Business And the Business Environment - Tesco Assignment

Business and the
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Purpose and different type of organisations and adoption of legal structure........................1
P2. The size and scope of different type of organisation............................................................2
Task 2...............................................................................................................................................4
P3. the relationship between different organisation function and their link to organisational
objective and structures...............................................................................................................4
Task 3...............................................................................................................................................5
P4. identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples................................................................................5
P5. conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses............................................................................................................7
TASK 4............................................................................................................................................9
P6. Explain how strengths and weaknesses interrelate with external macro factors..................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment refers to the combination of internal and external factors which focuses on
influencing e a company's operating situation. These factors affect a business operations and
various decisions which they have to take in their regular course of operations. Various factors
include political, environmental, social, legal, suppliers, competitors, customers and many
others. These all factors play a very crucial role in affecting internal decisions and functions of
company.
This report is based on super market company Tesco which is a American multinational
company and its foundation was laid in 1919. Jack cohen founded this company's This report
deals with various topics such as purpose of business environment, different types, their size and
scope, structure, function etc. analysis of external environment of Tesco which affects company
in both negative and positive manner(Sodeyfi, 2016)..
TASK 1
P1. Purpose and different type of organisations and adoption of legal structure.
There are some organisations which are used for serving the society and individuals
present there. All companies start their business with a purpose and objective that is generally
maximization of profit earning and creating a brand image in market. This helps in economic
growth of company and country ta same time.
Public Sector: These organisations are those which are regulated and controlled by
government of that country. They don't want to do maximization of profits but instead they want
to serve the society and fulfil requirements of people of society. National health service is one
such organisation which is having presence in UK, this company provides employment to
approx 1.6 million people. Main aim of this organization is to improve health of their patients.
This is a public organisation and government is having control on all its operations.
Private Sector: These are those type of organization which are part of country's
economy and contribute towards growth and development of country & its economy as a whole.
They make up larger share in the economy, and they are always controlled by private individuals

and enterprises. Private sector companies form big part of every economy, they may be in form
of partnerships, groups or individuals. There is legal regulation of government on such
companies but they are not public companies. Tesco is a UK based company they have small
convenience stores and also large hyper markets. There are more than 3000 stores in UK, and
they are one of biggest retailers in UK. This company is listed in London stock exchange and
also have stores present in Asia, Europe. People of UK are able to meet all their requirements
from one stop destination that is Tesco for fulfilment of their grocery requirements. This is a
private owned company and all their profits earned by them are solely owned by company.
Voluntary Organisation: there are some organizations which do not aim to earn
monetary profits, instead they aim to achieve other objectives being set by them these are
considered as voluntary organisations. They want to do social service for society or benefit
people living in society. Oxfam is a company which is a charitable organisation and it has
objective of eradicating property in the country which they are working. There are 20 charitable
organizations which are independent and Oxfam is a confederation of these 20 companies. They
work for benefit of people living in society who are below poverty line and don't have any
income source for their survival, fulfilment of basic needs. They try to provide some
employment opportunities, sources of survival to such people. This helps in upliftment of people
living in society and they can benefit from such efforts made by this company.
P2. The size and scope of different type of organisation.
There are basically three categories in which organizations are divided that is private,
public and voluntary. Apart from this categorizations there is another differentiation being made
between companies based on their overall turnover & productivity. They are classified into
medium, small and Large enterprises(Virglerová, Dobeš and Vojtovič, 2016). This classification
is very important to put a company in a particular category. This is applies on every company as
size, scope, vision, mission of every company, it structure all are different and they vary
according to their main objectives. Following are some of organizations whose size and scope
has been discussed:
TESCO
Vision & Mission- Vision of a Tesco as one of largest supermarket chain of UK is to
become most highly valued companies in terms of services and pro0ducts they are providing to

their customer and society. Company has a mission that they want to create such value for their
customers which can lead to lifetime loyalty.
Size & Scope- Tesco is a brand having approx 7000 stores and they are giving
employment to around 5 lacs people across globe. scope of this company since last two decades
has been because of transformation strategy which they have used to change their brand image
and achieve success.
Organisation Structure- Tesco organisational structure is based on regional manager at
top, then comes store manager and then division is food trading manager and non food trading
manager, personnel manager. All this helps in smooth operation of company's functions.
National Health Services:
Vision & Mission- This company has a vision that they want to ensure long and healthy
life of people of their country(Sodeyfi, 2016).
Mission of this company is that want to do prevention of disease and they want to promote
healthy lifestyle, improvement of delivery system,m of health care. At same time they want to
focus on access, quality, efficiency and sustainability of their company.
Size & scope- There are approximately 15 lacs employees who are working in this
company. This company is at fifth largest company who is providing employment to people.
Company's main aim is providing health care to present and future generations of country.
Organisation Structure- Structure of National Health service is having a 'Tripartite
System” which includes hospital services, primary care including dentists and opticians, and
third part in structure is community services which include child welfare, maternity, ambulance
etc.
Oxfam
Vision & Mission-They try to fulfil the basic needs of such people and help them in
surviving. They also helps such needy people by providing them some legal rights.
Size & Scope- It is a confederation of approx 20 independent organisations which are
working together in more than 90 countries. This company is successfully operating and they are
fulfilling needs of people who are in need. They are working for a good cause and are therefore
achieved success in short period of time(Prajogo, 2016).

organisational structure- this company has a council which consists of trustees who are
responsible for governance of activities, operations, functions taking place in such companies.
Task 2
P3. the relationship between different organisation function and their link to organisational
objective and structures.
structure of any organisation is designed to identify job and various functions taking place the
company. A well developed structure is developed by companies to achieve overall set goals of
company. Four basic structures are explained below:
Marketing and Finance: Tesco has a very well established marketing department which
is involved in making effective strategies and helps in market research. Main aim of Tesco is to
create strategies which are strong enough to increase sales of company. Finance department of
Tesco is responsible for controlling of finance and passing of budgets for all different functions
of company. Various marketing programs and campaigns are organized by Tesco time to time
for this finance department needs to provide budget to marketing department of company. This
type of interrelationship is very important for attainment of overall objectives of
company(Otache and Mahmood, 2015).
HR and marketing: The HR department is responsible for recruiting and selection of
best candidate in company. It is marketing department which needs new people who can
perform their activities and tasks more productively. Marketing department provides
information related to various requirement and then HR department has to plan their hiring and
recruiting according to such requirements.
Organisational structure
Structure adopted by Tesco is a functional organization. Which means that they classify
various departments in company according to their functions. Functions have to be conducted
smoothly in company otherwise it may lead to reduction in overall profitability and productivity
of companies. Below mentioned is a flow chart which clearly depicts the type of functional
division Tesco is following(Moroni, Arruda and Araujo, 2015):

Task 3
P4. identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.
The management of Tesco should use PESTLE approach to analyse various factors
present in macro environment and then see how such factors are affect organization:
Political factor: This factor has both negative and positive impact on Tesco. If
government is changing rules, policies & regulations in favour of company then it will be
beneficial for taking various decisions in company on other hand there can be also a situation for
example increase in regulations for production related activities which can lead to increase in
cost for company(Kolk, 2016).
Economic factor: Tesco is a company which gets so many benefits in form of rebates
they get in policies, prices and taxes which helps in increasing effectiveness of operations of
company. If country is facing a situation of inflation then this can have a very positive impact on
company as they can increase their prices and this will in turn lead to increase in profitability of

company. Economic factor can also has a negative impact on company as if there is reduction in
disposable income of people then this may lead to reduction in overall sales of company.
Technological factor: Advancements of technology has brought lot of positive changes
fir company as well as increased opportunities for them. Such as growth of online market is
providing increased source for approaching their customers. TESCO is also taking benefits from
this technological development and they have also started using online source as a medium to
market, promote and sell their products. Constantly changing technology has also forced this
company to adopt them, but this also leads to increase in cost for company. Also, adoption of
new technology does not necessarily guarantee success in that new advancement(Khan and
Quaddus, 2015).
Social factor: There are lot of social changes taking place in UK which includes
customers are moving towards shopping in bulk. This can have positive effect on Tesco as their
sales might increase in large quantities. Also, Goods demanded by companies are affected by
customers choices and beliefs. People are becoming more conscious for their health this can lead
to decrease in sales of some of products of company.
Legal factor: Government changing policies and procedures have a constant effect on
Tesco's operations. There are some of regulatory authorities in every country which constantly
regulate & monitor company's changing policies are in accordance with legal requirements. Such
as changes in Food Retailing Commission ( FRC) has suggested some code of Practises that
companies can't change prices very easily they have to give prior notice to such authorities and
seek their permission. On other aspect this has a benefit also as it ensures customers trust(Huang-
Horowitz, 2015).
Environmental factor: Tesco is a very committed towards environment they are
operating in, they have made efforts to reduce the wastage they are doping to the environment
because of their production and manufacturing functions. This will make their customers having
increased brand image of company. This environment factor has a negative impact on company
as they have to constantly monitor their activities and make checks that they are not involved in
doing any harm to environment.

P5. conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses.
SWOT analysis of Tesco:
Strength Weakness
 Tesco is one of biggest retailers of UK
and has largest grocery chains in world.
 Tesco dominates grocery market.
 There stores are continuously growing
in number and this is leading to
expansion of this company.
 Tesco has failed to achieve success in
Japan which was a very good
opportunity for the company.
 It is following low cost strategy which
can lead to lower profit margins
 In year 2017, company's reputation
was affected badly as they were
imposed fines because of
misrepresentation of profits
Opportunity Threat
 Tesco is willing to start its operations
online mode.
 Tesco can work towards decreasing of
transportation cost of company.
 New technologies can be used by
company in their operations so that
they are able to attain efficiency in their
operations.
 Behaviour of consumer is changing
very fast.
 There are new competitors which are
emerging and providing intense
competition to Tesco.
Threat of substitute: For Tesco this company has a threat that its products may be substituted
with other brands such as Morrison, Sainsbury etc(Grigore and Drăgan 2015).
Threat of competitors: Major competitors of Tesco such as ASDA, Sainsbury, Morrison is
providing tuff competition to Tesco in terms of products and increased variety.
Bargaining power of suppliers: Suppliers are very important for every company from Tesco's
point of view, company has to face increased negotiations from their suppliers. This sometimes

increases cost of procuring raw materials which is a demerit for company as they have to reduce
their profit margins, in order to attain cost leadership in market.
Bargaining power of buyers: In context of Tesco buyers have high bargaining power as they
have many options of different companies available with them and which can provide them same
equality products just like Tesco(Fabuš, 2017).
Threat of entry: Already existing competitors of Tesco, are already high in number and they is
also a threat of new start-ups being entering in this industry.
SWOT analysis of Oxfam:
Strength Weakness
 Oxfam is having clearly defined
objectives and goals.
 They have a large global network
which provides good credibility to this
brand.
 This store is less preferred by
customers who are looking for
luxurious products.
 Company is having a global presence
but only as a retail store.
Opportunity Threat
 Oxfam has a opportunity to create
awareness amongst its targeted
customers by approaching them
through increased means and sources
of advertising.
 There is low customer motivation for
this brand.
 Oxfam is facing very high competition
and this gap is going to increase in
future.
Threat of substitute: There is high threat on Oxfam that there customer's can substitute their
products with their competitors products.
Threat of competitors: competitors such as Amazon, eBay and Hive have always given good
competition to Oxfam. Other competitors are also emerging whoo are giving competition to
Oxfam(Deasy and et.al 2016).
Bargaining power of buyer: There are many options available with buyers especially in case of
retail and lifestyle sector which can affect sales of company.

Bargaining power of suppliers: It is very important for Oxfam to maintain good relations with
their suppliers as to survive for long term it become necessary for companies to maintain good
relations with suppliers this also helps in having cost advantage.
Threat of entry: There has been a changing trend and people are more involved into using
some opportunities available in market, this leads top new companies who are willing to provide
quality and price based competition to Oxfam.
TASK 4
P6. Explain how strengths and weaknesses interrelate with external macro factors.
Basis Strengths Weaknesses
Political
Tesco is properly adhering to various
governmental policies and regulations
applying on it.
This has a strong impact on
company's operations and overall
functions as they have to strictly
follow all rules and regulations and
any violation will impose penalties
and fines on Tesco.
Economical
TESCO is a company always want to
enter in those countries having high
GDP growth which affects company in
positive manner they are able to increase
their sales and achieve growth(Clarke, Li
and Xu, 2016).
Tesco is a company which is
expanding its area of operation and
if they enter in those countries which
are having low GDP growth then
this has a impact on company's
operations.
Social Factor
Tesco is a company which has a strength
that they believe in modifying products
according to changing customers'
preferences, demand and supply
conditions and this has affect on
Social factor is related to consumer
behaviour which is never constant
and keeps on changing according to
changing requirements of customers,
hence Tesco has to constantly do

increasing profits of company. modifications to adapt to such
changes.
Technological
Tesco's management has successfully
adopted changing technological
requirements. For example growth of e
commerce has lead to use of digital
media as a source of advertising which
Tesco is also using
This factor also has a weakness that
there are rapid changes and
advancements happening in
technology, for a company like
Tesco it is a very big challenge to
cope with changing technology, hey
have to deal with changing costs and
this is also very time consuming for
company.
Legal
Tesco is affected by laws and rules
which are prevailing in external
environment and are constantly
changing.
Changes in legal laws and
regulations of company, affects
company as they to also change their
policies according to such legal
changes.
Environmenta
l
Tesco has a management which always
focuses on protection and conservation
of environment. Company always
focuses on using techniques which are
environment friendly(Banica and Hagiu,
2015).
Every company is operating in
external environment and factors
present in this environment have a
major impact on company and to
survive for long term they have to
continuously monitor such changes
and then adapt themselves according
to it.
CONCLUSION
According to the above report it can be concluded that there are different types of
organizations which are there and there features vary according to objective, scope , size etc.
there are basically there types of organisations public, private and voluntary, their scope, size,
structure have been discussed. Analysis of internal and external factors of company and its effect

on company is functions have been discussed, SWOT analysis, PESTLE analysis is done which
will help a company in future planning of their strategies and operations. Such internal and
external analysis of companies help them in forming effective strategies and same time process
of decision making of company.