Pestle Analysis of Business Environment

This assignment requires students to conduct a PESTLE analysis to examine how various external factors influence the business environment. The analysis should cover political, economic, social, technological, legal, and environmental factors and their potential impacts on businesses. Students must draw upon relevant academic sources and examples to support their arguments.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Types, purpose and legal structure of public, private and voluntary organisation................1
P2 Scope and size of different types of organisation..................................................................4
TASK 2............................................................................................................................................7
P3 Relationship between different organisational functions to accomplish objectives..............7
TASK 3............................................................................................................................................9
P4 Impact of external factors and their positive and negative effect..........................................9
TASK 4..........................................................................................................................................11
P5 SWOT analysis of organisation...........................................................................................11
P6 Interrelation of strengths and weaknesses of organisation with external factors.................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business environment contains different external factors which creates opportunities and
threats for organisation. Such external factors can be identified as political, economical, social,
technological, legal and environmental. Consideration of all such factors provides the
opportunity to management of organisation is to attain success in their operations. SWOT
analysis is effective tool through which organisation knows their strength and weaknesses. It
helps in preparation of effective strategies and policies which directs the employees to
effectively perform their functions. Through this large number of benefits are achieved like
competitive advantage, good brand image, higher number of sales, satisfaction of the different
requirements of customers etc. To align the activities and interest of all the departments
contributes in achievement of good coordination among their functions. It helps to accomplish
the common goals of objectives (Besharov and Smith, 2014). Tesco is multinational grocery
retail organisation which has more than 6553 stores in all over the world. The products under
which this organisation deals includes clothing, electronics, furniture, toys etc.
In the present report explain about types, purpose and legal structure of public, private
and voluntary organisation, scope and size of all three types of organisation, relationship
between organisational departments to achieve common goals. Also, positive and negative
impact of macro-environmental factors, SWOT analysis of organisation to ascertain strengths
and weaknesses and contribution of PESTLE analysis in creation of strengths and weaknesses
within organisational processes.
TASK 1
P1&P2 Covered in PPT
TASK 2
P3 Relationship between different organisational functions to accomplish objectives
There is huge role is played by the organisational structure to grab the opportunities and
accomplish their organisational objectives. The organisational structure is divided on the basis of
their specialities which helps in proper disbursement of their roles and responsibilities among the
employees. It provides the opportunity regarding development of effective teams which provide
combine efforts to attain desired results. Tesco is retail multinational organisation having large
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number of stores in more than 20 countries. The organisation is able to serve their functions
because different departments effectively provide their functions.
The above diagram provides the information regarding the structure of Tesco. This which
provides that 6 different departments are working under which they also have many sub
departments. All the different departments of Tesco are interrelated to each other and provides
support in functioning of each other. Board of directors is considered as owner of organisation
whom are responsible for taking important decisions. On the basis of their instructions all the six
departments of organisation are perform their activities which are mentioned below:
Sales and marketing: The functions of sales and marketing are interrelated to each
other. The main of Tesco is to generate large number of profits and attain the loyalty of
customers towards their services. All this can be achieved by the organisation with the
application of right sales and marketing techniques. To attain success, marketing department of
organisation is need to conduct research which helps in determination of factors present in
market. It helps in formulation of effective plans which directs employees in performance of
their functions (Cavalcante, Kesting and Ulhøi, 2011).
Production department: This department provides their functions on the basis of the
information which is collected by the marketing department of Tesco. It provides the opportunity
to consider the preferences of customers and providence of products which fulfils their different
requirements. Through identification of the demand of their different products they can timely
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distribute their products to stores in different customers so, the customers not have to wait. It
helps in improvement of their sales figure which has direct impact upon their profitability. It
helps in earning of large number of profits.
Human resources department: One of the most important department of organisation
which provides the function regarding workforce planning. Other different functions which are
provided in Tesco includes payroll, appointment, firing and keeping of the proper records of
employees. It helps in appointment of adequate number of staff members in different
departments. It improves the efficiency of all the departments and easily accomplish their targets.
Appraisal of actual performance of employees helps in formulation of incentive strategies. It has
direct connection with the performance of employees and motivates them to work hard to earn
large number of income.
Finance department: This department of Tesco takes care about the amount of funds
which is needed to provide their products and services effectively. They have the duty to raise
the funds from different sources and allocate in proper manner to all the departments. It provides
the opportunity to the marketing department of Tesco is to apply new methods and techniques
like use of online platform to bring awareness among the customers about their different
products. On other hand, production department uses new methods and equipments which helps
in improvement of quality of their existing products (Christopher and Holweg, 2011).
R&D departments: This department of organisation has the role to identifies the new
ideas of working which improves the efficiency of all departments working in Tesco. This
department also analyse the competitors which are prevail in market and strategies which are
adopt by them. It helps to bring flexibility and sustainability in their operation through adoption
of new ideas which are provided by this department.
Purchasing: This department of Tesco has the responsibility to buy new raw materials,
spare parts and other services. It is recognised as one of the important department which helps in
regular performance of the activities of organisation.
Organisational Structure
The different points on the basis of which organisational structure is determined are
mentioned below:
 Function based: Segmentation of the organisational structure on the basis of
departmental functions like Human resource, finance, marketing etc.
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 Geography based: Decide the structure of organisation as per their business functions in
different areas and countries.
 Product based: As Tesco deals in different kind of products like grocery, household etc.
So, fixing up of the structure of organisation on the basis of different products.
 Consumer based: Segmentation of organisational structure as per the different attitude
and behaviour of their customers. It helps in satisfaction of their different needs and
requirements.
TASK 3
P4 Impact of external factors and their positive and negative effect
There are many external factors which can be identified by the management of
organisation through PESTLE analysis. Such factors are also called as macro-environmental
factors. All these factors hove both positive and negative impact upon business operations. It is
the responsibility of the manager of organisation is to consider such factors and formulate better
policies which reduce their adverse impact. It helps to attain sustainability in their operations and
drive their competitors out of the market. Different macro-environmental factors and their impact
upon Tesco is defined below:
Political factors: Tesco provides their functions in more than 20 countries. All the
countries have different political factors which impacts the performance of Tesco in such
country. The major factors which are considered under this includes tax rates, acts of
legislations, stability of government etc. It is observed that there is financial instability in all over
the world. In this regard, government motivates the retailer to create large number of
opportunities for individual of the society (Carlin and Schaffer, 2012).
 Positive impact: Linnet tax policies and stable government provides the opportunity to
Tesco is to earn large number of profits from such countries. For ex., 45% revenue
generates from US, Canada etc.
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 Negative impact: There are many countries where government policies are not stable
which has adverse impact upon business operations as it is difficult for management to
change policies.
Economic factors: The different factors which are considered under this includes
inflation, deflation, level of income of individuals, flow of cash in country etc. Activities of
Tesco are depends upon the UK market share around 30%.
 Positive impact: UK is developed nation where flow of cash is good and individuals has
good source of income which provides opportunity to improve their sales and profit.
 Negative impact: In all 20 countries where Tesco provides their services having not
stable economic conditions effects the working and profits in adverse manner.
Social factors: In UK it is observed that customers buying behaviour is changed. Now
they prefer bulk shopping. Tesco provides large number of food and non food items. Their
demand is directly impact through belief, attitudes, norms of customers.
 Positive impact: The level of eduction in UK is advanced where individual use online
methods to purchase products which has positive impact upon their sales.
 Negative impact: lack of education and different attitudes of customers have negative
impact (Grimpe and Kaiser, 2010).
Technological factors: This includes about the application of innovative ideas and
technologies to operate their operations.
 Positive impact: It helps in improvement of the quality of their existing products.
 Negative impact: Use of obsolete technology increase the cost of production.
Legal factors: This includes about the regulations which are provided by government
need to apply by Tesco while proving their services in different countries.
 Positive impact: Helps to comes out from the past record of infringement of patents.
 Negative impact: Non fulfilment of such regulation closure of the business activities or
have to bear heavy penalties which has negative impact upon their image.
Environmental factors: Tesco has the responsibility to provide economic friendly
activities and provide maximum benefits to the individual of society through their different
business functions.
 Positive impact: It helps to attain their vision about ascertaining the loyalty of customer
towards their services.
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 Negative impact: Non providence of CSR activities and fulfilment of environmental
regulations impacts their organisational activities.
TASK 4
P5 SWOT analysis of organisation
Tesco is multinational organisation. It is considered as third largest retail organisation in
terms of revenue. SWOT analysis is the important technique which helps in identification of
their strengths, weaknesses, opportunities and threats. It provides the opportunity to apply their
internal strengths to garb the future opportunities and improves their brand image. These analysis
helps to make their position more strong in market. SWOT analysis of Tesco is mentioned
below:
Strengths
 Wide customer base: Due to providence of large number of products they have wide
customer base. The individuals whom buys the products which are provided by Tesco
includes drilling contractors, equipment brokers, oil and gas companies. It becomes the
strength of organisation because their earnings are not depend upon one segment of
society (Hair, 2015).
 Strong product portfolio: This organisation has strong product portfolio which includes
the selling of equipments and services in all over the world. It provides their products on
the basis of the demands of their customers.
 Patent and licence agreements: Tesco hold the patents and licence agreements
regarding the technologies which are used in production which helps in development of
their core business. It provides the opportunity regarding performance of many projects at
one time.
Weaknesses
 Infringement controversies: There are many controversies are faced by Tesco due to the
use of the patents of other organisation. This will have huge adverse impact upon the
image of organisation. There are many penalties are imposed upon the organisation.
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 Concentrated operations: The major earning which are incurred by Tesco is from US,
Canada and Mexico and maximum service are provided in North America. Due to
economic slowdown in such countries have direct impact upon their operations.
Opportunities
 Investment in R&D: Tesco is considered as technology based organisation which needs
to constantly apply new ideas and techniques which helps to attain sustainability in their
operations. It provides the opportunity to attain good position in market and attain
competitiveness in operations. It helps in satisfaction of their different requirements
which contributes in attraction of large number of customers.
 Strategic acquisitions: The management of organisation has the opportunity to made
investments in strategic acquisitions which helps to build their existing processes more
strong. Through application of innovative technology saves the time and money.
Threats
 Global economic environment: Tesco provides their business functions globally.
External factors which are present in market has huge adverse impact upon their
operations because such factors are different in every country. This will also reduce the
capacity of the management of organisation is to continuously change their policies
through understand the consequences of such different factors (Kolios and Read, 2013).
 Seasonal variations: Tesco provides the drilling functions which considered as seasonal
activity because it can be provided in such areas which are frozen. Such variations in
business activities due to the impact of season has direct effect on planning and execution
capacity of such projects.
 Risks in oil and gas industry: There are many risks are associated with activities of
exploration of oil and gas which damages their future business activities.
P6 Interrelation of strengths and weaknesses of organisation with external factors
Consideration of external factors helps the management of Tesco is to convert such
factors into their strengths. It provides the opportunity regarding removal of their weaknesses
and grab the future opportunities effectively. Through this large number of benefits are achieved
by organisation like competitiveness, higher number of sales, attraction of large number of
customers, higher profitability etc. Interrelation of external factors with their strengths and
weaknesses can be determined through description which is mentioned below:
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Political: The major operations of Tesco are provided in UK, North America, US,
Canada etc. All these countries have stable government where regulations regarding retail
organisation is linnet.
 Strength: This will becomes the strength of Tesco which helps to earn their more than
45 % of profits from such countries.
 Weaknesses: Tesco provides their activities in 20 countries where different political
conditions which makes the task more difficult to understand different regulations.
Economical: one of the major factor which impacts the profit of of supermarket chain is
cost of labour. As their activities are performed by large number of employees, change of 1% in
labour rate has increases their expenditure.
 Negative impact: This will reduce the profit margin of Tesco
Social: It I observed that there are huge changes are come in the behaviour of employee's
regarding purchase of products. Due to improvement in education facilities now they start use
online mode to purchase goods. Also, through creation of large number of employment
opportunities, now individuals have paying power to purchase in bulk (Miller, Yablonovitch and
Kurtz, 2012).
 Strength: It provides the opportunity regarding increase their number of sales and
profits.
Technological: Tesco uses innovative technologies to produce their products. It is
observed that management use social media platform for advertisement of their products.
 Strength: It becomes the strength of Tesco because it helps in attraction of new
customers and attain competitiveness.
 Weaknesses: It increases the cost of product.
CONCLUSION
It has been concluded from the above report that three different kind of organisations
prevails in market and provides their functions for achievement of their different objectives.
Tesco is considered as profit organisation which has main aim is to earn large number of
benefits. The different departments which are working in Tesco for their success in market are
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operational, marketing, finance, human resources etc. PESTLE analysis helps the management to
understand the impact of different factors and formulation of effective policies as per their
understanding. SWOT analysis helps to grab the future opportunities through proper use of their
strengths and removal of their weaknesses.
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REFERENCES
Books and Journals
Besharov, M.L. and Smith, W.K., 2014. Multiple institutional logics in organizations: Explaining
their varied nature and implications. Academy of Management Review. 39(3). pp.364-
381.
Cavalcante, S., Kesting, P. and Ulhøi, J., 2011. Business model dynamics and innovation:(re)
establishing the missing linkages. Management Decision, 49.(8). pp.1327-1342.
Christopher, M. and Holweg, M., 2011. “Supply Chain 2.0”: managing supply chains in the era
of turbulence. International Journal of Physical Distribution & Logistics Management,
41.(1). pp.63-82.
Carlin, W. and Schaffer, M.E., 2012. Understanding the business environment in South Asia:
evidence from firm-level surveys.
41.(1). pp.63-82.
Grimpe, C and Kaiser, U., 2010. Balancing internal and external knowledge acquisition: the
gains and pains from R&D outsourcing. Journal of management studies. 47(8).
pp.1483-1509.
Hair, J.F., 2015. Essentials of business research methods. ME Sharpe.Pingali, P.L. and Roger,
P.A. Eds., 2012. Impact of pesticides on farmer health and the rice environment (Vol.
7). Springer Science & Business Media.
Kolios, A and Read, G., 2013. A political, economic, social, technology, legal and environmental
(PESTLE) approach for risk identification of the tidal industry in the United Kingdom.
Energies. 6(10). pp.5023-5045.
Miller, O. D., Yablonovitch, E and Kurtz, S. R., 2012. Strong internal and external luminescence
as solar cells approach the Shockley–Queisser limit. IEEE Journal of Photovoltaics.
2(3). pp.303-311.
Turban, E., Sharda, R. and Delen, D., 2011. Decision support and business intelligence systems.
Pearson Education India.
Teece, D.J., 2012. Dynamic capabilities: Routines versus entrepreneurial action. Journal of
Management Studies. 49(8). pp.1395-1401.
Online
PESTLE ANALYSES: 6 Core Variables. 2017. [Online]. Available through:
<http://www.mbahelp24.com/pestle-analysis-6-core-variables/>. [Accessed on 31st October
2017].
Business and the environment. 2017. [Online]. Available through:
<https://www.imperial.ac.uk/environmental-policy/msc/msc-environmental-
technology/options/business-and-the-environment/>. [Accessed on 31st October 2017].
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