Tesco Business Environment Analysis

This assignment delves into a comprehensive analysis of Tesco's business environment. It utilizes tools like SWOT, PESTEL, and Porter's Five Forces to evaluate both internal strengths and weaknesses as well as external opportunities and threats. The analysis aims to provide a clear understanding of the factors influencing Tesco's success and strategic planning in a dynamic market.

Business and Business
Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
ASSESSMENT 1.............................................................................................................................1
TASK 1 AND TASK 2: Enclosed in ppt.....................................................................................1
ASSESSMENT 2.............................................................................................................................1
TASK 1............................................................................................................................................1
1.1(P4).........................................................................................................................................1
1.2(M3)........................................................................................................................................2
TASK 2............................................................................................................................................3
2.1(P5).........................................................................................................................................3
2.2(P6).........................................................................................................................................4
2.3(M4)........................................................................................................................................5
2.4(D2).........................................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
The complete surroundings of a system that is running for earning profits and its
objectives is the environment. The system is the business and the environment hence called is the
business environment. The complete analysis of the business environment is necessary during
the strategy planning process. This report aims to discover the aspects of the business
environment as well as perform the internal and external analysis of the same using PESTEL and
SWOT analysis. TESCO being the organization that is the life of the retail market in the UK has
been considered for better understanding.
ASSESSMENT 1
TASK 1 AND TASK 2: Enclosed in ppt.
ASSESSMENT 2
TASK 1
1.1(P4)
Business environment is constituted with two types of environment that is internal and
external (Wetherly and Otter, 2014). These are also referred as the micro and the macro
environment respectively. Micro environment has employees, suppliers, objectives, policies and
the complete structure of the organisation that helps in the development of the product. While the
macro environment comprises of the social system, legal structure, policies, cultural values and
the shareholders, competitors, etc. of the organisation (Müller and Timofeev, 2016).
The impact of the macro environment on the business operations is described below:
1. Business strategies have to be developed according to the macro environment factors.
Negative changes will definitely impact the internal structure of the company and also the
product prices will decrease.
2. If inflation occurs, consumer spending decreases. This means that organisation suffers a
decrease in the sales despite of best marketing strategies.
3. The foreign affairs policy and the relations of the country with other countries definitely
affect the business operations of an organisation. If these relations are not maintained
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then government will apply trade restrictions which mean the import and export
purchasing gets affected.
The above given examples depict the impact the macro environment can have on the business
operations of any organisation.
1.2(M3)
The complete and detailed analysis of the macro environmental factors for TESCO can
be obtained with the help of PESTEL tool. This is described below:
1. Political: The political policies and the rules and regulations that are defined by the
government have to be followed by the organisation. From the day of foundation till its
present day of functioning TESCO has been following all the policies. But with time
changes like Competition Law, Enterprise Act have been successfully adapted by the
company. These laws prove out to be threatening for the company as they encouraged
more new entries in the market.
2. Economical: The trade restrictions and economic policies of the country are the economic
factors of the macro environment. TESCO always gets influenced by the changes in the
economic status of the company. But the company has been an important contributor to
lessen the impact of unemployment.
3. Social: The organisation has been working according to the acceptance power of the
consumers because any sort of disturbance or discrepancy caused by the products of the
company towards the consumers can lead to serious consequences (Sohi and Malshe,
2016).
4. Technological: Technology has always helped the business to flourish and maintain a
pace with the society. The better the technology the better are the opportunities for the
company to excel in its own field.
5. Environmental: TESCO must plan all its operations in such a way that they do not harm
the environment or cause any sort of ecological disturbances in nature.
6. Legal: The company’s legal structure and policies are all strong enough but there were
several issues regarding its services which led it face allegations in the court.
From the above analysis it is clearly visible that TESCO has a stronger grab in the market
hence, most of its policies and strategies are maintained in such a way that the organisation
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won’t collapse because of minor changes in the macro environment. It is also understood that
regular use of this analysis helps in developing even much stronger market approach even in
critical condition.
TASK 2
2.1(P5)
Internal analysis of TESCO is given below:
The company has been working with an objective to give better opportunities and
working facilities for its employees. Proper functioning of its different departments has helped it
to open up branches or operating centres in many parts of the country. The company has been
approaching to different social groups and communities which gave diversity to it working
atmosphere. Organisational structure plays a vital role in the smooth functioning (Wu,
Chandramohan and Bali, 2016). This can only be achieving if efficient organisation structure is
implied. TESCO works on the hierarchical structure for operating and managing all its activities.
The company due to its beautiful working and relentless relations with the suppliers has led it
achieve its objective of acquiring great market share.
Basic internal analysis is conducted on the capabilities and core competencies of the
company (Hamilton and Webster, 2015). From utilisation of resources to achieving the
objectives and missions of the company everything has to be in place. The resources include
labour, capital and raw materials which all together form the basic elements of business
operation. TESCO has been gathering its resources efficiently but has to work on improving their
objectives and targets with improving the core competencies of the company.
External analysis can be made using Porter’s five fore model as follows:
1. Threats from new entrants: When new comers enter the market the company has to
change its product strategies so that they are not led back by these new ventures; which
means it has to make continuous efforts for innovation in its strategies and activities
(Wetherly and Otter, 2014).
2. Competition from rivals: Rivals will always try to ruin the market status of the company.
Hence, the organisation has to work hard and preserve its entire secret within itself and
keep on analysing the facts and profiles of fraudsters.
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3. Bargaining power of suppliers: Suppliers are increasing in the modern world and hence,
the company will get more attractive offer from different suppliers. Focus must be made
on getting those deals which include minimum costs for the resources and supply of the
same.
4. Bargaining power of Consumers: Consumers are always oriented with a motive of
acquiring least prices for best products. If the company leverages this bargaining in the
hands of the consumers it will never be able to earn any profits. Hence, the company
must give minimum bargaining power to the consumers (Cai and Yang, 2014).
5. Threat from competition: Competition threats are necessary for the development of
business. But extra completion causes the company to freak out and lose all the control
over its consumers and market share.
The strengths and weaknesses of the organisation that are identified with these analyses are
Strengths: The Company has recognised is a recognised brand and has maintained its reputation
by giving better products and services to the consumers. It has also been working ethically
hence, gathered a lot of support from its potential a current consumers.
Weaknesses: TESCO has limited approach for marketing and doesn’t have much innovation in
its operational activities. The company needs to work much more efficiently so that it can extend
its functionalities to a greater stretch.
2.2(P6)
The strengths and weaknesses that were identified above have great correlations with the
external macro factors of its business environment. It was observed that the company has to
develop its marketing skills so that more consumers are attracted (Ferreira and et. al.2012).
When considering the external macro environment the observation was justified that competitor
and the competition they provide have an adverse effect on TESCO. Many a times the company
lost the right over some of its services that originally belonged to the company. As well as
defamation helped these rivals to conquer unexplored markets that could have been a great
opportunity for the company.
Since, the internal and external analysis of a company is based on the micro and macro
environmental factors hence, the correlation occurred. Basic necessity of any business strategy is
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the analysis. If a company doesn’t analyse the working features and just takes the decision, then
the probability of failure of these decisions is at maximum. TESCO must bring innovation and
unique skills in the company so that it can fight all the threats and turn its weaknesses to future
strengths. Only training, development and education opportunities for the employees can bring
positive changes in the internal atmosphere of the company (Carroll and Buchholtz, 2014). If
the internal environment is alright then fighting spirit at the global and international level also
increases.
2.3(M4)
The SWOT analysis of TESCO is achieved below:
Strengths
 One of the leading retail multinational
organisations (About Us. 2016).
 Has high brand recognition and value.
 The company has been running since
1919 which gives it great experience to
fight the competition.
Weaknesses
 Negative publicity has been a major
concern for the company since many
years.
 TESCO doesn’t have much global
presence. It has its chain of operations
only in Europe.
Opportunities
 Can increase its operational function
from retail to other sector like clothing
or restaurants, etc.
 Competition is rising; hence the
company can launch online services for
its customer base.
 Better marketing styles can be adopted
for better coverage. For example,
digital marketing, social media
marketing, etc. (Jimenez, 2014).
Threats
 The company requires coming up with
methods that can prevent competitors
from duplicating the products that
TESCO has been supplying.
 Merger acquisition must be controlled.
 With the growth of technology, higher
competition from the suppliers is
threatening the established relations of
the company (Khan and Khalique,
2014).
From this analysis we have identified the important strengths and weaknesses of TESCO. This
implies that the company must focus on these key areas before developing or planning any future
strategies. It is very clear that the organisation’s decision-making is always influenced by these
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factors because if not taken into consideration; TESCO would have to pay huge amount for the
losses that can incur.
2.4(D2)
The impact of macro and micro factors on the business objective and the decision making
of any company can be easily understood from the preceding examples (Botha, Kourie and
Snyman, 2014):
1. TESCO will stop functioning if it doesn’t get enough cooperation from is suppliers or
employees. This can happen when the company doesn’t fulfil the demands and needs of
its internal stakeholders that is the employees.
2. If suppose the government of UK formulates a policy that regulates the import of
exclusive food items from other countries. Then the functional department of the
company which handles all the imports will be stuck because the heavy taxation on
imports has reduced company’s purchases and decisions regarding the imports will be
affected.
3. Macro environment components include the competitors also. If a firm manages to
duplicate and provide same products that TESCO has been producing and that too at a
cheaper price, the consumers would definitely be inclined to those companies and hence
the sales and finance of TESCO would get affected.
From all of the above examples or situations it is crystal clear that complete business
environment has adverse and advantageous effects on the functioning as well as the objectives
and decision making process of the company (Dibrell, Fairclough and Davis, 2015).
CONCLUSION
The main aim of the report is achieved by getting the complete knowledge about the
business environment and the types of organisations that are involved in the business. Through
this report one can understand and learn the analytic segment of the strategic planning in a
business and its environment. For getting a complete detailed evaluation of the business
environment of TESCO internal and external analysis as performed as well as the strengths and
weaknesses were known about TESCO. It was realised that it is very much important to have
handy tools like SWOT, PESTEL and Porter’s five force model so that one can make effective
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decisions for the organisation and then strategically plan to obtain the respective objectives and
missions.
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REFERENCES
Book and Journals
Botha, A., Kourie, D. and Snyman, R., 2014. Coping with continuous change in the business
environment: knowledge management and knowledge management technology. Elsevier.
Cai, S. and Yang, Z., 2014. On the relationship between business environment and competitive
priorities: The role of performance frontiers. International Journal of Production
Economics. 151. pp.131-145.
Carroll, A. B. and Buchholtz, A. K., 2014. Business and society: Ethics, sustainability, and
stakeholder management. Nelson Education.
Dibrell, C., Fairclough, S. and Davis, P. S., 2015. The impact of external and internal
entrainment on firm innovativeness: A test of moderation. Journal of Business Research.
68(1).pp.19-26.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Jimenez, S., 2014. Recollections: An Internal Analysis of Memory and Perce.
Khan, M. W. J. and Khalique, M., 2014. Strategic Planning and Reality of External Environment
of Organizations in Contemporary Business Environments. Business Management and
Strategy. 5(2).pp-
Müller, M. and Timofeev, D., 2016. Issues Faced By Small and Medium Enterprises In A Global
Business Environment.
Sena Ferreira, P. and et. al., 2012. Framework for performance measurement and management in
a collaborative business environment. International Journal of Productivity and
Performance Management. 61(6). pp.672-690.
Sohi, R. S. and Malshe, A., 2016. Learning to Improve New Product Outcomes. In Marketing
Challenges in a Turbulent Business Environment. Springer International Publishing. 1. pp.
151-151.
Wetherly, P. and Otter, D., 2014. The business environment: themes and issues in a globalizing
world. Oxford University Press.
Wu, X., Chandramohan, K. and Bali, A.S., 2016. Corporate Governance and Bribery: Evidence
from the World Business Environment Survey. In Financial Crimes: Psychological,
Technological, and Ethical Issues Springer International Publishing.1. pp. 219-234.
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