Understanding the Business Environment

This report discusses the importance of analysing the business environment for Tesco, a multinational British grocery retailer. It covers the classification of business organisations, stakeholder analysis, and the significance of PESTEL analysis and Porter's five forces model. The report also explains how monetary and fiscal policies can stimulate a country's economy.

The Business
Environment

Table of Contents
Introduction.........................................................................................................................................3
TASK 1.................................................................................................................................................3
Classification of business organisation...........................................................................................3
TASK 2.................................................................................................................................................4
Defining the term of stakeholder, shareholder and stakeholder analysis within organisation.. 4
TASK 3.................................................................................................................................................6
Why it is imperative to analysis the business environment and critically evaluate the PESTEL
analysis for the chosen organization..................................................................................................6
Importance of the porter's five forces model......................................................................................8
TASK 4.................................................................................................................................................9
Explain how the application of monetary and fiscal policy might be used to stimulate a country’s
economy. Use an example of a country with which you may be familiar..........................................9
CONCLUSION..................................................................................................................................10
References..........................................................................................................................................11

Introduction
All activities that aggregate all conditions, factors, and situations that are derived from
the environment and directly affect the business organisation are referred to as the "business
environment." It is the sum of all internal and external factors, such as customer demands and
wants, demand and supply, expectations, employees, suppliers, current trends, economic
growth, technology, and so on. All these internal and external factors might have a direct
impact on the working conditions of a company. It aids in the study of prospects, resources,
and growth, as well as improves the overall state of a company's performance (Guo, C. and
et. al., 2018). It is really important to every business. Micro and macro environments are the
two sorts of business environments. Tesco has been chosen for report which is multinational
British Groceries which is founded in 1919 by Jack Cohen in United Kingdom. The report
will discuss the several business organisations with its examples. There is analysis of
stakeholder for the chosen organisation in order to evaluate the needs & influences of
stakeholders. Further report is explaining the porters five force model within organisation that
influencing competitive market environment in both nationally and internationally.
Moreover, there is explanation of monetary and fiscal policy which is used for stimulating
monetary and fiscal policy of the country economy.
TASK 1
Classification of business organisation
 Public sector- The government organisation, which includes the federal government,
states, and towns, owns this organisation on behalf of the people. It is a non-profit
organisation that provides services to the public in the areas of education, welfare,
employment, and natural resources, all of which contribute to society's well-being. To
provide public services, revenues are raised through a variety of sources, including
taxes, fees, and financial transfers from other government agencies. It includes public
corporations, entities, and businesses (Michael, Reisinger, and Hayes, 2019). The
organization's mission is to distribute items and services to the public for use or
consumption by making effective use of resources. Money is created for the benefit of
society, requiring the government to exercise social control over trade and industry in
order to ensure equitable distribution. Public infrastructure, police, and public
transportation are examples of public services that are not profit-making. The
National Health Service, for example, is a publicly funded health-care system that was

founded in England in July 1948. The funds come from general taxation and are
controlled by the Department of Health and Social Care.
 Private sector- It refers to a business that is run and controlled by private individuals
with the goal of maximising profits through entrepreneurial activity. The corporation
is not under the supervision of the federal or state governments. Private owners own a
major portion of the economy. Trade unions, sole proprietorships, small and medium-
sized businesses, multinational enterprises, and professional trade associations are all
part of this sector, which is made up of different individuals, organisations, and
partnerships (Mustapha, A.M. and et. al., 2020). The goal of this sector is to make
money through increasing sales in order to raise per capita income and GDP, which
are both essential sources of growth and development in the economy. To earn
enormous amounts of revenue, the private sector recruits a large number of skilled
workers. It can be created by starting a new business or privatising a government
entity. It involves as example of multinational companies, sole proprietorship,
partnerships etc.
 Voluntary sector- It is referred to as the third sector of the organisation since it is a
non-profit organisation with the goal of having a social effect rather than making a
profit. Charities, cooperatives, community-interest companies, and tiny informal
community groups are all part of this sector. It is a self-contained sector that engages
in non-profit and non-governmental social activities. The voluntary sector refers to
non-governmental organisations (NGOs) that operate independently of the
government. The goal of this industry is to provide a variety of benefits to society as a
whole by motivating people without making a profit. The purpose of social welfare is
to boost society's wealth, which leads to increased growth by continuing to work.
Cancer Research UK, for example, is a charitable organisation run by its own staff of
grant-funded researchers that provides social services through undertaking cancer
prevention programmes and research. This group raises awareness with the goal of
eliminating sickness at all levels by working as volunteers.

TASK 2
Defining the term of stakeholder, shareholder and stakeholder analysis within
organisation.
Stakeholder- It refers to an individual or a group of individuals who are engaged in
organising any choice or activity. It can be characterised as a term used by a party to increase
people's interest in a company's choice. It is also known for owning a significant portion of
the company's stock. Employees, suppliers, and investors are some of the most important
stakeholders of a normal firm. Stakeholder entities are factors in the business that can be both
internal and external. It has the ability to influence the organisation through strategic
planning. External stakeholders in the context of Tesco include creditors, communities,
governments, suppliers, and creditors. In a week, they serve millions of customers.
Shareholder- It refers to any individual, organisation, or corporation that owns stock in
the company. Members of a corporation are another name for it. To put it another way, the
legal entity of a business that is owned by an individual or an can possess up to 50% of a
corporation, which is referred to as a "shareholder." Various shareholders, including the
firm's founder, can possess shares in the company in many circumstances (Niemimaa, and et.
al., 2019). The number of shareholders in Tesco can be characterised as majority
shareholders. BlackRock, with 6.9% of Tesco's outstanding shares, is the company's largest
shareholder today. LLP, commonly known as overseas investors, is the company's second
largest stakeholder, holding 3.4 percent of the stock.
Stakeholder analysis- It's the process of determining who are the most important
stakeholders. Stakeholder management is a term that refers to a technique for identifying and
analysing stakeholders' requirements and desires. It aids in the examination of stakeholder
requirements and expectations for the company's project. Customers, the government,
competitors, creditors, and other stakeholders are all considered in Tesco's stakeholder
analysis. Tesco aspires to address the requirements and desires of its customers by developing
low-cost, high-quality products as well as home services. The main purpose is to identify
those stakeholders who have involvement in business directly or indirectly. In context to
Tesco Stakeholder analysis can be as follows-
 High power, highly interested people- The stakeholder of Tesco have high power by
having active participation which helps in influencing people. in involves the

stakeholders of CEO and top management which are responsible for making effective
decisions and strategies.
 High power, less interested people- The stakeholder of Tesco have the power of
ruling business but having low interest regarding activities of business and having low
influence involving suppliers, investors. They help in providing necessary supplies to
meet the objectives.
 Low power, high interested people- The power of Tesco stakeholder is low bu5t
having high influence and interest in business operations which consider employees,
leaders. Their performance helps in accomplishing business objectives by utilising
resources efficiently (Pînzaru, Zbuchea, and Vitelar, 2018).
 Low power, less interested people- The stakeholders have low power and interest in
the operations of business which are labour in context to Tesco.
Stakeholder Analysis process-
In the case of Tesco, stakeholder analysis aids in the identification of key stakeholders
as well as the company's development. The following are some steps to consider when
analysing the stakeholders:
 Identify the stakeholders- It refers to the examination of stakeholder activity as a
whole, which aids in the identification of requirements and requests. In the case of
Tesco, they must compile a list of all stakeholders who have purchased shares in the
company and then analyse who is interested in the company's success or failure.
 Prioritize the Stakeholders: Tesco prioritises their stakeholders through focusing on
individuals in order to maximise their effect. The grid leading tool must be controlled
by stakeholders (Linder, and Williander, 2017).
 Understand the key stakeholders: In the case of Tesco, they must understand and
identify stakeholder demands and expectations from the firm or project, which aids in
the analysis of stakeholder interests such as what motivates them, what type of view
they have about working, and what influences them to work.

TASK 3
Why it is imperative to analysis the business environment and critically evaluate the PESTEL
analysis for the chosen organization
Business environment play a vital role for any organization which is help to analysis
the organization environmental factors which are affect the overall activity of company or
organization. It is the term which is use by every organization to analysis the process of the
company (Antonescu, 2018). In relation to Tesco, it is known as large British multinational
company which deals in retailing. The market of Tesco can be analysis by the business
environment factors which includes Pestel analysis and Porter five models which helps to
analysis the competitive advantages of company and the affects by Pestel analysis. There are
some various points which helps to analysis the factors in relation to Tesco which are given
below-
 The Environment of Tesco can be analysis by the marketing Model which helps to
understand the overall activity by Pestel analysis. There are some various factors in
Pestel analysis includes Political, Economy, social, technology, environmental, legal
 There are many risks and opportunities which is faced by every organization. In
relation to Tesco, they have also risked and threats which can be analysis and
measured by SWOT analysis of company which helps to know about the company’s
strength, weakness, opportunities and threats which helps the company to set their
goals.
 There are many competitive advantages of every organization same as well as Tesco,
they have also many competitive advantages which can be analysis by the Porter’s
five forces model (Dede, 2019).
PESTEL Analysis of Tesco
PESTEL analysis helps to analysis some factors of company which includes Political,
Economy, social, technology, environmental, legal factors. In relation to Tesco, Pestel
analysis helps the company to know about its policies, change in environment, people
behaviours, technical issues, economy growth etc.
 Political factor- It is helps to analysis the factors which can affect the company
directly. There are many factors such as current trends, tax policies, rules and
regulation etc in relation to Tesco, the company can be affected by the stability policy
because there is no limitation.

 Economic factor- it is defined as the term of factors which include economy growth,
rates of inflation, economy change etc these factors can affect the company (Millar,
Groth, and Mahon, 2018). In relation to Tesco, there are high cost of labour which can
affect the company’s economy.
 Social factors- It is defined as social culture factors which includes Religious,
opinion, attitudes, behaviour etc these social factors can affect the company socially.
In case of Tesco, the company can face many issues and difficulties because there are
many customers of company who can change their behaviour by time and if Tesco
sale product and services in low quality then it is dangerous for the customer health
and their expectation too.
 Technological factor- Technical Factors are the term which can affect the company
with some technical issues like networks, mobile payment, net banking, online
services etc. in term of Tesco, company is affect by the services and products and
communication with their customers. Services are provided by online which may can
affect the company because of lack of networks etc.
 Legal factors- it is the legal term factors which includes consumers decisions, health,
laws etc. In setting to Tesco, the company is affected by the UK government, because
there is many rules and regulation by the government of UK which can affect the
overall performance of the company.
 Environmental factors- Environment factors include raw materials, pollution,
environment, which increase the fear for society. In case of Tesco, the company use
more plastic which can affect the environment directly (Yousfi, Batoulis, and Weske,
2019).
Importance of the porter's five forces model
Porter’s five forces model is given by the Michael Porter to analysis and identify the
competitive advantages of a company. Which can be analysis by its five forces. In case of
Tesco, five forces of Porter help to analysis the performance and improve the performance
for the future success. The five forces include company’s threat of new entrants, bargaining
power of suppliers, customers, substitution threats, competitors’ rivalry.
Porters five forces
 Threat of new entrants – it is the term which is helps to analysis the threats of new
entry of the company in the market. It is analysis the new competitor within an

industry. In relation to Tesco, it is a big company of UK where the risk of new
entrants is low because Tesco deals in many products and services and also produce
best services to their customers. So, there is no risk in the company.
 Bargaining power of suppliers- it is defined as the term where the suppliers are able
to bargaining for product and services. In relation to Tesco, the company have loyal
customers, and suppliers as per research it is a large and world known company so
there are law number of bargaining suppliers (Mosteanu, 2020).
 Bargaining power of customers- It is defined as the process of purchase the product
with bargaining. In case of Tesco, there is no risk in bargaining power of customers
because Tesco produce best products and services so the Tesco’s customers are loyal
with the company.
 Threat of substitution- It is defined as the term of threat where the two companies
are producing same brand and product to their customers. In relation to Tesco, the
threat of substitution of product can be High risk because many companies are
producing similar products and services which can be disadvantage for the company.
 Competitors Rivalry: It is the term of market where the product of produce by the
company within one market which is also the threat of the any company. In relation to
Tesco, the competitor’s rivalry of company is medium because there are many
companies who are produce similar brands and products within the market but
because of loyal customers of the company they are able to purchase the product and
services only form Tesco supermarkets (Ndou, Schiuma, and Passiante, 2018).
TASK 4
Explain how the application of monetary and fiscal policy might be used to stimulate a
country’s economy. Use an example of a country with which you may be familiar.
Monetary Policy: It is refers to the central bank which is helps to maintain the
economy. It is helps to maintain the records of unemployment, currency protection, growth of
the economy etc. monetary policy is which policies which achieve the multiple rates like
interest rates, inflation rates etc. in relation to Tesco, Monetary policy of company is set to
delivered in the central bank which is helps to maintain the economy of UK. For example,
UK’s Central banks uses two monetary policy which includes interest rates and bank rates to
set them for the development of economy.

Fiscal Policy: it is defined as the national governments which involves expenditures
to recover the economy growth with payment in dollars. In relation to Tesco, the company is
founded in UK the fiscal policy for the Tesco can be analysis by the payment which is pay in
dollars to maintain the economy growth which is pay to national government of UK. For
example, UK’s government are required to spendings and revenues which is at a certain level.
In relation to Tesco, it is a world known company which deals in many products and
services which has the largest supermarket in the UK. The Monetary policy and fiscal policy
of Tesco, helps the company to pay the central and national government taxes which is helps
to improve the economy growth (Yan, 2018).
CONCLUSION
From the above study, it has been analysis that Business Environment play a vital role
in any company because it helps to analysis the overall performance of the company.
Business Environment can help the company by giving some factors includes Pestel analysis,
porter’s five forces model, SWOT analysis and many factors which helps to analysis the
company’s competitive advantages, issues, opportunities and threats etc. it is analysis that
Tesco is a British multinational company which is produce in Relating. It is a fast-growing
company which helps to provide better product and services to their customer and fulfilled
their needs and wants. This report analysis the company business types which includes public
sector, voluntary, private sector etc. it is also define the importance and roles of stakeholders,
shareholders and stakeholder analysis for the Tesco. This report analysis the company
Political, environmental, technical, social, legal and economic issues by Pestel analysis of the
company and also analysis the competitive advantages of the company with the helps of
Porter’s five forces model. It has been analysis that monetary and fiscal policy of company
which can affect the economy and country. The overall study is analysis that, Business
environment is very important for any organization.

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