Business Environment Analysis of Tesco

This assignment examines the business environment of Tesco, a retail giant, by focusing on its suitability for small and medium-sized enterprises (SMEs). It delves into the positive and negative impacts of both flat and hierarchical organizational structures on SMEs' operations. The report further conducts a PESTEL analysis to identify external factors like political, economic, social, technological, environmental, and legal influences, outlining their implications for Tesco. Additionally, a SWOT analysis helps in understanding the company's strengths, weaknesses, opportunities, and threats within its business environment.

BUSINESS AND
BUSINESS
ENVIRONMENT
ION
17459

TABLE OF CONTENTS
INTRODUCTION.........................................................................................................................................3
TASK 1..........................................................................................................................................................3
TASK 2..........................................................................................................................................................5
TASK 3..........................................................................................................................................................8
TASK 4..........................................................................................................................................................8
CONCLUSION..............................................................................................................................................8
REFERENCES..............................................................................................................................................9

INTRODUCTION
A business is such entity that involved in production of goods and services. Business environment
includes both internal and external factors which influence the functioning of an enterprise. This report is
about HSBC which is world’s most respected and leading international bank. In this report, different
types of organizations of London are explained with their importance and objectives of formation. It will
help the reader to understand different types of organizational structures followed by the clients of HSBC.
TESCO is one of the biggest client of HSBC (Chavis, Klapper and Love, 2011). TESCO is a
multinational retail corporation which deals in both food and non food products. This study also includes
various external as well as internal factors which effect the business operations of TESCO. Through this
learning, reader will come to know about both positive and negative impacts of these factors on various
functions of entity.
TASK 1
HSBC is a public limited company which involves in banking and financial services. It deals with
several types of organizations. There are generally four types of companies which exist in the market.
These are discussed as under:
 Sole Trader: It is the oldest form of a business organization. It is also known as single
entrepreneurship or individual proprietorship. It is such enterprise which is owned by one person.
It may include one or more employees and is very common form or ownership in UK ( Beaumont,
WHITAKER and PEDERSEN, 2013). It is one of the easiest forms of organization because it
does not require any paperwork at the time of its formation. Theses types of entities are usually
small in size, as run by sole proprietor. Main objectives behind its formation are to create self
employment, to utilize funds, to serve customers directly, provide independent living and
facilitate services to large firms. Main advantage of sole trader ship is that it is easy to form and
windup without any legal formalities. It also facilitates quick decision making, independent
control and secrecy of business affairs, personal contacts and flexibility (Craig and Campbell,
2012). It also has disadvantages like limited capital resources, unlimited liabilities to owner,
uncertain life and limited scope for expansion of business.
 Partnership: It is such business which is run by two or more owners of enterprise. HSBC also
deals with these types of firms. It is normally formed by using partnership deed which is a type of
an agreement between all parents. These enterprises are generally small or medium in size. The

primary goal of formation of partnership firm is to generate money along with sharing strengths,
spreading the risks, to grow business bigger and minimizing legal formalities. This type of
formation facilitate owner easy to form and windup business, better management of operations,
sharing of risks, flexibility in functions, greater motivation, large financial resources, maintain
secrecy, etc. (Naude, 2010). There are some disadvantages also in relation to this firm such as
limited resources compare to other businesses, unlimited liabilities, slow decision making
process, uncertainity of life of firm and conflict between partners over workload and other
business related issues.
 Private Company: It is such entity whose shares are not issued to public and it operates under
legal requirements which are less strict to public company. It is an enterprise with private
ownership. It is also known as close corporation that is owned by non government organization or
a small number of people. HSBC also deals with these type of companies whose main goal is to
profit maximization, transparency in reporting, restricting access, etc. These entities have private
Ltd after their name, for example; ABC Private Ltd company (Harrison, 2013). It can be easily
started by registration with company’s registrar office. The main advantage of it is that whole
control of business operations are held with the owners of firm. Members or owners of this
company has limited liability i.e., every member is liable up to the amount which was invested by
him/her. The greater disadvantage of this corporation is that it cannot issue prospectus to the
general public due to which shares of the firm are not offered to them.
 Public Company: It is the company other than private one whose shares are traded on stock
exchange (Meiners, Ringleb and Edwards, 2014). The main objective of publicly owned company
is to maximize value of shareholders by generating more profits to it. There are number of clients
of HSBC which are related to this category. Other objectives include economic development, self
reliance and development of backward areas and generation of employment, customer welfare,
economic surplus and public utilities. The shares of these companies are listed generally on
London Stock Exchange. It is the duty of client manager at HSBC to maintain the records of their
clients and these enterprises are one of them. There are few advantages of public limited
companies such as; it can raise more capital compares to private corporations, members have
limited liability, shareholders have right to sell their shares, economies of scale, higher status is
beneficial for more publicity, etc. As it is an entity with a number of shareholders, the original
owners many lose ownership and control of the business (Teece, 2010). Another disadvantage of
it is that it discloses all main accounts of company to public which may harm the operations of it.

TASK 2
Every business needs a systematic structure in order to survive. Organizational structure describes
about activities like task allocation, supervision and coordination to achieve goals and objectives of
enterprise. Structure is depends on objectives and strategy of an entity. It determines the roles and
responsibilities are assigned, coordinated, controlled and flow of information among different levels of
management. There are generally two types of structures which are followed by clients of HBSC such as
tall and flat. These are discussed as below:
 Tall Organization Structure: It is the one that involves many levels of management and it is very
popular among the corporations of UK. These types of enterprises usually have many managers
and they have a small span of control (De Jonge, 2011). It means that managers have control over
small number of people. It is often required in large and complex corporations. It is more
complicated and complex in nature and may be slow in order to respond than the other structures.
Here, there are many layers of middle level management between top and lower. Every level of
management has its own procedures, rules and regulations to follow. As it includes hierarchy of
managers, and they have only few numbers of employees to supervise. Most of the clients of
HSBC follow this type of structure in their organizations (Hair, 2015). It facilitates improvement
in performance of workforce, discipline, employee and employer relations, development of staff,
control and supervision, etc. Under this structure, management may face several problems; due to
creation of many levels it may delay communication between employees and employers, delay in
decision making process, managers may become more dominating, not suitable for routine jobs
and difficult to coordinate activities at various levels. As it involves many managers, so it is very
costly compare to other structures.


Figure 1: Tall Organization Structure
(Source: Naude, 2010)
 Flat Organization Structure: This structure is just opposite to the above one. It does not involve
a number of levels of management. There are only few or no layers of management. In other
words, only few mangers are involved in this structure, those are authorized to manage
operational functions of corporation. Management in this focus on employees’ empowerment
instead of stick on the chain of command. As it does not have number of layers, so employees can
directly communicate with their owners. In every enterprise an effective communication is must
to run a business in smooth way (Worthington and Britton, 2015). Some corporations in UK have
this type of structure within their workplace. It is less costly compare to above one because it has
few managers to supervise their workers. Workforce of this type of enterprise take part in
decision making process and that makes it faster than others. It is more suitable for standardized
and routine activities. This may affect the performance of employees or team members because it
has several subordinates under one manager.

Figure 2: Flat Organization Structure
(Source: Worthington and Britton, 2015)
In both of the above structures all departments are same but functions of those vary from each others.
They include several departments such as production, finance, sales, human resource, marketing,
information technology, etc. In flat structure, there are not any further departments but is it opposite in tall
organizational structure.
The clients of HSBC have several organizational functions which are directly linked with its
structure and objectives. The main functions of management are planning, organizing, directing,
controlling and staffing. It includes production, sales, marketing, research, etc. Different departments
within the enterprise have various functions to perform. In an organization whether small or large has
several functional departments and each department have some people to work. If a company has a
tall structure then it consists of many departments (Turban, Sharda and Delen, 2011). On the other
side, if it is a flat organization then number of functional departments may vary. A corporation with
various departments spread functions across different branches within the workplace.
The main function of any manufacturing unit is to produce goods and services and avail it in the
market at reasonable rates. Production is directly linked with structure and objective of a firm.
Objectives help management to decide their goals and targets to achieve and structure facilitate how
to proceed further to accomplish it. An organizational chart helps management to show the structure
of company to its employees or workers. Every function of an entity is linked with another, i.e.
production is depend on the planning and strategies of an enterprise and sales is depend on the
number or production (Wheelen and Hunger, 2011). These functions are divided among the various
departments within the company. Therefore, structure and objectives of a firm plays a vital role in
various functions of organization.

TASK 3
In PPT
TASK 4
In PPT
DEPARTMENTS WHAT THEY DO
USE THE SLIDES
CONCLUSION
This study concluded that HSBC has different types of clients which include sole traders,
partnership firms, private and public companies. It describes about two different kinds of organizational
structures such as tall and flat. Tall is beneficial for large organizations which has a number of layers of
management where as flat is suitable for small and medium size enterprises. Both of them have some
positive and negative impacts on business operations. This report also explains about business
environment of TESCO. It requires to make PESTEL analysis to identify various external factors and
their positive and negative implications are described. These factors includes political, economical, social,
technological, environmental and legal. SWOT analysis of this company helped management to identify
various risks exists in their business environment. After evaluation of risks, several measure have to be
adopted by managers to overcome from this.

REFERENCES
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