Business Environment Analysis and Risk Management

This report includes analysis of TESCO which is UK based organisation that is providing their products and service in international market. It includes internal and external analysis of company along with application of different models. Moreover, it includes explanation of risk and risk management plan that assist firm to mitigate risk present in business.

Business Environment
Analysis and Risk
Management

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Internal analysis of organisation with using conceptual model...................................................1
Conducting external analysis of organisation with using conceptual model...............................3
Risk assessment of company along with identification of risk and action plan..........................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
Books and Journals......................................................................................................................8

INTRODUCTION
Business environment can be described as surrounding in busine business is conducting their
activities and operation. There are different factors resent in surrounding of business that create
impact over profitability and operation of company. These factors create various risk in business
that is related to failure (Abdel-Basset and Mohamed, 2020). In order to mitigate risk, business
needs to conduct different analysis. This project report includes analysis of TESCO which is UK
based organisation that is providing their products and service in international market. This is an
organisation that has groceries store that is one of top organisation in term of revenues. It was
founder by Jack Cohen in the year 1919 in UK. This project report includes analysis if internal
environment of company. It also consists evaluation of external environment of company along
with application of different models. Moreover, it includes explanation of risk and risk
management plan that assist firm to mitigate risk present in business.
MAIN BODY
Internal analysis of organisation with using conceptual model
SWOT analysis
Strength Weakness
 TESCO is one of large organisation
which has huge financial turnover that
is creating strong position of company
in market. In the year 2020, company is
earning operating profit of around £1.9
billion (Akhtar and Sushil, 2018).
 Market share of TESCO is also
increasing as it has around 26.9% of
market share in grocery business in
UK. There are various other marketing
players operating in that country which
has lower market share of company.
 It is an organisation which is also
 There is changes occur in leadership of
TESCO as CEO of company has
changes. it is difficult for company to
run understand new guidance.
 There is increase rigorous quality
control measure in TESCO that create
problems in their organisation and also
facing difficulty in order to solve
complaints.
 TESCO is facing shortage of products
as due to pandemic people afraid and
started stacking different grocery
products.
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getting growth which is of 10.5%
during period of pandemic. With this
growth, they also hired employees for
purpose of operating in market.

Opportunity Threat
 There are various opportunities to be
faced by TESCO which they can attain
by offering their products at online
stores. It will allow company to
increase their customer reach.
 There is increase in unemployment rate
due to covid19 pandemic. Due to this,
people are ready to work for less
payment. It will allow company to
employ cheap labours.
 There is increase in plant based protein
products as people are switching from
meat based products to plant based
products. It will increase sales of
TESCO as it is selling plant based
products to their customers.
 Due to Brexit, there is not deal among
EU and UK that create threat for
TESCO as government has made
various changes in their rules and
regulation (Durst, Bruns and Henschel,
2018).
 Economy of UK is facing recession due
to Brexit that create threat for business
of TESCO as it leads to decrease in
purchasing power of people.
VRIO analysis
VRIO is an internal analysis which is to be adopted by an organisation for purpose of
evaluation of different resources of company and on basis of it, a firm get competitive
advantage in market. There are different resources possess by managers of TESCO that
create competitive advantage for company (Hao and Kang, 2019). Explanation of this
analysis in organisation of TESCO is mentioned below:
Resources and
capabilities
Valuable Rare Imitable Organised
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Employees Yes No No No
Financial
resources
Yes Yes No No
Patent Yes Yes Yes No
Distribution
channel
Yes Yes Yes Yes
Valuable resources: Valuable resource are those resources which are related to specific needs of
customers. These resources provide future growth to an organisation. TESCO has Valuable
resources that provide them competitive advantage. It resources includes employees, financial
resources, distribution channel and patents. These resources assist firm for attainment of their
goals and objectives.
Rare: It is those resources are those which are not easily available and cannot access by another
organisation. These are not common resources and there are some companies which are making
efforts in order to convert common resources into rare resources (Koryagina, Khachaturyan and
Klicheva, 2018). TESCO has some rare resources which includes financial resources, patent as
well as distribution.
Imitable: Imitable resources are those resources which cannot be copied by competition in their
business model. It provides strong competitive advantage to business as competitions cannot
posses these resources in their organisation. TESCO has some imitable resources like their
patents rights as well as distribution channel.
Organised: It is another category which includes resources which are organed in effective and
structure manner and provide success to business. It allows company to provide products to
customers when they are demanding it (Manni and Faccia, 2020). TESCO has well organised
distribution channel that allow them to meet needs of their customers.
Conducting external analysis of organisation with using conceptual model
PESTEL analysis:
It is an external analysis which is conducted by business manager for purpose of identification
of external factors that create impact over business. It is essential for managers of Unilever Plc to
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identify these factors as it allows them to control negative impact of these factors over operation
of company. Explanation of these factors in context of Unilever Plc is mentioned below:
Political factor: Political factors consist rues and regulation of government that create impact
over operation of a company. Due to Brexit, government of UK has made various changes in
their rules and regulation. It is important form managers of TESCO to consider these factors
while operating in UK (Pettit, Croxton and Fiksel, 2019). Government has also made various
rules and regulation for business during time global pandemic. TESCO also consider these rules
while operating in order to ensure smooth flow of their business.
Economic Factor: Economic factors are those which create impact over cost of business. It
consists interest rate, labour rate, inflation rate and others. Due to global pandemic, various
organisation terminates their employees from their organisation. It provides opportunity to
TESCO to hire these individuals at lower wage rate.
Social Factor: It include demographic factors, culture, value and belief of people. There is
increasing health awareness among people and due to which it is important for organisation to
ensure safety precaution in their organisation. There is also a trend among people as their focus
is shift from meat-based products to plant-based products that create positive impact over sales
of TESCO.
Technological Factor: It includes factors which are related to technological advancement,
upgradation. These factors create opportunity for business of TESCO as it ensures convenience
to customers. TESCO is focusing on Machine Learning and AI based technology that allow them
to better understand needs of customers (Rangkuti, 2020). TESCO is also adopting digital
technology and also planning to offer their product at online stores. It provides them opportunity
to business for increasing their marketing share.
Legal Factor: It is a factors that consist laws and legislation that is to be adopted by business in
order to ensure smooth flow of their operation. It is important for business of TESCO to adopt
this legislation in business. These legislations are minimum wages act, employee safety and
security act, consumer rights and others. Adoption of these legislation allow company to avoid
interference of legal authority in business and also allow them to create positive image in minds
of consumer.
Environmental Factors: It consists factors that are related to pollution, climate condition
sustainable practices, weather condition and others. TESCO is involved in supermarket chain
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that does not create negative impact over environment. It is creating good impact of company in
minds of consumer as there is increasing environmental awareness among customers (Rocha,
Narcizo and Gianotti, 2022) TESCO is also fulfilling their corporate social responsibility by
providing right products to customers that is good for their health.
Porters five forces model
It is an external analysis which identify as well as analyse competitive forces of business that
develop shape of industry and also assist for identifying weakness and strength of business. It is
a model that allow business to identify structure of industry that identify corporate strategy for
business. Explanation of this model in context of TESCO is mentioned below:
Competition in industry: Competition is one of important factors that create impact over
profitability of business. Increasing number of competitors in industry will leads to increasing
threat for business as in order to overcome of competition, business needs to cut down prices of
their products (Rude and Weersink, 2018). At same time, lower competition in industry will
power of company to increase prices of their products that allow them to increase sales and profit
of company. There are various competitors of TESCO in market like Aldi, Sainsbury but with
their effective strategy, TESCO is overcoming of company. Hence, there is moderate threat from
this factor to TESCO.
Threat of new entrants: A company is also getting threat from entry of new company in
industry. New companies enter in market with effective strategy and innovation that allow them
to capture market share in less time. Increasing potential for new firm to enter in industry will
reduce power of company to increase prices of their products whereas decreasing potential of
new firm to enter into industry will increase power of company to capture more market and
charge higher prices of customers. Business of super market require huge investment that will
create lessor threat of this factor for TESCO
Power of supplier: Supplier are those people who are providing raw material to business in
order to produce final goods and service. Number of suppliers in industry create impact over
ability of business to fluctuate prices of products and service. Power of supplier is affected with
uniqueness of their products and cost of company to switch to another supplier. Lessor number
of supplier in industry will increase ability of supplier to bargain with company whereas
increasing number of suppliers in industry will decrease their ability to reduce prices of inputs
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and other supplies. TESCO is taking supplier from various suppliers as there are different
suppliers available in market. It will reduce threat of this factor over operation of company.
Power of customers: Power of customers include ability of company to fluctuate prices of
products and service. Increasing numbers of customers will reduce their power to bargain for
products and service of company whereas decreasing numbers of customers will increase power
of customers to bargain for products of company (Sabahi and Parast, 2020). TESCO is targeting
large customer but these due to increasing competition in market, company is facing high risk of
this factor.
Threat of substitute product: Substitute products are those products which can be easily
replaceable and can be used in place of products and service of company. Availability of close
substitute reduced attractiveness of products of company. There is various substitute available in
market of products of TESCO which increase threat of company in industry.
Risk assessment of company along with identification of risk and action plan
Risk can be described as probability of business to get actual results different fronm result
expected by company. There are different types of risk present in maret that create impact of
operation of company. TESCO is an international organisation which is facing huge risk in
international market. Explanation of these risk in context of company is mentioned below:
Financial risk: It is a risk that involved credit externed by company to customers by owning
debt load. Financial risk is also faced by company as they invested among in some investment
opportunity and does not get return over it instead facing loss. It is important risk that is faced by
TESCO and in order to avoid this risk, business needs to minimise debt burden.
Reputation risk: It is a risk that is linked with customers as sometimes companies are failed to
satisfied their customers. Business is also facing risk related to product failure, negative
press as well law suits (Silvius, 2018). TESCO is facing this risk as there are some bad quality
measures are identified in business that crate negative impact over reputation of company.
Operational risk: It is another risk that can be occur with combination of internal and external
factors that cause loss to business. For instance, fire damage or other unexpected event occur in
business. For this, managers of TESCO need to ensure proper safety arrangement I their
organisation.
Risk Impact Likeliho Mitigation/ action Time
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od
Reputa
tion
risk
TESCO is facing this risk as
there are some bad quality
measures are identified in
business that crate negative
impact over reputation of
company. It will create bad
image of company in minds of
their consumer.
Yes In order to overcome of this
risk, business needs to focus
over quality of their products
that allow them to protect
image of company. They
should also involve in different
sustainable practices and also
needs to fulfil their corporate
social responsibility.
3 Month
Operati
onal
risk
This risk is one that is depended
on unexpected event to be
happened in business it creates
impact over reputation of
business in market. This risk
also related to change in trend in
market.
No In order to control these types
of risk, business need to ensure
proper safety of unexpected
event. They also need to
monitor market as these events
also occur in change in market.
2 Months
Financi
al risk
It is a risk that reduce
profitability of company and
impact over financial stability of
company.
Yes In order to control this type of
risk, business needs to ensure
diversity in business that allow
them to mitigate in business.
6 Months
CONCLUSION
From above mentioned project report, it can be concluded that there are different factors present
in business that create impact over business. In order to control impact of these factors, managers
also need to identify these factors present in business. For this, they can conduct internal and
external analysis. Internal factors allow them to identify factors resent inside business whereas
externals factors allow managers to identify factors present outside business. Internal analysis
includes SWOT analysis and VRIO analysis that evaluate skills, capability and resources of
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company. External analysis includes Porters five forces mode and PESTEL analysis that identify
factor that create serious factor over business.
REFERENCES
Books and Journals
Abdel-Basset, M. and Mohamed, R., 2020. A novel plithogenic TOPSIS-CRITIC model for
sustainable supply chain risk management. Journal of Cleaner Production, 247,
p.119586.
Akhtar, M. and Sushil, S., 2018. Strategic performance management system in uncertain
business environment: An empirical study of the Indian oil industry. Business Process
Management Journal.
Durst, S., Bruns, G. and Henschel, T., 2018. The management of knowledge risks: what do we
really know?. In Global business expansion: Concepts, methodologies, tools, and
applications (pp. 258-269). IGI Global.
Hao, J.P. and Kang, F., 2019. Corporate environmental responsibilities and executive
compensation: A risk management perspective. Business and Society Review, 124(1),
pp.145-179.
Koryagina, I.A., Khachaturyan, M.V. and Klicheva, E.V., 2018. Development of mechanisms of
value creation and risk management organization in the conditions of transformation of
the economy of Russia. International journal of social, behavioral, educational,
economic, business and industrial engineering, 12(1), pp.44-48.
Manni, F. and Faccia, A., 2020. The business going concern: financial return and social
expectations. In Sustainable Development and Social Responsibility—Volume 1 (pp.
201-213). Springer, Cham.
Pettit, T.J., Croxton, K.L. and Fiksel, J., 2019. The evolution of resilience in supply chain
management: a retrospective on ensuring supply chain resilience. Journal of Business
Logistics, 40(1), pp.56-65.
Rangkuti, Z., 2020. The effects of Tier-1 capital to risk management and profitability on
performance using multiple fixed effect panel data model. Measuring Business
Excellence.
Rocha, C., Narcizo, C.F. and Gianotti, E., 2022. Internet of management artifacts: Internet of
Things architecture for business model renewal. In Emerging Issues And Trends In
Innovation And Technology Management (pp. 297-316).
Rude, J. and Weersink, A., 2018. The potential for cross‐compliance in Canadian agricultural
policy: linking environmental goals with business risk management
programs. Canadian Journal of Agricultural Economics/Revue canadienne
d'agroeconomie, 66(3), pp.359-377.
Sabahi, S. and Parast, M.M., 2020. Firm innovation and supply chain resilience: a dynamic
capability perspective. International Journal of Logistics Research and
Applications, 23(3), pp.254-269.
Silvius, G., 2018. Integrating sustainability into project risk management. In Global Business
Expansion: Concepts, Methodologies, Tools, and Applications (pp. 330-352). IGI
Global.
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