Business and the Business Environment

This document provides an analysis of the business and the business environment, focusing on various purposes and types of diverse organizations, the interrelationship among different organizational functions, and a PESTLE analysis of Tesco with their positive and negative impacts. It also discusses the political and economic factors affecting Tesco's operations.

Business and the
business
Environment

Table of Contents
Introduction....................................................................................................................................3
TASK 1...........................................................................................................................................3
P1 various purpose & type of diverse organizations.................................................................3
P2 : Size and Scope of this types of organisation......................................................................4
TASK 2...........................................................................................................................................6
P3 Interrelationship among different organizational functions.................................................6
TASK 3.........................................................................................................................................10
P4 PESTLE analysis of company with their negative and positive impacts...........................10
P5 Internal analysis of company..............................................................................................11
P6: Interrelation of strength & weakness with the external macro factors..............................13
CONCLUSION............................................................................................................................16
References....................................................................................................................................17

Introduction
Business environment consist of the micro and macro environment factors that are
affecting their level of functioning. Present report is based on TESCO that is based on
consideration of various factors that are affecting its long run functioning and operations. It was
founded by Jack Cohen in the year 1934. there is analysis of different organisations according to
their size and scope so that further interrelationship can be built up with the external and internal
environment by application of models such as PESTLE, SWOT (Gaganis, Pasiouras and
Voulgari, 2019). There is analysis of interrelationship with each of the associated factors of
macro environment based on such discussions there are conclusions that are drawn.
TASK 1
P1 various purpose & type of diverse organizations
Organizations are classified according to categorizes of their objectives that can be to earn
profits, social welfare or both.
Private Organization :
These are the organizations that are owned by private entities that can be a partnership, person,
association, operating for profits. In this funds are managed from the personal sources. TESCO
is a private organization.
Purpose : The main objective is to get profits, creation of value for the company and
enhancement of customer base and market share.
Legal Structure of Private Organization :
Sole Proprietorship :
It is a type of business set up that is controlled and owned by a single individual. They are held
liable for all the liabilities and losses. The compliance of regulations are minimum in sole
proprietorship.
Partnerships : These business are managed by one or more partners. The mutual decisions
related to profits and loses are made according to clauses that are part of partnership deed.

Limited Companies : these are the organizations that posses separate legal entities then those
who are managing the company. The capital is procured by issuing of shares and further they
are having limited share. TESCO is a limited company.
Public organisation : Public companies are those that are managed and run by government as
their main aim is not to earn profits but to maximize the social welfare. In these organisations
funds are offered by government from the taxes collected out of public contribution. They are
offering goods & services to enhance the living standards of people and enhance equality in the
society among various classes (Fabuš, 2017).
Purpose : The main purpose of NHS is to offer medical services to poor segment of society.
Legal structure: The legal structure of public organisation is related to higher control by
government. The central government has the power to take all the decision. There has to be
timely adherence to rules and regulations so that there can be maximization of their
contribution.
Example: National health services is a public organisation where the main objective is to
provide health related services to people who are living below poverty line.C) Voluntary organization:
Meaning: Voluntary organisations are those that are controlled and directed by the government.
In these activities have to be implemented by volunteers according to social conditions.
Features: voluntary organisations posses a vision to enhance the livings standards of people
who are part of the society.
Purpose: The main purpose of such organisations is to make society a better place for living.
Legal structure: the legal structure of voluntary organisations is to manage the top level where
the trustees are reliable for execution of various functions and further offering them with
financial resources.
P2 : Size and Scope of this types of organisation

Private Public Voluntary
Size TESCO is a private
entity that is largest
private employer in
UK. They are
employing 250,000
employees in UK and
367, 000 staff they are
having 2365 stores
across UK (Hamilton
and Webster, 2018).
NHS is a public sector
organization that is
employing 1.6 million
people and having
workforce of
2,165,043 across UK.
In NHS there are 1.2
million people
working in England
and in Scotland there
is staff of 162,000
employees.
Oxfam is a voluntary
organisation that is a
confederation of 19
charitable independent
institutions they are
having focus on
alleviation of poverty
as it was stared in the
year 1942 as a major
non profit group.
Oxfam international
secretariat has 300
staff across globe and
Oxfam affiliates have
10,000 staff & 50,000
interns and volunteers
that are located in
different parts of world
across 90 countries.
Scope TESCO is focussing
on achievement of
their laid down
mission that is to
create higher value for
customers and earning
of higher customer
loyalty. It will lead
towards better long
run functioning.
NHS has a wide scope
as they can cater to
one million patients in
a time period of 24
hours. They have
bought social reforms
across four major
locations that is
Scotland, England,
northern Ireland and
Oxfam believe that
situation of poverty are
unavoidable that can
be dealt with effective
human actions. They
are having a belief of
sustainable livelihood
and posses a mission
to deal with higher
uncertainties of future.

TECSO is operating at
international level by
having presence across
countries of Europe,
North America and
Asia.
Wales. NHS is
enhancing its presence
by going global
through use of
international
engagement strategies.
They have a history of
doing international
business overseas
(Enhancing the NHS
through international
engagement, 2020).
Oxfam is a
international
confederation of, many
different
organisations’ coming
together that are
having presence across
different parts of the
world.
Purpose The main purpose of
TESCO is to enhance
their market share in
order to earn higher
levels of profitability.
NHS is made up of
multiple organisations
with each individual
organisation having
their own recruitment
teams and vacancies
list.
The main objective of
Oxfam is to work
towards injustice of
poverty, they are
working towards
building of better
future for themselves,
saving of live from
disasters and being
more accountable.
Legal structure One of the major legal
structures under which
TESCO is operating
includes their
corporate governance
model. In this sector
people are dealing
with all their
National health
services are entering
acute services
contracts with central
government to provide
all the mental, hospital
related services. The
present plan of
Oxfam trustees are
responsible or charity,
activities and assets,
Oxfam the chief
executive officer is
responsible for trustees
to manage the overall
functions of Oxfam. It

associated
stakeholders and
focussing on formation
of strategies to deal
with the changing
macro environment
situations. According
to the legal structure
they are part of the
company according to
their legal formation.
government for
national health
services is to focus on
NHS foundation trusts
that were taken over
by NHS Foundation
trust in the year 2016.
is supported by
strategic leadership
team and other key
roles. Dr Dhananjay n
is the CEO and Allison
court is the chief
transformation officer.
Can leafy is another
chief financial officer
and John Plastow is
the chief impact
officer. Further other
members includes the
peter had and who is
the chief supporter
officer and Tina
proudlock is chief
operating officer..
TASK 2
P3 Interrelationship among different organizational functions
Different functional units in organisations:
There are different functional units in a organisation:
Production function:
Production function is related to production of goods & services according to requirement of
customers in the target market (Prajogo, 2016). Production function is performed in TESCO
according to specific customer requirements. In TESCO production function has a

interrelationship with the finance department and marketing department as it provides them with
various insights to forecast customer demands of specific product requirement so that there is no
piled up inventory in the organisation.
Finance department:
Each business organisation requires certain specified financial resources for their effective
functioning (Ištvanić, Crnjac Milićand Krpić, 2017). In TESCO the finance department is
providing the requisite financial resources to all the functional departments that help them in
maintaining of the effectiveness in the functioning.
Human resource department:
Human resource department is responsible for hiring of competent individuals so that talented
employees can be hired in the organisation (Cherunilam, 2016). For this there is coordination
that is established between different departments that can assist in hiring of skilled workforce in
TESCO. HR department poses interrelationship with all other functional departments such as
marketing, finance, sales so that proper job description can be prepared.
Marketing and sales department:
Marketing and sales department in organisation is very crucial as managers in this
department posses direct contact with the target customers. There is always a interrelationships
between such departments as it helps them in providing insights of the future strategies of the
success of business.
Purchase function:
It is a function that is part of extraction of raw materials according to demands of the sales
and production department in TESCO. In this there is relationship with other functional
departments such as marketing, sales so that there can be proper exchange of information and
there are no hindrances in the way in which information is transmitted between departments.
Organization Structure:
The structure of a organisation is defined according to the way various activities and
functions are performed by these departments. There are different functional department sin
TESCO as mentioned below:
1) Functional structure: It is a type of structure in which there are different functions
that have to be performed by various functional departments such as services and sales
departments.

2) Divisional structure: The divisional structure is related to dividing the organisation
by addition of two different product lines. The main objective of this structure is to
divide the organisations functions according to various product categories
(Khajeheian, Friedrichsen. and Mödinger, 2018).
3) Matrix structure:
Matrix structure is combination of functional and divisional organisation structure. In this there
is application of functional department according to various product categories (Saleh and
Watson, 2017).
In present case TESCO is using a matrix structure according to different categories of products
that are offered by the organisation.
Different departments working together to achieve their laid objectives in TESCO:
In case of Tesco the overall organisation structure is hierarchical that is reflecting a large
size business. At the store level there are typical organisation structure that includes the metro
stores, super stores and extra formats. Different managers who are working across these stores
are coming together in order to achieve the laid business objectives. Organization structure is
used to define how different activities are to be supervising in such a manner to achieve delayed

organizational Aims. It affects the overall of the action procedure and provides the foundation
on with the overall operation procedures finally rest.
There are food trading managers, non food trading managers and personal managers.
All of these managers there is specific provision of section that is assisting to perform their
assigned functions. The overall organisation structure of Tesco is hierarchical in nature because
it is focusing on different departments and the reason of using a hierarchical structure is because
of the large size of organisation. There are multiple layers that are present in organisation and
there is requirement of closed communication so that there is less conflicts. This is the main
reason there has been use of hierarchical structure for the purpose of managing different
organisational activities.

TASK 3
P4 PESTLE analysis of company with their negative and positive impacts.
PESTLE analysis is a framework that is used by an organisation in order to study the
macro environment of business as well as all these factors that can influence operation and
function of business unit (Hamilton and Webster, 2018). In which Tesco is British multinational
company and operates its business at global level. For this they need to consider all factors
which can affects their activities. Below mentioned is the analysis:
Political factor: Tesco is dealing with various countries and all these countries holds
different political factors like tax rates, legislation and stability in political parties and economic
condition of nations.
Positive effects: there are certain political factors like tax rebate, integration of different
economies with political parties. For the same Tesco deal might be optimistic and puts positive
impacts on operation. For instance there has been proposal of TESCO Tax by local council in
recent years but it has been refused buy UK government as it may lead to price hike for general
public. It leads to TESCO continuing with their price leadership position.
Negative effects: Other than positive there are various factors which leave negative
impact on profitability of Tesco and these might be tax rate and laws. As well as some inventory
that Tesco imports from china and East Asia.
Economic factor: it refers to all these factors which are related with the economy of
nation like foreign exchange, interest rate, gross domestic etc. all these factor can effects the
operation of Tesco.
Positive impact: The increased cost of borrowing in UK nation puts positive impact on
profitability of Tesco.
Negative impact: it has been found that Tesco expanding its business and the company
are still depends on grocery market of UK that proves that economies are not beneficial for firm.
For example in 2018 the UK minimum wage rise by 4.4 percent that lead to millions of pounds
cost to TESCO that year,

Social factor: It considered all these factors which depend on trends and preferences of
consumers (Sroufe, 2018). This is also related with the culture factor in which companies are
dealing.
Positive effects: It has been analysed that in this modern works people are more
preferring healthy food as well as trendy products. In which company is effectively introduced
social changes for enhancing the revenue and profit by offering healthy and tasty food products.
For instance there are 65 percent of loyal shoppers in UK that is a benefit for TESCO in long
run.
Negative impact: Due to the adoption of changes, Tesco needs to invest in marketing
strategies and research. Is company will not get this pattern then company might faces loss. For
example the present COVID outbreak has resulted in lower preferences for people to visit
physical stores that is leading to difficulty in managing their sales in situations of lockdown
especially there is loss of revenue
Technological factor: Advancement in technologies affects the operation of company.
For this each organisation needs to adopt innovation and creation in order to work effectively.
Positive effects: Tesco launch RFID technology into their stores for increasing the
experience of end users. This implies to increment in profit and sales. For example TESCO have
developed their own website and payment system named as PayQwid that is resulting into an
ease for its customers. There are facilities of scan as you shop and tag products that are saving
labour and time for tesco.
Negative impact: Introduction to technologies brings company to invest huge amount
which might not be offer success in term of goal attainment.
Legal factor: It considered all factors that are related with the legislations of government
that can affects the performance of employees along with company (PANDEY, 2017).
Positive effects: By introducing all laws like retailing commission law, Tesco can gain
profit.
Negative effects: the selected firm faces so many legal actions due to misleading
inventory and according fraud. This needed huge investments in order to bench down these
actions. For example: In year 2016 17 employees of TESCO took an action against TESCO for
gender and age based discrimination that has resulted into a loss of GBP 12 million to settle this
claim.

Environmental factor- It is related with the natal surroundings and company needs to
address all these factors for maintaining the sustainability of environment.
Positive impact: Tesco uses renewable resources and also minimizing the carbon
footprints and that increases the brand value of firm at marketplace. For instance TESCO has a
commitment to generate 100 percent of their electricity by year 2030. They are also claiming to
minimize the 50 percent of carbon footprint by year 2020.
Negative impact: Use of plastic bag and then leave that in environment puts negative
impact on company mage.
P5 Internal analysis of company
Tesco SWOT Analysis:
Strength Weakness
 On the basis of annual report 2018,
Tesco is the biggest retailer of UK.
 Tesco possess wide range of product
line as well as they are using optimal
technologies like RFID.
 Tesco having poor operation
performance as well as specific target
market that enactment as weakness.
 To become the price leader, Tesco is
using cost leadership strategy and this
sometime leads negative impact on
profitability of company.
Opportunity Threat
 Diversification is a great opportunity
for Tesco Company (Gupta, Gupta and
Gupta, 2019).
 Use of strategic partnership provides an
excellent opportunity to Tesco firm for
grabbing ample number of consumers.
 Enhancement in competition due to
Competitive rivalries like ALDI,
Walmart, Morrisons leads to threat for
Tesco.
 Tesco featured backlash because of
Christmas Eva. Along with it many
people’s are boycotted from their
stores.

SWOT analysis is affecting the decision making of Tesco as they are examining the external
threads in order to minimise its negative impacts for example the Christmas backlash resulted
into a complete negative image for Tesco that was mitigated by use of some more promotional
advertisements and campaigns in order to attract people and build up that trust again for their
loyal base of customers.
SWOT analysis of NHS:
Strength weakness
 NHS is providing healthcare services to
approx one million patients every 36
hours and there are vast majority of
services offered at free of cost
(Šoltés,and Štofková, , 2016).
 Sometimes due to alliances that are
formed by integrated care partnerships
is resulting into difficulty in managing
of the functions by NHS across the
organisation.
Opportunities Threats
 NHS can focus on bringing together
NHS Providers and commissioners,
local authorities and other local
partners to plan their services according
to long term needs of local
communities.
 There can be registering with care
quality commissions is to register care
providers & monitor, inspect and rate
the services to protect users.
 There is a high threat from primary care
networks because of the general
practises with other local providers
from community services, voluntary
sector and social care.
P6: Interrelation of strength & weakness with the external macro factors.
Basis Political Social Economical
Strength TESCO is following In TESCO the main TESCO there has to be

all the legal rules and
regulations that are
part of te political
factors that have been
formed by the
government of their
country. It is assisting
them in getting the
required support from
all the political parties
so that they are able to
smoothly carry all
their functions &
operations
(Głodowska, 2017).
objective is to work
according to the
expectations of
customers. For this
TESCO is willing to
achieve a position of
low cost leadership
where they are willing
to offer products at
low cost so that they
are able to maintain
their loyal customer
base.
timely revenue
contribution towards
economic
development. In this
way this private
organisation is making
a significant
contribution towards
growth and
development of the
country in which they
are operating &
functioning.
Weakness There is increase of
tax rates that is leading
to a situation of
reduced profits for
TESCO.
There is a continuous
change that is taking
place in the needs and
demands of society
that leads to lot of
adjustments that has to
be done by TESCO in
order to ensure their
survival in long run as
Compared to other
competitors such as
ASDA, Morrison.
TESCO is planning to
launch a new range of
vegan products to
comply with the
There has been a
change in the
economic conditions as
there has been Brexit
referendum, further
Covid pandemic has
also affected the
economic scenario of
UK. All such situations
are leading to a
negative impact
because of the fast
changing economic
conditions.

changing preferences
of people towards
organic range.
Basis Technological Environmental Legal
Strength TESCO is focussing
on application of latest
technologies such as
there has been
complete Change in
form of use of self
checkout systems that
is part of adoption of
latest technology that
is bought by TESCO.
TESCO is making
efforts towards use of
eco friendly products
for which they are
making adequate
efforts in order to
minimize the use of
plastic so that they are
no posing any harm to
the external
environment.
TESCO Is making
adherence to all the
legal laws that have
been possess by the
government such as
equality act, diversity
act, anti discrimination
act, that is assisting
them in managing of
their workforce and
overall functions of the
organizations.
Weakness TESCO has to make
financial investment
because of the rapid
changing technology
there can be a negative
impact on their
financial position in
the organisation.
In some cases it is
difficult for
organisations like
TESCO to have a
technique of
synchronicity as their
main objective is
maximization of
profits. For this there
has to be more focus
on sustainable
development by
adoption of eco
friendly measures. But
TESCO is bound to
fulfil all the legal
formalities but in some
situations there can be
a negative impact
because of lot of
frequent changes that
are taking place in the
organisation policies.

at same time such
measures lead to high
cost that may affect
the future strategies of
TESCO.

CONCLUSION
From the above mentioned report it can be conclude that it is very crucial for the
organisation to make timely analysis of external and internal factors that are affecting the
functioning if organisation. It is crucial to make a analysis of the environment that consist of the
competitive factors so that business can further form strategies and deal with the threats of
external environment. There is also a need to focus on the weakness to overcome it with the
application of strengths that can lead to achievement of higher productivity.

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Enhancing the NHS through international engagement, 2020[online], available
through<https://assets.publishing.service.gov.uk/government/uploads/system/uploads/
attachment_data/file/937207/
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