Business Environment Tesco: Doc

BUSINESS AND
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types and purpose of organisation..........................................................................1
P2 Size and scope of different organisation................................................................................2
TASK 2 ...........................................................................................................................................3
P3 Relationship between different organisational functions .................................................4
TASK 3 ...........................................................................................................................................5
P4 Identify positive and negative impact of macro environment on business operations. ........5
TASK 4 ...........................................................................................................................................7
P5 Conduct internal and external analysis of the organisation for identification of strength and
weakness.....................................................................................................................................7
P6 Explain how strength and weakness interrelate with external macro factors. ......................9
CONCLUSION .............................................................................................................................10

INTRODUCTION
Business is defined as the continuous activity which is undertaken by the individual with
the objective of earning profit. The major motive of the organisation is to earn more and more
profit by selling goods and services to the potential customer's. It is the duty and responsibility of
the management of the firm to make necessary changes in the working structure of the
organisation, so that goals and objectives are achieved in the best possible manner. This can be
done by involving the employees in the decision-making process. Business environment is
related with making plans and strategies after analysing the internal and external factors which
can directly or indirectly affect the working of the organisation(Ayios, 2018). Company chosen
for this organisation is TESCO which is one of the biggest multinational grocery retailer of UK.
Major topics covered in this report are different types and purpose of organisation along with
their scope and size, relationship between different organisational functions, positive and
negative impacts of macro environment and identification of strength and weakness which are
interrelated with the macro environment.
TASK 1
P1 Different types and purpose of organisation
Organisation is different unit of people that is structured and organised to achieve goals
and objective of company. In this task different types of organisation with its purpose and legal
structure will be included:
Public organisation- The public organisation is formulated by government the decision
makers of this are government officers and authorities that work to provide services or products
at low rate.It is self funding enterprise that work and provide benefit to society along with buyer
who purchase it. They perform their daily operations with the collection of tax and deliver or
offer their goods or services in society. In present case NHS is chosen as public organisation
which work with purpose to provide better services to society rather than to earn profit. They
work with motive of providing better health services by charging minimum price from
clients(Buytendijk, Hatch and Micheli, 2011).
Legal structure of public organisation

 Central government- In this government is responsible and authorise to make policy for
whole nation so all public department or organisation work in sequential process or
manner. State government- The state government formulate policy and create of conduct that is
follow by public companies that operate activities in boundaries of state.
 Local government- Public organisation that work for development of small area such city
or town have to follow laws and legislation of local government.
Private organisation- In present scenario private organisation help to increase the
economic of country. This are operate by owners that register their firm and offer products
which help to make profits. The purpose of public organisation is to earn sufficient amount of
profit for their business. Tesco is chosen as private organisation that is operating their business
all over the globe in retail sector. Management of organisation offer inferior quality products to
their customer(Chokheli, 2014).
Legal structure of private organisation
Sole proprietorship- Under sole proprietorship a single person is responsible to operate
and organise company activities for their business. The profits and loss that are earned by
performing business activities are hold by owner only.
Partnership- In partnership firms there are two or more persons which work together to
operate business activities. With this they share profits and risk that help to expand business at
international level. This business start with an agreement between different owner in which their
roles and responsibilities are explain briefly.
Limited company- Limited company is a structure in which company operate their
business as different members. For example- if company has to suffer loss then their owner are
responsible for only those part which amount is invested by them in company.
Voluntary organisation-This type of organisation are developed or created by different
group of individuals. In which they all combine their efforts to achieve common goal that work
for benefits of society. To create voluntary organisation group management has to take
permission from ruling government in which they want to operate their business activities. For
this case Oxfam is chosen as voluntary organisation which work with purpose of removing the
poverty from the nation. They offer essential resources to needy person that help to raise the
living standard of citizens.

Legal structure of voluntary organisation- For the case of voluntary organisation
different members that are diverse from each other work together for provide benefits to society.
For this essential points are as follow:
Trust- For voluntary organisation there are three pillars that include donor, trustees and
society. It include lot of money so in this case trust and pledge provide systematic process by
which society is benefited.(Commander and Svejnar, 2011).
P2 Size and scope of different organisation
Private organisation- Tesco is the giant company which stores are present at multi-
national level. Each organisation has different purpose by which their size and scope is different
from public or voluntary organisation. Like in context of Tesco management has increased their
size by opening their store in different countries. The expansion of organisation help
management of Tesco to earn surplus profits that help them to retain at top position in retail
sector. More than 6,000 stores are present in UK, India, Malaysia etc. that help company to
increase their market capitalization by which they earned more revenues. In terms of scope
groceries include items are needed by customer on daily basis so company has opportunities to
enter in rural market and to cover potential customers by which more revenue is earned by
company(Craig and Campbell, 2012).
Public organisation- Public organisation provide their services to whole society. For this
company has to offer and deliver their product in wide area. This help them to satisfy the needs
of customers. As in this case NHS provide their services in health sector this help society to live
healthy life as company provide its services by charging minimum prices from their customers. It
is public funded company that raise funds form government. Their are more than One million
employee's are working with NHS. As in UK specifically in England NHS provide various
health services that include primary care, long-term healthcare, and dentistry services by charge
low amount. Company has wide options in term of scope as they has large number of work-force
that is working with single public organisation. Apart form this company provide free health
services to low segment or required citizen that define scope of company in whole world.
Voluntary organisation- Oxfam is the largest charitable trust or organisation that is
working in UK as NGO. They work not to earn more profits but they for development of
society . It was established in the year 1942 and in present approximately twenty trust are
working under Oxfam management with aim to remove poverty from society. So this increase

size of company as their members are present all over the world. The main motive of
organization is to provide essential resources to poor or needy citizen so they live their life in-
comfortable manner. As with this company motive is also fulfilled that is to improve living
standard of company and reduce poverty from country(Heaton, Linden and Teece, 2014). To
manage this process management of Oxfam has implement hierarchical structure as it help to
delegate and segment the work as per company objectives and goals. All activities that are
performed by volunteers is for welfare of society so in this trust factor is most essential because
it help to fulfil basic requirements that are needed by society individuals.
TASK 2
P3 Relationship between different organisational functions
In an organisation different types of functions are present that help them to achieve their
goals and task. It include marketing, production, finance research and development etc. This task
define relationship between different function which is as follow:
Illustration 1: Organisational Chart of Company
Source- Organisational Chart of Company. 2013
Marketing and production function- Both marketing and production are essential
function of company that help to sustain their business for longer period. In the production
company manufacture its goods or services for customer and marketing team promote and aware
customer about the product. Marketing department of company also help management to predict
the need and demand customer and then tell production department to develop or update product
that satisfy need of customers(Hopkins, 2011).

Like in case of Tesco the members of marketing team make analysis and predict trends
and needs of customer that is beneficial for production department essential information to
production department with this organisation develop products that match with their objective. In
case of private organisation this process is very important because main motive of private
organisation is to earn profits only.
Human resources and sale department- To run an organisation human resource or
workforce is always needed. For complete of all activities manpower execute their efforts in the
process of organisation which help to achieve their goals or objective efficiently and effectively.
In this case HR department is responsible to hire best candidates for company. As with effective
employees company is able to produce effective result that increase value in company products.
As in sale department the main resource is human which are selected by HR team.
In context of Tesco large number of employee's are needed to organise and manage their
multi-national stores. They are best resource that help organisation to maintain their top position.
Apart from this management of Tesco hire candidates which help them to make competitive edge
among their rivals with their effective performance. It also help organisation to achieve their task
and goal within limited time period(Jenkins and Williamson, 2015).
Research & development along with finance function- To expand business in large area
research department play an essential role they explore opportunities in industry or market. For
this they require invest huge amount that is needed to find out exact need of customer. In this
finance department help management to manage sufficient amount that are needed R&D team. A
It is the responsibility of finance team to provide monetary resources to different departments of
company so they operate their regular activities easily(Madureira, 2014).
For case of Tesco company has to face competition from local and inter-national player
so it is essential for them to manage money. As it help to buy resources that are necessary for
company to perform their day to day activities. With completion of this activities manager of
Tesco is able to achieve their objective and to generate income by selling their products which
are manage by finance department of company. Structure followed by Tesco under private
organisation is sole proprietorship that work with motive of earn profits only. For this finance
department follow structure that is decided by top management so company earn huge profits for
their business.

TASK 3
P4 Identify positive and negative impact of macro environment on business operations.
Macro environment is concerned with the external factors which directly or indirectly
affect the working of the organisation. This is because it becomes tough for the organisation
control such factors in the best possible manner. But to reduce the negative impacts of macro
environment organisation can focus on analysing such factors in the best possible manner. As
after this management of TESCO will be able to make strategies for improving and enhancing
the present and future conditions. The positive and negative impacts of macro environment on
TESCO is discussed below-
Political factor- It is concerned with the political stability and regulations imposed by
the government of the particular country(Menet, 2016). The rules and regulations of imposed on
the import and export of goods directly affects the working of the organisation. The laws related
to import duty can have negative and positive impact on the organisation. For example high
import duty on the goods is negatively impacting work of TESCO. As the organisation imports
its raw materials from various parts of the world. Whereas the positive impact of import duty is
organisation will be able to reduce unemployment rate in the best possible manner. As with the
help of its TESCO will be able to provide employment to various individuals.
Economic factors- It is concerned with the inflation, deflation and interest rate of the
country in which organisation is currently operating. The cost, prices and profits are resulting in
negative and positive impact on the working of TESCO. Organisation is focusing on increasing
borrowing cost in UK which is resulting increase of cost and price. Due to this factor the brand
image of the organisation is at danger which is one of the biggest negative impact. Whereas
continuous diversification of the products has lead to growth and profitability of the organisation
in the UK and international market(Paul, Yeates and Cadle, 2014).
Social factors- It is related with the attitude and perception of the individuals regarding
the products and services of the organisation. Change in need and preferences of the potential
customer's have largely affected the business of TESCO. As customer's of UK are demanding
fast delivery of goods with proper return policy. But the organisation is unable to provide this
which is the negative impact of this factor on the business of TESCO. Customer's are also
demanding organic and healthy products. Management of the organisation is successful in
satisfying such needs of the customer's, as major changes have been done to provide healthy

products. Focus is emphasised on producing healthy products, so that health of the customer's
can be improved.
Technological factor- Technological factor is related with using innovative techniques to
control and manage the external environment. It is related with making best use of latest
technology for achieving goals and objectives in the best possible manner. Major changes in the
activities related to technology has lead to growth and development for the organisation. TESCO
is able to meet the needs of this customer's by using RFID technology. The main motive was to
increase and enhance the experience of customer's in the positive manner. But technology
requires time to time updates, so that best results can be drawn. Management of the organisation
is unable to make changes in the technologies because its involves high investment. This is one
of the negative impact of this factor on the working of TESCO(Riaz and Khalili, 2014). As
rapid changes take place in the technological environment , so it becomes essential for
organisation to adapt new techniques.
Environmental factor- It is concerned with making changes in the polices related to
environment and society. TESCO is currently facing high pressure from the government of UK
for reducing the environmental issues. It is the threat for the organisation because if plans are not
taken for saving this than image of TESCO will be at danger. Due to this the business of the
organisation was affecting in the negative manner. To overcome this issue management of the
organisation has introduced plans for recycling and reusing plastic bag in the best possible
manner. The delivery vans of the organisations are also made to use fuel saving routes, so that
environment can be saved. This has proved to be one of the positive point for TESCO because
plans are made for conserving and saving the environment.
Legal factor- It is related with rules and laws of the particular country which needs to be
taken into consideration by the management of the organisation. The employees of TESCO were
not satisfied with the pay rates given by the organisation. Due to this organisation was facing a
problem of high turnover and absenteeism. It has also resulted in negative impact on the working
of the organisation. Whereas the positive impact of such law on TESCO is organisation started
working as per norms of Food Retailing Commission(Silva and Sias, 2010). As with the help of
this organisation is able to attract and retain more customer's because their health is taken into
consideration.

Impact of PESTEL analysis- If the management of TESCO is able to analyse each and
every aspect of macro environment in the systematic manner than its performance can be
improved and enhanced. TESCO needs to make strategies as per the laws and regulations of UK,
so that chances of risk and uncertainty in the macro environment can be reduced. With the help
of this organisation will also be able to achieve its long and short term goals in the effective and
efficient manner.
TASK 4
P5 Conduct internal and external analysis of the organisation for identification of strength and
weakness.
It is very much essential for the organisation to properly identify its strength and
weakness. As with the help of this TESCO will be able to give tough competition to this
competitors available in the same industry. TESCO has large number of competitors available in
the retail market of UK. Due to this is becomes essential for the management of organisation to
properly identify positive and negative aspect of internal and external analysis. TESCO will also
be able to achieve competitive advantage in the best possible manner(Thompson, 2017). As new
ideas and strategies can be made for increasing the satisfaction level of its potential customer's.
For analysing the internal and external environment management of the organisation can use
SWOT analysis in the systematic and coordinated manner. SWOT analysis of TESCO is
discussed below-
STRENGTH WEAKNESS
 TESCO is one of the biggest grocery
retailer of UK. The sale and profitability
of the organisation is also at the rapid
growth stage which is one of the biggest
strength for the organisation.
 The organisation is able to provide goods
and services as per the needs and
preferences of its potential customer's.
Due to organisation is able to capture
large market-share within limited period
 TESCO is currently facing a problem of
rapid decline in its operating profit. Its
performance is continuously decreasing
after the introduction of Brexit
referendum. The share price of the
organisation is also decreasing which is
one of the biggest weakness.
 Due to high competition in the retail
industry of UK the chances of price wars
in continuously increasing for the

of time.
 Organisation offers wide range of
products to its customer's and also deals
in diversified market. Its diversification
strategy has helped the organisation in
achieving proper competitive advantage
in the market for longer period of time.
organisation. TESCO is not able to
increase its profit margin in the
systematic manner.
 The brand image of the organisation is at
danger because of commercial income
scandal. Its customer's are losing trust
because of this scandal.
OPPORTUNITY THREAT
 Organisation has wide range of
opportunity to form strategic alliance
with other big companies. This will help
TESCO in offering wide range of
products to its potential customer's. The
satisfaction level of the customer's will
also be increased if TESCO is successful
in forming proper alliance with other
reputed companies.
 TESCO also has the opportunity of
entering in the online retail market.
Organisation needs to make necessary
changes in the working structure for
sustaining and growing in the online
market. Organisation also has wide range
of option for attracting customer's by
offering discounts related to home
delivery of products.
 TESCO also has the opportunity to
expand its business in various
international markets. This will directly
 There is high competition in supermarket
industry of UK. Due to this there is high
chances of shift in customer's from one
brand to another. It is one of the biggest
threat for the organisation.
 Economic crisis and recession has lead to
negative impact on the working of
organisation. Tax matters and credit
crunchers is also a riskier factor for
TESCO.

help the organisation in increasing its
sustainability and performance in the
effective manner.
P6 Explain how strength and weakness interrelate with external macro factors.
The strength and weakness related with the macro factors are interrelated with each other.
As if the organisation is successful in knowing this than better decisions can be undertaken for
achieving the objectives in the best possible manner. The interrelation of macro factors with the
strength and weakness are discussed below-
Political factor- It is related with trade policy which is imposed by the government of the
country. Major strength of TESCO is organisation is operating in various parts of the world and
also has strong customer's base. Where its weakness is organisation is unable to manage the work
of its outlets in various parts of the world(Van Vuuren, Roberts-Lombard and Van Tonder,
2012).
Economical factor- The financial position of the organisation is at the growth stage
which is the major strength for the organisation. As TESCO will be able to adapt new and
innovative changes for increasing experience of its customer's. Weakness of this factor is
organisation is facing employee turnover and absenteeism because its employee's are not
satisfied with the working structure.
Social factor- The organisation is successful in producing goods and services keeping in
mind the beliefs and values of its potential customer's and due to this organisation is able to gain
the trust of its customer's which can be taken as the strength for the organisation. Whereas its
customer's are also facing major health issues, so it is becoming essential for the organisation to
introduce plans and strategies for maintaining the health of its loyal customer's. This can be done
by providing them organic and healthy products with low prices. It is also essential for the
organisation to know the paying capacity of its customer's in the particular market. This is
because if this is known than TESCO will be able to attract more and more customer's in the
systematic and desirable manner.
Technological factor- It is related with using latest and innovative technology, so that
better competition can be given to the competitors. Innovative plans for Online shopping is one
of the biggest strength for the organisation. As with the help of this TESCO is able to attract and

retain more and more customer's in the systematic and effective manner. Whereas the weakness
for the organisation is TESCO is unable to provide security to its customer's regarding the data
privacy. Vital information of its customer's is not safe due to this business of the organisation is
getting affected negatively(vom Brocke, Zelt and Schmiedel, 2016).
Environmental factors- There are various initiative taken by the organisation for saving
and conserving the environment. This includes making plans for recycling and reusing plastic
material and introducing such delivery vans which focuses on saving the fuel and energy. This as
proven to be one of the biggest strength for the organisation. As with the help of this TESCO is
able to conserve the environment in the best possible manner. Whereas the weakness for the
organisation is external environment is uncertain and involves various kinds of risk. So it is
becoming difficult for the organisation to adapt rapid changes for the external environment.
Legal factor- TESCO was unable to make plans as per the rights of its employee's
working in the organisation. This means proper benefits and salary was not given to the
employee's and due to this employee's were resigning from their job. Organisation was also
involved in various law cases because of this factor which has proven to be a weakness for the
organisation. Whereas the strength for the organisation is major changes were made for
following and introducing the norms of Food Retailing Commission. As with the help of this
TESCO is able to make goods as per the need and demand of its customer's.
With the help of this analysis management of the organisation will be able to take better
decisions for controlling and managing the work if the organisation in the effective and efficient
manner. Major and minor objectives of the organisation will also be achieved if PESTEL
analysis is analysed in the systematic and coordinated manner.
CONCLUSION
From the above given report it has been concluded that proper plans for controlling and
managing the business environment can lead to profitability of the organisation. As with the help
of this each and every factor will be analysed in the systematic and coordinated manner. The
various kinds of organisations such as private, public and voluntary have different purpose and
objectives. There organisational structure is also very much different from one another, so it is
the duty of the management to make plans as per their purpose and objectives. Each and every
department of the organisation plays a vital role in achieving the objectives of such
organisations. Every department of the organisation is interrelated with one another, so if

functioning of one department is affected than there will be a negative impact on other
department also. With the help of SWOT and PESETEL analysis management of the will be able
to take better decisions for sustaining in the market for longer period of time.

REFERENCES
Books and Journals
Ayios, A., 2018. Trust and Western-Russian business relationships. Routledge.
Buytendijk, F., Hatch, T. and Micheli, P., 2010. Scenario-based strategy maps. Business
Horizons. 53(4). pp.335-347.
Chokheli, E., 2014. About modern methods and instruments of Strategy analysis.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Craig, T. and Campbell, D., 2012. Organisations and the business environment. Routledge.
Heaton, S., Linden, G. and Teece, D., 2014. Business model innovation
Heaton, S., Linden, G. and Teece, D., 2014n and organizational design: a dynamic capabilities
perspective.
Hopkins, B.R., 2011. The law of tax-exempt organizations(Vol. 5). John Wiley & Sons.
Jenkins, W. and Williamson, D., 2015. Strategic management and business analysis. Routledge.
Madureira, L., 2014, March. Market and Competitor Analysis: Real Exercise. In The Art of
Intelligence: Simulations, Exercises, and Games (pp. 125-142). Rowman & Littlefield.
Menet, G., 2016. The importance of strategic management in international business: Expansion
of the PESTEL method. International Business and Global Economy. 35(2). pp.261-
270.
Paul, D., Yeates, D. and Cadle, J. eds., 2014. Business analysis. BCS, The Chartered Institute for
IT.
Riaz, M.N. and Khalili, M.T., 2014. Transformational, transactional leadership and rational
decision making in services providing organizations: Moderating role of knowledge
management processes. Pakistan Journal of Commerce and Social Sciences (PJCSS).
8(2). pp.355-364.
Silva, D. and Sias, P.M., 2010. Connection, restructuring, and buffering: How groups link
individuals and organizations. Journal of Applied Communication Research. 38(2).
pp.145-166.
Thompson, J.D., 2017. Organizations in action: Social science bases of administrative theory.
Routledge.
Van Vuuren, T., Roberts-Lombard, M. and Van Tonder, E., 2012. Customer satisfaction, trust
and commitment as predictors of customer loyalty within an optometric practice
environment. Southern African Business Review. 16(3). pp.81-96.
vom Brocke, J., Zelt, S. and Schmiedel, T., 2016. On the role of context in business process
management. International Journal of Information Management. 36(3). pp.486-495.
Online:
Organisational Chart of Company. 2013. [Online]. Available
through:<http://www.innovationmanagement.se/2014/04/03/for-all-departments-how-
can-ip-help-hr-rd-sales-and-marketing-production-finance-purchase-ceo-or-owner/>