances every year
which increases the
need for drivers also
this makes them one of
the biggest
organizations
operating in the world.
share in UK and has
stores in 12 countries
and it only deals in
high end products
which makes it the
biggest supermarket
chain of UK.
poverty.
Scope NHS has a wide
information about
allied health
professionals which
helps in providing the
view and role of trans
formative potential
and to put their focus
on improving the plans
to deliver locally.
They are extending
their roles in order to
be more efficient.
Workers who are
under urgent care unit
are trained with proper
supervision so that at
the time of crisis they
can respond more
effectively.
Scope of Tesco goes
into every market they
are already selling and
the market which they
are trying to enter to
sell their products and
services. Tesco has the
largest market share in
UK and now they are
planning to enter into
US market so that they
can increase their
market share and
brand image. For that
they are focusing on
increasing the
productivity and
supply chain so that
they can meet the
expected demands of
market.
Oxfam is a non profit
organization which is
focusing on reducing
poverty and increase
in donation for the
poor so that they can
help more and more
people around the
globe. Oxfam believes
in approaches which
are innovative,
practical so that it
helps them easily to
encourage and lift
people who are
suffering from
poverty. Oxfam motto
is to save lives and
help them in their
livelihoods at the time
of crisis.
Mission NHS's mission is to Mission of Tesco is to Oxfam's purpose is to

provide the quality of
care they provide to
every person who
visits every day and
improve the service
with every visit.
make better things
according to their
needs.
provide solutions
regarding poverty and
injustice which lasts.
Oxfam is working on
ending the poverty
locally and globally
and believes in
building a future
which is safe and
secure for everyone.
Vision Vision of NHS is to
deliver better health
services, better care
and creates better
value so that money
spend by people on
them gives a feeling to
them that its worth it.
Vision of Tesco is to
be the most highly
valued organization in
the eyes of the
customers they serve.
Vision of Oxfam is a
world where people
can enjoy their rights
and where everyone be
it poor or rich is
treated equally and not
discriminate it.
Legal Structure Structure of NHS is
bounded by Chapter 5
of part 2 of the NHS
act 2006.
Tesco follows the
legal structure of
Corporate Governance
. Being a big company
Tesco has all the
licenses required to
sell the appropriate
product in the market.
Oxfam has no legal
barriers as the
company is providing
its services for the
betterment of society
and promoted by the
government.
Objectives To work together to
treat and cure patients.
To make sure to treat
everyone with equal
To ensure equal rights
for women.
To provide justice to
those who have been

respect.
To commit to provide
improved and quality
of care services.
served wrongly
To save the lives of
people and provide
them education so that
they can improve their
lifestyle.
P 3 Functions of organizations-
Human Resource of NHS- HR staff of NHS is concerned with recruiting those who are eligible
and dismissing those who are not suitable for the job. At the time of beginning NHS gives
training to people to make your knowledge and skills up to date. They are required for
maintenance and attendance of employees. HR in NHS maintains the machinery, evaluation of
job, administration work regarding salaries and rewards for good work. As NHS handles day to
day activities of providing health services for adults or people who are older so that this
department is concerned with recruiting and training to those whop are suitable for this job.
Accounts of NHS- The accounts and finances of NHS has to be well run. They ensures and sets
and manages appropriate budgets for the selected departments. This department helps in making
decisions on how to and where to spent money after that auditing is done to check if the money
spent was on a right direction or a wrong direction. They also have responsibilities to control the
ledger and analyzing the finances.
Human Resource of Tesco- HR strategy at Tesco believes in simplifying the work, challenge
the rules which are unwritten, to achieve the targets all the skills of head employees are
compared with the management of performance. In this way performance management is linked
with Tesco. HR at Tesco ensures that each and every employee understands their role,
opportunities and threats that can affect and influence the employees and contribute towards the
purpose and values of the company. This department ensures all employees are accountable and
responsible for the performance and contribution of them for the organization. Tesco is
continuing its focus on improving and increasing the skills of their workforce. (Wood and
Logsdon, 2017)
Research and Development of Tesco-

To ensure that the products and services of a company is meeting the expectations of their
customers or not and if not then what is the reason, can our existing products work or it needs to
be developed or a whole new product is needed. To know this Tesco consults with the research
and development team. It is a expensive method but if doe the right way it can extract positive
results and help achieve the targets for the company. (Ruël and Wolters, 2016)
Accounts of Oxfam- Oxfam has to rebuild their organization in terms of gaining the trust of the
people and their reputation back as the rumors of Oxfam workers using prostitutes affected the
company in a very bad way. One of their directors resign and started working for another charity
because of some misconduct in charity in 2011. Currently they are fighting two lawsuits one is
internal and one is of sexual misconduct. Until the verdict is out it is restricted for Oxfam to bid
for contracts and after this whole scenario 7,000 people have stopped supporting them which
have resulted in 14 million dollars of losses. (Stott, Stone and Fae, 2016)
Research and Development of Oxfam-
This department helps Oxfam to look ahead so that they can plan according to the changing
wants and needs of environment. They conduct the research and obtain the data by campaigns
which helps them to monitor and assess the results. Researchers of Oxfam helps in observing and
writing policies and check the reports of campaign which help them bring new ideas that help
them in future and increase the capacity and quality of research of Oxfam. The research team of
Oxfam is full of people with experience, skills and expertise of people. Oxfam work with others
to generate new ideas which helps them to contribute in external factors. (Quinlan and et.al.,
2019)
LO 2
PESTLE of Tesco-
Political Factors of Tesco-
Tesco has their stores in 12 countries which includes Asia and Europe too that means Tesco has
many political factors which encounters the smooth flow of business. Political factors which
affect the business includes rate of taxes, rate of unemployment and economic condition of the
country. (Prajogo, 2016)
Economic Factors of Tesco-

Focus of the company is to increase the borrowing cost as factors such as profits and prices
affect severely Tesco. The borrowing cost factor increase the cost and prices and leads to
reduction in profits which can affect the brand its image and reputation in the market and
strategy of cost leadership.
Social Factors of Tesco-
Trends of consumers are changing at an infrequent rate. Today everyone has less time for
shopping because of their tight schedule which makes them prefer one stop shopping and if
ordered online they want fast delivery with flexibility of return policy. According to a report it
was concluded that 65 per cent of shoppers in UK are loyal customers which gives Tesco an
opportunity to maintain and increase their connection with customers. (Kozubíková, Homolka
and Kristalas, 2017)
Technological Factors of Tesco-
In the recent past Tesco has faced issues regarding poor customer experience but with the help of
improved technology, Tesco has made its way to regain the trust of the customers. Now Tesco
has provided flexibility of paying as per their convenience as they have developed its own
payment system through mobile known as Payqwid.
Environmental Factors of Tesco-
Varying in environment has led the companies face a lot of pressure by the government so that
companies address these issues and respond to them for the benefit of society. Tesco has
addressed these issues and now at the time of delivery they use not only routes which are small
and saves fuel but also they collect plastic bags which are unwanted and they recycle them.
Legal Factors of Tesco-
Key areas must be keep in mind by a company so that law or legal factors does not affect your
performance and company. In the year 2016 it happened with Tesco 17 workers took a action
legally against the employer on the basis of discrimination and on the issues of low wage rate,
holiday shifts etc.
SWOT analysis and Pestle of Tesco-
SWOT ANALYSIS OF TESCO

STRENGTH
The company is the biggest and leading grocery store in UK. It is the best supermarket
which always stands on 1st position in the market. It always leads in the market with 4% market
share. The company is geographically diversified with more than 6800 different stores among the
14 countries. The company is not only diversified in its outlets but also with the product range. It
provides largest employment to the people of Europe. It has also obtained many national and
international awards and it has best supply chain. (Saleem, 2015)
WEAKNESS
The started their business in various countries including japan and US where they failed
to run their business. The company also got involved in scandals like fraud accounting and trail
scandals. In Oct 2018 they also had decrease of 9% in their operating profits. The company also
faced problems like financial errors, Low cost strategy, poor operational performance in specific
markets and club card controversies. (Kolk, 2016)
OPPORTUNITIES
Expanding the jack’s (recently introduced a discount store by the Tesco which shows
the growth significantly) business. It has some opportunities to expand the business and become
a competition for all low cost rivals. The company made many joint ventures where Tesco
outlets are not performing well. Another opportunity for the Tesco was to start online services
for their customers. It can emerge its market in the regions like Indonesia, South Korea and
Turkey. (Jaakkola and et.al., 2016)
THREATS
The company had an Christmas controversy where the social media had black flashed
when they had launched their Christian ads. The Christian religion found it disrespectful for their
religion. The company had a n competition with supermarket giants like Walmart, Carrefour and
Aldi. The company also got a threat like “Fake Farm” where the company was accused with
misleading the customers with fake brands and products.

PORTER’S FIVE FORCE MODEL OF TESCO
THREAT OF NEW ENTRANTS
As we know that every company has a fear of new entry in the market because a new
entry will always create some competition for them. So to avoid those competition, the
company innovating their own new products and services for their customers. This
helped them a lot to bring new customers and it gave a variety in products and services to
their old customers. It helped a lot in building the economies of scale which will low
down the cost of per unit produced by the company. (Hillary, 2017)
BARGAINING POWER OF THE BUYERS
The bargaining power of the customer can be reduced by building a large customer base.
It will help the company to make their sales and production simpler and efficient and it
will help a lot in reducing the bargaining power of the customers. To keep the bargaining
power of the customer’s low, the company started innovating new products very rapidly.
Customers will get attracted towards the new offerings and discounts. (Grewal and et.al.,
2015)
BARGAINING POWER OF THE SUPPLIERS
Having a very strong connection with the suppliers is also very essential for a company.
It is necessary for the company to build efficient supply chain with the multiple suppliers.
The company also experimented on the product design of the raw materials. This is done
because in case the prices of raw material increases in future, then company can find any
substitute. (Deasy and et.al., 2016)
THREAT OF SUBSTITUTE PRODUCT OR SERVICE
To overcome with threats of substitute product or service the company became service
oriented and not only the product oriented. Instead of focusing on what customer buys,
the company focused on the needs of the customers. The company also increased the
switching cost for its customers. (Bah and Fang, 2015)

RIVALRY AMONG EXISTING CUSTOMERS
The company build the differentiation very sustainable. The scale was also build by the
company so that they can compete in better way in the market. The company collaborated
with their competitors so that they can increase their market size rather than completing
for the smaller markets. (Aithal, 2016)
Interrelationship between SWOT and PESTLE of Tesco
Tesco is the third largest multinational groceries and general merchandiser retailer of UK
and having a stores across the country. Tesco is having more than 100 shops across the country..
There are several subsidiaries of Tesco such as Booker group, Tesco Bank, Telecoms and the
Tesco Tech support etc. The strengths and weakness of Tesco related to the several factors such
political, social, economical and technological factors that are as follows -
 The strengths of the company directly interrelates with the social, environmental,
political and on the economic factors of the company like the online marketing is one of
the biggest strength of Tesco. Automation in activities increases the quality and the
efficiency of the company as well as the employees and enables the company to identify
and improve the existing policies and work (Aithal., 2016). Strong cash flow
management helps the company to expand their business because people are very much
aware about the online services and the check each and every detail about the website and
the cash management plays an important in it. These all factors are directly relates to the
advertisement, collaboration and maintaining cleanliness are all defined by the PASTEL
analysis.
 The employees currently working with Tesco are about 150,000 because of the work
culture and environment of the company. Excellent advertisement policies of the
company across through TV's print media, social media (Bah and Fang., 2015). Tesco
also take part in the sponsoring several events in Paralympics. Tesco also invest lot of
money on the training and development of the employees that will be beneficial in the
growth of the company. As the market is changing regularly according to the consumer's
demand, this can affect the selling of the company because consumers always go towards
the things that is cheaper in cost.

 Political support is the main factor that is helpful in the growth and implementation of the
company in every sector. Without the support and corporation of the company that can
affect the economic factors. The political factors are itself is like a strength of the
company and it may turn into the weakness as well (Deasy and et.al., 2016).
 In the weakness of the company, the competition in the supermarket sectors is the major
cause for Tesco. The technology advancement in the Tesco as compare to other
companies is not up to the mark and company is pending very less on research and
Development. The success rate is very less outside UK the non-productive resources are
available that is not enough to give the fire success to the company. The growth rate and
the Net contribution ratio is below the industry average. The improper franchise
management is the major factor that influence badly on the company. The young and
skilled employees can be helpful in increasing the economic condition of Tesco and the
technological advancement and the investment in the Research and Development
Department is the positive factor that helps in generating better revenue and also helps in
the development of the company. But the technology advancement can be harmful for the
company because it will decrease the manpower and their efficiency of the employees
and the machines will be more involved in the development of the product and this
increases the unemployment ratio (Grewal and et.al., 2015)
 From the past few years, Tesco is facing the issues like negative feedback of the
customers regarding the product and services but after the machines are working with the
employees, this problem is reducing regularly.
 The biggest threat for Tesco is the market share with the low cost rivals and the falling
value of pound currency results in the decrements in the selling of Tesco.
 Tesco also takes several legal actions against the age and the gender discrimination which
is found to be a biggest strength of Tesco (Hillary., 2017).
 The global recession is the biggest threat of Tesco and this results in the poor economy.
Tesco need to develop the different and effective marketing strategies to compete with
the other competitors otherwise the company will lose its business and derailed from the
track. All this analysis of Tesco from the SWOT and PESTLE helps in analyzing the
strengths and the weakness of the company and the these also helps in increasing the
economy of the company and the company can plan the new, innovative and the strong

strategies for the development of the company and helpful in the sustainability (Jaakkola
and et.al., 2016).
CONCLUSION
From the above studies it has been summarized that NHS, Tesco and Oxfam are different types
of companies and their motive and goal to serve in the market is different. They have divided
their work into sections like private and public limited companies for profit and voluntary
companies for social welfare. Mission, vision, objectives, scope, size and legal structure of all
the three companies have been stated.

REFERENCES
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