Business and Business Environment Tesco

Business and business
environment
(Project - 2)

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P4 Positive and negative impact of macro environment.............................................................1
TASK 2............................................................................................................................................3
P5 Internal and external analysis of a business organisation......................................................3
P6 How strength and weaknesses can affect macro environmental factors................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business environment plays an imperative role in growth and success of every business
organisation. It also helps managers to gain high competitive advantage from target market.
Business environment is an amalgamation of internal and external factors of the company. These
factors can be analysed through SWOT and PESTLE analysis of the company (Cronan and et.
al., 2011). Apart from this, the present assignment is based upon TESCO; it is one the largest
dealer of grocery products and services. The main objective of the firm is to provide healthy and
qualitative services to customers so as attain and retain them for long term period.
TASK 1
P4 Positive and negative impact of macro environment
In this over dynamic environment, there are different types of external factors which can
hamper firm's working activities and operations in an adverse manner. TESCO also put efforts in
analysing external aspects and how to utilise resource in order to gain high competitive
advantage. It helps firm to grow and survive effectively at marketplace. Along with this, this can
be analysed through PESTLE analysis, it has positive and negative impact on business operation
(De Jonge, 2011).
(Source: Tesco PESTEL analysis, 2017)
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Illustration 1: Macro environmental factors

PESTLE analysis of TESCO is stated as under: -
Political factors – These factors involves tax rates, political stability of the country, acts
of legislations etc. TESCO performs in several nations over the world, therefore it is necessary
for its analyse its political condition and other aspects. Business organisation fulfil all
government rules and regulations in order to perform at global level. Apart from this, UK has
strong financial stability; its government encourage retailers to create jobs. UK government has
adopted a tax which highly affected TESCO. For example – in 2011 the government raised the
tax rate from 17.5% to 20% so as to earn more government revenues, i.e. £15 billion per year. It
results, increasing VAT rates leads lower customers' spending. Thus, an enhancement on VAT
rates adversely affect the sales revenue and profitability. Apart from this, UK government also
adopt a fat tax rate which major aim is to control obesity and reduce medical problems that are
associated with it. These measures can also affect the sales revenue of TESCO. In order to
overcome this, the firm has launched new healthy food range in 2014.
Positive impact – Helps in reducing illegal activities
Negative impact – Increases tax rates or import export can affect a business in international
market.
Economical factors – The major negative aspect of economic factors is – due to
economic recession in 2008 UK economy is still facing various issues, such as- reduction in
interest rates, unemployment, reduces the purchasing power of customers etc. All these aspects
can also hamper the financial position of the country through which customers spend less amount
on premium products (Erving and et. al., 2011). Apart from this, positive impact of economic
factors are customers starts to eat more at home which provides opportunities to supermarket
retailers, like TESCO. Now UK is recovering from financial crisis; higher economic growth rate
was forecasted and the GDP was assumed to be 2.7% higher then the pre-crises. Therefore,
economic growth is the positive sign for TESCO in terms of increasing the demand of its
products and services.
Social factors – Now these days, British customers tend towards ‘one-stop’ and ‘bulk’
shopping, it occurs due to various social changes. Social cultural changes refers that the number
of ageing population is enhancing among female workers which generates reduction in home
meal preparation. It means, retailing firms have to focuses on producing added-value products
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