Business and Business Environment

This presentation discusses the impact of macro environment on business operations and the importance of internal and external analysis in identifying strengths and weaknesses. It also provides recommendations for managers to navigate the business environment.

Business and
Business
Environment
(LO3 & LO4)

Table of Content
 Introduction
 Impact of macro environment upon business operations
 Internal and External analysis of an organisation in order
to identify the strength and weakness
 Conclusion
 Recommendations

Introduction
Business refers to the economic activity carried out to
generate huge revenue and profits. Businessman requires a
business environment which is the combination of internal
and external factor like customers, government, employee
and so on that influences the operations of business
environment.

Impact of macro environment upon
business operations
PESTLE is macro economical external factor that include
political, economical, social, technological, legal and
environmental factor that directly affect the operation of
Tesco either in positive or negative manner.

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PESTLE analysis consists
given factors:
 Political factors
 Economic factors Social
factors
 Technology factors
 Environment factors
Legal factors

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Political factor
These factor include government rules and regulation,
taxation policy and so on. As Tesco operates in more than
11 countries and each country have their own rules and
regulation, so it is important for the manager of respective
company to take political factors into consideration.

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Economic factor
Economic factor refer to any changes in foreign exchange
rate, inflation rate, deflation rate and so on. These factors
influences the operation of Tesco due to which it is
important for manager of respective company to frame
strategies rules and polices while taking economic factor
into consideration

Social factor
It includes changes in
customer value, belief,
population distribution
etc. Thus, company must
give priority to social and
cultural factors before
serving any area.
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Technology factor
It refer innovative ways of producing as well as distributing
goods and services. For instance, Tesco has significantly
developed its supply chain management to gain
competitive advantage over competitors.

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Environment factor: It refer to various law implemented
by government to safeguard the interest of environment.
These factor prevent exploitation of resources by making
optimum utilisation of natural resources.

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Legal factors: Legal factors includes labour law,
employment law and so on. Tesco should make sure they
gain legal control over business regulations as well as
flow of goods & services. Thus, taking care of external
legal factor helps in smooth business operations.

Internal and External analysis of an
organisation
SWOT analysis helps in
identifying strength,
weakness, threat and
opportunity of respective
company so that they can
make future decision
wisely.

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Strength: Tesco is known for its profitable supermarket
chains and excellent shopping experience. It has huge
financial reserve because of which they expanding their
outlet without any obligation. Apart from expanding they
render varieties of frozen or non frozen and non food item.

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Weakness: Instead of adopting skimming price strategy
Tesco has to set minimal prices on the basis of their
competitors. Hence, lowers down the revenue margin of
company. Along with that respective company faces the
issue of employee absenteeism and turnover rate
especially on the chains which are not performing well
because of external environmental factor.

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Opportunity: With the increase demand of healthy food
respective company can provide huge variety of organic
food. Along with that to gain the advantage and reduce
rivalry pressure Tesco can form an alliances with its
competitors.

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Threat: External factor like recession, inflation government
rules directly hampers the profitability of company. Thus,
these are the biggest threat to respective company as it
perform its operations worldwide.

Conclusion
From the above report it has been summarized that business
environment helps in analysing the internal and external
factors that brings any changes which can be positive or
negative in the operation of business. Thus, conducting
SWOT analysis is valuable for manager of any company
to evaluating the internal strength and weakness.

References
Chavis, L. W., Klapper, L. F. and Love, I., 2011. The
impact of the business environment on young firm
financing. The world bank economic review. 25(3).
pp.486-507.
Erasmus, B., Strydom, J.W. and Rudansky-Kloppers, S.
eds., 2016. Introduction to business management. Oxford
University Press Southern Africa.

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