Business Environment Analysis and SWOT Analysis of TESCO Group

The assignment requires students to analyze the business environment of TESCO Group, identify its strengths, weaknesses, opportunities, and threats (SWOT), and provide a comprehensive report on the findings. The report should include an overview of the company's history, mission statement, and key stakeholders. Additionally, the student should conduct a SWOT analysis of the company, highlighting areas where it excels and areas where it needs improvement. Finally, the assignment requires students to identify potential opportunities and threats that may impact TESCO Group's business operations.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT...........................................................................................................................1
TASK 2............................................................................................................................................1
P3 Relationship between organisational functions with objectives and structure......................1
TASK 3............................................................................................................................................2
P4 Impact of macro-environment................................................................................................2
TASK 4............................................................................................................................................4
P5 Swot analysis of Tesco...........................................................................................................4
P6 Interrelation between strength and weakness with macro factors.........................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business environment is one of the important part for the organisation. There are many
factors that have impact over the operation of organisation. It covers internal and external
factors. This is important for business to consider such factors in effective manner so that it can
not affect operations in negative manner. These factors may also be related to employees,
customers, management, supply, demand and business rules and regulation. Tesco PLC is the
UK based company that offers their services at large level. It is British multinational grocery and
general merchandise retailer in UK market (Commander and Svejnar, 2011). This is retail sector
company where they offer grocery product to its customers. There are many stores that Tesco
Has opened in various location so that they can target their customers at large level. This
company provides their product to supermarket, supra store and Hypermarket. They have main
focus to remain competitive in market by providing effective product and services top users. In
the present report, the impact of Micro and macro environmental factors over business and the
strength and weakness are also stated.
TASK 1
Covered In PPT
1

Notes-
Many companies are in market that are effectively providing their services at large level.
Some of them are privately owned and rest are public. There are some organisations that are
under the control of government.
Some firms operate for the objective of profitability whereas some are working that have
primary motive to have the welfare of society. Such business entity perform different activities
for their different purposes. They have their own values, views and purpose. The difference can
be identified in term of their size, purpose, objective and belief.
2

Notes-
Public Sector Organisation
This sector organisation offers their services to people free of charge as School fees and
amount is charged for other services as swimming pool, sports facility and other curriculum
activity. Chairperson and Board of directors are appointed by government ministers. They have
main duty to perform their duties on behalf of government.
There are some national and international business firms as MFI, Vodafone and BT.
Franchising is the essential factor that is commonly found in restaurants like McDonald's. They
provide food and other services as 24 hour plumbing.
Example
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McDonald's is American based public sector organisation that has business centres
worldwide. Its hamburger is very famous. They are continuously trying to expand their business
by opening many centres in different regions. They have covered market area in around 119
countries and have outlet (in number) around 35000. They deal with around 70 million
customers in a day.
Purpose
The main purpose of McDonald's is to provide their services in effective manner and to
retain number of customers for longer period. They promise to provide their services when and
where it is needed by users. They have main purpose to attain the satisfaction of customers
toward their product and services. Further more, they use best quality product and raw material
in their production, that is why they provide surety in term of quality measures.
Legal aspect of Public sector
Government has power to regulate all the activities and functions of this business
organisation. Central government pays for goods. Local government makes the payment for
services that are offered by Council tax.
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Notes-
Private sector organisation: Different type of business are under this sector as sole trader,
partnership, companies and franchises.
 Sole traders are most common in UK. They are the person who have full control over
the business and they perform different activities (like window cleaning, plumbing,
electrical work and busking). There are around 20 sole trader are in UK.
 Partnership is another form of private entity. In this, two and more than two person
collective work for the common goal. They share profit and loss of their business.
 Private company is owned and control by shareholders and directors. New shares are
sold on its face value i.e. £1 per share. Such business units are generally smaller than
public company. It is important for these business sector to register and fulfil the
guidelines of Companies Act, 2013.
 LLP (Limited Liability Partnership) is the form of partnership where partners have
limited liability. In this partner are not responsibility for the act and misconduct of other
partners. There are many many advantage to the LLP as comparison to company.
Example- Virgin group is an investment company which is operating their business in global
market. No inter-fear is made by government authority.
Purpose
 This has objective to treat customers effectively so that they can provide maximum
satisfaction to its users.
 To enhance profitability.
 To expand their market area so that they can provide their services to large area that help
to enhance its profitability.
Legal requirement of private companies
To file Confirmation statement and require to maintain PSC register every year at
registered office of company. It is required to inform to companies house regarding the changes
that occur in business.
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Notes-
Voluntary Organisation
This business unit where people perform their function for specific purpose. They have main
task to make the welfare of the society. They do not have main objective to earn profit and such
firms are considered as non-profit organisation (NPO).
Example
Oxfam is voluntary association that has main operation to consider the welfare of society. It
is founded in 1942. They have connected to number of organisation and people to
address the problems of social group.
Purpose
 To address the problem that is faced by society and to make welfare of them.
 This is Non profit organisation that work for the development of social group.
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Notes-
Public sector-
This organisation provides adequate support to society and they have main role to address
the issues that are faced by people. They continuously work to provide healthy environment so
that social welfare can be made. These business sector consider CSR activities so that they can
provide maximum assistance to others. Government has vast impact over the performance of
such organisations because public sector organisation has main role to make the growth of
country. It has large market area as comparison to private sector entity.
Size of McDonald's:
The market size of this business is large and there are more than 4 Lack employees are
working in around 120 countries. Estimated 150 outlets are of McDonald's so that they can
provide their services at large level.
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Stakeholder:
Ministers and advisors, Political parties, Local government council, Courts, business houses.
Objective: They have target to provide quality product and service and to enhance the
satisfaction level of its customers by providing their services. They promise to avail the product
when and where it is required by consumers.
Notes-
Private sector-
This business unit tries to create positive image in society so that they can be effective to attract
large number of customers. Private sector organisation is not under the control of government. It
is required for them to follow all the affected laws and Acts. It is the main goal to meet market
demand. They are effective to enhance their activities so that they can be able to provide more
satisfaction to its users.
Size of Virgin Group: This organisation is providing their services in around 50 countries. They
are performing their operation with the help of 5000 employees. Number of customers are
continuously increasing.
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Stakeholder: Developers, Centre owners or operators, Carriers, Industry and advocacy groups
Objective: They have key objective to enhance their market area and to increase its profitability.
This organisation has main objective to provide luxury experience to its users.
Notes-
Voluntary Organisation
This organisation has main goal to enhance the level of satisfaction of its users. They are
providing their services for the welfare of the society.
Supportive factors are as-
 Funder- They provide financial assistance to individuals and business ordinations. They
have main role in the operation of business and provide assistance so that firm can be run
more effectively.
 Trustees- They have important role to provide guidance and support to organisations so
that they can perform well. Such persons have main task to provide assistance to people
who are facing an issue in this regard.
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 Volunteers- They provide help to society and do not charge money for this. Such person
try to devote their best effort so that they can provide maximum assistance.
Size of Oxfam: Many services are offered by this organisation. Number of people and
corporates are associated with this organisation so that they can provide support to society.
Around 20,000 people are associated with Oxfam and many big organisations are also associated
with it.
Stakeholder: Volunteers, Children, Donors, Other NGO, Parents
Objective: To provide effective services to the individuals who are living in poverty striving to
exercise their human rights, provide them dignity as they are full citizen and take control over
their lives.
TASK 2
P3 Relationship between organisational functions with objectives and structure.
Tesco PLC is the company that is providing their services in retail grocery sector. The
key functional area of the company is grocery service. They are providing their product and
services to large number of people and its market sector is enhanced. They have main objective
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to enhance their market sector so that they can achieve more profitability. There are many
departments that are operating in it as human resource, marketing, finance department, IT
department etc. This is important task to consider such departments so that they can be more
effective to enhance their market share. These sectors are interrelated to each other. They are
effectively functioning to achieve their goals and objectives (Dahan and et. al, 2010).
Following are the department that are working under Tesco as-
Human Resource- This department is one of the most effective for the functioning of this sector
organisation. It provides help to effective operation of the business so that such company can
attain their objective in effective manner. They are directly associated with man power. This aids
to organisation so that they can be more impactful in their performance. Many people are
required for manufacturing activities. So it is the main area where this department their role.
Finance Department- Funds are required for every activity of business. This is the main role of
such business organization to consider its functioning so that they can attain their objective.
When it is not managed in better way then it may have negative impact over the performance of
Tesco. Many activities can be performed effectively when there is sufficient amount of funds and
it aids to achieve the goals and objectives of organization.
Marketing: This sector is important part of Tesco PLC because there are many product that are
offered by this business to its customers (Fernando, 2011). It is important department where it is
required for this business to make focus on marketing so that they can target in more effective
manner to its customers. This helps to identify the market demand where there is requirement to
make focus. This has main role in the achievement of goals and objectives of the organisation.
Research and department: R & D department is one of the important sector. It provides
assistance to identify the area of improvement and to identify the factor that are required to
consider by this business (Avramenko, 2012). Market research is required to be made so that
organisation can get to know about the market demand and the requirement of customers. This
sector helps to attain the objectives of firm.
IT department: This sector is important to consider because now a day, this is required for this r
organisation to consider new technologies in their operation so that they can target their
customers in more effective manner. They can identify the factors that can be implemented by
them so that they can enhance their market share at large level. This sector play important role to
achieve the goals and objective in more impactful manner.
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Relationship among various department-
Human Resource Vs Finance
The Human resource department is linked to the finance department. When there is any
change arise in company due to recruitment and resignation then it has impact over finance
department. It is required for the company to plan accordingly. Suppose, if company plan for
marketing campaign then it is required to consult to HR and finance department because finance
and adequate man power are required for marketing of its product.
Sales Vs Customer Service
The product and services are offered to the customers which is called as Sales. When
product is sold to people then it is required to provide some services after sale. If sale gets
increase then it is required for the organisation to provide their services to more people. It is
directly related to customer service department.
All the functional department of the companies are inter-related to each other. All the
area are coordinated so that business objective can be attained. These are related to goals and
objective of the company and if there is any variation that arise in company then it affects the
attainment of goals.
TASK 3
P4 Impact of macro-environment
The macro-environment of Tesco can be analysed by doing PESTLE analysis. This is
nothing but the impact of several exterior factors on the performance of company. This is further
described below:
 Political factor: A range of political factors are affecting Tesco in direct as well as
indirect ways. As company is operating world wide , it faces several issues of
governmental policies. These consist of taxation rate. Government of different nation
offers different rate of taxes. Some impose less but some high. This effects the turnover
or earning of company as large number of revenue goes on paying such taxes only. The
fluctuation in the currency of revenue of several nation also badly impacts the
performance of corporate. The value of revenue sometimes gets high or sometimes gets
low. The lowering one causes losses for them. Certain acts of legislation like prohibition
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of child law, rules related wages etc. are impacting them a lot. If third party or company
itself engaged in the crimes like child labour totally destroy the brand image of
enterprise. Government are inspiring the firms to create more opportunities of job for
local people as instability in the world occurs (Fernando, 2011). And the plus point is that
Tesco are playing a vital role in generating employment for domestic purposes. This
ultimately increases the demanding of their goods or services and diversification in the
workforce are carried on. TESCO is operating their business at international level then
this factor will influence it directly and indirectly. As TESCO plays an important role
because it provides more jobs to the people which aids in increasing the demand of its
products or services and also helps in diversifying its workforce. This element has some
positive as well as some negative impact such as if it will create full employment
situation in the country then it will become favourite of government as well as will be
able to carry out its activities in well manner. While its negative impact is that it will
increase its cost and will also affect its sales revenue of certain products or services.
 Economical factors: Costing of labour is one of the main economical factor that are
impacting the money making policies of supermarket chain. The bill of GBP is approx
4.5 billion per year and as per that the increment of only one percent in the labour
costing of company will interchange this figure by 45 million. The enhancement in the
national minimum wage to GBP is around 7.20 in year of 2015 shows the increment of
11 percent. Hence, it has been analysed that current increase in national minimum wages
in UK incurs a costing of 495 million in GBP. The economical factors are most likely to
increase the costs, demands, benefit and prices. Hence, corporate have to be aware of
these alteration in the policies like modification in taxes or any other factor that may
influence the approachability of finance. It is noticeable that the business of organisation
is expanding globally but they are depending on the market share of UK. Tesco has
market share of approx 30% (Gebauer, Paiola and Edvardsson, 2010). The key of success
is nothing but globalisation and variegation over many years. But due to declination in
the available income level and domestic financial gain, company are now giving more
focus towards promotional activities rather than manufacturing luxurious items. This
factor will affect this company in negative manner which can be explained with the help
of an example such as- in case of inflation situation, people purchasing power will be less
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then they will not purchase too much thing which will impact the sales and revenue of it.
It have positive impact such as- if consumer purchasing power will be limited then they
will not eat food outside but cook food at home which will increase the opportunity for
grocery store like TESCO expand their output because for making food, they have to
purchase material.
 Social factor: As there are several changes occurred, trends are indicating that users are
preferring to shop in bulk rather than buying single items. So, company is decided to
increase the quantity of non-food elements for selling. The different types of products or
services that are ordered by consumers mainly depends on their attitudes and beliefs and
influenced by social conditions. Now-a-days customers are concentrating towards their
health and demanding organic food products mainly, due to this corporate is trying to
accommodate this demand. It will affect the company into positive ways such as if today
people are becoming more health conscious then it will increase the demand of organic
food that will create opportunity for TESCO.
 Technological factors: The development in the technology are proved to be beneficial for
the functioning of company (Commander and Svejnar, 2011). This advancement has aids
in offering online shopping to their users having the facility of home delivery.
Additionally, the servicing of self-checkout points are providing convenience and making
this simpler for users that in turn are minimizing the cost of labour. Also, firm is
investing a large sum of money in attaining its aims of reducing carbon footprint. TESCO
uses various latest technology like wireless devices etc. which increases the sales of
company and negative impact is that it will increase its cost because it has to hire expert
who can deal with it.
 Environmental factor: Tesco has the pressure of reducing the environmental issues and
adopting environment friendly measures , they are mainly giving its focus to reduce the
carbon footprint and committed to minimize it by approx 50 % by the year of 2020. Also,
company is reducing their production of wastes at their stores and enhancing the social
ethics in their users. Its positive impact will that it will increase its reputation in the
market as well as will become favourite in the eye of government and negative impact is
that company has to incur lots of amount.
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 Legal factors: The several policies and norms of government are impacting the working
of Tesco . For instance, Food retailing commission in 2004 had recommended a code of
practice that should be presented which can prohibit several practices like increasing the
price without notifying users, condition of demanding revenue from supplier, etc. IN
order to facilitate such policies, venture has reduces their prices on fuels so that users can
buy large amount of goods from grocery shops. Additionally, in their recent
advertisement, lowering in the prices of product or services has been shown (Halbert and
Ingulli, 2011). If it will not follow legal rules then negative impact will be that it will
create disturbance in its operation and positive impact will be that it will become
favourite of government.
TASK 4
P5 Swot analysis of Tesco
The SWOT analysis is nothing but the identification of strength, weaknesses, threats and
opportunities of venture. Swot analysis for Tesco are described below:
 Strength: Tesco has won different awards in the field of retailing sector for its excellent
performance, customer services and their complete experience of shopping. It has gained
largest profit in comparison to other companies. It has been emerged as greatest retailer
in the UK having the market share of about 27.9 % in grocery only. This gives a toughest
competition to other firms like ASDA, Sainsbury's, etc. Tesco is also seen as first firm
that offers online business and this aids in generating a large amount of revenue.
Company has also a coercive property portfolio and because of this increment in overall
values is achieved. There are around 7817 stores around all over the world. This has also
a great brand value because they offers quality based products or services. They are
generating more opportunities of job for local people (Hamilton and Webster, 2015).
 Weaknesses: Company has faced a enactment loss of around GBP 6.4 billion and that put
them in debt of GBP 8.5 billion. Also, the complete leverage debt has been reached at
GBP 22 billion. Several subsidiaries are not performing well because they are open to
specific external elements. The competitive situations creates a war of pricing that
decreases the profit margin of different retailers. Now, company have to think of other
ways to gain benefits. Also, several retail formats of specific firm are not operating well
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as per the expectation. This recommend that company has not done much more marketing
research. Consumers are not purchasing a large amount of items because they are having
less available revenue. Retailers also do not lowers the prices by leaving them as their
previous cost. Now retailers are depending highly on UK and Europe for its selling
performance. They do not spending their money and time on developing another market
and focusing on the same where they are operating (Aterido, Hallward-Driemeier and
Pagés, 2011).
 Opportunities: Company has many chances to operate jointly with other organisations as
local firms are aiding them in marketing research and in developing intelligence in the
sector of marketing in order to improve their performances. There are several
opportunities of offering online shopping and carrying on home delivery in different
more areas. Additionally, they have chances in privately based label market. They can
also manufacture western goods as their demand is increasing.
 Threats: The economical decline and credit compression are continuing to create threat
for the marketing share and profits in several areas all over the world. This reduces the
number and size of purchasing that is done by users. Competition is raising as company is
performing their business globally. This forces firm to offer their goods or services at
more lower prices and also giving them wide range of varieties at the same price. This
creates looses for them. The competitors are supplying their products in a faster rate in
relation to Tesco as they are more producing more innovative products because they
know to use the technology in better way. The prices of food getting high in the world,
due to this reduces the goods that is purchased by users.
P6 Interrelation between strength and weakness with macro factors
Strength and weakness of Tesco is inter-related with the macro factors like political,
social, legal, etc. This is listed below:
Strength:
 Political factor: The strength of the company is closely related to some of the political
practices like encouragement of government. Government inspires the corporate as they
are making large number of employment for local people. This additionally increases
brand value and ultimately selling rate of the venture as large number of people get
familiar by their goods or services (Kang, Lee and Kim, 2010).
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 Technological factor: The advancement in the technology aids the firm to increase their
quality work. This aids in creating online business and giving home delivery of goods.
This has been increased the selling rate drastically as their products are purchased by
people living in all over the world. Certain works like calculation made easier by using
modern software such as Spreadsheet, Ms-excel,etc. This reduces the error that occurs
due to hand calculation by reducing the time as well as cost. Communication between
clients, employees and managers can be done more effectively by using techniques like
social media (Face book, twitter, what's app, messaging, video conference, email, etc.).
Now workers can attend meeting with their heads without presenting physically via using
video conference option.
 Environmental factor: Users of Tesco wishes that their chosen organisation will do social
welfare and company is doing so by fulling their demands. They are engaged in doing
corporate social responsibility. They invest a part of their income in educating poor kids,
making employment opportunities, etc. Because of this they achieved good support of
customers. They are also showing their concern about environmental issues and they are
trying their best in reduction of carbon footprint and assures government that they will
reduce them around 50% by the year of 2025 (Avramenko, 2012). Additionally, company
is producing less amount of waste at their stores and making ethical balance.
Weaknesses:
 Economical factor: The company totally depends on the economical conditions of the
population, If the civilians are getting high income then they will purchase a large
amount of goods. But if they have low amount of salary then the selling rate will
decreases. The increment in prices of food lowers the turn over of company as very less
number of goods are sold.
 Social factor: Marketing plans of Tesco gets greatly influenced by the beliefs and attitude
of people. Because of the change in their life style and tastes, corporation have to alter or
modify their manufacturing policies. They have to produce their goods or services as per
their demand. Now-a-days customers are getting more aware about their health so they
are moving towards organic food in relation to junk foods (Klapper and Love, 2010).
Now company, have to make products like curd, butter, cheese, fruits, vegetables, milk,
etc.
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 Legal factors: Venture are getting negatively impacted by legal factors due to this
weakness of them are not minimizing. Certain laws like child labour prohibition, wages
related law, timing or working hour law etc. recommended organisation to follow some
rules laid by them. Neglecting of any law will result in punishment. High taxation rates
are also imposed by government, due to this most of revenue goes in paying these taxes
only. So, this result in lowering the overall strength of company (Mahmood and Hanafi,
2013).
CONCLUSION
As per above study it can be concluded that business environment is effective factors that
is required to consider by every organisation. Tesco PLC is one of the leading company that is
effective to provide their services in market. There are many factors that are required to consider
by this business as internal and external. It is essential for this organisation to consider effective
flow of PESTLE factors and SWOT of the company so that they can identify the issues in
effectual manner. This is important fir this firm to use upgraded technology and information so
that it can not affect their operation. Different types of organisations are operating as private,
public and voluntary.
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Online
SWOT Analysis of TESCO Group. 2017. [Online]. Available through:
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[Accessed on 15th July 2017]
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