SWOT Analysis of Tesco PLC

The assignment involves a comprehensive SWOT analysis of Tesco PLC, including its internal (strengths and weaknesses) and external (opportunities and threats) factors. It also touches upon the importance of PESTLE analysis in understanding the external environment and making informed decisions for business growth and development.

BUSINESS &
BUSINESS
ENVIRONMENT

INTRODUCTION
Business involves activities which are conducted by group of people in order to attain
same goals and objectives. They have main objective of long term sustainability and earning
good profits. In order to achieve this goals and objectives, managers of association has to make
alterations in their plans and policies. Business organisation runs in society hence it is essential
to make policies according to external environment. When there is change in external factor,
enterprise has to accept it (Bah and Fang, 2015). This helps to maintain long term sustainability
in industry. This report is based on TESCO which has good name in retail sector. This
organisation is a British Multinational Groceries and general merchandise retailer in England.
This report covers different types, size and scope of organisations, interrelationship among
different departments, positive and negative impact of macro environment, internal strength and
weakness in relation to external macro factors.
Background of TESCO
TESCO was established in 1919. This is an international largest grocery and general
merchandising retail retail chain. This organisation has business in North America, Eastern
Europe, Asia. Founder of TESCO was Jack Cohen who had idea to create grocery store chain.
He began business with small stall at Well Street Market. Jack Cohen opened the first TESCO
shop in September 1931 at 54 Watling Street, Burnt Oak, Edgware, Middlesex. In 1947, it was
listed in London Stock Exchange. Business politics of TESCO is to purchase small outlet and
then sale product at cheaper rate. This leads to instant success to business.
LO 1
1 Different types and purpose of association and legal structures
In society, there are different types of organisation. They have different purpose and
reason behind it. Hence employees have in order to attain their goals and objectives,. There are
mainly three types of organisation i.e. private, public and voluntary organisations.
Private organisation
Private associations are the bodies which have main aim to earn profits. This
organisations are run by individual or number of individuals. They have their own sources of
funds such as ploughing back of funds, bank loan, etc. In UK, these organisations plays a
important role in developing economy of country. TESCO is example of private organisation.
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TESCO is the organisation which is largest international grocery store. This organisation was
listed in London stock exchange in 1949. they have plans to diversify their services and expand
business in all over world. TESCO deals in food, clothing, electronics, financial services etc.
Benefits of private organisation is that there is more growth and development prospects
which helps to increase workforce and this helps to provide satisfaction to consumers.
Drawbacks of private business, there is division of ownership, profits which makes division of
decision making power also.
This is the organisation which deals in retail industry. Legal structure of private organisations
are as under-
Sole proprietor- Sole proprietorship is an business enterprise which is run by single
person. This is the association which requires less amount of money and aims to earn livelihood.
These organisations are run by family members (Belás and et. al., 2015). Advantage of some
proprietor is that individual is responsible for profits and has decision making power. While
disadvantage is that in case of lack of funds, it is tough to raise from external sources.
Partnership- Partnership is the business which is run by two or more people. These are
the members which run business in order to attain same goals and objectives. There is pre-
determined ratio of profits, losses, capital, etc. These partners have unlimited liability on closure
and setting off liabilities. Partnership form is established under legal laws.
Advantage of partnership is that there is sharing of losses and capital. While disadvantage is that
there is requirement of consent of all partners.
Company- Company is a legal body which incorporated under legal law. They have main
objectives to attain good profits. They works according to external market trends and hence they
are able to attain long term sustainability.
Advantage of company is limited liability. Hence in case of TESCO managers are not
liable for debts personally. Whiled is advantage is due to change in market trend TESCO has to
alter their working style.
Public organisation
These are the organisations which works in order to serve society. In these organisations,
there is interference of government because they work for social benefit. Government
departments such as water, electricity department, etc. The Child support agency is example of
public limited company. Child support agency has different names in other countries such as
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department of children and families, department of children and family service, etc. They
provide services to improve condition of families residing in society. They are responsible to
provide protection to children and report for abuse.
Benefits of this organisation is this helps to perform operations according to society
demand. This helps to improve standard of society. Drawbacks of this organisation is that they
do not belief in making innovation in working style.
Legal structure of public organisation are as under-
Local government- This is the lowest level government which works within specified
geographical areas such as village, region, etc. They have objective to provide good services to
local people residing in small geographical region (Botha, Kourie and Snyman, 2014).
State government- This government works at upper level than local government. This is
the association which works within specified state. There are many issues which arise to people
residing their, so this government works on this behalf.
Central government- This government is at highest level in society. There are many
organisations which in different countries, so these government are take care of their actions.
Voluntary organisation
These are the organisations which works to improve condition of society. There are many
issues which are faced by organisation such as poverty, lack of education among low income
family, etc. So these organisations works in order to improve their condition. This is important
and significant because this assist in development of country. Oxfam is the example of voluntary
organisation. They work to reduce global poverty since 1942. Winnie Byanyima was Executive
Director of Oxfam international. According to data one out of three employees are suffering
from poverty. Hence managers of Oxfam are working in order to reduce poverty.
Benefits of this organisation that they works to improve living of standards and provide
equal rights to dislike people. Drawback of this business is there is lack of financial resources
which affects working style of organisation.
Legal structure of voluntary organisations are as under-
Charitable trust, association of people are part of voluntary organisation. These
associations works to improve living of standard of people. Services offered by these
organisations is beneficial for all people residing in society (Cai and Yang, 2014).
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2 Size and scope of different types of organisation
As there are different organisations, so there is difference in their size and scope also.
When there is difference in their scope and size, so there is difference in their aims and
objectives. This is discussed as under-
TESCO Background details of the organisation- TESCO is the company which deals in retail
sector. This is third largest organisation in terms of profits. Products and services supplied- Books, clothing, electronics, furniture, toys, petrol,
software, etc. Size- This organisation covers 19 charitable trust under them. Scope- TESCO deals in re6tail sector products such as home furnishing items, clothes,
etc. Vision- To deliver good quality product so strong sustainable long term growth can be
achieved. Mission- Create value for customers to earn their life time loyalty. Business objectives- To enhance profits and sales through providing diversified services
in all over the world. Legal structure- This organisation is covered under aspect of private organisation. Stakeholders- This association has stakeholders as customers, employees, managers,
shareholders, etc.
Child Support Agency Background details of the organisation- This organisation operates in Asia, Thailand,
Europe, etc. This organisation works to improve condition of children and provide
upgraded services. Products and services supplied- Children education, take care houses for children m,
etc. some services offered by this organisation. Size- This organisation operates at small level so this is effective and relevant for
attaining good image. Scope- Scope of association is great which is relevant for attaining good image. They
provide facilities to improve living of standard and well being of people.
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 Vision- They want to provide good nourishment to children and hence they do not attain
goals and objectives. Mission- To provide proper and basic education to children with good health. Business objectives- Objective is to improve condition of children's in UK. Legal structure- This organisation is headed by government departments. Stakeholders- Stakeholders are political parties, volunteers, parents, etc.
Oxfam Background details of the organisation- Oxfam is a non profit organisation which
headed around 19 charitable trust. Products and services supplied They provide services in order to improve living of
standards. They provide free food to people. Size- This is the ninth largest organisation in world. Scope- They work to reduce poverty and illiteracy from UK. Vision-To create equality in society and hence there is sustainable growth of
organisation. Mission- Their mission is- Equal right of living with dignity to all. Business objectives- Eradication of poverty, improve living of standards and remove
illiteracy. Legal structure- Legal structure of Oxfam is charitable trust.
 Stakeholders- Society is the stakeholder for Oxfam.
Franchises- Franchises is the marketing technique which is used in order to expand
business. This is the technique which is used for providing licensing to person or group of person
in order to open business on their behalf. This helps to expand business in different geographical
region.
Joint Venture- joint venture is the technique of collaboration with one or more
organisation. There is requirement of some resources hence with the help of joint venture there is
co-relation in resources so operations are performed with effective and relevant manner.
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LO 2
3 Relationship between different organisational function and its link to organisational objectives
and structure
Organisational structure
Organisational structure is way in which organisation works. This is the way through
which managers perform business operations. This is relevant and significant for achieving set
goals and targets. As TESCO operates in different parts of country, so they are more flexible in
their working. This assist in producing goods according to customer need and hence profits gets
improved. TESCO is using hierarchical structure.
(Source: Structure of TESCO, 2017)
Hierarchical structure means there is different levels of hierarchy in TESCO. This
structure helps to work as per instructions of top level managers. Top personnel such as regional
manager and store manager has right to take decisions and convey it to middle managers i.e. food
trading, non food trading and personnel managers, so they can order to subordinates to perform
job responsibilities.
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Illustration 1: Structure of TESCO

There is relation among departments in the form of horizontal and line departments. This
is significant and relevant because business activities are related to each other which helps to
complete activities on time and achieve aims. For instance: as per case TESCO PLC there is
relation among food and non- food trading department in the form of collecting and departure of
raw material.
TESCO is a big organisation which deals in different products. They have outlets in all
over the world. So it is essential to work according to external market (Caiazza, Shimizu and
Yoshikawa, 2017). There are many departments which jointly works in order to attain good
sales. Hence they have relations with each other. This is discussed as under-
Marketing with production department- Marketing department plays important role in
attaining goals and objectives of TESCO. They have essential role in enhancing sales. When new
product launched in market, then it is responsibility of marketing manager to convey feature to
marketing department. This helps in advertising and grabing targeted consumers.
Research and marketing department- Research and development department works to
analyse ways through which organisation can know about new methods. When research
department of TESCO came to know about new product and service, then this is conveyed to
marketing department. Then marketing department collect information and then implement to
TESCO. This enhance sales and profits of TESCO.
Finance with production department- Finance is the basic need of managers at TESCO.
This helps to work according to external market (Cull and et. al., 2015). There is requirement of
machinery, equipments, etc. for production. There is specific budget for it which is fixed by
finance department. Hence there is relation between finance and production department of
TESCO. This aims at reducing cost and increasing profits.
Departmentalisation is used by TESCO because they have different departments such as
purchase, sales, research, marketing, production, etc. which works one after another to provide
best services. This helps to attain efficiency in products and services hence customer satisfaction
can be attained. This helps to increase brand image of TESCO in industry and maintain long
term relations with employees.
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LO 3
4 Positive and negative impact of macro environment on business operations
Macro environment means factors which affects business organisation indirectly. These
are the factors which affect business operations through external environment components (Eling
and Schaper, 2017). PESTLE analysis is used as tool by managers of TESCO to analyse
political, environment, social, technological factors. These are not in control off managers but
they impacts decisions of TESCO.
Political- Political factor includes political strategies, tax policy, trade policy, trade
restrictions, etc. There is essential role of government in smooth running of business operations
of TESCO. TESCO operates in different parts of country, so they have to work according to
political policies. Brexit is result of political factor.
Positive impact Negative impact
There is legal trade restrictions after Brexit
which emphasise managers of TESCO to work
in more ethical and relevant manner.
Negative impact of Brexit it that there are some
trade restrictions of it is tough for managers of
TESCO to expand business.
Economical- Economical factor includes tax rates inflation deflation rate. Managers of
TESCO has to keep these factors in mind so there is balance between cost and profits (Epifanova
and et. al., 2015). Inflation rates in UK are less so there is increment in sales and revenues of
TESCO.
Positive impact Negative impact
When there is reduction in inflation rate of
country, purchasing power of consumer
increases. This is beneficial for sales and
profits of association.
If inflation rate is rate then there is more
regulations in monetary terms which affects
financial position of country.
Social- Social factor includes norms, culture of society where TESCO operates. There is
difference in culture, religion, beliefs of people, so this must be kept in mind by managers of
TESCO. There is requirement of more formal Dresses in UK as comparison to Asian Countries.
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Positive impact Negative impact
TESCO can provide Western Dresses to
customers of UK and this helps to get positive
impact on sales and revenues.
Due to regular change in demand, there are
possibilities of dead stock and this lead to
increment in cost.
Technological- Technological changes are taking place very frequently in business
environment. So it is essential for TESCO to accept these changes (Huang-Horowitz, 2015).
Technological changes includes up-gradation of machinery, installation of new software, etc. For
instance: launching of online application is part of technological changes.
Positive impact Negative impact
When new portable online is installed in
organisation, efficiency can be achieved. Good
quality product and services can be offered to
society.
There is requirement of funds for installation
of new technology, so this change in costly and
time consuming for TESCO.
Legal- Legal factors includes norms, rules, regulations, etc. These are essential to be
followed by TESCO (Khan and Quaddus, 2015). There are many laws related to employees such
as equal remuneration act, compensation act, etc.
Positive impact Negative impact
When TESCO is working under legal norms
and regulations, then employees remain
satisfied because they are getting fair
remuneration and maintain long term relations.
There is requirement of legal practitioners such
as lawyer, CA. This requires hiring cost and
managers of TESCO become dependent on
them.
Environmental- Environment are changing and this is not in control of managers of
TESCO. This factors affects delivery of product and services to consumers. Use of solar heaters
are best technique to save energy and improve condition of society.
Positive impact Negative impact
This provides satisfaction to stakeholders that Due to excess rain there is impact on logistics
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TESCO is working for society, this improves
brand image.
services which affects business operations of
TESCO in negative manner.
LO 4
5 Internal and external analysis to identify strengths and weaknesses
SWOT analysis is one of the important aspect which provides knowledge about strength
and weakness of association. There are some factors which are good and some are weak. These
factors can be analysed with SWOT analyse (Menychtas and et. al., 2014). SWOT stands for
strength, weakness, opportunities, threat. Strength and weakness is internal factors while
opportunities and threat is external factors of organisation. There is tough competition in TESCO
so it is essential to polish weak areas and strengthen good areas.
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(Source: SWOT Analysis, 2017)
Strength
 TESCO is one of the leading brand in
industry. This organisation operates in
different parts of country so they are
well known among society.
 They provide good services through
online source also. TESCO has provision of club cards
which provides information about
consumers. This helps to provide
appropriate product to consumer.
Weakness
 financial position of TESCO is not
good. Hence they can not accept
external changes in appropriate manner.
 Brand image of TESCO gets affected
due to commercial scandal in 2015.
 employees turnover rate in TESCO is
more. This affects brand image of
organisation in industry.
Opportunities
 they can expand their business in Asian
countries.
 They can increase their role in financial
Threats
 Changes in global economic
environment is one of the biggest threat
for organisation.
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Illustration 2: SWOT Analysis

services sector which is fruitful in case
of inflation.
 TESCO must use different and
innovative marketing strategies through
which they can market product and
services and hence this is fruitful
increasing sales and profits.
 Loan rates is less in UK, so there are
more growth prospects which are
relevant for diversification of business. Reduction in inflation rate at UK assist
in growth of business.
 There is competition in retail sector
organisations.
 There are many alterations taking place
in demand of consumers, so this affects
business operations.
 TESCO operates in different countries
and there is threat of currency inflation
which affects growth rate of
association.
 As there is more legal regulations, then
it is threat for TESCO to compile all
legal regulations.
Influence of SWOT analysis in decision making process
SWOT analysis is one of the important tool for improving efficiency of company. There
is requirement of some changes which is relevant and significant for improving brand image.
TESCO accepts external changes frequently and implement to business organisation. This is
effective and relevant for attaining long term sustainability (Moroni, Arruda and Araujo, 2015).
TESCO provides good services through online mode, so this is strength for organisation. If there
is query to consumer and application is not friendly, then this affects decision making of
organisation.
There is more labour turnover in organisation. This is negative aspect for organisation, so
this affects decision making of TESCO. There must be provision of personal interaction of HR
manager of TESCO with employees. This helps to misunderstand their mindset. There must be
events, training, etc. through which there is interaction among employees and there is good
environment within organisation. Hence there is impact on decision making with SWOT strategy
of TESCO.
6 How strength and weakness interrelated with external macro factors
Macro environment includes factors which are associated with external environment.
There are some strengthen as well as weakness which assist in business operations (Virglerová,
Dobes and Vojtovic, 2016). There are some changes which has to made by managers of TESCO
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in order to compete with other firms such as Sainsbury, ASDA, ALDI, etc. in industry. Strength
and weakness are interrelated with external factors which are discussed as under-
Political factor
Political factors includes governmental policies. This factor is strength as well as
weakness for TESCO. Brexit is part of political aspect for TESCO Opportunity- In UK, after BREXIT business expansion is easy. So managers can think of
diversification.
 Threat- But there is competition with external and global brands which is threat for
growth of TESCO.
Economical Factor
Economical factors includes tax policies of country. This is important for running
TESCO in industry. Inflation rate in TESCO is low in UK which is part of economical factor. Opportunity- When there inflation, then purchasing power increase and there is positive
impact n sales of TESCO.
 Threat- There is fluctuation in currency rate, which may increase rate of loan at banks.
Social factors
Social factors includes ethical, cultural values of organisation. This is relevant because
this can be strength and weakness for TESCO. Change in demand of consumer is frequent in
UK which is result of social factor. Opportunity- Managers can provide product and services as per desire of consumers so
this increases growth opportunities.
 Threat- Due to change in trend, old stock may be old and this might be waste which
increase cost and reduces profits of TESCO.
Technological factors
For TESCO technological changes includes up-gradation of software, change in
technology, etc. This can be strength and weakness for TESCO. Launching of new software at
workplace for accounting is part of technological change. Opportunity- This provide exact information with less time, so there is reducing in time.
So operational efficiency can be achieved by TESCO.
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 Threat- training cost is fixed expense for TESCO. There are possibilities that employees
are not comfortable in working under latest techniques. So productivity of TESCO gets
affected.
Legal factor
In this factor legal laws, regulations are covered which has to be followed by managers of
TESCO. Remuneration act, employment act, etc. are part of legal factor. In UK there are more
legal norms which are essentially to be followed. Opportunities- if managers proper perform operations, then they can attain good brand
image among stakeholders.
 Threat- due to regular change in laws, working style of TESCO gets affects which is
threat for organisational growth and development.
Environmental factor
Environmental factor includes use of environment friendly techniques such as use of
renewable sources of energy which is beneficial for saving environment of UK. Opportunities- Managers of TESCO are using solar heaters which consumes natural
energy and this creates good image in front of stakeholders. Hence brand loyalty
increases. Threat- Climate of UK is dynamic, so this shows delay in delivery of product and
services to outlet.
Recommendations
It is recommended to managers of TESCO PLC that there is requirement of proper
analyse of external market which helps to preform operations according to current trends. This
helps to get positive impact on performance of association. This helps to analyse demand of
consumer which helps to enhance brand image of TESCO PLC. With cahnge in external factors,
managers has to alter working style, product and services according to customer demand.
CONCLUSION
From the above discussion it is clear that business enterprise can run in effective way
with the help of planning and analysis of market. There is requirement of some changes which
are relevant and significant for organisational growth. Managers has to make strategies according
to customer demand, so brand awareness and consumer satisfaction can be achieved. In
environment there are different organisation working having different goals and objectives.
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There is difference in their size and scope also hence employees are working accordingly. In
business enterprise there are different departments working in order to attain goals and
objectives. For instance: marketing department is linked with research and development
department because change in external environment analyse by marketing department and then
conveyed to research department. They make efforts to reduce cost and increase profits. PESTLE
analysis is important tool for growth of business because it provides knowledge related to
external factors such as change in legal norms, etc.
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REFERENCES
Books and Journals
Online
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Organisational Structure. 2018. [Online]. Available through:
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nizational_structure.htm>.
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