Business & Business Environment - Tesco Assignment

BUSINESS &
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types and purposes of organisations.................................................................1
P2 Size and scope of a range of different types of organisations chosen for the purpose......3
TASK 2............................................................................................................................................5
P3 Relationship between different organisational functions and how they link to
organisational objectives and structure..................................................................................5
P4 Positive and negative impacts the macro environment.....................................................6
P5:Internal and external analysis of specific organisations in order to identify strengths and
weaknesses.............................................................................................................................8
P6: Explain how strengths and weaknesses interrelate with macro factors of TESCO.........9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
A business environment can be describe as the external and internal factors which affects
the functions of the company such as management, employees, business regulations and various
other factors (Hilton and Platt, 2013). A healthy business environment helps the business to
prepare for the external factors. Tesco is a multinational retailing British company which deals in
groceries and general merchandise. The company was founded in 1919 by Jack Cohen. It is a
private company which is also the third largest retail organisation in the world which can be
measured by its gross revenue. The company has been operating to various countries including
Asia, Europe, UK, and so on. Different types of organisations and their scopes would be
discussed in this respective report.. Also, the external and internal factors which affects Tesco's
functions and productivity would be studied in this report.
TASK 1
P1 Different types and purposes of organisations
As different organisation have distinguished goals to operate their business. There are
different people who are responsible for the functioning of the business. However, there are
various ways to classify the types of organisations such as formation, ownership, liability and
many more. Basically, there are three types of organisation which are Public organisation,
Private organisation, proprietorship, voluntary organisation. The legal structure of private, public
and voluntary organisations are mentioned below.
Public Sector Organisations- Public organisations are the type of organisations which are
operated by the government (Deasy and et. al., 2016). The prime motive of such organisations is
to provide services to the people. The shares of such companies are traded in open market by
stock exchange which are usually available for the public. The funds to operate and form such
organisations are raised usually by taxes, fees and other means. Public sector includes police,
defence, national health services and many such sectors. NHS which is a Medicare system of UK
is one of the biggest examples of a public sector organisation.
 Structure- The system was formed by Department of Health which is a part of UK
Government. It is usually funded via general taxation system.
 Purpose- The NHS was formed to provide comprehensive health care services to the
citizens regardless to their wealth, age, gender.
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Private Sector Companies- Also known as privately held company is the type of
company which is owned and operated by private individuals (Craig and Campbell, 2012). The
prime motive of such companies are to earn profit. The funds are usually obtained through
personal savings, company's shares, bank loans, Government grants etc. There are many types of
private sector companies such as sole trader, partnership, joint ventures and many more. The
examples of such company is Tesco.
 Structure- Owned by private individuals and companies who deals in various services
like food, retail, private hospitals and many more.
 Purpose- The main objective of the private companies are achieve growth, market
position and profit.
To understand more about sole traders and partnership, the description is given below.
 Sole Trader- Also known as sole proprietorship is a type of company which is operated
and owned by a single person. There is no legal differences between the business owner
and the business entity. Due to this, the owner is responsible for any type of financial
matter such as loans, loss, debts, etc. The owner of the company has the right to hire
employees for the company. Some of the examples are plumber, electrician, restaurants,
etc.
 Partnership- A partnership is arrangement where more than 1 people come together to
achieve their common goals (Smith, 2016). This can be done by individuals, companies
and many others. In such associations, the partners are responsible for any loss or debts.
Some of examples are Apple and Hermes, solicitors, dentist etc.
Voluntary Associations- Also known as common-interest Association that can be
described as group of people who enter into an agreement to form an organisation in order to
achieve a common goal. Such associations can be government or semi-governmental as well.
These are not owned by any individual, however the volunteers would be responsible to serve the
cause. For example Oxfam
 Structure- The operations are handled by a corporate Leadership team which consist
Chief Executive and 7 Divisional Directors.
 Purpose- The purpose of Oxfam is to work on disaster relief, poverty, advocacy etc.
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P2 Size and scope of a range of different types of organisations chosen for the purpose.
The size of the company can be determined by various factors such as the company's
turnover, number of employees etc. These are the components which distinguishes the
organisations from each other and create a wide difference between them. Furthermore, the size
and scope of NHS, Tesco and Oxfam is discussed below.
NHS (Public Sector Organisation)-
 Vision- The respective organisation's vision is to enable people to live more
independently and healthier with the help of high quality seamless care.
 Mission- The system stated its mission as to provide care and services that every family
would want to opt.
 Objective- The goal of NHS is to exchange information, best practise and expertise
across the network.
 Size- National Heath Service is a healthcare system controlled by the government. It is
also the largest single payer healthcare system globally. It provides medical support to all
the citizens where most of the services are free at the point of use. However, some of the
services are free for visitors as well such as emergency treatment, infectious diseases
treatment etc. It is one of the largest means of public employment with its total number of
employees being nearby 1.4 million (Savrul, Incekara and Sener, 2014).
 Scope- NHS is provoding various services like opthalmology, dentistry, pimary care,etc.
And is now looking forward to make progress in health and social care. Various plans
regarding care models, sustainability and transformation have been offered. It is planning
to have more strategic structure for specific services like cancer and diabetes and looking
out to serve public in a more efficient ways.
Tesco (Private Sector Organisation)-
 Vision- The vision of the respective company is to maintain and create leading
underwriting and technical pricing to support Tesco Bank Growth Strategy.
 Mission- The mission statement of Tesco is to create such values for the customers which
will help them retain lifetime loyalty.
 Business Objective- The prime business aim and objective of Tesco is to sell more goods
and services than other competitors in the market.
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 Size-It is a multinational company which is serving in many areas of the world like UK,
India, Thailand, etc. The company deals in Supermarket, Convenience shop and many
other products with its subsidiaries like Tesco Bank, Tesco Mobile, Booker group and so
on. The organisation has 6,553 shops in total (Prajogo, 2016). The total revenue of the
company is £ 55.9 billion in 2017 where as it has more than 4,76,000 employees.
 Scope- The organisation is dealing in energy efficiency and electric vehicles in many
parts of the country mainly focused on UK. However, it is planning to expand its
business in US and other parts of the world to achieve more market and customers
which will lead to more profit for the company. It is also looking forward to launch a
loyalty program where customers would be able to earn and redeem points on the basis
of their power of purchasing. Tesco is also looking forward to attain more customers
through its low price high quality strategy.
Oxfam (Voluntary Association)-
 Vision- Oxfam vision is to see the world without poverty. Also, the organisation believes
in working on other factors like equality, citizen rights, etc.
 Mission- To use right based sustainable development program, advocacy, and
humanitarian assistance in disaster and conflicts.
 Business Objective- The goals of the above organisation is to increase more money for
basic services and help people to attain fair share of the needed resources.
 Size- It is an international confederation of 17 organisation who are working together in
94 countries. The respective association works in poverty in UK, money and
development, women rights and many other sectors. The total revenue in 2017 from
different sources was £1,040.7. The company is having 2,500 staff and 31,000 volunteers
from all around the world.
 Scope- The association is working on various humanitarian issues such as disaster
helps,women rights and many so and is now looking forward to serve the rest part of the
world where it hasn't started its operations like US and other countries. Oxfam is
planning to come up with new policies to help like old age care, addiction camps etc.
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TASK 2
P3 Relationship between different organisational functions and how they link to organisational
objectives and structure
Functional Organisation Structure- It is the most common style of organisation where
the departments are divided into small group based on their specialisation such as finance, HR,
marketing, production etc. The operational efficiency of such organisations are excellent as they
share mutual skills and knowledge (Wetherly, 2014). Every department of the company works
together to achieve a common goal of the company. Though different departments works on
different elements, the final goal of Tesco remains common which is growth of the company and
earn more profit.
 Marketing and Production- These are two different departments of Tesco where
marketing is refer to the activities of advertising and selling the product keeping in mind
to satisfy the customer's need which helps the respective company to attain their profit
share from the market. On other hand, Production here refers to the process of
manufacturing the products, managing their quality and the amount of production which
will fulfil the demand of the customer and result in increase in number of sales which
helps the company to earn revenue. (Hamilton and Webster, 2015). Though both study
different aspects of management, they are inter related. The marketing team can only
operate once the production is done as it is highly dependant on the production team to
give the desired quality which is demanded by the consumers. Same way, the
production team cannot produce such products which the marketing team can't sell.
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 HR and Finance- The role of the HR team of the respective company is to appoint the
candidate for the desired designation who can help in raising the productivity of the
organisation which ultimately leads to revenue growth. Additionally, this department
also decide wages as per the Tesco's budget. Where on the other hand, the finance
team focuses on providing the financial support for the completion of the task while
maintaining the budget of the organisation. To achieve the objectives of Tesco, HR and
finance work together. The finance team makes sure that sufficient funds are released to
help HR team operate smoothly. At the same time, HR team makes sure that the wages
rate doesn't exceed the Tesco budget.
 R&D and Marketing- R&D is a department which focuses on collecting data about the
market trends and demands of the customer. It also helps in developing new products
which can help Tesco raise their sales which further helps in raising the profit levels of
the concerned organisation. On the other hand, marketing team focuses on selling those
products in the market to achieve common goal of the respective company. R&D helps
marketing team of the concerned organisation in planning appropriate marketing
strategy as per the data received which further helps in attracting more customers
(Deasy and et. al., 2015).
 R&D and Finance- These are very important part of the management of Tesco as
balancing both can help in achieving drastic results. These departments go hand in hand.
R&D department can provide appropriate data to the financial team of the respective
company which can help them make more relevant decisions about their investment
decision-making. Where as Finance department can also help R&D of Tesco by
providing sufficient funds to conduct these analysis for the betterment of the company.
TASK 3
P4 Positive and negative impacts the macro environment
The macro environment for a business here refers to the external factors that influences
the business. To understand these factors, PESTLE analysis can be practised on the respective
company (Kew and Stredwick, 2017). PESTLE is an acronym of political, economical, social,
technological, legal and environment. These are the external elements which influences the
business operations and affects the growth of the Tesco.
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Political- This element of PESTLE analysis discuss the political or the government
policies that affects the business such as tax policies, labour law and many so. Tesco needs to
follow these laws and adjust their operations accordingly.
The positive and the negative impact of the government interferences are mentioned below.
 Positive- Tesco has successfully created many job opportunities which has further helped
in the economical growth.
 Negative- As the organisation operates globally and every country has different political
issues. For instance, due to EU Referendum, the company has faced a heavy loss because
of low purchasing power of the customers.
Economical- The economical factor consist of economical growth, interest rate,
exchange rate, inflation and others. The profitability, cost and demand highly depends on these
factor (Siewiorek and et. al., 2012).
 Positive- An analysis done by Kpmg reflects that for every £1 of Tesco retail direct
Gross value added (GVA) in United Kingdom financial year 2016-17, an additional £
5.46 of GVA of UK was generated by the organisation directly or indirectly.
 Negative- The respective organisation is still highly dependable on UK market share
which is why TESCO will be badly affected by the recent changes in the UK economy.
Social Factor- The social factor of the above analysis refers to the social trends, culture,
beliefs and lifestyle of the customer. Demographics of the customer also plays a major role in
social factor.
 Positive- The changes in the demographics of UK shows an increase in old age
population and female workers which leads to decline the pace of in home preparations.
This gives a great opportunity to the company to earn their share from Added-value
products.
 Negative-The customers are also becoming more health conscious and their choices of
food products are continuously changing. This is why Tesco needs to introduce more
health friendly products to attain the changing demand of the consumers.
Technological- The technological element studies how various technological aspects
such as production and distribution of goods and communicating means affects Tesco (Sena
Ferreira and et. al., 2012).
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 Positive- The respective company has invested a great amount on technology like official
website development which has helped the company in increasing it profit by 10%.
 Negative- Technology is the type of element which is ever changing. It is not easy to
cope up with all the technological advancement.
Legal- This element includes various legal regulations which the company needs to
follow such as product safety, health and safety, consumers rights and many more.
 Positive- Tesco has a good history of following all the legal regulations which is why it is
easy for the company to expand its business in new areas.
 Negative- Food Retailing commission has enforced the companies to use standard
pricing for the products. Tesco initiated lesser prices on the promoted product, where as
the company increased the prices of other products.
Environment- The environment factor here refers to the carbon emission and other
environmental factors in context to the company.
 Positive- The concerned organisation is very much committed to reducing its carbon
footprint by 50% by 2020 and minimizing the waste which is produced by their stores.
 Negative- The process of making products more sustainable is a costly affair which
results in increase in cost of Tesco.
TASK 4
P5:Internal and external analysis of specific organisations in order to identify strengths and
weaknesses
There are various external and internal factors which affects the total profit of the
company (Bah and Fang, 2015). To understand it more, SWOT analysis can be implemented
which will help in studying the internal factors i.e strength and weaknesses and external factors
which are opportunities and threats for Tesco.
Strength-
 Award Winning company- Tesco has won various awards for its retail excellence,
shopping experience and customer service.
 Large market Share- Tesco is the largest and one of the most profitable supermarket in
UK which is one of the strongest points of the respective company.
Weakness-
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 Low Subsidiaries output- Some of the subsidiaries of Tesco are not operating up-to the
extent of making much profit share as they are highly affected by the external factors.
 Dependency- The organisation is highly dependant on UK and Europe market Due to
which it hasn't focused developing rest of its market operations in other parts of the
world.
Opportunities-
 Opportunity for Joint venture- As there are any parts of the world where Tesco is
underperforming, the organisation have an opportunity for joint ventures with the help of
which the company can improve its performance due to market intelligence of local
companies.
 Growing market- The market is expected to pace at a CAGR of 5.7% in the coming 5
years (Harrison, 2013). As Tesco is one of the leading organisation in the market, it is
expected to earn good revenue in coming years.
Threats-
 Risk in oil and Gas Sector- Certain activities carried out by Tesco such as exploration,
production application and others may cause substantial risk which can affect the future
planning of the company
 Competition- There are other big retailers in the global market which might offer less
price range on similar products which can be a subject of concern for Tesco.
P6: Explain how strengths and weaknesses interrelate with macro factors of TESCO
Tesco is prone to the external macro factors as these forces can't be controlled by the
company. However, these forces might impact negatively or positively on business operations.
Therefore, management of Tesco requires to create impactful strategy in order to reduce its
adverse impact. External Environmental factors can be a strength or weakness of the firm in
different manners such as:
Political Factor - The political or government policies can be favourable for the
company if they implemented all the regulations and law of the country properly (Harrison,
2013.).
 Strength – By providing more job opportunities to the citizens of UK, Tesco is increasing
the employment of the respective country. Also, the organisation is favoured by the
government which further allows various subsidies to the company.
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 Weaknesses – After Brexit, it has become hard for business organisation to get
appropriate funds from the finance providing companies for the expansion of business.
Thus, it has turned out to be a negative aspect for growth of business organisations.
Economical Factor- The respective company contributes a big share in UK economical growth.
 Strength- The Gross value added by Tesco to the UK economy is £ 5.46, which is huge.
Therefore, it helps the organisation hold a strong position in the market.
 Weaknesses- EU referendum has caused a huge impact on the company as it was very
much dependant on the UK market share. So, due to the influence of Brexit, the spending
power of the citizens has also decreased. Hence, the growth of the company is on stake.
Social factor – TESCO is a leading multinational groceries retailer who provides quality
services to their customers on the basis of their requirement and needs.
 Strength – TESCO can benefit from the current lifestyle habits of the citizen which leads
them to indulge in added value products . This gives the company to grab more market
share.
 Weaknesses – The company will have to introduce more of packed food items as per the
customer demand which is a costly affair. Also, it is not possible to fulfil every
customer's ever changing demands, due to which the sale of new packed food cannot be
guaranteed. (Harrison, 2013.).
Technological Factor- This factors analyse the technological elements which can have an
impact on Tesco such as communicating means and others.
 Strength- This factor has turned out to be very favourable for the company as digital
marketing has lead to profit share of the company. Also, also it has helped Tesco in
reaching out more customers.
 Weaknesses- As these tools require lot of investment due to the process that is involved
in application of these technologies. Hence, it lead to increase in the cost of the company.
CONCLUSION
From the above report, this can be concluded that there are distinct types of organisation
that vary from each other on the grounds of size, scope, legal structure, purpose and many other
factors. Additionally, by practising PESTLE analysis, it can be clearly seen that how the macro
factors affects the organisation and what measures can be taken to overcome the problems
keeping in mind that these factors cannot be controlled by Organisation. The report also helps in
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better understanding of different types of organisation such as public organisation, private
organisation, voluntary association and many more. Apart from this, the report also helps in
learning how different organisation department works together to achieve the common goal of
company.
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