Impact Analysis: Tesco Plc and EU Policies

The assignment discusses various factors that can influence the operations of Tesco Plc, a UK-based organization. These factors include the expansion in India, which offers low labor costs and a qualified workforce, enabling Tesco to reduce its operational costs. The taxation policies of different nations, including the European Union's (EU) policies on food safety and antitrust, also play a crucial role in shaping the business environment. The EU's policies aim to promote fair trade opportunities and protect businesses from unethical activities. To succeed, Tesco Plc needs to emphasize on these factors and regulatory bodies to ensure compliance with quality standards and regulations.

Business Environment
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 2- UNDERSTANDING THE NATURE OF NATIONAL ENVIRONMENT IN WHICH
BUSINESSES OPERATES.............................................................................................................3
(2.1) How economic systems attempt to effectively allocate resources ....................................3
(2.2) Assess the impact of fiscal and monetary policies on chosen business organization’s
activities .....................................................................................................................................4
(2.3) Evaluate impact of two macroeconomic policies and how influence your UK
organization and global economy ..............................................................................................5
TASK 3- UNDERSTANDING THE BEHAVIOR OF ORGANIZATIONS IN THEIR
ENVIRONMENT AND ASSESSING THE SIGNIFICANCE OF GLOBAL FACTORS THAT
SHAPES NATIONAL BUSINESS ACTIVITIES..........................................................................6
3.1 Three different types of market structure and determining pricing and output decisions of
organization.................................................................................................................................6
3.2 Ways your organization behaves is shaped by market forces...............................................7
3.3 How your chosen organization is shaped by the business strategies....................................8
4.1 Significance of international trade on the selected UK business organization.....................9
4.2 Impact of two global factors that impact on UK based organization..................................10
4.3 Evaluate the impact of two European Union policies on chosen UK based organization. 11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
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INTRODUCTION
Business Environment consists of different external and internal factors that directly and
indirectly affect the operations of business organization. In the contemporary marketplace,
enterprise needs to analyse both the factors as it would help the organization to sustain in the
competitive scenario. In the globalized economy, business environment plays crucial role in
almost all the enterprises as it will help in understanding the internal, external environment as
well as it will also understand the current marketplace under which organization is operating
their businesses (Ahmed, 2012). For conducting the present report selected organization is Tesco
PLC, one of the leading British multinational grocery supermarket chains in the UK. Tesco PLC
is a public limited company and the business allows public to invest in its shares for proper
funding. This company is mainly affected by the business environment as they operate their
business in the different countries and region that affect their operations too.
Present report will focus on understanding the main purposes of organization to exist in
the competitive scenario thus, by understanding the nature of market environment in which they
are operating their business. The report will also understand the major impact of monetary and
fiscal policy on the internal environment of the business as well report will also access the affects
of competitive policy and several other government mechanism on the businesses. Lastly, report
will able to assess the significance effects of global forces on those organizations that operate
business in UK.
TASK 2- UNDERSTANDING THE NATURE OF NATIONAL
ENVIRONMENT IN WHICH BUSINESSES OPERATES
(2.1) How economic systems attempt to effectively allocate resources
A number of economic systems have been explored that helps in allocating resources in
adequate manner; thus such economic systems are free market economy, centrally planned
economy and mixed economy and they effectively allocate different resources within the
organization. In the free market economy, resources are privately owned by the individuals and
often decisions regarding the manufacturing is also taken by the individual itself. The main
motive of organizations operating in free market economy is to earn maximum profit and grow
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their business in the different region (Bansal, 2012). Under this economy resources are being
allocated through identifying different market aspects.
What should be
developed:
Based on needs and demands of customers
How it should be
developed:
On the basis of seller's profit acquiring power
For Whom it should be
developed:
Based on purchased ability
Another economic system includes centrally planned economy under which government
plays a central role in taking decisions and allocating scare resources in their ways. According to
the demography and demand government distribute and allocate resources in the economy.
What ought to be
produced:
On the basis of preferences given by government
The way to develop it: It depends on the availability of workforce at government offices
For Whom it is
developed:
Based on preferences of ruling bodies
Last type of economic system includes Mixed economy under which individual and
government collaboratively takes the decisions regarding allocating different resources. Such
economy is based on different private sectors where allocation of resources is based on market
forces as according to the demand of customers for instance, grocery sector of UK economy
(Camacho, 2012). While, in public sector resources are allocated by government.
What needs to be
produced
Partially by customers aspects and on government basis
The ways to produce: Based upon producers aspects as how they look for profits and to a
certain extent by government
For Whom it should be
produced:
Often on the basis of customers and government
(2.2) Assess the impact of fiscal and monetary policies on chosen business organization’s
activities
Fiscal policy and monetary policy affects the performance of Tesco PLC as well as on
their activities. Government of UK has the authority to determine Fiscal policies as that helps to
control the level of economy through altering taxation and government spending. For instance, if
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UK government increases the tax rates then Tesco will have fewer funds to invest and employ
(Frischtak, 2001). Thus, it affects the Tesco PLC in charging higher prices for their products and
services. However, if government decreases the tax rate then Tesco PLC would higher their
spending in the UK economy and generates employment opportunities for people.
Another policy is monetary policy that attempts to manage macroeconomic variables in
an economy with the help of interest rate. This policy not only impacts the Tesco PLC but it also
affects the entire UK economy (Grier, 2006). For instance, higher in the interest rates will
reduced the demand and prevent the UK economy to expand fast. However, if the UK economy
growth is slow-moving then they may cut the interest rate as lowering the rates will support the
economy in boosting their growth and also reduces unemployment.
(2.3) Evaluate impact of two macroeconomic policies and how influence your UK organization
and global economy
It has been spotted that the competition Policy is all about development of various
policies and regulations which can improve the overall control on various business operational
activities. It is to provide better business opportunities in global market with maintaining various
standards. In other words, it can be said that the macro economic policies are formed with an
motive to provide fair and equal business opportunities to all organizations in all over the world.
With an assistance of this, number of business organizations can operates their business in most
preferred locations rather than their native place (Harrison, 2009). There are number of
competition policy which must be followed by Tesco Plc in order to meet the standards. The
classification of policies can be as Antitrust & Cartels, Market Liberalization and Merger
Control. The above mentioned policies are prepared to ensure that companies are not getting
involved in any kind of unethical or aggressive activity while they are operating in domestic and
international market (Carter, 2007).
In the support of this, it can be said that there are number of rules and regulations or
policies which are formulated by diverse international agencies in order to promote fair and
ethical work practice. It is necessary for international organizations to meet the standards of
global agencies while operating at the global level. For example, as per the Indian policies if any
organization wants to enter in Indian market that means management needs to get involved in
Joint Venture (Fernando, 2011). If Tesco Plc is not having any Joint Venture with local
organization then company can not operate its business in the country. In other words, it is a law
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of Indian governance which restrict foreign companies to have direct operations in nation so they
have to participate in collaboration activity with associations who are already operating in the
Indian market (Matthews, 2005). This clearly indicates that if Tesco Plc is looking to enter in
Indian market then management need a tie up with an business firm which have operations in the
same market.
Other than this, it is also necessary for Tesco Plc to have improved focus on health and
safety and employment policies while operating business in international and domestic market. It
will facilitate business organization to have brand image and reduce negative outcomes of
business. In this support the UK governance has also formulated various laws so that workplace
standards can be maintained in better way (Doving, 2010). Moreover, it can also be stated that
the regulatory bodies within nation are basically formulated to have better control over work
culture of retail industry. Office of Fair Trade is a policy which have responsibility to ensure that
the key market players are working in correct manner and have fair and righteous work culture.
With an improved focus on this policy the management of Tesco Plc can easily meet the needs of
customers. It also make sure that the goods which company sells are meeting the quality
standards and it will not impact the health of customers (Kárpáti, 2001). If company will not
follow these standards and policies in proper way then business can face some critical issues.
TASK 3- UNDERSTANDING THE BEHAVIOR OF ORGANIZATIONS IN
THEIR ENVIRONMENT AND ASSESSING THE SIGNIFICANCE OF
GLOBAL FACTORS THAT SHAPES NATIONAL BUSINESS
ACTIVITIES
3.1 Three different types of market structure and determining pricing and output decisions of
organization
Business markets take different forms and the structure of a marketplace that enables the
perceptive of how organizations behave in the market structure. Determining market structure is
essential in determining the pricing and output decisions. There are primarily three different
types of market structure likewise monopoly, perfect competition and oligopoly. In Perfect
competition, there are large number of buyers and sellers that deals in selling the standardized
products (Rejc, 2004). Thus, this market structure is flexible as there is ease in market entry and
exit. Under perfect competition market structure individual supplier have no control on taking
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pricing decisions. Pricing decisions are often determined by the aggregate demand and supply
condition of market. Tesco PLC possesses perfect competition market structure as there are large
numbers of buyers and sellers and pricing of their products are determined by the demand of
customers (Tsiakkiros, 2002). However, output determination under perfect competition will
continue to increase its output as long as they are ruling market price.
In case of monopoly market structure, only one buyer is there who has the power to
determine pricing and output decisions of the business. If demand is high at marketplace then
business can increase the prices of their products but the excess hike in price of product can
dissuade the demand of products (Besbes, 2009). Another type of market structure includes
oligopoly that has few firms in the market that sells differentiated products in the marketplace.
Price elasticity of demand in the oligopoly market is very small as due to few firms. However,
the degree of control and decisions regarding the output is with the firm existing in the market
structure (Greenwood, 2010).
3.2 Ways your organization behaves is shaped by market forces
There are different market forces existing in the external environment that influences and
shapes the behavior of organization. Thus, UK economy is considered as the fastest growing
industry for the retail organization as customers prefer to purchase quality products and services
at competitive prices. Market forces demonstrate the relation among supply and demand inside
the market (Lee and et. al., 2008). The way organization respondents shows its concern towards
business or its economical circumstances. It further has a direct impact on business's profitability
and revenue aspects. Large business organizations are engaged in conducting market analysis in
proper manner and simultaneously they need to make sure that they are providing appropriate
products to the clients as per their needs (Potter, 2008). The different market forces that shape
organizational behaviour include:
 Supply and demand: The foremost market force that shapes the Tesco PLC behaviour and
actions include supply of the products and demand of products. Supply and demand
forces plays vital role in delivering the services and products among the market
customers. For instance, higher the demand of product will increase the supply of
products in the market thus directly affect the prices of Tesco products (Rosenbloom,
2011). However, with the lower demand of products in the market Tesco PLC would
supply less products in the market thus, will tend to reduce the pricing of products?
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Therefore, demand and supply of products in the marketplace also shapes the activities of
Tesco PLC.
 Customer’s perceptions and actions: Another market force that shapes the activities and
behaviour of Tesco PLC include perception and preferences of customers. The main aim
of Tesco PLC is to deliver wide variety of products in the market to satisfy the
requirement of customers (Willem, 2007). Thus, determining the perception and needs of
customers will assists the Tesco PLC in manufacturing and selling products according to
customer’s requirement to enhance their profit margin.
 Pricing decisions: Pricing decisions of Tesco PLC also act as market forces that shapes
the organizational behavior and patterns. Customers often prefer to purchase products
with low prices and high quality to satisfy their needs. For instance, there are large
numbers of organization existing in the retail sector that provide wide variety of products
at comparative low prices (Willem, 2007). Thus, customers will purchase product from
the organization that sells higher quality products at minimum prices. Therefore, pricing
decisions also act as the important market forces that influence the decisions of their
customers regarding purchasing Tesco PLC products.
3.3 How your chosen organization is shaped by the business strategies
It is necessary for every business organization to have designing of strategies as per
consideration of various environmental and cultural factors which can impact the business
operations. The classification of factors can be as follows: Political Factors – In the support of this, it can be said that the management of Tesco Plc
must have consideration of various political factors during the formation of strategies.
Governance of UK has introduced number of frameworks to amend the work conditions
of retail sector. If management of Tesco Plc is not considering governance framework
during strategy formation then it may lead business to great failure (Adler, 2007). For
example, the changes in tax rates also have great great impact on organizational activities
so stability in political factors must be considered in strategy formation. Economic Factors – The economic conditions and financial environment also need to
consider as vital part as it impacts directly on the operations of organization. For instance
the UK financial and economic condition is good it means the company can decide its
products pricing as per premium pricing strategy (Cloud, 2010). It will also facilitate the
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business organization to meet the standards of efficient and effective performance in
order to meet goals and objectives. The low income expense ratio of UK citizens will
force Tesco Plc to decrease the cost of products and services. Socio-Cultural Factors – It means it is also necessary for business organization to have
improved focus on perception of social class. For example, if management of Tesco Plc
has decided to introduce high fat juice product but the social need is low fat juice product
then business can face some key issues. It is necessary for Tesco Plc to have attention on
effective identification of societal trends in order to meet the customer needs (Densten,
2002). If business strategy is selected without consideration of social and cultural factors
that means organization is having low chances to survive in market. Technological Factors – It is necessary for every business organization to have improved
focus on effective development of technological factors so that business can have great
opportunities. In this support it can be said that the improved focus technological factors
provides better identification of customer needs and demands which is beneficial for
effective designing of strategies (Maguire, 2003). There are number of technological
equipment's which can be used by management of Tesco Plc to have better
communication with customers. It also reduces the cost of operations which also impacts
the selection of strategy. For example, the use of latest technology into operations
provides better effectiveness and helps in meeting customer needs and wants in most
suitable manner.
 Environmental Factors – It is also necessary for management at the retail enterprise to
ensure that the organizational actions is not affecting the environmental conditions. If
organizational activities and products is impacting environmental conditions then it will
also influence the business strategies and force management to develop better standards
(Bueno, 2014).
4.1 Significance of international trade on the selected UK business organization
Every country emphasizes on international trade and this also extends the opportunities of
growth and success in different market places. Some goods are available in some countries, so
that ought to be exchanged with specific products and services which are not possible to execute
without international trading. International trading is very profitable and economic. Some of the
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benefits of international trading to UK business organizations will be described in the following
part:
Broadens Horizons and Markets: The organizations working in UK can produce large
amount of goods and services to different countries and this generates the possibilities of
deriving foreign currency. International trade is far better as compared to domestic trade and it
also develops the opportunities of global expansion and diversification. Hence, involvement in
international trade encourages the ratio of sales, profit and customer base. The advancement in
profit is considered as key advantage of international trade as it also amends the other business
opportunities (Creating an Organizational Structure. 2014). Global trade is necessary part of
operational activities because it aid the retail organization in effective expansion of company
market share as well as brand presence in the global retail industry. It would also help the
enterprise to have increase in its customer base and advance the brand image in the market.
Production Costs: Trade relations with other countries helps in managing production
costs and through this, overall operational cost of the business can be declined. Tesco PLC has
been importing wide range of products from other countries in affordable prices which helps the
business to manage balance between supply and demand aspects (Pirraglia, 2013). Tesco PLC
has wide range of outlets in national and international countries. There are a few employees in
Tesco who get the opportunity to visit different countries so as to promote the outlets.
Materials: To produce more goods, Tesco is dependent on suppliers and customer’s
needs. In order to manage production aspects, Tesco believes in importing and exporting services
and this also enhances the reach of business to different market places(Bueno, 2014). Likewise,
there are varied countries which requires quality materials like arms, cars, engines and to get the
same, they import it from UK. Global trade gives the opportunity to exchange products
differently there will be very scarce choice for each country.
4.2 Impact of two global factors that impact on UK based organization
There are number of global factors which can influence the operations of Tesco Plc;
hence thee business must look upon international trade aspects. The classification of global
factors can be made on the basis of technological developments, cost of labour, taxation policies
and etc. Further, in respect to this, having cultural differences may create some barriers for
business organization; thus there should be equal concern for all cultural values and norms. For
example, the company is operating its business in India but due to cultural and language
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differences the executive is facing some issues. In this condition it is necessary for management
to have improved knowledge about cultural aspects (Maguire, 2003). Moreover, every nation
have different technological aspects which can also impact the overall operations of retail firm.
In the support of this, it can be stated that the business organization is looking of business
expansion in any developing nation where technological resources are not available in easy
manner. In this situation management of Tesco Plc needs to bring technological resources from
foreign sources (Densten, 2002). It will increase the overall cost of operations and may lead
business to some financial issues.
Other than this, it has also been spotted that the Tesco Plc is well known as international
firm so it is necessary for management to meet needs and wants of customers in better way. The
needs of customers are differ from country to country so it is necessary for management of retail
firm to have improved focus on diverse plans which can facilitate in providing products as per
the customer needs (Cloud, 2010). In the support of this, it can be said that the labour cost also
have impact on the business operations so it is necessary for retail firm to focus on this factor.
For example, the company is looking for business expansion in India which means the labour
cost of business will be low. It is because the India is holding high ratio of qualified and low cost
human resources which is one of opportunity for Tesco Plc as it will also reduce the overall cost
of operations (Adler, 2007). In other words, it can be said that it is a way through which
management can have better balance between operational costs and expenditures.
Furthermore, the taxation policies of different nations are also different as per the local
governance standards. It can also influence the operations of business organization. Another key
factor which can influence the Tesco Plc operations is technology (Willem, 2007). Number of
latest technological equipments are using within international market. It is one of key reason that
the Tesco Plc is also looking forward for technological advancement in its operations.
4.3 Evaluate the impact of two European Union policies on chosen UK based organization
It has been spotted that the European Union has introduced number of policies in order to
amend the business opportunities and protect businesses from any unethical activity. In the
support of this, it can be said that the European Union is a international trade agency which
monitor business activities of various European nations like UK, France, etc. In other words, it
can be said that it is a business regulatory body which control various trade activities at overseas
level. In order to have better promotion of fair trade opportunities the EU has introduced number
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of policies (Willem, 2007). In the support of this, it can be stated that the Food and Safety policy
is one of regulatory policy which ensure that the food products provided by organizations are
according to quality standards and it will not influence the health conditions. It is requisite for
Tesco's management to emphasize on food and safety policy so that to prevent customers from
harm. If Tesco Plc will not follow the regulations and quality standards of EU then company
might experience several legal constraints which could hamper overall operational activities
(Rosenbloom, 2011).
Other than this, it has also been spotted that management of Tesco Plc need to focus on
improvements regarding various measures which can influence the overall operational activities.
For example, the Tesco Plc is looking for launch of organic product but EU has set some
standards in respect of organic product. In such respect, it is crucial for the business to have
improvement in products as per the standards (Potter, 2008). Moreover, Antitrust policy is
another regulatory which is associated with the operations of firm. It ensure that the
organizations are not having any unethical business practice. In other words, it can be stated that
the business organization must not involved in any actions as that can affect stakeholder's interest
and it may also lead to customer dissatisfaction.
CONCLUSION
Summing up the research, it can be concluded that business environment is consisted of
diverse factors which are integrated with external and internal forces. It provides understanding
about direct and indirect impact of factors on the operations of business organization. It has been
spotted that it is necessary for every business organization to have improved knowledge about
various environmental factors so that business can have effective designing of strategies.
Moreover, it is also necessary for Tesco Plc to have improved services as per the needs of all
stakeholders and business should also meet all responsibilities and organizational goals in
effective manner. The one of key responsibility of organization is to increase the value
proposition of their staff in order to have better motivation among employee’s and increase in
commitment towards social group. Other than this, it has also been spotted that it is also
necessary for business organizations to have improved focus on European Union policies in
order to meet the standards and better accomplishment of organizational goals.
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REFERENCES
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