Understanding the Business Environment - Tesco and HSBC Bank

This report covers the analysis of the business environment of Tesco and HSBC Bank. It includes the legal structure, operation, objectives, market structure, stakeholder analysis, PESTEL analysis, and Porter's five forces model. Tesco is a multinational British retailer company, and HSBC Bank is a British universal bank in the United Kingdom.

Understanding the
Business Environment

Table of Contents
INTRODUCTION.....................................................................................................................................3
TASK 1.......................................................................................................................................................3
Legal structure, operation and objectives of the organization..................................................................3
Market structure of chosen organization and how this structure impact behavior of company in looking
to attain competitive advantages..............................................................................................................5
TASK 2.......................................................................................................................................................5
Apply the stakeholder analysis process to identify organizational stakeholders’ group...........................5
TASK 3.......................................................................................................................................................7
Why it is imperative to analysis the business environment and critically evaluate the PESTEL analysis
for the chosen organization......................................................................................................................7
Importance of the porter's five forces model............................................................................................8
TASK 4.......................................................................................................................................................9
Key performance indicator in annual report of the organization and evaluate the development of short-
and long-term performance......................................................................................................................9
CONCLUSION........................................................................................................................................11
REFERENCES........................................................................................................................................12

INTRODUCTION
Business Environment refers to the all the activities which aggregate of all the condition,
factors, situation which is derived from the environment and affect the business organization
directly. It is the total of all the factors include internal and external which includes customers
demands and wants, demand and supply, expectation, employees, suppliers, current trends,
economy growth, technology etc. All the internal and external factors can affect the working
condition of business directly. It is help to analysis the opportunities, resources, growth and also
improves the overall condition performance of business (Basak, and et.al., 2020). It plays a vital
role in every business. There are two types of business environment which includes Micro
environment and Macro environment. For Task one and two Tesco has been chosen topic where
the Tesco is a multinational British Groceries which is founded in 1919 by Jack Cohen in United
Kingdom. This report will cover the company organization according to business organization
types and also help to analysis the company sector. It will analysis the market structure. This
report also defines the shareholder and stakeholder analysis. For task three and four HSBC bank
has been taken topic which is the British universal Bank in United Kingdom. This report will
cover the HSBC current Macro environment influence with PESTEL analysis and also cover the
market environment with the help of Porter’s five model. The report will cover the short- and
long-term annual report of HSBC Bank.
TASK 1
Legal structure, operation and objectives of the organization
Overview of the organization: TESCO Plc is a multinational British retailer company which is
the third largest company in the world. It was founded in 1919 by John Cohen in United
Kingdom. It is a groceries and merchandise retailer which is the public limited company. Its
headquarters in Welwyn Garden City, England UK. They also provide online services to their
customer by introduce their own website www.tescoplc.com. It is the one of most leading
retailers which is measured by gross revenue. They introduce many products such as
supermarkets, superstore, hypermarket, convenience shops. Their shops in Europe around 5
countries. Tesco aims to serve their customers better services to provide good quality food
(Boone, Kurtz, and Berston, 2019).

Legal Structure: It is playing a vital role for any business because it is the term of legal
areas such as tax payment, business control, legal assets. It is also known as the ownership
business structure. It is referring to the company entity which has legal responsibilities. It is also
defining the company structure. The Legal structure of TESCO, it is a Public limited company
(plc). Public limited company has many advantages like shares can be sale, and sell it to public
through stock exchange. As per research, it has flat hierarchical structure which has six levels
between staff and executive chief.
Operations/Purpose: It is referring to the system which integrates the units in the business to
introduce the final goods and services. Operation management of Tesco, it is a retailer company,
the main key activities at company are; logistics inbound, marketing and sales, customers
services, logistics outbound (Chen, Jin, and Huo, 2020). Tesco investing more in technology
day-by-day to develop the customer experience. Tesco has a leading in supermarket positions.
The future data records of Tesco depend on operation management. The aim of Tesco to become
a leading market in the world by providing better and good quality products and services to their
customers at low price which helps to attract more customers and increase the sales. Tesco
understand the customers needs and wants So, they provide services and product according to
their customers which helps to satisfy the customers and fulfilled their desires.
Objective: Tesco set their objectives to achieve them, they aim to produce better goods
and services to increase the customers loyalty and customer’s value which help them to earn the
lifetime value. There are more certain aims of Tesco which are as follow-
 To analysis the customer needs and wants and fulfilled their demands as per they want.
 To become a leading retailer supermarket by produce good product and services at low
price.
 To maintain the employee, engage and improve their performance for achieve the future
goals.
 To earn lifetime loyalty with customers by understand them.
 To create the better environment for customer satisfaction.
 Provide the product and services according to customers which helps to gain more
customers and sales.

Market structure of chosen organization and how this structure impact behavior of company in
looking to attain competitive advantages
Market structure of an organization helps the employee to understand the responsibilities
and role within the business (Kamal, 2020). There are many kinds of market structure in the
organization, in context to Tesco, they have Oligopoly market structure. Oligopoly is defined as
the term of market, where it has few firms in the market. Tesco has the lack number of
competitions in the market. Tesco main competitors are Asda and Sainsbury. The Oligopoly
market structure helps Tesco to collect the competitive advantages. There are some competitive
advantages which are as follow-
 Competitions: There is benefit in competitions of United Kingdom’s Oligopoly. In
context to Tesco, they sell product and services nearly their shops where the customers
are preferred to buy the things nearly their home. And there are lack number of
competitions in the market.
 Advertisement: Tesco’s Oligopoly market structure is very powerful; they provide better
advertisement of their product which helps to attract the customers and increase the sale
of the company.
TASK 2
Apply the stakeholder analysis process to identify organizational stakeholders’ group
Stakeholder: It is referring to the individual or team which is interested in organization
any decision or activity. It can be defined as the term of party that increase the interest in any
decision of an organization. It is also known for owning some percentages of company’s shares
(Lent, and et.al., 2019). There are some primary stakeholders in a typical corporation includes
employees, suppliers, investors. Stakeholder entity’s is factor which can be internal and external
in the business. It can affect the organization by using its strategic planning. In context to Tesco,
there are some external stakeholders which includes creditors, communities, government,
suppliers and creditors. They serve many million customers in a week.
Shareholders: It is referring to the any person, organization or company which has their own
shares in the company. It is also known as members of corporation. In other words, the legal

entity of company which is own by individual or organization. An individual can own 50%shares
of a company which company considered as shareholder. In many cases, there are many
shareholders who is company’s founder can also own share in the company. In context to Tesco,
the number of shareholders can be defined as majority shareholders. In today’s time, the largest
shareholder of Tesco is BlackRock who shares 6.9% outstanding. and the second largest
shareholders is LLP which is also known as international investors who holds 3.4% of stock of
company (Li, Wang, and Gu, 2019).
Stakeholder analysis: It is the process of identifying the key stakeholders. It is the term
of stakeholder management and it is a important technique to identify the stakeholder and
analysis their needs and wants. It is help to analysis the stakeholder needs and expectation from
the company project. In context to Tesco, analysis their stakeholder includes customers,
government, competitors, creditors etc. Tesco aims to meets their customer needs and wants and
develop their product at low price, good quality product, home services etc.
Stakeholder Analysis process-
In context to Tesco, the stakeholder analysis helps to identify their key
stakeholders and also the development of the company. There are some steps to analysis
the stakeholders which are as follow-
 Identify the stakeholders- it is referring to analysis the overall activity of stakeholder
which help to identify the needs and demands. In context to Tesco, they need to make a
list of their all the stakeholders who is purchase the share from the company and then
analysis the who interest in company’s success or failure (Nemeth, Dew, and Augier,
2018).
 Prioritize the Stakeholders: Tesco prioritize their stakeholders by giving the interest to
individual for increase the level of impact. Stakeholder has to power to control the grid
leading tool.
 Understand the key stakeholders: In context to Tesco, they should understand and
identify stakeholder needs and expectation from the company or project which helps to
analysis the interest about the stakeholder like what things motivate them, what kind of
opinion to work in the work, what influence them to work.

TASK 3
Why it is imperative to analysis the business environment and critically evaluate the PESTEL
analysis for the chosen organization
Business environment is important for every organization. It is helping the organization
to analysis the factor of environment that affecting the overall organization process (Oeij, and
et.al., 2019). In context to Tesco, it is a multinational retailer company and the environment of
market can be risky so, analysis the various reason there are some major points which helps to
measure the business environment which are as follow-
 Business Environment of Tesco can be analysis by the PESTEL Model which helps to
analysis the all factors include Political, Economy, social, technology, environmental,
legal. These factors help to analysis the business operation the company.
 Every business has many risks, opportunities, threats. Tesco has also some risks,
opportunities which can be analysis by the SWOT analysis to define the strength,
weakness, opportunities and threats of the company which is also help in set the future
growth.
 By analysis of business environment of Tesco, it is analysis that Tesco has many
opportunities to collect the competitive advantages.
PESTEL Analysis of Tesco
 Political factor- It is referring to the factors which impact on company, the factors
include policies, tax policy, current trends, regulation etc. In relation to Tesco, the
company affect by these factors because there is no limitation for political stability
(Quinlan, and et.al., 2019).
 Economic factor- It is referring to the factors which can affect the economy which
includes economy growth, inflation rates, globalization, change in economy etc. For
Tesco economy factor affect the company by labour cost which is high. The total gross
revenue affects by Cost of the labour which is issue for the whole economy supermarket
chain.
 Social factors- It is referring to the factors which can affect the industry socially which
include demographics, attitude, religious trends, opinion etc. In context to Tesco, it is

difficult to analysis the demand for product and services which can change the customer
attitude. Tesco should analysis the customers behaviour and provide services and product
according to their health.
 Technological factor- This factor is the term of technical factors which affect the
company technically which includes technology of distribution of goods and services,
produce goods and services, communication with target market in a new way. In context
to Tesco, they use many kinds of technology which includes computer, television, radio,
and other which helps to attract the customer attention (Rincon, 2018).
 Legal factors- It is referring to the factors which include opportunities, consumer rights,
health and safety, laws etc. In context to Tesco, they affected by the governments rules
which can affect the company overall performance.
 Environmental factors- it is referring to the term of factor which affect the company by
increasing the fear of raw materials, target pollution etc. In context to Tesco, they are
investing more to create the society sustainable. They use plastic which affect the
environment
Importance of the porter's five forces model
Porter’s five forces model is an important model to analysis the forces which are affect
the company. It is help to improve the strategy for performance (Svensson, and et.al., 2018). It is
also help to analysis the threat of new entrants, bargaining power of suppliers, customers,
substitution threats, competitors’ rivalry.
Porters five forces
 Threat of new entrants – It is refers to the any entry of competitors in the market which
can be barrier for the company. As per research there is lack number risk for Tesco
because it is the leading company so the threat for new entrants for the company is low.
Tesco produce best products and services which is the good advantage for the company.
 Bargaining power of suppliers- It is refers to the power of bargaining of suppliers
where at the some point they lies in terms of payment, amount etc. in context to Tesco
there is law number of bargaining power of suppliers because as per research company
has loyal relation with suppliers and customers

 Bargaining power of customers- It is refers to the bargaining power of customer where
the customers are bargaining for the products and services. In context to Tesco, the
bargaining power of customers is medium because sometimes customers bargaining for
some product which company has to face (Tilley, 2019).
 Threat of substitution-It is refers to the threat which is arise when the similar product
introduced in the market at low cost. In context to Tesco, the threat of substitution is low
because company make better products and services, they have loyal customers,
customers are only purchase the product from them.
 Competitors Rivalry: It is refers to the same product and services which is produce by
another company within the market. It is also the threat for company. In context to Tesco,
they have threats of rivalry is high because they produce those products which is
produces by another companies. Which can affect the customer attraction.
TASK 4
Key performance indicator in annual report of the organization and evaluate the development of
short- and long-term performance.
The key performance: indicator is a measurable value which demonstrate that how effectively
an organisation is attaining the key business objectives. The Tesco also uses the KPIs in order to
evaluate their success at reaching targets. There are various KPIs of the Tesco. Certain of them
are mentioned below:
 Profit- Delivering a profitable growth is very essential as Tesco’s aim is to create a value
for the entire stakeholder a long time period. The group operating profit, before an
exceptional items or amortisation of the acquired intangibles. This is the headline
measure of group’s performance. Tesco’s (Walton, 2020).
 Cash flow- Strong cash generation is very crucial part of Tesco’s underlying philosophy
as company manage their business. Retail operating cash flow is cash generated from the
continuing operation, not including impact of the Tesco bank’s cash flow. This is a
measure of case generation and working capital efficiency by retail business, recognising
that the Tesco banks is regulated and run independently from retail operations.

 Sales – In this, group sales are a measure of the revenue excluding sales made at the
petrol filling stations. This demonstrates group’s underlying performance by eliminating
volatilities associated with a movement of the fuel price.
Development of the short term and long-term goals
 Tesco’s short-term goal is to reduce the food waste at global level and ensure that surplus
food goes to those who need it.
 Tesco’s long-term goal is making it easy to live healthier. It’s another goal is make a
positive contribution to communities where it is operating.
Financial and non-financial measures of the performance
In context to Tesco, the financial performance measurement has just one objective which is
to bring betterment of financial department of respective firm. These measures are able to deliver
the short-term success to the organisation (Wang, Kung, and Byrd, 2018).
 Through these measure, respective company can know that how it has been utilizing their
resources. Manager of Tesco, and its potential investor’s relay on the several financial
performance measures for the utmost profit.
 Beside it, Tesco’s non-financial performance is related to its organisational performance
which is not associated with the money. It ensures a prosperity of Tesco’s in long run.
Tesco’s non-financial measure support company’s strategies. In order to make the
customer experience better, respective company need to make fixed objectives, it also
helped by the non-financial measurement.
Recommendation
Form the above discussion it is analysed that Tesco is doing well in its financial and non-
financial growth.
 In order to make it more improved, it is recommended to Tesco that respective company
should expand its customer base and revise their offer or pricing as these strategies help
the Tesco to improve their financial performance.
 In order to improve the non-financial performance, Tesco should practise to satisfy the
customer more. The company should take action to facilitate the training and

development session so that employee can get knowledge about latest technology (Zhou,
and et.al., 2019).
CONCLUSION
From the above study it has been analysis business environment play a vital role for any
company because it helps to improve the overall performance of company by analysis the
environmental effects which is the impact for the company. it is also helps to analysis the
company position within the market by analyzing PESTEL AND Porter’s five model. It is
analysis that Tesco is British company in UK which is the largest retailer as per revenue the legal
structure of company is, it is a public limited company which has so many advantages.
Stakeholder and shareholder analysis by the stakeholder analysis process which helps to know
about the company’s key stakeholders. It has been analysis that the business environment of
company analysis by PESTEL analysis And Porter model and also analysis the annual report
performance of company by KPI Model. The overall study has been analysis that for any
company or organization it is important to better environment to make the organization better.

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