Analyzing Business Environment Factors

This solved assignment examines the influence of various macro environmental factors on Tesco Plc. It delves into political, economic, social, technological, environmental, and legal (PESTEL) factors, assessing their strengths and weaknesses for the organization. The analysis highlights how Tesco can leverage these factors to achieve business success and outlines the importance of understanding the business environment for effective decision-making.

BUSINESS
ENVIRONMENT

Table of Contents

INTRODUCTION
The term business is referred to a enterprise, company or an organisation which functions
to provided product and service to its target customer for meeting there business objectives.
These organisation provides there goods and services for there monetary and non monetary
benefits(Al-Debei and Avison, 2010). Businesses are generally owned by private owners or it
may be owned by government and government bodies of country. Management of enterprises
depends upon ownership if it is owned privately, owners are the only one who manages its
functions whereas government owned organisations are managed by government officials.
Internal and external factors which impacts directly and indirectly the functions of
business structure, employees, customers of organisation, demand and supply is referred to
business environment. The sum of all factors which affects working of an organisation is known
as environment of business. These factors include all micro and macro elements which directly
or indirectly influences functioning of organisation. It is necessary for all enterprises to eliminate
negative impacts of factors influencing business with significant strategies in order to survive in
competitive business market. In the following assignment different types of organisation and
there purposes will be studied significantly with impact of micro and macro factors on
businesses(Becker, 2017).
TASK 1
P1 Covered in ppt.
P2 Covered in ppt.
P3 Relationship of different organisational functions and its link to objectives.
Tesco Plc is a multinational grocery store which provides quality products and services to
the individuals of society where it operates. The organisation is a third largest retailer in business
world. It aims in providing high quality of services to customers inorder to improve standard of
living of individuals and aims in achieving value of business among its customers(Boons and
et.al., 2013). As per the above diagram it has been show that in the Tesco plc there are various
functional department which are very important for the company. Every department have
interred connection with each other because these have common objective as attain the
organisational objective. Each functional department have their own objective such purpose for
1

insatnace, marketing department have objective to increase the sales , human resource
department have purpose to manage the human resource, finance department have objective is to
manage financial performance etc. Thus it can be said that each one have its own objective. Each
department have objective to attain the common objective of the Tesco that is enhance
profitability and market share so each department perform in excellent manner to attain this
common objective. The functions of the Tesco plc can be studied from the given diagram and
these functions of organisation are described as follows:-
Board of directors:- The BOD of Tesco Plc consist of 10 members who works effectively in
achieving the goals and objectives of business. A change was done in the board members of
organisation in the year 2014-15. New appointment of chair person of board was done and seven
new members were appointed in the place of retired members. The board of director are only the
personnels who takes decisions and commands managing director of business and further
managing director coordinates with the different functional department of organisation to work
effectively and efficiently. It has major objective is to coordinate the activities and monitor the
performance of each department so as Tesco can attin it department objective.
Human Resource:- Human resource management is major function of the company which
includes various activities like recruitment and selection, training and development, motivation,
developing workforce practices and policies etc. This function of Tesco plc consists of different
individuals such as human resource director, manager and recruitment officers who works for
hiring good staff members for organisation. The HR directors plans for recruitment of employees
and guides the members of department for hiring of individuals (Brinckmann, Grichnik and
Kapsa, 2010). The major objective of this function is to manage the human resources in effective
manner and attain the business objective. In the absence of employees, company can not attain
the business objective so it is very important for this department within the Tesco plc is to
manage its employees in effective manner so as they can effectively carry out its business
performance.
The function is directly linked with achievement of organisations objectives. Good recruitment
of employees for organisation by HR helps in attaining objectives within time frame with less
wastage of time and money. This supports organisation in improving business performance and
enhances effectiveness and efficiency in operation(Bryman and Bell, 2015).
2

Finance:- Finance department is another major function of the business enterprise which have
main objective is to damage the financial performance of the company. This function of Tesco
Plc is related to the management of organisations funds. This department includes members such
as finance managers and accountants who record financial data of organisation and are
associated with receiving amount of receipts and making payments. The function also prepares
budgets for organisation and allocates finance requirement within time frame. With help of this
functional department, company can easily measure and mange its financial performance. The
record of profitability and loss in the business are measured in this functional department. While
financila activities is effectively coordinated and manage then company can atatin its target in an
effective manner and this department have interrelation with other department.
The function supports organisation to forecast financial requirements in future and allocates them
within time frame which help in continuous working of organisation effectively.
3
Illustration 1: Functional department
Source:Functional department, 2017

Administration:- This function is related to all clerical works of organisation such as keeping
the records of customers, handling documents, dealing with queries of customers and other. This
department is also associated with the maintenance, management and security of business.
The department helps organisation to provides effective services to its customers without any
mismanagement which supports to gain interest of customers in organisation.
Marketing and sales:- It is a function of organisation which is directly associated with the sales
and marketing of business products and services. Function determines marketing policies which
has to be undertaken by organisation to achieve its goals. This is one of the most important
functional department in the company which assist in introducing and promoting the product and
services in the market. In the absence of this department, cited venture can not introduce and
promote its product and services.
This helps Tesco Plc to attain its sale objectives of its products and services. It supports
organisation to use effective marketing plans which supports in achieving objective to increase
customers and enhance brand image of Tesco Plc.
Customer service:- It is an function which is directly related to services provided by
organisation to its customers. These function deals in providing information demanded by
customers, giving advices and delivering product and services in best possible way to attain
customer satisfaction.
The function helps to achieve interest of new and existing customers towards Tesco Plc which
increase the numbers of service user for organisation. The effective customer services assists in
getting complete satisfaction level of customers with the provided services and solve customers
grievances effectively to increase goodwill of business(Cantwell, Dunning and Lundan, 2010).
4

TASK 2
P4 Positive and negative impacts of macro environment of business operations.
The negative and positive impacts of macro environment factors on the operations of Tesco plc
in United Kingdom is described as follows:-
Political:- In the macro business environment, political factor is another major factor which
affect the Tesco Plc in large manner. In this aspect includes the governmental law, legislation,
regulation, code of conduct, etc which directly affect the business activities and function. The
factor have adverse positive and negative impacts on operations of Tesco Plc. In order to protect
the business and its working, Tesco plc should understand the governmental impact on the
business of this political factor. With assistance of this component, cited venture can protect its
business and its functioning. The government of United kingdom have implemented the new Tax
policy which have negatively impacted the organisation. The increase in VAT rate have helped
government to earn more revenue but it have reduced the customers spending which have
negatively impacts on sales revenue of Tesco plc(Carroll and Shabana, 2010).
Economical:- The economy of United Kingdom is effectively recovering from situation of
financial crises which have positive impact on Tesco Plc. Recovery from financial crises have
helped organisation to increase its growth rate in retail industry, whereas the condition of
recession in economy have lead to unemployment which have declined the purchasing power of
individual which results as an negative impact on sales of Tesco Plc.
Social:- In the business environment, social and culture is another most important factor which
affect the company profitability and market share. Tesco Plc is a firm which deal with the
customer product and services. It is very difficult for the company to understand the changing
trend and taste of the customer. Thus, it is very important for corporation to analyse the taste,
preferences, culture, region, class, caste and background of customer so as it can easily meet the
actual requirement of the customers. The significant decrease in birth rate and increase in life
expectancy have lead to increase in number of elder people in society of United kingdom. This
have affected the tastes of the individual. More of elder people in society and taste variance
affects the sale of new products launched by Tesco Plc.
Technological:- In the business environment, technology is one of the factor which affect the
business activities and function in the large manner.In the every department of the company like
marketing, human resource, administration, operation, manufacturing, production, information
5

technology required an effective and high quality of technology. In the absence of technology,
business activities and functions can not accomplish and company can not attain its objective.
Due to regular changing technology, company have to adopt the new technology and equipment
in the business context. Tesco Plc required to conduct the market research so as it can easily
acquire the new technology and improve its quality of work. The factor plays an significant role
in impacting operations of Tesco Plc positively and negatively. The technological factor have
significant competitive advantage and disadvantages. The use internet and mobile technology
have helped Tesco Plc to provide better distribution services to there customers whereas as the
more effective technology used by its competitor declines growth of Tesco Plc.
Environmental:- This is another major important factor which affect the Tesco plc in large
manner,.In this factor includes the natural resources of the country like weather, climate, air,
water , fuel etc, While Tesco plc survive its business activities and functions in the market then
it has to consider the environment of the country. With help of this consideration about the
environment, company can easily cope up with the changes in the country. The factor relates to
management of organisations waste, pollution control and recycling of waste goods. The strict
rules laid by government of United kingdom have forced Tesco Plc to operate its business
without harming environment due to its operations. Due to this Tesco plc uses more of
greenhouse gases which is more costlier as compared to other fuels, which increase the cost of
operation and negatively affects profitability of organisation(Cavusgil and et.al., 2014).
Legal:- This is the major factor in the business environment which affect the Tesco company in
large manner. In this component various legislation , code of conduct and regulation has been
included. This factor assist to the company's employees, customer and business. With help of this
legislation, policies and practices of government company can protect its employees in large
manner. The various laws framed by government have adverse effect Tesco plc. The
organisation is also working in financial services such as credit card, loans and savings. The
Financial service act (2012) implemented by government of United kingdom affects the services
in financial field of operation. The strict regulation compresses the functioning of Tesco Plc.
P5 Internal and external analysis of Tesco Plc to identify strengths and weaknesses.
The internal analysis of organisation is done in order to determine the internal factors of
organisation, which affects organisations functioning positively and negatively. The factors
impacting operations of business positively are the strengths whereas factors impacting
6

negatively are weaknesses of organisation(Elliot, 2011). The internal factors of includes business
plans and policies, structure of organisation, its objectives and strategies. The internal analysis
can be done by using the SWOT method which supports in determining strengths and
weaknesses of organisation. SWOT of Tesco Plc is described as follows:-
Strength:- Tesco Plc is a multinational organisation in retail industry and grab 9th position in
retail industry all over the business market. The organisation have globally known brand image
which is a great strength of Tesco Plc this supports organisation in increasing the number of
customers and enhances the profitability of business. The organisation have good financial
position as compared to its competitors such as Asda and Sainsbury.
Weakness:- The organisation have faced great financial loss due increase in number of bad debts
in financial services of firm provided to its customers such as credit cards and loans. Tesco Plc
lacks in planning financial strategies which declines profitability of organisation and its have
also faced an issue in launching mobiles of its own brand due to lack in use of improved
technologies.
The external analysis of organisation to determine strengths and weakness is done with
the use of PEST analysis which is described as follows:-
Political:- The increase in the VAT rate as an new policy implemented by government have
declined the profitability of Tesco Plc which is an weaknesses of organisation.
Environmental:- The rules framed by government for protection of environment from business
activities have negatively impacted the scope and limited business activities of Tesco which an
significant weakness of organisation(Jahangirian and et.al., 2010).
Social:- The change in tastes and preferences of society individuals is related to the social factor
which affects positively and negatively the operations of business. The youngsters of society
prefer new technology and online shopping which is being provided by Tesco this acts as an
strength for organisation.
Technological:- The use of mobile and internet by Tesco in providing service to its customers is
an strength of business which helps to increase new customers for organisation.
P6 Interrelation of strengths and weakness with external macro factors.
The external factors which affects operations of business are directly related to the
growth and profitability of Tesco Plc(Kolk and Van Tulder, 2010). The effects of external macro
factors on functioning of business can act as an strength and weakness for organisation. External
7

macro factors consists of Political, Economical, social, Technological, Environmental and Legal
factors of country where business operates. These factors have direct relation with strength and
weakness of Tesco and this are discussed as follows:-
Political factors:- The factor is linked with the political conditions and taxation polices
implemented by government. The harsh political condition of country where business operates
leads to the weakness for organisation and political stability leads to strengths for organisation.
In the context of Tesco Plc, the major strength of the political factor is that company can protect
and keep secure its business activities and function. With help of this component, company can
easily survive its business functioning in ethical manner.
Economical factor:- The economical condition of country where business operates determines
the strengths and weakness of organisation. The good economical condition of country is
strength for business.
Social factors:- The social factors is related to the values, beliefs, tastes and preferences of
individuals where business functions. The operation of organisation as per this factors act as an
strength for organisation and violating these social factors leads to business weakness. This is
one of the effective and important factor in the business environment which assist to the
company in knowing the actual needs and wants of the customer. The major strength of this
social and culture factor is that company can easily analyse the actual taste and preferences of the
customer. With help of this factor, company can meet the actual requirement of the customer and
attain the business objective. However, regular changing the taste and preferences of the
customer can negatively impact on the business as company have to adopt the new strategies and
business practices.
Technological factor:- The adaptation and use of new technologies in functioning helps in
increasing strengths of business and use of out dated technology in business is its weakness. The
one major strength of the technological facto is that company can easily improve the quality and
efficiency by this component. This assist in improving the process and system of the business.
Environmental factor:- The strengths and weakness have direct relation with environmental
factor if the business operates is the suitable environment for its operations and works as per
condition its becomes strengths for organisation and vise versa(Kotler, 2011).
Legal factors:- The legal factors such as rules and regulation framed by government for
organisation acts as strength and weakness for organisational good policy acts as strengths and
8

vise versa. With assistance of the legal factor within the business environment, Tesco plc can
keep protect its customer, employees and business. Thus it can be said that with help of this
factor, company have large benefit as it can safely operate its business activities and function.
CONCLUSION
The above report concludes that there are different types of organisations based on there
ownership. These business have there own aims and objective where some have objectives to
earn profits out of there provided products and services and some functions in providing services
for not for profits out of it. The different macro factors have been studied in the above report
which helps to determine the strengths and weakness of Tesco Plc and retail organisation. From
this report it has been also concluded that in order to atatin the business success and goal it is
very important for the company to analyse iots business environment and impact of various
factor like political, social, technological, economical etc.
9

REFERENCES
10

11

12

13