Impact of Macro Environment on Business Operations

This presentation outlines the impact of various external factors on business operations and analyzes the strengths and weaknesses of the organization. It also describes the interrelationship between strengths, weaknesses, and external factors in the macro environment.

BUSINESS AND BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
 Introduction
 Main Body
 Conclusion
 References

INTRODUCTION
 The Presentation will outline impact of various external factors on business
operations, analysis of strengths and weakness of the organization.
 Further, the presentation will also describe interrelationship between strengths,
weakness with external factors that are existing in macro environment .

Impact of macro environment on business operations
Macro environment –
 It refers to the part of business environment that consists of external factors
that can impact the operations of the company indirectly and firm cannot
fully control these factors. Macro environment involves those factors that
may impact the performance, decision-making, various types of strategies of
the firm related with pricing, distribution and marketing etc.
PESTLE Analysis -
 PESTLE analysis refers to the tool that an organisation can use for
evaluating the different types of factors that are existing in the external
environment outside the organisation.
 Tesco will use PESTLE analysis for identifying the positive as well as
negative impact of factors such as political, social, legal, economical etc. on
the operations of the firm.

CONTINUE
Political -
 Political environment involves factors such as change in the activities of
the Government, rules and regulations etc.
 One of the major factor that has impact the business of Tesco is the effect
of Brexit. Brexit has affected the prices of the products of the company.
 The rules and regulations of the Government of the country may also
affect the operations of Tesco such as policy regarding tax rate etc.
 The policy of Government regarding tax rate that is 'Tesco Tax' can affect
the profitability of the firm.
Economical -
There are various economic factor that may affect the level of price, cost and
profits of Tesco. Such as the minimum wage rate has increased by the
Government for labour by 4.4% in 2018.

CONTINUE
Social -
 Social environment involves various factors such as lifestyle, values ,
demographic trends related with the buyers.
 The changes in trends of shopping, customer taste will also affect the
business of Tesco. For example- Trend of shopping has been changed.
Customers are preferring shopping of all products at one place. Tesco is
focussing on customers needs this will help the company to improve its
performance.
 Customers are becoming more health conscious. Therefore, Tesco should
offer organic products for satisfying the demands of the customers.
Technological -
 There are various technological factors that may impact the process of
production and distribution of goods or services of the company.

CONTINUE
Legal -
 There are various factors that are existing in the legal environment that
may affect the performance of the firm in different ways. For example-
Rules of the Government such as 'sugar tax' related with the content of
sugar in the products will affect the products offered by Tesco through
various supermarkets, convenience shops etc.
 Tesco has already faced a legal case by the workers of the company in
year 2016. The company should make efforts so that, such type of things
will not happen in future. Otherwise, it will negatively impact the
reputation of the firm.
Environmental -
 Government of the country has already developed rules and regulations
that are to be followed by the companies for protecting the environment.
Firms have to comply these regulations for the benefit of the society.

Analysis of strengths and weaknesses of the organization
 SWOT Analysis -
 SWOT analysis is a tool that helps an organisation to evaluate the
strengths and weaknesses of the organisation that are existing inside the
company as well as the framework also helps the management to
determine opportunities and threats for the firm that are existing in the
external environment.
 The management of Tesco will use this framework to determine various
factors that may impact the decision-making of the company. These are
as follows-
Strengths -
Tesco is among the Top 10 retail company in UK. The sales and profits of
the firm are much higher as compared to other companies that are
operating in the country.

CONTINUE
Weaknesses -
 In year 2017, Tesco has declared wrong amount of the profits for
this, it has paid large amount of fines.
 The low cost strategy of Tesco can impact the level of sales and
profitability of the firm.
Opportunities -
 Tesco is having opportunity to expand the business of Jacks that
has been recently launched by the firm. This will help Tesco to
compete with other companies like Aldi etc.

CONTINUE
Threats -
 Company is facing intense competition from other companies such as
Arcadia Group etc. For example – The merger of Sainsbury and Asda
can impact the profit margin of Tesco.
 Focus of buyers towards organic food items can be an opportunity or a
threat for the company. If, firm will not make efforts for offering health
conscious products the, company will loose its loyal customers.
 Regulations, economic crisis etc. can create negative impact on the
performance of various stores of Tesco that company is operating in
various countries.

Interrelationship between strengths and weaknesses with
macro factors
 Strengths and Weaknesses of the company are directly related with
factors that are existing in macro environment such as political, social,
technological etc. The way in which company deals with macro factors
depends upon the strengths and weaknesses of the firm.
 Interrelationship between macro environment factors and strengths and
weaknesses are as follows -
 Economic environment consists of factors like rate of tax, rate of
inflation etc. If the organisation is having huge financial resources, in
that case the strategy of Tesco related with pricing will not be affected
by changes in rate of inflation or change in rate of tax.

CONCLUSION
 The presentation has described the strengths and weakness of Tesco with
the help of SWOT analysis, macro factors affecting the decision-making
of the firm with the help of PESTLE analysis.
 The presentation has also outlined interrelationship between strengths and
weaknesses of Tesco with economical, political, technological factors etc.

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