Business and the Business Environment: Types of Organizations and Their Legal Structures

This article discusses the types and purposes of organizations, including public, private, and voluntary sectors, and their legal structures. It explains the relationship between different organizational functions and how they link to organizational objectives and structure. The article also identifies the positive and negative impacts of macro environmental forces on business operations, supported by specific examples, and conducts internal and external analysis of Tesco to identify strengths and weaknesses.

Running head: BUSINESS AND THE BUSINESS ENVIRONMENT
BUSINESS AND THE BUSINESS ENVIRONMENT
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1BUSINESS AND THE BUSINESS ENVIRONMENT
Table of Contents
UNIT 1.................................................................................................................................2
Introduction..........................................................................................................................2
LO 1.................................................................................................................................2
1. Explain different types and purposes of organizations; public, private and voluntary
sectors and legal structures..........................................................................................................2
2. Explain the size and scope of a range of different types of organizations..................6
LO 2.....................................................................................................................................8
3. Explain the relationship between different organizational functions and how they
link to organizational objectives and structure............................................................................8
LO 3...................................................................................................................................10
4. Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples..............................................................................10
LO 4...................................................................................................................................14
5. Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses..........................................................................................................15
6. Explain how strengths and weaknesses interrelate with external macro factors of the
business Tesco operates.............................................................................................................18
Conclusion.........................................................................................................................19

2BUSINESS AND THE BUSINESS ENVIRONMENT
UNIT 1
Introduction
An organization is generally organized by group of individuals with distinctive aims and
purposes such as business or public service. There can be witnessed a certain surrounding or
situational contexts whereby business enterprises execute their operations which is further
regarded as business environment which essentially comprises an amalgamation of certain
external as well as internal factors. However, these factors have the propensity to impact each
other and further function in accordance in order to influence the business strategy1. Tesco, on
eof the leading multinational grocery and merchandise retailer organization has evaluated the
change in the business environment in the globalized era. The paper will aim to evaluate the
positive and negative impact on macro environmental forces by further shedding light on the
internal and external analysis of the company. In addition to this, the paper will analyze the way
strengths and weaknesses of Tesco correlate with its external macro forces.
LO 1
1. Explain different types and purposes of organizations; public, private and
voluntary sectors and legal structures
Private sectors are generally owned by private individuals or groups whereby the
primary purpose of the organizations is to generate revenues and further create profits.
1 Carroll, Archie, and Ann Buchholtz. Business and society: Ethics, sustainability, and stakeholder
management. Nelson Education, 2014.

3BUSINESS AND THE BUSINESS ENVIRONMENT
Furthermore other private sector business purposes intend to include further development with
the elevating market share and maximising sales2. However by contrast, establishment which is
part of the state serve as element associated with the public sector whereby non-profit
associations are referred as a vital part of the voluntary sector.
The primary types of businesses engaged in private sector are:
 Sole trader- Sole traders is recognized as one of the most universal type of trade
ownership and thus is initiated in a broad variety of activities such as electronic work,
accountants. In the UK it has been noted that around 20% of sole dealers execute their
operations in the construction sector, further 20% in the retailing sector and the rest in
financial domain and catering3. As the rate of significance of complicated documentation
process is considerably low the process of decision making executes in an effective
manner with the strong association of customer and employees.
 Business Partnership- Individuals in business partnership share their competences and
ideas in order to facilitate the process of capitalization. Furthermore, partnerships are
established by legal documentation witnessed by an official solicitor and seek vital
information such as the distribution of revenues4. However, forms of partnership are
common in professional services such as accountant, solicitors and law. Partnerships
draw similarity with sole trading in terms of partnerships being unrestricted liability.
Private Sector Limited Companies
2 Trebbin, Anika. "Linking small farmers to modern retail through producer organizations–Experiences
with producer companies in India." Food policy 45 (2014): 35-44.
3 TESCO PLC (Tescoplc.com, 2016) <https://www.tescoplc.com/media/1542/q1_ims_2014.pdf> accessed
2 July 2018
4 Christopher, Martin. Logistics & supply chain management. Pearson UK, 2016.

4BUSINESS AND THE BUSINESS ENVIRONMENT
These forms of business enterprises are regulated by shareholders thus necessitates a
Memorandum of Association and Articles of Association which includes the authorities of
stakeholders, procedures for recruiting directors and other arrangements in terms of auditing
company accounts.
 Private Limited Company or LTD-limited liability, with private shares- In these
organizations owned by stakeholders, the owners can create regulations on the percentage
of shares being purchased5.
 Public Sector Public Limited Companies- There are over 500,000 companies in the UK
whereby around 4% of them are engaged in public limited sector. However, the name of
these organizations ends with PLC and the shares of the companies can only be
purchased and sold with the authorization of the Board of Directors6. Furthermore, the
shares of public limited companies with restricted liability can elevate considerable rate
of capital, economies of scale and enhance the dominance of the market.
` The public sector is often recognized as the state sector that is owned and regulated by
the government for their citizens. The primary purpose of this sector is to deliver services
required by the general public regardless of the income or wealth for instance health and
education7. Furthermore, these business enterprises are aided through taxation process. The
organizations engaged in the public sector includes
5 Anheier, Helmut K., Nonprofit organizations: Theory, management, policy. Routledge, 2014.
6 Tugby L, Waller-Davies, B and Tugby, L, 'Profile: Tesco - The UK’S Largest Retailer' (Retail Week,
2013) <https://www.retail-week.com/home/profile-tesco-the-uks-largest-retailer/5046179.article> accessed 2 July
2018
7 Doherty B, H HaughF Lyon, 'Social Enterprises as Hybrid Organizations: A Review and Research
Agenda' (2014) 16 International Journal of Management Reviews

5BUSINESS AND THE BUSINESS ENVIRONMENT
 Central Government- Defence, national health services, social security, police and
universities constitute a major portion of the public sector.
 Local Government- Local government fundamentally comprises primary and secondary
education system, refuse collection, social services as well as sport facilities.
Voluntary Sector
The organizations constituting the non-profit or voluntary sector vary from both public
and private sector whose fundamental aims and objectives were reliant on profit generation.
While voluntary organizations such as charitable organizations, trade unions along with public
art enterprises do not share its profits and revenues to its stakeholders or owners but further
utilize the profits to accomplish its targets8. Furthermore, non-profit enterprises possess the
capacity to transform their share of revenues as surplus to attain its self-preservation,
advancement and other prospective strategies. Thus are devoid of any acts of liability in most
nations specifically in terms of income and property taxation.
The legal structure of a business enterprise aims to be vital to the way the business
executes its operations. A limited company exists as a legal entity in itself in seclusion from its
ownership. Furthermore, the development of limited company necessitates the documentation of
several permits with the Registrar of Companies which must involve a Memorandum of
Association and Articles of Association. If necessary documentation is satisfactory, legal
incorporation is issued further establishing the company into significance as a legal entity. Tesco,
being a public limited company (PLC) aims to pursue a strategic business unit (SBU) pertaining
all of its operational areas to enhance the rate of competitiveness within the domain of individual
8 Young, Dennis R., and Jesse D. Lecy, "Defining the universe of social enterprise: Competing
metaphors." Voluntas: international journal of voluntary and nonprofit organizations25.5 2014: pp.1307-1332.

6BUSINESS AND THE BUSINESS ENVIRONMENT
market areas9. It has been noted that the SBU aims to serve TESCO with high degree of
flexibility in order to expand its operational area in several directions and further facilitates the
company to be successful globally rather than implementing strategies from home nation.
2. Explain the size and scope of a range of different types of organizations.
There are generally five forms of organization, public, government enterprise,
cooperatives and NGOs. It has been noted that limited business are generally corporate
associations whereby they have legal identification in its own authorization. Studies have
revealed that limited business organizations have been established by two or more individuals
which led the business associates have to comply with various process of documentation such as
memorandum and articles of association. Furthermore, several private limited business
enterprises must comprise minimum one share while an organization can serve a significant
portion of its revenues and share to the public. In addition to this, business enterprises can offer
considerable amount of share to the segment of the population who want to form association
with any specific company. It has been recognized that Tesco established by Jack Cohen as a
solo traders’ organization, therefore the organization can easily develop without any legal
formalities. Modern theorists have revealed the growth of Tesco over the past three decades
which has involved a significant transition of its strategy and brand image. The company in 2005
surpassed all its unconstructive image and evolved as one of the largest and leading retailer in the
UK comprising a portion of over 30% of the grocery market in comparison to the 16.50% share
9 Butler, Richard. and C. Wilson. David, Managing voluntary and non-profit organizations: Strategy and
structure. Routledge, 2015.

7BUSINESS AND THE BUSINESS ENVIRONMENT
of ASDA and around 16% revenues of Sainsbury which had been recognized as a prominent
market leader of UK until surpassed by Tesco in the late 1990s10.
Furthermore, it has been recognized that Tesco has maintained various rules and
legislation in order to enhance their business sustainability as a public limited company. The
company has registered them with the London Stock Exchange in order to sell their share to the
populace. Furthermore, it has been noted that the London Stock Exchange maintains strict
regulations in the process of share trading. The business enterprise effectively organizes annual
meeting with their stakeholders once in a year11. As the volume of the organizations is
immensely reliant on their distinctive product types, the scope for one of the leading beverage
brand Coca-cola enterprise is to produce and deliver non-alcoholic beverages such as carbonated
drinks, concentrates, energy beverages and packaged drinking water. Furthermore it has been
identified that OXFAM, one of the renowned charitable organizations comprise a wide range of
target which aids more resources in order to safeguard themselves from new entries to the market
whereby it has been recognized that a large business enterprise with enhanced rate of resources
comprise a higher rate of risks in order to sustain its level of protection. With the dependency of
several business operations on the stakeholder base, the level of influence thus becomes
immensely higher by any business operations. As the recent business environment has been
immensely been targeted by several global organizations, the business environment of Tesco has
been gradually transforming on the basis of the trend of latest consumer base and society12.
10 Tesco plc, 'Our Businesses' (Tesco plc, 2018) <https://www.tescoplc.com/about-us/our-businesses/>
accessed 2 July 2018
11 Doherty B, H HaughF Lyon, 'Social Enterprises as Hybrid Organizations: A Review and Research
Agenda' (2014) 16 International Journal of Management Reviews
12 Khan, Arifur, Mohammad Badrul Muttakin, and Javed Siddiqui. "Corporate governance and corporate
social responsibility disclosures: Evidence from an emerging economy." Journal of business ethics 114.2 (2013):
207-223.

8BUSINESS AND THE BUSINESS ENVIRONMENT
Though, the business can undergo certain degree of expansion globally by supportive industries,
the business might experience irrepressible situation because of the whole business operation
which is based on factors related to macro environment and forces.
LO 2
3. Explain the relationship between different organizational functions and how they
link to organizational objectives and structure
The business operation of any organization is immensely reliant on various functions
such as human resource, sales as well as marketing, along with research and development,
customer service, administration, finance and accounts. As the process of marketing is regarded
as a significant association with the market to enhance the level of contentment of the consumer
base, it is considered to be highly effective for both the consumer and the distributor base. This
process aids TESCO to deliver adequate customer details for emerging new products which
subsequently aids the quality life of the customers13. Furthermore, it has been noted that the
emergence of Tesco has a prominent brand has effectively formulated a competitive base
through the comprehensive pricing strategy. Furthermore, the business enterprise has expanded
its production system which permits the customer base to have expedient rate of accessibility to
products and services14. The elevating rates of demand of Tesco products facilitate the expansion
of its business and generate more revenues from the UK market. The unique communication
techniques of the organization facilitate the company to enhance its social behaviour in a well
13 McKeever, Brice S., and Sarah L. Pettijohn. "The nonprofit sector in brief 2014." Washington, DC:
Urban Institute (2014).
14 Barrientos, Stephanie. "Corporate purchasing practices in global production networks: A socially
contested terrain." Geoforum 44 (2013): 44-51.

9BUSINESS AND THE BUSINESS ENVIRONMENT
constructive manner. Tesco has proficiently established several awareness campaigns in order to
spread the rate of responsiveness such as anti-smoke awareness and diabetes prevention
awareness initiatives aimed for the Tesco and Diabetes UK collaboration to enhance the rate of
accountability of the organization on the society.
Tesco finance functions facilitates the daily transaction of the purchases, sales, use of
business resources internally as well as externally to the business enterprise. Tesco’s cash and
cash equivalents further ensure the proper financial transaction of the company in order to
sustain business liabilities. Thus the corporate, financial department of Tesco is accountable for
supplying additional investment for the development of the business. Furthermore, Toyota has
engaged itself in efficient human resource management department in order to supervise
employee activities in the organization. The HR strategy at Tesco involves high degree of work
simplification, introducing essential skills along with performance management associated to
achieving critical targets and objectives. Strategic HRM in Tesco has attained both credibility
and popularity over the past decade especially in regards to its influence on the company’s
performance15. Thus the induction provided to the employee base encompasses all learning
capabilities and permits certain cultural divergences. It has been identified the corporate
objectives implemented by the company which are further reinforced by a comprehensive
Corporate Strategic Action Plan which entails various functions of Tesco. As Tesco falls under
cost leadership category it coerces to the lowest cost operator in the industry. Thus in order to be
a cost leadership environment, investment is required in the domain of production technology
along with improved quality staff. Tesco’s products are considered to be lowest in comparison to
15 Hartley-Brewer J Merrick, 'Tesco Chairman John Allan Slams Tory Plan For EU Referendum' (The
Independent, 2015) <https://www.independent.co.uk/news/uk/politics/generalelection/general-election-2015-tesco-
chairman-john-allan-slams-tory-plan-for-eu-referendum-10187367.html> accessed 2 July 2018

10BUSINESS AND THE BUSINESS ENVIRONMENT
its competitors Sainsbury and Morrison16. However, Tesco cannot be identified as a true cost
leader as it has distinguished itself from other operations in regards to its product range, service
delivery, and online sales. Thus it can be stated that Tesco is proficiently aiming to adopt both
cost leadership and differentiation.
LO 3
4. Identify the positive and negative impacts the macro environment has upon
business operations, supported by specific examples.
As the business environment constitutes of several internal and external forces under
which any small or large business enterprise executes its operations, thus serves a critical role in
the business. It further shapes the competence level of the business enterprise in order to sustain
its customer associations. Modern theorist significantly categorizes the business environment
into macro and macro factors whereby the macro environmental factors tend to pose universal
impact on every small, medium or large enterprise operating in a particular market such as
economic, environmental or political environment17. While the micro environment aims to focus
on the suppliers, distributors and customer base of the organization.
The positive and negative impact on the organization has been discussed through the
analysis of PESTLE factors.
16 Butler S, 'Tesco Increases Grocery Market Share For First Time In Five Years' (the Guardian, 2016)
<https://www.theguardian.com/business/2016/oct/18/tesco-increases-grocery-market-share-sales-rise> accessed 2
July 2018
17 Barrientos, Stephanie. "Corporate purchasing practices in global production networks: A socially
contested terrain." Geoforum 44 (2013): 44-51.

11BUSINESS AND THE BUSINESS ENVIRONMENT
 Political Analysis-The UK government in recent times has adopted a taxation assessment
which posed high degree of influence on Tesco. In 2011, it has been reported that the UK
government has increased the rate of Value Added Tax (VAT) from around 17.8% to
20% with the propensity to raise government revenue by £ 13 billion per year. As a
result, a rise in the rate of VAT unconstructively impacts the growth of sales revenue
generated by Tesco18. Furthermore, the UK government has planned to adopt proposed
taxation rates with the purpose of regulating the intensifying rate of obesity and further
restrict medical issues associated with it. Therefore, such assessment can pose adverse
affect on the revenues of certain goods retailed by Tesco. As a result, Tesco acts to be
responsive to such threat and introduced a wide range of new healthy food products to
mitigate such risk factors19.
 Economic Analysis-The UK economy tends to reveals signs of resurgence during events
related to financial crisis. It has been noted that a considerable rate of financial rise has
been estimated with a gross domestic product which was approximated to undergo an
increase of over 2.5% than the pre-crises peak20. However, economic development has
been regarded as a positive indicator for Tesco as it results in the advancement of
supermarket and retail industry, the leading industry in UK where Tesco executes its
operations21.
18 Chaffey, Dave, and Paul Russell Smith. eMarketing eXcellence: Planning and optimizing your digital
marketing. Routledge, 2013.
19 Lettice, Fiona, Markus Tschida, and Ingo Forstenlechner. "Managing in an economic crisis: The role of
market orientation in an international law firm." Journal of business Research 67.1 (2014): 2693-2700.
20 Shortell, Stephen M., et al. "A taxonomy of accountable care organizations for policy and
practice." Health services research 49.6 (2014): 1883-1899.
21 Ridley-Duff, Rory. and B. Mike, Understanding social enterprise: Theory and practice. Sage, 2015.

12BUSINESS AND THE BUSINESS ENVIRONMENT
 Social Analysis-With the increase of longevity of UK citizens, the nation witnessed a
significant transition in individual preferences. Thus, the adoption of e-commerce by
Tesco for its grocery products has been recognized as a significant approach which
further takes into consideration the areas of concern regarding mobility which are
primarily experienced by the elder generation. However, several modern theorists state
that elder age group with a high income show greater degree of inclination towards
internet usage and thus tend to purchase products online. Therefore, Tesco tends to be
positively responsive to factors related to social change.
As the perceptions and opinions of contemporary consumer base tends to
encounter rapid changes because of the changes in the quality and price of the product
range of an organization. This further tends to shed light on the corporate strategies and
approaches which must be receptive to the business environment. However for instance,
in 2013, Tesco were critiqued for horsemeat scandal which posed a persistent impact on
several players in the food and retail sector. As the company faced allegations of not
providing quality products as claimed in the marketing campaigns, it affected the
customer base of Tesco with a declined rate in sales.
 Technological Analysis- As technology is regarded as a critical factor in supply change
management, retailers like Tesco must establish proficient supply chain management in
order to acquire competitive advantages and further improve its cost productivity. IT has
been conceived that Tesco being one of the leading retail organizations needs to take
into consideration factors related to advanced technologies for example, cellular
communication facilities can enhance the supply and distribution chain as the customer

13BUSINESS AND THE BUSINESS ENVIRONMENT
base of the company can purchase according to their preferences22. However, Tesco
management needs to develop their knowledge for disruptive technologies which has
frequent incidence in the domain of retail industry. As disruptive tools or technologies
tend to emerge from an innovation of technology that shows incompetence to
accomplish desired organizational performance, customers value the current technical
expertise rather than inclining on the recent one. However, a niche in the retail industry
develops where the disruptive technical expertise is more suitable to customer base; such
technology seems to be unconstructive to well-established organizations like Tesco and
Booker which is recognized as the leading wholesaler provider in the UK. Thus it can be
stated that disruptive technical expertise will enhance the rate of its prominence and will
act as a significant factor to the customer base in comparison to the current technical
expertise23. As a result, disruptiveness or inefficiency in technical expertise can hamper
the performance growth of any organization.
 Legal analysis-Tesco, being a vital player in the UK retail industry tends to get affected
by several legislative factors during the execution of its operations. For example, in
relation to the agricultural products and services, the UK government is reforming the
fundamental agricultural policy and regulation. Such measures can result to reduced rate
of subsidies, which impact the skills of the agricultural sector in order to attain certain
agricultural principles established by Tesco24.
22 Roness, Paul G. "Types of state organizations: Arguments, doctrines and changes beyond new public
management." Transcending new public management. Routledge, 2017. 77-100.
23 Mowday, Richard T., Lyman W. Porter, and Richard M. Steers. Employee—organization linkages: The
psychology of commitment, absenteeism, and turnover. Academic press, 2013.
24 Cummings, Thomas G., and Christopher G. Worley. Organization development and change. Cengage
learning, 2014.

14BUSINESS AND THE BUSINESS ENVIRONMENT
Tesco is also involved in several financial services and products like credit cards,
savings, loans and mortgages. However, the Prudential Regulatory Authority adopts a
micro-perspective and is accountable to the organizations which are engaged in financial
services and further executes its operations in adherence to relevant regulations.
 Environmental Analysis-It has been noted that the major societal issues threatening
the food retail industry in particular has been regarded as one of the significant
environmental issues, which is a key area for large scale organizations to act in socially
responsible manner. Thus, by successfully identifying this trend within the broad
ethical stance25, Tesco’s corporate social responsibility is concerned with the
approaches which a business enterprise surpasses the minimum obligations to the
stakeholder base specified through means of regulation and corporate governance26.
LO 4
5. Conduct internal and external analysis of specific organisations in order to
identify strengths and weaknesses
SWOT Analysis
Strengths Weaknesses
 Leadership position in the UK
retail industry
 Effective online operations
 Weak financial performance
 Adverse effect to the brand’s
image because of commercial
25 Iqbal, N., S. Anwar, and N. Haider. "Effect of leadership style on employee performance." Arabian
Journal of Business and Management Review 5.5 (2015): 1-6.
26 Younis, Eman MG. "Sentiment analysis and text mining for social media microblogs using open source
tools: An empirical study." International Journal of Computer Applications 112.5 (2015).

15BUSINESS AND THE BUSINESS ENVIRONMENT
 Initiation of club card as an
effective consumer information
mechanism
 Well-established property
portfolio
income scandal in 2015
 Dependability on the UK market
 Reduced employee morale
Opportunities Threats
 Pursuing global market
development strategy
 Increasing presence in financial
service industry
 Raising opportunity for e-
commerce27
 Developing the effectiveness of
marketing strategy
 Global retailers cause threats by
offering reduced prices
 Lack of ability to sustain cost
leadership competitive advantage
 Currency fluctuations
 Development of new ethic-
sensitive issues
Strengths
 Tesco being one of the leading retailers in the UK industry comprising a grocery market
share of over 28%. Its biggest competitor is Sainsbury which constitutes a market value
of around 16.5% and Walmart owned ASDA which is equivalent to around 16.5%.
 The company further utilizes e-commerce networking with increased rate of efficiency.
However Tesco has been recognized as one of the primary retailers and merchants in the
UK to profitably initiate e-commerce channel and has been generating revenue via e-
commerce for solid share of its gross revenues28. It has been noted that in 2015 the Tesco
e-commerce grocery market developed surpassing the market at a significant rate of 20%
27 Marsden, T. K., and A. Arce. "The social construction of international food: a new research agenda." The
Rural. Routledge, 2017. 87-106.
28 Neilson, Jeffrey, Bill Pritchard, and Henry Wai-chung Yeung. "Global value chains and global
production networks in the changing international political economy: An introduction." Review of International
Political Economy 21.1 (2014): 1-8.

16BUSINESS AND THE BUSINESS ENVIRONMENT
while the organization posted an amount of pre-tax loss rated of GBP 6.40 billion in the
equivalent financial year.
 Tesco generates a considerable amount of profits from its Clubcard membership in
several distinctive levels. This type of membership has used to proficiently implement is
a tool to raise the rate of customer retention as well as customer loyalty, whereby
customers can obtain single credits for each GBP 1 spent. This leads a member to receive
a statement and vouchers in the redemption of the credits they have saved.
Weaknesses
 Modern economists have noticed as statutory loss of GBP 6.3 billion in 2015 which has
further elevated its net debt amount to over GBP 8.5 billion. However, the amount of
revenue earlier than taxation has been constantly reducing all through the past four
decades, whereby the decline during 2014 has been recognized to be most critical further
revealing the outcomes of accounting offence revealed in 201429.
29 Amer, Muhammad, Tugrul U. Daim, and Antonie Jetter. "A review of scenario planning." Futures 46
(2013): 23-40.

17BUSINESS AND THE BUSINESS ENVIRONMENT
 It has been noted that few of Tesco’s subsidiaries have been unable to operate and areb
highly exposed to certain external factors. For example, Tesco Finance revenues have
faced adverse effect during the recent credit crisis.
 Tesco is extremely reliant on the retail UK market for its trade growth and further has not
spent adequate resources on establishing other markets where it has its operations.
Opportunities
 There can be identified several avenues for strategic associations and alliances with other
brands and accepted companies in order to provide increased level of products more
customer base in certain definite crucial target markets.
 Furthermore, in countries whereby Tesco has its operations which have been
encountering challenges to perform proficiently, there could be certain avenues for
collaborated ventures in which local business enterprises can aid to enhance the
performance of those areas with adequate market observation and market intelligence.
 Developing markets sustain numerous areas of avenues for certain retail strategies and
formats that Tesco already offers which can further provide improved rate of accessibility
to the western goods or products demanded by these areas30.
Threats
 High rate of economic fluctuations related to economic recessions which will persist to
cause coercions or threats to the market share and productivity in certain areas across the
world, further reducing the number and volume of procurement made by the consumer
base.
30 Brahma, Sanghamitra, and Sumita Mishra. "Understanding Researchable Issues in Knowledge
Management: A Literature Review." IUP Journal of Knowledge Management 13.4 (2015).

18BUSINESS AND THE BUSINESS ENVIRONMENT
 Furthermore, it has been noted that high rate of competitive challenges emerging from
other vital global retail players who strategize to offer reduced price range along with
greater variety to establish strong position in the market.
 Labour threats related to increasing wages and other benefits across the world can aid to
Tesco’s beneficiary basis which tend to exert pressure on its pricing strategy.
 The government regulations of UK along with other political power have been
reinforcing Tesco to adhere to new regulations and directives which require them to
develop significant transformations towards its operational structure for the company’s
additional expense31.
6. Explain how strengths and weaknesses interrelate with external macro factors of
the business Tesco operates
The social environmental strategy decision makers have been influencing the business
environment of Tesco whereby this strategy has facilitated the customers’ life cycle.
Furthermore, the technological macro analysis also plays an influential role in the business
environment of Tesco whereby its consumer base can make effective preferences by advanced
internet technologies and place orders through online system32. Tesco has been providing its
services through online procedures and receive customer feedback in order to enhance it’s the
organizations’ productivity level. Technological environment further aids the strategic decision
making of Tesco in order to ensure the customers’ purchasing behavior.
31 Hauswald, Hannes. Stakeholder trust in family businesses. Springer Science & Business Media, 2013.
32 Bondarenko, Tatiana Grigorievna, et al. "Optimization of the company strategic management system in
the context of economic instability." European Research Studies 20.2 (2017): 3.

19BUSINESS AND THE BUSINESS ENVIRONMENT
However, it has been identified that Tesco is unable to increase their business strategies
because of low economic level and politics. As economical and political environment are
regarded as critical factors for the weaknesses in Tesco, the rate of business contraction approach
has acted as highly decisive role in the growth of retail outlets. Thus, other retail business
enterprises tend to reveal low degree of ability to attain competitive advantageous position from
political forces33. This has led Tesco to be unable of attaining advantage from economical
environment forces. However, Tesco attain high level of opportunities from free global market in
political and economic environment.
Conclusion
Therefore, from the above discussion it can be stated that PESTLE and SWOT analysis
are immensely vital mechanisms for any organizational strategy. Thus it can be concluded that
Tesco has formulated an effective PESTLE analysis for its organizational growth by mitigating
certain political and economical environmental factors. However, it is important for the
organization to provide supreme service in their market and further comprehend the behavioral
pattern of the consumers because of the rise in the product sale. Thus, in order to develop the
level of product selling service, Tesco must enhance the rate of customer dependency related to
e-commerce, digital product and discount price.
33 Rahman, M. "Usage of Strategic Management Models: Benefits and Limitations." World Vision Resarch
Journal 8.1 (2014).

20BUSINESS AND THE BUSINESS ENVIRONMENT
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