SWOT and PESTLE Analysis of Tesco

The assignment involves conducting a SWOT analysis to identify Tesco's internal strengths and weaknesses, as well as an external PESTLE analysis to examine the company's business environment. The results of both analyses are then compared to understand how they interrelate with each other. The assignment aims to provide a comprehensive understanding of Tesco's position in the market and its potential for growth.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 .......................................................................................................................................1
P1. Explain different types and purposes of organisations; public, private and voluntary
sectors and legal structures.....................................................................................................1
P2. Explain the size and scope of a range of different types of organisations......................6
TASK 2............................................................................................................................................8
P3. Explain the relationship between different organisational functions and how they link to
organisational objectives and structure..................................................................................8
TASK 3 .........................................................................................................................................11
P4. Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.........................................................................11
TASK 4 ...................................................................................................................................13
P5. Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses.....................................................................................................13
P6. Explain how strengths and weaknesses interrelate with external macro factors ...........14
CONCLUSION..............................................................................................................................15
REFERENCES .............................................................................................................................16

INTRODUCTION
Business environment is very important concept in business. Every business have to face
different factors due to these uncertainty in an environment. There are internal and external
factors which may considered in environment. In internal factors those elements are considered
which occurs inside the firm. Such as organisational structure, employees, workers productivity
and others. These factors are under control of enterprise (Baraya, Budden and Escobar, 2011).
The another factors is external. These factors are not under control of an organization it take
place outside firm. These elements are dynamic in nature and have great influence on business.
This may include political, social, economical, legal and environmental.
The company which is taken into consideration is Tesco. It is one of the leading grocery
brand in UK. The market share of company is very high. They are operating their business in
many other countries also. The main motive of firm is to provide high quality of goods in lower
prices. The firm is into many businesses such as clothing, grocery, electronics, financial services
and others.
In this report different types of organisation and purpose are given. Different
organisational functions and their interrelation has been discuss in this assignment. The internal
and external environment audit has been done in this project. The positive and negative impact of
these factors are mention.
TASK 1
P1. Explain different types and purposes of organisations; public, private and
voluntary sectors and legal structures
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There are different kind of enterprise. Some of them are private owned and some are
government owned. The operations are differ from each other. These enterprises are having
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different size, nature, capital structure, number of employees and others. The rules and regulation
regarding to these firms are also different. Following are the some of types of organization.
Public enterprises: Public enterprises are those which are owned by government. The size of
enterprise is usually large. The number of employees are also large. These organisation is
working with the main motive of doing welfare for the citizen of country with small margin of
profits and Love,. The sources where they get the capital is taxes, different duties excise by
government. The examples for public sector companies is BBC is a multinational British broad
casting company. It is 124 year old organisation.
Private enterprises: These enterprise are owned by private individuals, groups,
partnership or company. Before establishing these enterprises firm need to follow different rules
and regulation exercise by the government of particular country. There are different types of
private companies some are very large and some are medium and small size in nature. There can
be different nature of business such as hair dressers, clothing business, textiles or other many
business. The number of employees are depend upon size of business. The main motive of these
enterprises are is to earn profits and increase their market shares. The example of public sector is
TESCO is the British multinational grocery company which is situated in UK. It has cover 12
countries and establish stores. It is the largest grocery market of the united Kingdom.
Legal form of organisation
 Sole traders: These are the form of business in which individuals are running business.
Example of sole traders are hairdresser. They are limited numbers of formalities which
individual needs to do . The individual and company are treated as same entity. Liability
are unlimited because every losses incurred by business has to bear by individual. For
example Gary J Harding, Russell Walker & Co., Peter Brown Accountant and Gillian
Murray.
 Partnership: In this formal agreement is signed by the partners. There are more
formalities which is followed while formulating the partnership. The deed formed legal
relation between partners. For example
 Limited Company: There are many many formalities which is followed while
establishing the company. Before opening any company the memorandum and article of
association is formed. There are many other documents which are needed while opening
an organisation.
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Voluntary sectors: The another form of enterprise is voluntary in this number of people form
group and work for well being of society. The sources where they get the funds are from charity
and donations. These enterprises are working for different reasons as some of them are working
for blind people, some are for women rights and other reasons. The main motive is do the
welfare of society and make this earth a better place. Some of the examples Oxfen is the biggest
voluntary company of United Kingdom. It provides facilities to the poor people and help them.
They work with communities for reducing poverty.
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Followings are main purpose of Business
 To bring continuous new innovation
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 To serve customers
 To earn profits and sell products across the world
 To get the good return from the investments
 To make appearances in market
6

P2. Explain the size and scope of a range of different types of organisations
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There are also different kind of level of enterprise. These levels are given below.
 International organisation: These organisation are not having their own business in
foreign country they sell their products by the way of exporting (Hamilton and Webster,
2015). The risk factor and cost is low because company do not operate their business in
foreign country.
 Transactional organisation: This is combination of multinational and global. The nature
and structure of these enterprises are very complex. These firms are very flexible in
nature as they operate in many countries so according to that only they manage the work.
 Global company: The size of these enterprises are very large. They have their business in
most of the countries. The organisational structure is very large.
 Multinational organisation: These companies are operating their business in limited
number of countries. These enterprises are small than the global firms. The risk factors
are also less because they serving in limited number of countries.
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Company responsibility towards its stakeholders: Stakeholders refer to customers,
suppliers, employees, government and others. These are very important part of an organisation.
So firm need to satisfy them to sustain in market for longer run.
 Company need to give the rights and authorities to their stakeholders
 The firm is responsible to give them job opportunities and provide security.
 Firm need to pay their suppliers on regular routine.
 Towards customers organisation need to provide good quality of products.
 Taxes and other duties should be paid to government on time.
These are requirements and responsibilities which firm need to fulfil. Tesco is company
those who are successfully satisfying their customers. This one of the reasons by which firm is
having good growth.
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TASK 2
P3. Explain the relationship between different organisational functions and
how they link to organisational objectives and structure
TESCO cannot work without their departments. There are many different departments so
that work can be properly divided. When the size of firm is very large these departments play a
vital role because they are having their own functions which they need to perform at their end.
By this all the tasks can be completed at right time (Jayeoba, 2012). Following are different
departments and their roles.
Production department: This department is having the roles and responsibility to produce
the goods and services by minimising the cost and maintaining the quality. Following are
functions of Tesco company's department.
 Preparing the schedule for the tasks that need to be assigned.
 Proper maintenance of machines and equipments
 Control the inventory
 Produce goods at low cost and of high quality
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Marketing department: The TESCO firms department is responsible for promoting
products in market and generate the awareness about products which firm is producing.
Marketing department is responsible for understanding the needs and wants of customers
(Jehangir, Dominic and Downe, 2011). Following are the functions of marketing department of
cited company.
 Understanding customers’ needs and wants.
 Evaluate the demand and supply of products.
 Communicate with public
 Support the sales of company
Human resources management: This department is taking care of human resources in an
organisation. This department is responsible for recruiting, trained them. The department of tesco
is taking care of human resources and ensure all the rights should be given to them. Following
are the functions of human resources department.
 To ensure the safety of employees
 Fulfilling the needs of workers.
 Selecting the right candidate for right position
 Providing better training to the candidates.
Finance department: This department is responsible for handling all the financial issues
of the company. Its main role is to prepare the budgets, balance sheet, profit and loss statement
and other accounts, by which financial position of the firm can be determine. Following are
functions of finance department of cited firm (Klapper, Lewin and Delgado, 2011).
 Keeping records for the company
 Preparing final accounts for company
 Preparing budgets
These are various departments which are stated above. These all are interlinked with each
other. If one department is doing their job proper it can effect other department also. As
marketing department is doing research they understand the customer needs and wants. After
that they inform the manufacturing department to produce the goods accordingly. Production
department communicate with finance department so that they can prepare budget. By this they
all perform their respective functions in coordination with one another. HR department is made
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to hire people according to the new project requirements and product launching so that work can
be properly assigned and completed timely.
Organisational structure is another important element. In this different parties can interact
with each other. There are various levels in an organisation. They follow the chain of command.
Following are different kinds of organisational structure of tesco company.
 Functional structure: Every level is having their own function and they are bound to
follow the given task. In this workers are required to inform the manager and further
manager communicates with higher level. The advantage of this structure is that
proper command can be given in a hierarchy flow. The demerit is that, all employees
remain busy with their own tasks so less communication takes place (Klapper, Lewin
and Delgado, 2011).
 Divisional structure: Every product line separate structure is prepared that all the
resources can be used in a proper manner. Tesco can be implement business function
where many product lines are there. The advantage of this structure is that all functions
can be carried out in proper manner (Rossi, Vrontis and Thrassou, 2012). The
disadvantage is that all employees are working according to their manner so in this
case inefficiency can take place.
 Matrix structure: By this company can bring any changes in an enterprise. Because this
structure is very flexible in nature. The drawback of this structure is that conflicts may
arise among the employees because of chain of command.
 Organisational chart: This is a very effective method to solve the problems. If tesco
company is not able to take the decisions from above structure they can follow
organisational chart. The control of different department also mention in this chart.
TASK 3
P4. Identify the positive and negative impacts the macro environment has
upon business operations, supported by specific examples
External factors are having great impact on business operations. These factors are not
under control of organisation. To study about macro environment, the PESTLE model is needed
to be studied. By this external factors can be evaluated in a proper manner. By this firms can
know their strengths and weaknesses (Krishnan, 2013). Various strategies can be followed by
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companies so that they can face these challenges in proper manner. Following are the PESTLE
of Tesco.
 Political factors: Political factors are those which takes place because of the
governmental policies and intervention. There are many rules and regulation which are
exercised by government to operate business. These factors include the taxes rates, fiscal
policies and others. In context to this case when the tax rates increases the people’s
purchasing power decreases this can effect Tesco’s business as the stocks of company
gets reduced. On the other hand, if the taxes rates decreases sales of firm increases as
customer need to pay less taxes to government.
 Economic factors: These factors are those in which economical condition affects the
business operations. These factors included exchange rates, inflation, interest rates and
others. In context to Tesco if the inflation occurs in the country then prices of goods rises.
In this customer buy less product because they save more. This may affect the profits and
sales of the firm (Love, 2011). On the other hand, if interest rates reduces the consumer
can get the loans at cheaper rates by which consumer gets more money and they can
spend more. This may increase the sales of Tesco products. Big companies like Tesco is
having large contribution to economy. This can stabilize the situation of economy. So it is
very important that the stability should be maintained because if no stability is there
consumers will not be willing to purchase products because they save more money rather
than spending them.
 Social factors: Social factors refers to group of common people those who share same
beliefs, norms, values. The change in consumer behaviour brings change in firm.
Enterprises also wants to update their products according to change in technology in
regular manner so that it can meet customers needs properly. These factors include the
customers lifestyle, attitude, perception, income, preferences. According to social factors
different kind of changes can take place in an organisation. Social factors can have
positive and negative impact on Tesco sales. If consumer has the mind-set that Tesco
provides good quality of product. This may have good impact on Tesco’s brand image
But if customers are having negative perception about the firm’s products then they can
shift to other brands.
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 Technological factors: Technology play a very vital role in today's business. Every firm
wants to bring new innovation into their business. So that customer can retain with them
for longer period (Macdonald, 2012). Tesco is adopting highly advanced technology in
their business processes. This may have negative and positive impact on business
operations. When a new product is launched by the company and after that technology
changes in that case firm might incur losses. Tesco need to adopt new technology and
modify their products accordingly. These days technology is changing rapidly and every
firm needs to cope up with that and adopt new techniques. By this more cost and time
can be incurred by firm which affects the profit margin of firm.
 Legal factors: This factors refer to the legal Act implemented by legal authorities. These
legal laws firm need to follow so that future complications can be reduce. Modification in
Act and legal laws can bring great change in enterprises. If the Act modify in positive
manner firm can easily implied it (Madsen, 2016). But if any law formed which is
difficult to implied enterprise can take time and they need to make change in
organisational the structure accordingly. These laws are changing in according to time
and firm need to bring changes accordingly in an enterprise.
 Environmental factors: These factors refers to environment. All the activities which is
conducted by an enterprise should not harm the environs. There can be negative and
positive impact of these factors. Firm are then requires to stop their production in a
manner in which they earlier used to. According to that firm need to give training to their
employees accordingly to which cost and time can be reduce. These factors include
noise, air, water pollution. Tesco is manufacturing their product and engaged in the green
environment. There product packaging do not harm environs.
TASK 4
P5. Conduct internal and external analysis of specific organisations in order
to identify strengths and weaknesses
Internal auditing is very important for firm. By this company can evaluate their strengths
and weaknesses. To do the internal analysis SWOT model is adopted. It is very important
method by which company can know about their strengths, weakness, opportunities and threats.
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There are disadvantage and advantage of this model (McDonald and Wilson, 2011). By these
future opportunities can be determined. Following are SWOT of Tesco.
Strengths:
 The company is having many diversified areas such as books, clothing, electronics,
petrol, software and others.
 The leading company which is listed in London stock exchange.
 The brand value of Tesco is very high.
 Tesco is owning many other private brands also which is having high equity in market
 The packaging of Tesco products are very different which provides differentiation from
other competitors’ products.
 The company is having their worldwide employees.
 Tesco is having their store and operation in many countries.
 Firm innovates its product regularly and they are successful toin fulfilling the needs of
customers.
Weakness:
 Weak financial performance
 The firm is having lots of bad debts and insurance claims by which brand image is
affected.
 Due to serious scandal in year 2015 the brand get badly affected. .

 Reliance is entering in UK markets which may affects company’s operations.
 Because of less disposable income customers are not buying company's products.
 Because of competition in price war The profit margin of Tesco is decreasing. Subsidiaries are affected by the recent crisis in UK.
Opportunities
 The firm is having opportunities to have strategic alliance with other brands so that they
can offer more product and services to wider customers.
 The areas where firm is not able perform well they can go for joint ventures with local
companies. By this performance of enterprise can be improved.
 They have opportunities to extend private label brands.
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 The firm can go for online business. As the number of people using internet is increasing.
It good opportunity for business to expand their market online so that more customers can
buy their product with more conveniences.
 Firm can more focus on non- food items (Mojaveri and Fazlollahtabar, 2012).
 Can enter into other markets through acquisition.
Threats:
 Economic crises can affect the business sales as consumers are not willing to purchase
the products more
 There are many other foreign competitors are enter into market. The pressure related to
prices are increasing on Tesco.
 Due to lower disposable prices, the sales and prices both are affected.
 The profit margins are decreasing and on that labour demand of high wages are
increasing (Reed and et.al, 2013).
 Due to all this the raw material prices are also increasing by which profit margin are
decreasing.
 Tesco is facing pressure from the government. There are many changes required for
which firm need to bring changes in their structure. There is also a great pressure from
stake holders regarding the environmental safety and social responsibility.
P6. Explain how strengths and weaknesses interrelate with external macro
factors
In this report the SWOT and PESTLE has been given. SWOT is used for internal
analysis. By this company may know about their strengths and weaknesses and bring changes in
their enterprises (Rankin, Windsor and Wahyuni, 2011). SWOT refers to strengths, weaknesses,
opportunities, and threats. On the other hand, PESTLE model is there which is used to conduct
the external analysis.
PESTLE refers to political, economical, social, technological, legal and environmental.
SWOT and PESTLE model are interrelated with each other. From the PESTLE firm can know
about their strengths and weaknesses what are situation they can handle properly and the
situation which they are not able to handle properly. As Tesco is having good strength to manage
the social factors. Company understand their customers’ needs and wants in proper manner. But
the firm is not able to handle the environmental and political factors. Firm need to make
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strategies so that they can improve their weaknesses. In PESTEL and SWOT this is common
(Myers and Korsmo, 2014). As the firm is able to meet customers’ needs and wants. They
produce the goods accordingly. This strength can give competitive advantage to Tesco. The
enterprise is providing good quality of products in at reasonable prices.
Swot analysis evaluate political factor which assist in changing rules and regulations of
the company. The external factors are directly linked with internal factors. If government change
rules then it directly affects on business functions or activities in effective manner. The swot
analysis assist in evaluating social factors which identify latest changes or trends of environment.
These external factors affects business environment and also employees performance. So when
firm is studying about PESTLE they also know about their strength, weakness, opportunities. If
one of this model is absent the another cannot work properly. So SWOT and PESTLE both need
to be work in proper manner. Firm conducted both for different reasons .
CONCLUSION
Business environment is very important concept in business. There are different kinds of
firms. Their purpose of operating also differ these modelfrom each other. These differences can
be in their size, nature, employees, enterprise structure. Company can go for foreign market to
expand their business so that more customer can buy their products. To enter in foreign market
there are different ways. Such as merger, joint ventures, franchising and licensing. The legal
formalities also differ from business to business. The business formalities related to sole traders
are differ then partnership and company. The external and internal audit has been done in this
assignment. For internal audit the SWOT has been adopted and for external PESTLE has been
conducted. Both these models are interrelated. By PESTLE firm can determine about their
strength and weakness. Enterprise formulate strategies accordingly so that Tesco can achieve
their goals effectively.
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REFERENCES
Books and journals
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Online
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