Business and the Business Environment

This report discusses the types of companies, size and scope of different businesses, relationship between organizational functions, impacts on macro environment and operations, and analysis of internal and external environment. It focuses on Tesco, a British multinational retailer, as a case study.

BUSINESS AND THE
BUSINESS ENVIRONMENT

Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
P 1 Types of company.................................................................................................................3
P 2 Size and scope of different businesses..................................................................................5
LO 2.................................................................................................................................................6
P 3 Relationship between different organizational functions and how they link to the
objectives and structure of the company.....................................................................................6
LO 3.................................................................................................................................................7
P 4 Impacts that is positive and negative on the macro environment and operations of business
.....................................................................................................................................................7
LO 4.................................................................................................................................................9
P 5 Analysis of the company on the basis of internal and external environment........................9
P 6 Strength and weaknesses that interrelates with macro factors that are external..................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment means all of the internal and external factors that affect how the company
functions including employees, customers, management, supply and demand and business
regulations. An example of a part of a business environment is how well customers' expectations
are met. Tesco, is a British multinational groceries and general merchandise retailer with
headquarters in Welwyn Garden City, Hertfordshire, England, United Kingdom. It is the third-
largest retailer in the world measured by gross revenues and the ninth-largest in the world
measured by revenues. This report contains issues such as Different types and purposes of
Organizations. Size and Scope of range of different types of organizations. Relationship between
different organizational functions and how they link to the objectives and structure of the
company. Impacts that is positive and negative on the macro environment and operations of
business. Analysis of the company on the basis of internal and external environment. Strength
and weaknesses that interrelates with macro factors that is external (Kuula and Haapasalo, 2017).
LO 1
P 1 Types of company
Public Company-
Firms that have categorized themselves as this category of business has to divide their
share in market to general public by which they will turn out to be the shareholders of company.
The motive of people is to invest and get substantial amount of return on it. NHS is a company
that has registered themselves as a public company which gives the power to people to buy or
sell their shares as per their preference. There are certain rules and regulations in order to do that.
First management must make sure that they have a minimum of 7 members and for the
maximum they can take as many as they want which is as per the shares that are listed in the
market. Apart from that they need to invest 5 lacks as paid up capital in market this will give
them the advantage of turning any of their private subsidiary to public. It is important that they
work as per legal guidelines so that they can be allowed to work under public company. They
also need to work on prospectus in order to describe their portfolio to public (Ślusarczyk and UL
HAQUE, 2019).

Private Company-
These firms usually register as individual or partnership entity. Most of the companies are
small but some of them such as Tesco operate on large scale. They started with people and in
these firms the maximum limit is up to 200 people. Even the paid up capital invested is 1 lacks
and they can set it as per the scale of their operations. Being registered as a private business they
are not entitled to distribute their shares in market. Company has maintained a void so that they
can keep their planning and future related decisions safe. Also they do not have to invest their
time on listing their prices on market or raising money through that option. The stores are opened
by the preference and analysis of market (Krajnakova, Navickas and Kontautienė, 2018).
Voluntary Company-
This form of business has a different motive to serve in market which is to cater the needs
of those people who are not privileged enough and do not have the resources to get ample
amount of education. This is done by non profitable organizations and one of these companies is
Oxfam. They began with their work in the year 1942 in Kenya and the executive director of
business is Winnie Byanyima. They have been successful in establishing different NGOs who
looks after these causes and try to reduce the difficulties in the lives of people. The company is
working as per their aim which is to provide everyone with equal rights and opportunities so that
they can remove the difference between poor and less. It is the legal structure of the company
that keeps the trustees of the company in their decision for charities. In order to serve in different
areas and cover more audience they have started working with 20 other companies so that they
can cater the needs of people globally (Popescu and Popescu, 2019).
P 2 Size and scope of different businesses
Size of business determines from where they can reach and provide services to different
people from different areas. Different countries such as Scotland, England and Wales are the
ones that keep on maintaining their operations. Apart from that they are working in North Ireland
to provide the services of social and healthcare department. They started working 73 years ago
during world war II. They scale of employment maintained by them is around 1,70,000 people.
NHS is the most beneficial for UK citizens as they get the treatment or checkup at free of cost.
They just need to cover the expenses for dental care and optician. They get the prescription at no

cost and even the delivery for the patients is free. Services provided by the company is
demanded in many companies because many people are not able to get proper medical attention
due to less resources of finances and other medical conditions which increase the scope for NHS.
This determines with the right amount of analysis they can set up their facilities in different cities
or countries.
Size of Tesco is vast and that is because they work on a large scale and it is believed to be one of
the biggest companies in terms of setting up of employment in UK and on a global level. Totally
they have around 3,67,000 people which is a huge team to maintain. Apart from this they have
2300 stores across the world. Scope of company is analyzed on the basis of their activities and
future related decisions. They have done immense amount of work in the past which has helped
them to set up their base of operations in different countries. Currently in order to work up to
their scope they need to focus on their competition and improve their strategies so that they can
increase their overall share in market back (Linderová and Janeček, 2017).
Size of Oxfam is large as they maintain their business with 20 other businesses on a global level
so that they can make the aspects of society better and reduce their difficulties so that they can
live happily. Scope of Oxfam is different which is to make people understand the importance of
equality and donating things which are not of their use. This can be done because the methods
implemented by them are of different and unique perspective but practical through which they
are able to influence the mind of people. The company has even helped those people who have
lost everything in disasters and they continue to do so. They believe that one must not lose their
morale. Company is looking for those who want to be a part of such activities and donate in
charitable events so that they can increase the members in their team and help more people in
need (Khajeheian, Friedrichsen and Mödinger, 2018).
LO 2
P 3 Relationship between different organizational functions and how they link to the objectives
and structure of the company
Marketing with HR-

Businesses such as Tesco that are maintaining operations on a large scale have to assess
and evaluate the role that HR has to play for their firm. One of them is to work with discipline
and as per the protocols set by management. They believe that with this measure they can deliver
the rate of consistency on delivery of goods. It is necessary for them to work with such
perspective because the competition in sector of Tesco is high. If they are not able to serve as per
this approach then they will face issues in market from their competitors. Management needs to
make sure that both HR and marketing team members work in coordination so that marketing
team can promote the process of recruitment and HR is able to select the best candidates for
marketing (Kasim, Haracic and Haracic, 2018).
Marketing with Finance-
This is the most important aspect of business as without the proper allocation of funds or
meeting the requirement for it they will not be able to function the daily aspects of business
properly. This will result in their performance getting affected. It is important that they look for
areas that are viable so that they can improve the chances of earning more profit. The
interrelation between the marketing and finance department is on that basis which requires them
to work together. It is because without the finance department sanctioning the funds to marketing
department the activities of marketing won’t be able to make it out. This is because marketing
and promotion incurs huge amount of money. Other than that if they are not in support then
marketing will not be able to work with more efforts and implement different strategies in their
culture which will limit the awareness of the brand and result in limited raise of funds (Nikitina
and Lapiņa, 2019).
Marketing with Research and Development-
It is important to invest time and efforts in this field because it helps the company to
analyze change in patterns and preferences of customers so that they can initiate with the right
step and increase their share. This is important and helpful because being a multinational
business company has to operate and work with approaches that meet the needs of different
background and goals can be attained. Apart from that they help the team of marketing to select
the strategy as per the opinion and acceptance of culture. This way marketing will also put their

efforts in the right area which may help department of research and development to explore
(Komljenovic, Loiselle and Kumral, 2017).
LO 3
P 4 Impacts that is positive and negative on the macro environment and operations of business
Political Factors-
These factors involves the decisions that are made by government which can have an
impact over the functioning of business. Tesco has maintained operations in different countries
which is why they have to look after this aspect. They have to work as per the guidelines given
and decision taken by the government. For instance the decision of EU refenderum has affected
the chain of supply due to which company is not able to keep their pricing strategy maintained.
In order to maintain their profits they had to change the whole routes for import and export of
goods.
Economic Factors-
These factors involve issues that relates with the condition of economy, standard of living
maintained by people, rate of income on the basis of average and the current status of country.
Although Tesco is facing difficulties due to the downfall of GDP in every country because of the
pandemic and that has affected the business on a high level. After that company has been not
able to maintain their strategy of pricing as they have to maintain their profits but for that
company is ready to lose their leadership strategy (Ištvanić, Crnjac Milić and Krpić, 2017).
Social Factors-
In order to comply with these factors company has to work as per the approaches which
defines the culture, religion, belief of general public and trends that change the pace of market.
For instance now the perspective of people has totally changed as now they don’t have the time
to go on the shop or store personally, now they get it delivered at their home. After the pandemic
people has changed their opinion because now they order the goods online and get it delivered at
their home as they feel safe because of contactless ordering. They have to make their strategies

as per the attitude of the customers and their thought process. As per the situation they just want
to be safe and consume everything that is good for their health.
Technological Factors-
These factors involve the aspects on devices and sector of IT which has observed
development or advancement. This form of development has helped company to offer a better
amount of service to their customers. In order to give attention to other fields they have take the
use of technologies such as RFID through which they can reduce their manpower to look after
level of inventory and now it can be done with the help of software on computer easily. Also the
company has also started taking payments online which has been convenient for the customers
(Hrechyshkina and Samakhavets, 2019).
Environmental Factors-
Companies such as Tesco who are maintaining their work on a large scale have to
comply with the bodies of government as well as NGOs which is to sustain the environment.
Apart from this they have to look and contribute for the benefit of society. Tesco uses a van in
order to make the deliveries but on the way the take the garbage in so that they can recycle it.
Also they have announced that in order to preserve the environment they will reduce the use of
carbon footprint.
Legal Factors-
These factors involve issues that are concerned with laws and regulations that are setup or
formed up by the government. This is important for the business of Tesco as there have been
many cases against them due to their bad attempts which has also resulted in their negative
image due to which they have lost many customers. If the company wants to keep on
maintaining the operations then it is important that they comply with these measures and work
with fair practices so that customers do not feel cheated and their reputation in market does not
get affected (Holotiuk and Beimborn, 2017).

LO 4
P 5 Analysis of the company on the basis of internal and external environment
SWOT Analysis
Strength-
Company is know for being the largest retailer in the sector of groceries in UK. They are
way ahead of their competitors. If looking on other aspects Tesco is still big than other
competitors as their revenue is bigger than them. Also it is increasing at a good rate which is
around 11 per cent per year. Company has maintained their relationship with their suppliers
which are why they are able to get their goods on time and at a sustainable rate. Among all of
their competitors only Tesco has been able to generate more jobs and became the biggest
employer of the country (Hamilton and Webster, 2018).
Weakness-
It is the failure of company in markets such as Japan and US which has been considered
their weakness. The reason of the failure was that they were not able to meet the export condition
of business. Apart from this they did not inform their club card holders that they are
discontinuing their service. One of the weaknesses of the company is that they failed to maintain
their accounts which then led to creating a scandal and created a negative image in the eyes of
general public. It is important for any business to file the right amount of profits and register that
in their accounts. The debt ratio of the company is high which is because the management has
not been paying attention to the credit card department as it was supposed to increase their
profits but instead they were incurring losses. Due to these issues they have not been able to
maintain their operating profits (Chukhray and Mrykhina, 2018).
Opportunities-
Currently the company has a expanded portfolio and even after that they have the
capacity to enter more markets and that is because of the resources and skilled employees they
possess. Apart from this they have opened subsidiaries under their name by Aldi and Lidi. They
also have the opportunity to partner up with other companies so that they can get a better
understanding of their market and by getting better understanding with the help of other

companies they are able to form different and unique strategies so that they can retain their
existing customers and gain new ones from market. Company was successful in claiming the
opportunity of online platform at the right time as because of it they have been able to work as
per the needs and wants of customers (Asongu and Odhiambo, 2019).
Threats-
There are many threats in market which Tesco is facing right now one of them being the
crisis of pandemic which has caused flux in the rotation of economy. Apart from that they need
to keep in mind that other issues such as decision of Brexit and their past decision which led to
scandals and lawsuits has affected their image due to which they have lost the trust of many
customers. The management of business has even taken misuse of advertisements because of
which they have not been able to take the use of advertisement in a positive manner after that.
These issues and threats has limited the growth of their business (Akhtar and Sushil, 2018).
P 6 Strength and weaknesses that interrelates with macro factors that are external
The approach of both measures and their perspective is somewhat similar as both pestle
and SWOT analysis helps the business to determine viability of the area and the outcome of the
decisions they have made. This helps the companies to achieve growth and establish their base in
market. There are different form of issues which states that both of these factors are connected
with each other. Although if there are similarities among them there are also some differences
and that is pestle gives out the results for external environment of business. On the other hand
SWOT analysis finds the result for both internal as well as external. There are different areas
which are covered by pestle analysis such as political, legal which helps them to form the
strategy which has been imposed by the government. It is important for them to work as per
these measures so that they are allowed to work and serve in the market. Also with the help of
these analysis they will be able to look after those areas which are not performing well and with
the help of some attention they will be able to complete it. This will help them to improve the
image because of the wrong attempts by them. If they neglect these analysis and fail to execute
this decisions they will lose the trust of their customers as well as their share in market. it is
important that management of Tesco bow down to this because they never apologized for their
wrong and unethical attempts which has made people doubt on them. This way they have lost the
chance of gaining back their loyalty and ask for their forgiveness. If they want to create their

image to back to what it was, it is important that they start working with important and fair
measures. Also with the help of analysis they need to find out the needs and wants of customers
that are changing and bring something in the market before their competitors so that they can
satisfy their needs and wants. The more they invest in markets that are emerging more there are
chances that they will be able to attain their position back (Abbas and Ul Hassan, 2017).
CONCLUSION
From the above studies it has been concluded that Tesco needs to build strategies after
discussing with their management and analyze all the areas in which they have attempted and
worked with unethical measures so that they can bring changes in those areas and win their trust
back. It is necessary as only after that they will be able to create a new image in market. It is
important to find out ways through which they can attract their customers. Tesco needs to
motivate their different departments to work in coordination so that they can work up to their
potential without any conflicts and help the business to increase their level of profits. This way
they will be able to evaluate areas which will help their business to achieve growth. It is
important for them to analyze the forces of environment with the help of analysis such as SWOT
and Pestle so that they can assess the internal as well as external forces of market. apart from that
it is necessary to take initiatives for the betterment of society and work with that approach which
helps to preserve the environment. It is important that they work with patience and wait for the
pandemic to be over so that they can form their strategy after that and achieve their goals and
objectives.

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