Understanding Business Environment: Tesco Case Study

This presentation discusses the micro and macro environment of Tesco, a leading retailer in the UK, with the help of Porter's Five Force Model and PESTLE analysis. It covers the factors affecting Tesco's performance, such as suppliers' power, buyers' power, competitive rivalry, threat of new entrants, political, economic, social, technological, environmental, and legal factors. The presentation concludes that understanding the business environment is crucial for sustaining the market place and attracting potential consumers.

BUSINESS
ENVIRONMENT

TABLE OF CONTENT
 Introduction
 Porters five force model
 PESTLE analysis
 Conclusion
 References

INTRODUCTION
 Business environment refers to all the factors that greatly affect a
company’s operation by including consumers, suppliers, stakeholders,
social, economic factors, technological development, etc.
 This presentation will illustrate the concepts of micro and macro
environment with the help of choosing Tesco as a firm through which
certain aspects will be discussed.

PORTER’S FIVE FORCE MODEL
The main purpose of this model is to examine the impacts of five forces
such as suppliers’ power, buyers’ power, competitive rivalry, threat of new
entrants and threat of substitutes.
 Buyers power: Tesco serves millions of customers in their stores hence
the bargaining power of buyers are low in the UK as they are not
organised.
 Suppliers power: Tesco works with lots of suppliers in the UK,
however, these suppliers can never put forth any important power on
Tesco as there are many of them out there.
 Threat of new entrants: The threat of new entrants is very low for
Tesco because a lot of capital has been required in order to enter into the
market space in which Tesco exists.

CONTD.
 Rivalry among Tesco’s existing
competitors: Tesco has huge amount of
competitors within the UK as they spend
lavishly over advertising their products
along with other marketing techniques.
 Threat of substitute products: Tesco
offers wide range of products to their
consumers along with sells substitute
products as well.

PESTLE ANALYSIS
In order to evaluate the external environment that greatly affects the Tesco in
each and every aspects are discussed below with the help of PESTLE analysis:
 Political: Being a retailer company and operates worldwide, international
political factors greatly affects the Tesco as well as their performances
within the market place. It involves varied tax rates, rules and regulations
along with the stability of the country in which the Tesco operates.
 Economic: It includes the factors that are related to the costs, demand,
prices of products and profit margin over them. Hence, the company should
be aware about any changes within the policies that have been adopted
worldwide.

CONTD.
 Social: Due to various social changes, recent
trends indicate that consumers are more
interested in purchasing items into bulk and
one stop shopping. Therefore, Tesco enhanced
number of non food items within their stores
to increase their sales volume.
 Technological: Technological advancements
have brought various opportunities for Tesco
as it provides facilities for online shopping
along with home delivery services which
greatly affects the purchasing habits of
consumers.

CONTD.
 Environmental: Tesco committed in order
to reduce their carbon footprints by 50%
along with minimising the waste produced
within their stores by enhancing social
sense of right and wrong in consumers.
 Legal: The rules and regulations that have
been created by government also directly
affect the performance of Tesco within the
market space. For instance, a code of
practice should be introduced in order to
ban current practices by the retailers.

CONCLUSION
From the above presentation it has been concluded that identification of
competitive advantages buy any organisation, the evaluation of internal as
well as external environment are highly essential and beneficial. It helps the
Tesco to sustain their market place along with their customers as well as
attract more of potential consumers.

REFERENCES
 Orugun, J.J. and Aduku, D.J., 2017. Intellectual capital and organizational
performance in a competitive business environment: A review. Asian
Research Journal of Arts & Social Sciences, pp.1-9.
 Dalevska, N., Kravchenko, S. and Kwilinski, A., 2019. Formation of the
entrepreneurship model of e-business in the context of the introduction of
information and communication technologies.