Impact of Business Environment on Firm Performance

The assignment concludes that a effective business environment is crucial for increasing firm performance. It highlights the importance of following advanced technologies in the firm to achieve better productivity rates. The report discusses various books and journals related to business environment and its impact on output and productivity, as well as business models for sustainable innovation.

BUSINESS ENVIRONMENT

INTRODUCTION
Business environment is considered as an environment which involves all the internal and
external components that somehow has an impact on the functioning of an organisation. Tesco
provides innovative and effective quality items to the client. It follows different types of
advanced technologies to improve overall performance in the market. This report is about
understanding the influence of macro environment on the operations of Tesco along with their
relationship between the external macro factors. Also, it includes the strengths as well as
drawbacks of the business.
TASK 1
1.1 PESTLE analysis
PESTLE analysis can help in analysing the actual condition through which Tesco must be
going on. Tesco is considered as a very famous and well known brand in the market place. They
make use of various techniques and strategies which further helps in maximizing the
performance rate of the company. They provide effective quality products to the client in a
market (Bah and Fang, 2015). Various tools have also been used by Tesco for increasing the
overall productivity of the firm and also helps in expansion of the company. PESTLE consists
five elements such as political, environmental, social, legal and economic. All these factors have
a different role on the overall condition of Tesco which are discussed as under :
Political factor
The government of UK has been cooperative enough for providing various policies and
procedures that are efficient enough that they can help in increasing overall productivity of Tesco
PLC. Recently UK government increase the rate of VAT which affects the company
productivity. Government increased tax rate from 17.5% to 20% which has main objective to
increase the revenue by 13 million per year. These policies also includes various measures that
Tesco can use which can further help in maximizing the revenue of the company as well.
Increment in tax affects the sales income that is generated by the Tesco. Sales income is the main
source of the company which hold the substantial effect on a profit (Boons and Lüdeke-Freund,
2013).
Economic factor
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Tesco has positive impact of economic factor in the industry. Higher growth is good for
the Tesco they can easily higher performance in a market. They provide innovative products and
services to the customers based on their consumer needs. The gross profit of an item was
approximation to be higher by 2.7%. (Bovee, Thill and Raina, 2016).
Social factor
In UK, the death rate and birth rate can vary from day to day. It can prove beneficial for
the company as in maximizing the overall productivity as well as the performance rate in the
market place. Along with this, it also provides the facility of shopping online such as the
customers can order food items, groceries etc. from their home as well. This strategy helps to
reduce the mobility issue in the market. The company has to bring adequate changes in its
products as per the taste and preferences of the customers.
Technological factor
Tesco follows different and innovative strategies to expand a business in a market. It
follows online shopping and computer technologies which gives more profit to the company. By
using enhanced and advanced technologies in the company they can easily compete with other
business in an industry. Tesco need to bring updated technologies which can add up to the cost of
a company
Environmental factor
Tesco follows different types of measure that are main objective to protect environment
in the market. For example, this firm use greenhouse gases and energy to maintain environment.
They apply innovative strategies and policies which help protect environment in an industry
(Brooks, Heffner and Henderson, 2014).
Legal
There are different types of laws which can affect the company’s performance. Tesco
makes use of the efficient policies so that their productivity can be increased and along with it,
their business can be expanded well in the market place. Government reforming agricultural
policies for the companies to give more profit to an entity. Various laws and legislations are also
there which Tesco can use for maximizing their overall productivity and other operations in the
market such as financial services act and appropriate financial policy. These acts and policies
provides essential services to the company such as credit cards, savings and loans (Gupta, 2013).
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1.2 Positive and negative impact of macro environment in Tesco entity
Tesco uses innovate strategies and approaches so that they can have some sort of
modification in their processes and procedures which can be more able to satisfy the customers.
Various advanced technologies are also being used by Tesco for achieving the targets and goals
in the market place. For maximizing the sales, the company has also initiated online shopping
facility. Along with the other factors, technological factors have been successful enough in
maximizing the sales and revenues of the company. (Harrison, 2013).
There are some negative impacts of macro environment on the company such as they
cannot follow all the rules and plans of the government in an industry. Various strategies are
being used by Tesco for a better innovation. They use different and innovative strategies and
technologies which sometimes not work properly and not give appropriate advantages to the
company.
Positive impact of the macro environment is that they follow advanced and enhanced
technologies which further maximizes the sales rate of the company. It uses online delivery to
provide the standard quality product to the customers. They provide various services to the
customers which however are responsible for maximizing the rate of productivity.
TASK 2
2.1 and M4 SWOT analysis
SWOT analysis can help in doing the analysis of a company in a better and efficient way.
A factor that acts as a strength for Tesco is that they have good and standard image in the
market. They provide efficient products to the customers. It helps to maintain effective brand
recognition in the market. They innovate products and services based on the client needs. For
maximizing the overall performance rate and productivity, they may have to involve advanced
technologies in the company. Also, it is their responsibility to provide efficient training and
development to the employees about using the technology. SWOT analysis of Tesco as follows:
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Strength
The strength of Tesco is that the brand is popular enough along with a good image as
well. Various shareholders of Tesco provides more advantages to the company (Onetti and et.al.,
2012). It has many stores and supermarkets in the world. It has many competitors such as Asda it
also follows advanced technologies to increase their brand recognition in the market.
Weaknesses
Tesco has some weaknesses such as they have lack of knowledge in some fields. They
have their own tablets and phones in a market. These phones do not have advanced features and
facilities that attract a customer. Tesco invested huge cost in the web development area to
increase their productivity and also increases overall performance in the market (Prajogo, 2016).
Opportunities
Tesco can easily invest in the digital entertainment and shopping area to increase their
performance in a market. They have their own brand tablets and phones in a market. They should
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Illustration 1: SWOT
analysis(strength, weakness,
opportunities and threats)
Source: SWOT analysis

provide appropriate training and development to an employee so that they can easily work
together and get higher performance.
Threats
Tesco has less number of stores and supermarket in the UK. So, they need to open more
stores in a world which helps in maximizing their productivity in the market and also in
expansion of the business. Employees have lack of knowledge in some field so the manager has
a responsibility to give training to an employee. They have many competitors in a market which
affects the overall firm performance in an industry (Sena Ferreira and et.al., 2012).
2.2 Internal and external analysis of Tesco company
Different factors have different impact on the performance of Tesco. To improve the
performance of an entity they need to follow advanced technologies. Tesco innovate the product
in a market to increase the productivity. There are various of internal and external factors that
affects the company performance. Some of the internal factors that affects an entity performance
as follows:
Customers
There are various of customers in a market and they have different needs. Based on their
needs they need to provide appropriate product. It helps to increase overall performance in an
industry. All customers have different preferences for the specific product. Tesco provide
innovate item based on the customer needs which helps to increase productivity in the market.
Employees
Employee also affects firm performance in the market. Employees needs to maintain
employee relation in a company. It is the responsibility of the manager to train all the employees
about the use of technology (Siewiorek and et.al., 2012).
External analysis of Tesco
Market factor
Market factors directly affects the firm performance in an industry. On the basis of the
need of the customers, Tesco can make products and services because it can be successful
enough for satisfying the customers. According to the present condition of a market, Tesco can
apply strategies and techniques.
Government policies
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There are significant impact on a government policies on the functioning of a company.
For instance, there can be decrease in demand due to increase in the tax rates, change in cost of
the material involved in provided to the customers etc.
2.3 Strength and weaknesses interrelate with the external macro factors
Tesco has main strength is they have a very good and popular image in the market. It
gives effective and standard quality products to a client which is further beneficial for the
company itself. It also follows innovative and effective technologies to increase their
performance in an industry. To increase the brand recognition in a market they need to follow
advanced technologies like online delivery and information system for the transaction. It will
give more enhancement to the company. For maintaining the popularity of the brain, Tesco
should focus on satisfying the customers to a huge extent.. They also should give innovative
product and services to the client which helps to increase productivity and also increase overall
performance in an industry. By opening multiple stores in different countries that will also give
their performance to the firm (Zeng, Li and Duan, 2012).
Tesco has a weakness that some employee has not enough knowledge in the technology
area. The manager has a responsibility to give training sessions and programs to the employee. It
gives higher performance in an industry. They have their own brand tablets and phone but
employee not have enough knowledge in web development field. By providing training and
development in web development area they can easily get higher performance in an industry.
Tesco should use different IT systems in the company to increase the efficiency between the
employees.
It is the responsibility of the manager to provide proper training sessions related to the
web development to the employees so that they can be able to develop a good range of products.
They also should provide appropriate tools and technologies to the employee which helps to
produce innovative products for customers. There are various types of technologies that come
under web development and that can help in achieving a better performance rate in the market. In
tablets and phones, they should add advanced features and facilities which help to increase their
productivity in an industry.
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CONCLUSION
It has been concluded from the report that business environment must be effective that
help to increase the firm performance. The main objective of Tesco is to satisfy the maximum
number of customers by providing them every possible facility. There are various internal and
external factors that affects the overall company performance. To increase the performance, they
need to follow advanced technologies in the firm.
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REFERENCES
Books and journals
Bah, E. H. and Fang, L., 2015. Impact of the business environment on output and productivity in
Africa. Journal of Development Economics. 114. pp.159-171.
Boons, F. and Lüdeke-Freund, F., 2013. Business models for sustainable innovation: state-of-
the-art and steps towards a research agenda. Journal of Cleaner Production. 45. pp.9-
19.
Bovee, C. L., Thill, J. V. and Raina, R. L., 2016. Business communication today. Pearson
Education India.
Brooks, G., Heffner, A. and Henderson, D., 2014. A SWOT analysis of competitive knowledge
from social media for a small start-up business. The Review of Business Information
Systems (Online). 18(1). pp.23.
Gupta, A., 2013. Environmental and pest analysis: An approach to external business
environment. Merit Research Journal of Art, Social Science and Humanities. 1(2).
pp.13-17.
Harrison, A., 2013. Business environment in a global context. Oxford University Press.
Iyer, B. and Henderson, J. C., 2012. Business Value from Clouds: Learning from Users. MIS
Quarterly Executive. 11(1).
Onetti, A. and et.al., 2012. Internationalization, innovation and entrepreneurship: business
models for new technology-based firms. Journal of Management & Governance. 16(3).
pp.337-368.
Prajogo, D. I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics. 171.
pp.241-249.
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.
Siewiorek, A. and et.al., 2012. Learning leadership skills in a simulated business environment.
Computers & Education. 58(1). pp.121-135.
Zeng, L., Li, L. and Duan, L., 2012. Business intelligence in enterprise computing environment.
Information Technology and Management. 13(4). pp.297-310.
Online
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opportunities-and-threats-analysis>.
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