This assignment delves into the organisational structure and macroeconomic factors affecting Tesco PLC, covering internal analysis, PESTLE analysis, SWOT analysis, and impacts of macroeconomic factors on business operations.
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BUSINESS ENVIRONMENT
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Table of Contents Introduction................................................................................................................................3 Task 1.........................................................................................................................................3 Introduction................................................................................................................................3 Positive impacts.........................................................................................................................5 Negative impacts........................................................................................................................6 Task 2.........................................................................................................................................6 Conduct a comprehensive internal analysis of your employing organisation. The internal analysis must include consideration of the organisation’s resources, capabilities and core competencies..............................................................................................................................6 Task 3.........................................................................................................................................9 Pestle analysis of Tesco.............................................................................................................9 Task 4.......................................................................................................................................10 Apply either a SWOT or TOWS analysis to your employing organisation. Write-up your findings and analysis in a formal business report....................................................................10 Conclusion................................................................................................................................11 Reference List..........................................................................................................................13 Appendix..................................................................................................................................14
Introduction Theassignmentservesthefunctionofexplainingandunderstandingtheconceptof organisational structure in the backdrop of a selected organisation. The assignment dissects the need and purpose of organisational structure with its corresponding functions. The organisation chosen here for the detailed analysis of the same is Tesco Plc. Tesco Plc is a leading retail chain rooted in UK at about 99 years ago. Founded by Jack Cohen, Tesco has its headquarters based at Hertfordshire. At present Tesco owns approximately 6553 outlets all over UK. Tesco’s success can be recognised by observing the net income which is 54 million pounds as recorded in 2017 (Tesco plc, 2018). The assignment contains organisational chart thathelpsthereadertoanalysetheinter-departmentalfunctions.Centralizationand decentralization has been compared and contrasted that helps the reader to understand the aims and objectives of the company. It also helps the management with an ideal organisation structure that becomes a blueprint for the future transactions. Organisational structure particularly aims at developing workforce, budgeting, enhancing communication etc. The advantages and the disadvantages of the hierarchical structure existing in the organisational structure have also been elucidated. However, the inter-relation between the organisational structures at Tesco has both its pros and cons, which has been addressed in detail. Task 1 Introduction There are various macroeconomic factors which affect the business environment and provide organisations with different opportunities to grow and improve business operations of the company (Harrison, 2013).The company that has been selected for this assignment is Tesco. A macroeconomic factor can be referred to as a variable which applies to the broader economy and includes economic factors such as economic output, unemployment rates, inflation etc (Popescu, 2013).These factors usually impact organisations in the large scale market and are studied through the use of frameworks such as PESTEL (Political, Economic, Social, Technological, Environmental and Legal) or Porter’s five forces analysis. The external macroeconomic environmentis very closely considered when any investment decisions are taken by businesses and organisations as these are affected by risks, financial output etc.
Some of the theoretical models that are used for this topic are the IS-LM model, Keynesian macroeconomics model etc. BREXIT is a very good example of how macro economic conditions affect the business environment. This landmark referendum cast in the summer of 2016, declared the United Kingdom’s intent to leave the Euro zone. The fallout from this was massive as stock markets reeled from derivative dropping in value, companies shedding trillions of their market capitalisation value (Kierzenkowski et al.,2016) Soon banks declared their interest to shift from the United Kingdom as they expected unemployment levels to increase and interest rates to be affected accordingly. Companies such as TESCO were also affected by this as they import a lot of their produce from foreign markets. The falling value of the pound meant that the company were paying more than previously, while market uncertainty and shocks affected their stock values as well. Another way in which this external macroeconomic environment will affect the company is terms of ease of doing business in other countries as they lose their pass porting rights. Another macroeconomic factor is unemployment levels in the country which could lead to Tesco facing employee acquisition issues. This could be due to the lack of work and decreasing disposable incomes.
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Positive impacts Apositivemacroeconomicfactorincludesthoseeventsthatwouldimprovebusiness prosperity as demands for goods and services would increase and national and international business opportunities for TESCO would be affected positively. Some of these positive impacts are found below: ï‚·Increasing employmentlevels would be one of those positive macroeconomic factors which would benefit TESCO. Increasing employment levels would mean that house hold incomesand disposable incomeswould increase, thus leading to higher consumer confidence and an increase in the net spend in Tesco stores. ï‚·Decreased interest rateswould mean that organisations and consumers would be able to borrow at lower cost from the banks. This means that TESCO could effectively increase the amount they invest into their own operations; while consumers will also increase their net spend. Unfortunately, this may lead to inflationary rates rising in the country. ï‚·Better economic outlook for the United Kingdomin the form of increased GDP levels would entail better economic performance for organisations such as TESCO as cash flow in the economy would increase. ï‚·Falling lease rateswould also benefit TESCO. A TESCO superstore is usually 11,000 square feet in size, which means that in terms of contemporary land rates, the company are significantly increasing their operational costs. Falling rent and lease would mean that the company could open several more branches of the super store, while opening stores such as Tesco express and Tesco Metro as well. ï‚·If the government were todecrease tariffs,then TESCO would be able to import their food products at a lower price which would significantly bring down their operational costs.
Negative impacts Negative macroeconomic factors include those events which would put the national and international economy at the risk of jeopardy as instability in politic-economics situations would lead to depressed business and economic environments. Some of these factors are found below. BREXITwas a prime example of negative macroeconomic situations as economic uncertainty decreased the value of the pound, which would make imports more expensive and increase the cost of operations for TESCO (Dhingra et al, 2016) Increased unemployment levelsmean that household incomes would fall, so would consumer confidence which would lead to TESCO suffering from a dip in sales. Though unlikely, adebt crisis (2008) would lead to an increase in the inertest rates significantly and mean that costs of borrowing would also increase, thus affecting the spending patterns of firms and consumers alike. Political instabilityin the form of frequently changing governments would affect the economy from a policy point of view as different governments may approach this in their own ways. This would again cause unstable economic situations. Terrorismwould also be a negative macroeconomic situation which would affect any economy and companies such as TESCO in turn. This would be because having a pulse of the public feeling is very important. Negative public mood has shown a decrease in consumer spending and this would have an impact amount of sales that TESCO are able to generate. Task 2 Conduct a comprehensive internal analysis of your employing organisation. The internal analysis must include consideration of the organisation’s resources, capabilities and core competencies. Internal analysis of the organization is the critical process by which the organization directly leads to attain target in the most appropriate manner. As stated by () on analysis of internal factors enables the organization to identify the areas that need to be improved in order to gain competitive advantage. With the help of SWOT analysis, the organization Tesco PLC would easily be able to identify and recognize the statistics that can raise the performance standards
of the organization accurately. In the following manner, the overall comprehensive internal analysis of Tesco PLC is carried out: Identification of strengths of organization Tesco PLC The organization Tesco holds more than 30% of the overall retail sector of United Kingdom(Tesco plc, 2018). This is one of the most important factors behind success of this organization. The reason behind having largest market share is its huge number of stores within the country United Kingdom that enables the organization to serve maximum number of customers and thereby lead to increase its overall sale record. This also leads the organization Tesco PLCto increase its overall market share on comparison to its competitors. This also enables the organization to maintain its strategy in the most appropriate manner. The organization Tesco PLC is also present online, which is also one of the factors behind appropriate sustainability of the organization in the market. By being online, the organization is able to provide an effective service to its customers and reach out even to those customers who reside far away from its store. Therefore, it can be analysed that change in technological strategy enabled the organization to continuous increase its overall number of sales within provided duration of time. Another strongest factor of this organization is its quality of products and services within approachable price rates. This directly enables the organization to increase its overall rate of customer satisfaction. The market research strategy implemented by the management department of this organization leads the organization to attain the demands and choices of customers effectively and thereby lead the organization to stabilize its economic rate.  Brand valueof the organization Tesco PLC is very high on comparison to its competitors. This enables the organization to easily attract huge number of individuals and lead in increase its overall revenue. This organization has high brand value as it organizes various events and shows, and pay special attention to CSR activities (Tesco plc, 2018). This leads the organization to improve its overall social stability in customer’s perspective.
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ï‚· Patents and patent License Agreementis strength of the organization Tesco PLC. This organization holds various patents and patent license agreements in order to develop the technologies that the organization believes for beneficial of the organization. Composing the exhaustive list of weaknesses of Tesco PLC ï‚·Due to various infringement controversies, the organization Tesco PLC has faced number of problems and issues. Many legal claims is been registered against this organization that directly impacts in decrement in number of customers purchasing its products and services. ï‚·Weak control over overseas marketis one of its most considerable weaknesses that directly enable the organization to depend mainly over market of United Kingdom (Tesco plc, 2018). Weak monitoring and managing of businesses in overseas market is the main reason behind low productivity on comparison to the market of United Kingdom. ï‚· Weak political support for overseas businessis one of its weaknesses. This leads the organization to decrease its political standards for supporting overseas business. This alsodirectstheorganizationtofacevariouspoliciesthatreducesitsoverall profitability. ï‚· Supply chain managementis one of the most effective weakness factors of Tesco PLC as it directly affects the quality of products and services. The strategies implemented by the organization Tesco PLC is not appropriate that results in decrement of its overall distribution of its products and services. ï‚· Employee relationswithin the organization Tesco PLC is very poor that weakens the bonding and relationship between employees and management department. This is mainly due to improper communication among the employees.
Task 3 Pestle analysis of Tesco Sainsbury uses the strategic tool to determine the external factors and the challenges that need to face by the organization in the present years. The external factors are stated as follows: Political-UK is a democratic country and so there is consistent level of government policies. There is also a risk of terrorism in the near future which may damage the structure of the government body. In the year 2010, there was a threat for UK’s security and Intelligence which hampers the business of Tesco to a great extent. UK is also facing challenges due to the difference in opinions of liberal democrats and conservatives which affects the democracy of UK. Therefore, UK took the oath to double its trade at the end of 2015 by getting tied up with India (mitropoulou, 2018). Economic-In the past years, the government was suffering from debt which challenges UK in boosting its per capita GDP. But today, UK is the strongest country on the grounds of economy and earning huge GDP which enhance the business of Tesco, according to the World’s bank’s Doing Business at the end of 2013. UK is facing about debt of £1.38 trillion and taking it as a challenge, UK government decides to reduce the corporate taxes. Technological- UK can be referred as a country which possesses best education system by establishing 170 universities which helps the people to get the knowledge about the negative aspects of the country. Tesco train its employees to its level best so that it will help the organization in meeting its target. Tesco is also concerned about the health of the people by providing the healthy food to its customers. The challenges that need to be faced by UK are the child poverty and increasing the dependency ratio from 16.5% in the year 2010 to 24.6% by 2060(Metzger, 2014). Technological Factor- Being a financially developed country, UK has a better access to advanced technology and innovations that ultimately helps in the development of the business sector. Tesco Plc has gained popularity not only due to its planning process but also for adopting different advanced technology with the passage of time. Especially in the retail sector, there was a huge crisis before the introduction of digital promotion tools and technique into the UK
market. But retail organization like Tesco Plc has implemented online shopping facility as well as mobile shopping technology along with its rivals such as Sainsbury’s, Morrison’s, etc has finally resulted in effective growth of the organization. Legal Factor- The UK government has strongly implemented few policies in order to maintain a favourable working environment across the country. Tax avoidance costs the country an estimated worth of £14 billion annually. The introduction of Acts such asEquality Act 2010ensures that all workers must be given equal importance and no discrimination is prohibited (Davies et al., 2016). Employment Law Act suggests that every employee must be provided with casual as well as earned leaves.In addition, Tesco Plc must put forward legal issues of the sector in order to increase the customer base and maintain a positive image in the market that will help in gaining the trust of the customers. Environmental Factors- With rapid globalization, people have become more ethical and that has allowed customers to select their own products from retail industries like Tesco Plc. It has to be taken into consideration that working environment of an organization play a major role in attracting consumers to become a part of Tesco Plc family. Tesco Plc has been highly dynamic in nature as it has helped in expanding the network throughout the European Circle. Task 4 Apply either a SWOT or TOWS analysis to your employing organisation. Write-up your findings and analysis in a formal business report. Strengths The organization Tesco holds more than 30% of the overall retail sector of United Kingdom (Tesco plc, 2018). This also enables the organization to serve maximum number of customers and thereby lead to increase its overall sale record. This also leads the organization Tesco PLCto increase its overall market share on comparison to its competitors. By being online, the organization is able to provide an effective service to its customers and reach out even to those customers who reside far away from its store. High quality of products and services enables the organization to increase its overall rate of customer satisfaction. Market research
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leads in attaining the demands and choices of customers effectively and thereby lead the organization to stabilize its economic rate. This organization has high brand value as it organizes various events and shows, and pay special attention to CSR activities. This leads the organization to improve its overall social stability in customer’s perspective. Weakness Number of infringement controversies is very high and so many legal claims is been registered against the organization Tesco PLC that directly affects in decrement in number of customers purchasing its products and services (Tesco plc, 2018). Weak political support for overseas business leads the organization to decrease its political standards for supporting overseas business. The strategies implemented for supply chain by the organization Tesco PLC is not appropriate that results in decrement of its overall distribution of its products and services. Opportunities Continuous investment in research and development of technologies and strategies used is its opportunity for future, as it would enable the organization to obtain maximum outcome within a short intervalof time. The organization Tesco has made substantial investment within strategic acquisitions. Threats Global economic environment is one of the main threats of this organization. This is due to definite uncertainty in the global politics and economic status. This directly impacts the demand of Top drive units of Tesco. Conclusion On a concluding note it can be stated that the assignment has successfully covered almost all the aspects which are relevant to the organisational structure of the chosen organisation Tesco. It successfully covers the details of organisational structure in the context of its need, purpose and functions at Tesco. Organisational structure in turn ensures the successful operability of any organisation. In other words it helps an organisation to establish and maintain a link between the various departments within an organisation. The evaluation of the overallorganisationalstructureofTescorevealedthefactthattheorganisationhas
successfully implemented a hierarchical organisational structure with an effective top down communication process. The communication process ensures that all the employees within the organisation are well informed about the decision making activities undertaken by the managementoftheorganisation.Furthermore,therelationshipbetweenthedifferent organisational functions has also been explained in the light of the relevant literature. It has provided the researcher with a clear understanding regarding the fact that without effective connection between different departments it would not be possible for an organisation to sustain within the competitive market place.
Reference List Davies, C., Ferreira, N., Morris, A. and Morris, D., 2016. The Equality Act 2010: Five years on. Dhingra, S., Ottaviano, G., Sampson, T. and Van Reenen, J., 2016. The impact of Brexit on foreign investment in the UK. BREXIT 2016, 24. Harrison, A., 2013. Business environment in a global context. Oxford University Press. Kierzenkowski, R., Pain, N., Rusticelli, E. and Zwart, S., 2016. The economic consequences of Brexit. Metzger, K., 2014. Business analysis of UK supermarket industry. mitropoulou,a.(2018).UKPESTLEAnalysis.[online]Academia.edu.Availableat: http://www.academia.edu/8993883/UK_PESTLE_Analysis [Accessed 31 Jan. 2018]. Popescu,G.H.,2013.Macroeconomics,effectiveleadership,andtheglobalbusiness environment. Contemporary Readings in Law and Social Justice, 5(2), p.170. Tesco plc, 2018. Tesco PLC. [online] Tesco plc. Available at: <https://www.tescoplc.com> [Accessed 31 Jan. 2018].
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The impact of the Macro-Environment upon Business Operations Introduction There are various macroeconomic factors which affect the business environment and provide organisations with different opportunities to grow and improve business operations of the company (Harrison, 2013). The company that has been selected for this assignment is Tesco. A macroeconomic factor can be referred to as a variable which applies to the broader economy and includes economic factors such as economic output, unemployment rates, inflation etc (Popescu, 2013).These factors usually impact organisations in the large scale market and are studied through the use of frameworks such as PESTEL (Political, Economic, Social, Technological, Environmental and Legal) or Porter’s five forces analysis. The external macroeconomic environment is very closely considered when any investment decisions are taken by businesses and organisations as these are affected by risks, financial output etc. Some of the theoretical models that are used for this topic are the IS-LM model, Keynesian macroeconomics model etc.BREXIT is a very good example of how macro economic conditions affect the business environment. This landmark referendum cast in the summer of 2016, declared the United Kingdom’s intent to leave the Euro zone. The fallout from this was massive as stock markets reeled from derivative dropping in value, companies shedding trillions of their market capitalisation value (Kierzenkowski et al., 2016) Positive impacts Increasing employmentlevels would be one of those positive macroeconomic factors which would benefit TESCO.Decreased interest rateswould mean that organisations and consumers would be able to borrow at lower cost from the banksBetter economic outlook for the United Kingdomin the form of increased GDP levels would entail better economic performance for organisations such as TESCO as cash flow in the economy would increase.Falling lease rateswould also benefit TESCO. A TESCO superstore is usually 11,000 square feet in size, which means that in terms of contemporary land rates, the company are significantly increasing their operational costs If the government were todecrease tariffs,then TESCO would be able to import their food products at a lower price which would significantly bring down their operational costs. Negative impacts BREXIT was a prime example of negative macroeconomic situations as economic uncertainty decreased the value of the pound, which would make imports more expensive and increase the cost of operations for TESCO (Dhingra et al, 2016) Increased unemployment levelsmean that household incomes would fall, so would consumer confidence which would lead to TESCO suffering from a dip in sales. Though unlikely, adebt crisis (2008) would lead to an increase in the inertest rates significantly and mean that costs of borrowing would also increase, thus affecting the spending patterns of firms and consumers alike.Political instabilityin the form of frequently changing governments would affect the economy from a policy point of view as different governments may approach this in their own ways. Terrorismwould also be a negative macroeconomic situation which would affect any economy and companies such as TESCO in turn. Dhingra, S., Ottaviano, G., Sampson, T. and Van Reenen, J., 2016. The impact of Brexit on foreign investment in the UK.BREXIT 2016,24. Harrison, A., 2013.Business environment in a global context. Oxford University Press. Kierzenkowski, R., Pain, N., Rusticelli, E. and Zwart, S., 2016. The economic consequences of Brexit. Popescu, G.H., 2013. Macroeconomics, effective leadership, and the global business environment.Contemporary Readings in Law and Social Justice,5(2), p.170. Student Name: Student ID: Appendix: Poster
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