Critical Success Factors for Business Growth

This assignment delves into the critical success factors (CSFs) essential for achieving business growth. It encourages you to analyze various perspectives on CSFs, including a PESTLE analysis of the macro-environment, the application of a B2B CSF framework for Chinese SMEs, and the role of co-innovation in driving organizational value. The assignment emphasizes the importance of understanding these factors within a global context.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types of organisations and their purpose................................................................1
P2 Scope and size of various organisations................................................................................3
P3 Relationship between organisational functions and objectives.............................................4
TASK 2............................................................................................................................................6
P4 Various macro environmental factors that make an impact on the business operations........6
P5 Internal and external analysis of strength and weaknesses....................................................8
P6 Relation of strength and weakness with external macro environment..................................9
CONCLUSION..............................................................................................................................11
.......................................................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment consist of all the internal as well as external factors which have
capacity to influence decision taken by an organisation. A company have to consider these
elements in order to make effective policies. Tesco is a leading firm in retail sectors, they are
operating in more than 12 countries, they have around 6553 stores in European and Asian
regions. Their mission is to make products which fulfil need of customers, they also believe in
making this world a better place to live. Their vision is very aggressive, they want to achieve and
retain top spot in retail industry (Arasti and et.al., 2014). This report will includes various type of
organisation like public, private etc. Functions performed in a company and its relation with
objective of enterprise will also become part of this file. Effect of macro and micro factors will
get discussed under this project.
TASK 1
P1 Different types of organisations and their purpose.
Covered in ppt.
P2 Scope and size of various organisations.
Covered in ppt.
P3 Relationship between organisational functions and objectives.
Tesco is operating in many countries which is the main reason that their structure is very
complex. They found this problem long time ago so they started making policies at store levels.
In order to achieve mission and vision of organisation, they make short, medium and long term
goals (Harrison, 2011). Cited company basically divide their work in two divisions, one is food
item and other is non food items like electronics, clothing. Tesco is strong in food segment but
they are still struggling in other department so they set some short and middle term goals to
improve their performance in this sector. They are targeting 6.5% market share before 2020 so
they can achieve a decent position in this area of operation. For this task human resource
department has to recruit more people in organisation because they will be needing more
salesperson before end of current year. Finance department has to provide more funds to HR
wing so they can pay employees salary on time. They also have to provide extra fund to research
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and development department so they can innovate new techniques to increase profit of company.
In long run they want organisation to expand their business, for this task they will be needing
more people at managerial level. This can be done by providing correct training to the employees
so leadership skills can be developed in their nature. This will give cited company better leader
which can provide great assistance in to the firm in terms of profit and expansion. One of the
most important long term goal of Tesco is to maintain proper work/life balance so workers can
do the task allotted to them effectively (Kian, ChongShafaghi and Leing Tan, 2011).
In retail industry most of the department are managed at store level. In Tesco they have one
regional manager who is responsible for all the units that are present in a region. Store manager
is accountable for execution of strategies made by top level management. Their are three
managers who work under him, first is food trading manager, second is non food trading
manager and last one is personnel manager. Cited company earn most part of their revenue from
food business (Klapper and Parker, 2011). Their was a time when this segment was not
performing according to their expectation which result in severe decrement in revenue. This was
a time when they took an important decision that they are put more resources in non food
segments as other players in this industry were getting strong because of this segment.
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Illustration 1: Table 1

Now a days people are getting more serious about their health which is the main reason
that they are giving more priority to organic product. They have target to enhance sale of organic
manufacture to 1 billion pounds in next five years. Their are investing more money in non food
segment but this section will take some to provide desired return (Moutinho, 2011). Until than
food division has to perform according to expectation because they are considered as key player
in generation of profit. Organic products are getting vary popular in public which is the main
reason that cited company is still allotting more resources in to this division.
Tesco has already enter in non food section which main consist of electronic goods and
clothing (Lee,Olson and Trimi, 2012). Top level management understand that they can not
depend on food segment for a long time because they are giving decent return, other companies
are getting some extra edge on cited organisation because of non food division. This is the main
reason that they are putting more funds in this areas so they can deliver better results in
upcoming time. Welfare of employees is a priority for the enterprise, they want to create
appropriate work/life balance in life of work. Personnel department solve various issues relation
to employees, this play crucial role in increasing their efficiency.
TASK 2
P4 Various macro environmental factors that make an impact on the
business operations.
External factors has capacity to change the decision taken by an organisation. If macro
environment is positive than a company can earn more revenue even things do not go according
to their plans but it atmosphere is negative than an organisation with sound financial position can
face serious trouble in business operations. Below is PESTLE analyse of Tesco:
Political Factors – Cited organisation is a multinational company which is present in more than
12 countries (Palo and Tähtinen, 2011). They have to follow tax system of different nations
which is a difficult work because tax structure of various states and countries is very
complicated. They have to hire more and special accountants which enhances cost of operation.
Brexit is anther problem in front of Tesco because they do not have any plans to cope of with its
uncertainty. Fear of unknown is reducing their valuation in market. But there are some Asian
countries who are inviting big firms of retail sectors because they know that this industry has
potential to provide job to large number of people. They are providing some special assistance to
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them so they can invest in these developing countries. Many expert of this sector believe that
Asia will play crucial role in success of many companies in upcoming time. This is the main
reason that some investors are ready to invest more money in this organisation which is giving
strength to their weak financial position.
Economical factors – Economy of a nation influence business of an a firm, if economy of a
country is good shape than even an underperforming organisation can achieve good growth, but
if economic system is in bad condition than all the companies who are performing well may face
serious troubles (Pikka, Iskanius and Page, 2011). Economy of Europe is not according to the
need of cited company which is the main reason that they are looking towards north America and
Asia. Demand of customers in UK is very limited which is the main reason that growth of Tesco
is low. In order to cope up with this situation they adopt two crucial strategies,
Internationalisation and diversification. They are investing money in Asian region which is
providing high return in short period of time. These countries has high growth rate which
making a positive impact on business of cited organisation (Pingali and Roger, 2012).
Social factors – Needs of society changes on continues basis which is the prime reason that
Tesco is giving much attention to bulk shopping. They have are started one stop shopping which
is getting very popular in this era. They are also investing huge funds in organic product which is
getting appreciation from society. This made position influence on their business as sale of
organic items are continuously increasing. But some people firmly believe that they are doing
harm to society by increasing pollution which is promoting their negative image among
customers.
Technology factors – Cited company is giving to much attention in this area because they
understand that in current time technology has power to assure success for an organisation. They
started online shopping which is one of the most popular platform on selling variety of products
(Reed and et. Al, 2013). They are also setting self service checkout points which is getting lot of
appreciation from customers. These two changes are playing crucial role in enhancement of sale
which is making a positive impact on business. But some experts of retail industry feel that these
changes are going to make negative impact on business of Tesco because it will increase their
cost of operation. They think that technology changes in very short period of time so investing so
much resources in this filed is very risky for cited company.
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Legal Factors – Government in UK is changing common agriculture policy which is growing to
make negative effect on cited organisation. Government give subsidiary to the farmers, but now
their are changing it's whole process. If peasants receive low financial assistance than they may
not maintain the quality which is needed by Tesco. This will make a negative influence on
business of cited company (Trkman, 2010). Some countries in Asian regions are changing their
legal system so they can convince leading players of retail industry to invest in their nation. This
will make a positive affect on business operation of cited organisation.
Environmental Factors – This enterprise is working in order to reduce their carbon foot prints by
almost 50%. They are going to reduce energy consumption and they are planning to decrease
utilisation of greenhouse gases (Wheelen and Hunger, 2011). This is improving their goodwill
which is positive for cited organisation. But their are some cases in which people are blaming
Tesco for increasing various type of pollution in atmosphere. This is making negative impact on
business of cited enterprise.
P5 Internal and external analysis of strength and weaknesses
Tesco is the one of the most important grocer and leading retailers in its home market. It
has maintains it s position through clears objectives to provide better products and services to its
customer and promote their business in achieving its goals in effectively. The need to analysed
every increase various number of customers by providing appropriate goods and services. To
increase more profit they need to analysed it online customers through providing products and
services online. There are so many ways to control resources of company and make them utilised
in effective manner so that minimum change of losses are their because they need to be control
as it help in advancement and development of company growth.
The aims and objectives of the company is only be achieved if the internal and external
factors of business are being effectively analysed. The new entrants can help to assist them to
upfront in managing resources of the company. Company internal factors more responsible for
the development of various ideas and changes that is need to be analysed properly so that better
results can be achieved:
Strengths:
 Tesco is one of the biggest company with market share of almost 27.9%. its close
competitor are Finsbury has the market share of 16.6%.
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 Finance is an important strength of Tesco which is related with cash reserves to meet the
outstanding liabilities of the company. Because in new era it is huge challenges that is
faced by company is availability of cash. It is based on internal rate of exchanges that are
to be transformed though fulfil scarcity of funds and meet this from internal sources.
 Marketing is a kind of techniques that are to be available to every aspects of country. The
products of company are delivered across every country.
Weaknesses:
 The main purpose of weakness is with relation to lack of innovation and co ordination
among various department to work as team in fulfilment of objectives.
 The people those are required in this kind of processes are too costly so overall cost of
products are goes upwards all the time.
 In 2015, Tesco Plc had loss of 6.4 billion and had pushed the amount of its debts to 8.5
billion.
 It reliance upon UK market: The most important weaknesses of this company is that
because it is more depend on the UK market because of which growth percentage of the
company are falling continuously.
 Debt reduction: It is not going to minimise debt until 2006. because of large investment
of capital expenditure are due to its investment in new stores.
Opportunities:
 Non- food retails: It has seen tremendous growth in hypermarket format in UK which
means that there are various expectations from retail sales in next few years. It is using its
low cost structure together with merchandising skills to include other leg to growth.
 Health and beauty: It has beauty range product which has huge chance of growth
potential because they are growing fast as in skincare retailer in other markets. The
company has a wide volume of market share positions in number one retails in terms of
baby goods markets.
Threats:
 UK structure change can make a price war: The followers in UK market are about to
become aggressive investors in relation to price, because of new ownership an Sainsbury
management polices. They are huge threat for Tesco Plc to compete against them.
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 International return can fall: The buy condition of Tesco is estimated around
investment around international group return as every nation moves past critical mass.
 International expansion: It is too costly to enter into new market with introduction of
new brand because they require more capital for marketing as well as land prices.
P6 Relation of strength and weakness with external macro environment.
Evaluation of performance of an organisation is necessary in order to find current
position where they stand. This task should be done on continuous basis because in current
business environment market trends are changing in very short period of time. SWOT analyse
help in finding strength, weakness, opportunities and threats.
Strength – Tesco is investing in Asian region. Many experts believe that this part of the world
will deliver surprising result in upcoming time. Cited company has a good brand name which is
the main reason that government of these countries are providing some special assistance to them
so they can increase the amount they are expending in this region (Zott, Amit and Massa, 2011).
This will decrease the unemployment in these nations. Their goodwill is their strength which is
the playing supporting them in expansion of their business. They are increasing production of
organic items which is getting lot of appreciation from public. This is improving their image
which is making a positive impact on their sale.
Weakness – Employees of cited organisation are not satisfied by the facilities they are getting in
stores. This is influencing their brand name and value because if workers are not happy with
working conditions than their efficiency will decrease which will hamper performance of Tesco.
The fund they are investing in developing countries are providing returns according to their
expectation. This is increasing their financial trouble which is cresting new trouble for the
enterprise.
Opportunities – This organisation should use new strategies of advertising because other players
of this industry are capturing market by doing innovation in this area. North America, Brazil,
Africa, Asia are some regions which have potential to grow at a high rate. Cited company can
merger which local players so they can smoothly expand their business. They are putting lot
funds in non food section which can give surprising return to them in upcoming time.
Threats – Cost of material in enhancing on continuous basis, this is the main reason that their
revenue is decreasing. Brexit is another challenge in front of Tesco, fear of uncertainty is
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influencing their decision making process. Positions of other players are getting strong, Walmart,
Carrefour are performing better than expectation of industry.
External factors has power to influence decision taken by Tesco. Brexit is going to make
huge impact on business operation of cited company. Their was a time when they do not need to
take different type of permission from European countries, but after Brexit they have to take
various kind of approvals from these nations, this will make increase complexity in their
business. Asian continent are making policies in which they are providing several special
assistance. The can recover the investment they have done in short period of time. Organic
products are getting popularity among people, it is going to increase their goodwill and sale.
CONCLUSION
From the above repeat it can be concluded that business environment plays crucial role in
failure or success of an organisation. Structure and size of a company decide area of operation of
an enterprise. Their are various types of entities in private sector like sole proprietor, partnership,
company, etc. Their legal structure and way of doing business is vary different. In order to
understand external environment most of the companies adopt PESTLE analyse. For internal
evaluation of performance of a company, SWOT analyse is considered as best option.
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Wheelen, T.L. and Hunger, J.D., 2011. Concepts in strategic management and business policy.
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