Tesco's Business Environment Analysis

This assignment examines Tesco's position within its business environment by employing the SWOT and PESTLE analytical frameworks. It delves into Tesco's internal strengths and weaknesses, as well as external opportunities and threats presented by political, economic, social, technological, environmental, and legal factors. The analysis highlights key aspects influencing Tesco's operations and future prospects.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1............................................................................................................................................1
P2............................................................................................................................................3
TASK 2............................................................................................................................................8
P3............................................................................................................................................8
TASK 3..........................................................................................................................................11
P4..........................................................................................................................................11
TASK 4..........................................................................................................................................12
P5..........................................................................................................................................12
P6..........................................................................................................................................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
The concept of Business Environment refers to the combination of all internal an external
factor that influence company's overall functioning and operation. Internal factors include firm's
product or services, assets, employees and marketing whereas External include stockholder,
customer, economic condition and competitors (Avramenko, 2012). The environment of business
is different from country to country depending upon the nature of business. It becomes necessary
for an enterprise to possess great knowledge related to opportunities and threats present in the
market place. According to Keith Davis, Business Environment refers to the sum total of all
events, forces and condition affect and surround it. For running business enterprise smoothly,
primary responsibility is to understand the business environment that affects its functioning
directly or indirectly. This report is based on TESCO which is UK's leading multinational
grocery and retail organisation. The report covers different types and scope of organisation,
PESTLE analysis, SWOT analysis, and impact of micro and macro factors.
TASK 1
P1
A business enterprise can be organised in one of various ways, and the form chooses by
owner will affect the liability of both owner and company. Below mentioned are some of the
most common option that can be taken into account by business owner:
1. Public Enterprises: Government bodies run, manage and control this sector. People pay taxes
to Government and further, they use this money for the interest and welfare of society only. The
entire functioning and performance of company is dominated by national, local or state
government. They produce products keeping in mind the welfare and interest of society. They
also take into consideration various factors like waste management, water management, shelter
for homeless people, healthcare, etc.
Legal Structure: Generally, there are two types of legal structure: one is Central and other is
State.
 Central Government: They regulate the entire functioning of a nation. All rules and
regulations In UK are made by central government for the welfare of both people and
company (Cheng, Yip and Yeung, 2012). Their main purpose is the collection of taxes
from the local public and advance utilize it for their own and public benefit.

 State Government: State government possess political nature. They share their power
and authorities with national government. The main purpose of state government is to
control and monitor the activities of education department so as to provide better
education to local resident.
 Local Government: Local bodies have to control the functioning of small geographical
areas such as a city, state or town (Halbert and Ingulli, 2011). Their main objective is to
look after the interest and welfare of people.
AIMS:
 To give essential public services
 To use resources in an optimum manner that leads to benefits of the community.
Public Sector is also known as producer, provider and buyer. Like TESCO falls into the category
of public sector. As providers, they open schools for providing learning and education to
children. As producers, they manufacture some of the product and services like education and
health care. Lastly, as buyers they purchase products that provide various services like road
building, equipment etc.
2. Private Enterprises: Private individuals own and run these type of organisations. These
enterprises are considered free in the economy. It is easier for private companies to modify
themselves as per the dynamic changes The main benefit of this sector is to produce goods and
services according to changing demands of their potential buyers. The contribution of private
companies in UK is near about 89% i.e. the objective of most of the organisation is to earn profit.
The example of private enterprise is Virgin Group.
Legal Structure: It's structure is classified as:
 Sole Trader: These type of businesses are managed by a single individual known as
Sole-Proprietor. Little amount of capital is required to run such business. Their main
purpose is to earn profit that satisfies the need and desire of their family members.
 Partnership: Such type of enterprises are normally run by two people or more than that.
Under this, all the partners possess liabilities and equal rights and also share profit and
loss in equal proportionate (Hämäläinen, Näyhä and Pesonen, 2011).
 Private Limited Companies: Such companies run with an aim of earning profit and
capturing large market share. The liability of their member is limited and profits are
divided on the basis of dividend.
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AIMS:
 Profit
 Maximise Sales
 Growth
 Increased market share
3. Voluntary Enterprises: Such type of organisation are not owned or run by any single
individual. These are also known as NPO and their main objective is to improve the economic
and living condition of people. Their members are called volunteers. Such organisations may or
may not be incorporated (Hilton and Platt, 2014). The reason of their existence is to serve the
society and its members. For example: Oxfam
AIM: They aim towards eradication of poverty from the country and moreover, raise the
standard of living of people.
Legal Structure: These type of organisations do not have any particular legal structure like
Private and Public. Their entire functioning and operations of the business are in the hands of its
members.
Charitable Organisation: It is a type of Non-profit Organisation, which aims to provide
financial assistance to individuals and also focuses on improving the standard of living of people.
Services provided by NPO benefit entire society and its residents irrespective of basis of grounds
of caste, religion, gender, age, etc.
P2
In UK, different organisations are working with different objectives. The size and scope
of these entities are different from one another. For example, TEXCO, Oxfam and Virgin Group
are three different companies of various sector. Their size, objective, vision, mission, distinguish
them from each other. Mentioned below is the detailed description of them:
TESCO
Size of TESCO: TESCO Plc is a leading multi-national grocery and merchandise retailer
company, situated in England, UK. It is world's 3rd largest retailer in profitability terms and
ninth largest in terms of revenue. It operates in more than 12 countries which includes Asia,
Thailand, Hungary, Europe, etc. Along with merchandise and grocery, they provide financial and
internet services, furniture, toys, clothing, electrical appliances, software, etc. (Kelly and Scott,
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2012). The company was established in 1919 i.e. 99 year ago. As per the data of 2017, TESCO is
having 6,553 stores and more than 476,000 workers are working under them.
Scope of TESCO: Large number of varied business activities are given by TESCO. Such
functions indirectly provides ample opportunities to the company in terms of earning higher
profit and capturing large market share so as to maintain high competitive edge in the market (Li
and et. al., 2011). Main function provided by TESCO are grocery, financial services and general
merchandise. Their varied function also assist in attracting large number of customer of different
countries.
Vision and Mission:
Mission: It's mission is to become highly valued business by the society in which they operate,
the customer they serve, their shareholder and their loyal and committed colleagues.
Vision: It's vision deals with growing business, earning trust and loyalty and maximise profit.
Business Objective:
 To provide customer with outstanding product and services
 To give what customer desire under one roof
 To understand customer better than anyone
Virgin Group
Size of Virgin Group: It is a British multinational corporation venture capital conglomerate
founded by Sir Richard Branson and Nik Powell. It is headquartered in London, UK. It was
established in 1970, almost 48 years ago. The company mainly deals in banking, books, travel,
retail, mobile phones, consumer electronics, healthcare, jeweller etc. The size of the organization
is quite large as they operate their business practices in different fields as well as in different
countries. The number of worker employed in Virgin Group is almost 71,000.
Scope of Virgin Group: This business concern deals in various core consumer sector such as
Music & Entertainment, Health & Wellness, Financial Services, Telecom & Media, etc. Similar
to their varied services, they operate in different countries such as Northern Ireland, Scotland etc.
Vision and Mission:
Mission: Their mission is to capture large market share and gain competitive advantage.
Vision: At Virgin, they try to infuse everything in which they are dealing-whether it is music,
telecommunication, travel with a sense of innovation and entrepreneurialism (López-Gamero,
Molina-Azorín and Claver-Cortés, 2011).
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Business Objective:
 To gain high competitive advantage over its rivals
 To capture large market share
 Provide product and services that highly satisfies customer's needs
Oxfam
Size of Oxfam: Oxfam is a non-profitable organisation under which more than 19 charitable
trusts are operating. Its main objective is to eradicate poverty from the world and these 19 trusts
are providing the organization with assistance. It was in England where they first started their
charity or services by providing free food to people (Moutinho, 2011).
Scope of Oxfam: It provides a number of facilities that are concerned with improving the living
standard and well-being of people. Volunteers also provide assistance to them and they focuses
on reducing poverty, advocacy, illiteracy from the country.
Vision and Mission:
Vision: Their vision is to create an equal, just and sustainable society by empowering equal
rights and focuses on improving standard of living.
Mission: Their mission is “Right to life with dignity for all”
Business Objective:
 Eradicate Poverty
 Enhance standard of living
 Removes illiteracy
Stakeholder Analysis: It refers to the process of systematically analysing and gathering
qualitative information to identify whose interest should prior taken into account when
implementing or developing policy or program (Sena Ferreira and et. al., 2012). They are mainly
categories into two parts one is Internal and other is External
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Internal: Those individuals or parties, that are a part of the company and influence its
functioning and operations. They own primary responsibility towards the company such as
employees, owners, managers, investors etc.
 Employees : Employees are responsible for carrying out specific tasks in a structured and
a systematic manner in order to achieve company's objectives efficiently and effectively.
Success of an organization depends upon it's employees' skills and abilities. (Teece,
2012). They are often considered as an asset to the business enterprise that yields higher
profits and revenue for them. They are the ones who interact with consumers daily.
 Managers: Managers are the ones who manage and run an entire department such as
Sales Manager, General Manager. They look after all the activities take takes place under
such department in an effective and efficient manner.
 Board of Director: They are they group or panel of member who regulate the
incorporated organisation. Such members are elected by the member of company itself in
their annual general meeting.
External: Those parties and groups that are not considered as a part of the organisation, but still
get affected by its activities constitute external environment. Such people hold secondary
responsibility towards the company. For example: customers, vendors, government, competitors
etc.
 Customers : A long-lasting relationship with its customers is an essential element for a
firm's success. Techniques like customer relationship management are being used by
most entities to gather customer related data. In TESCO, product range keeps altering as
per their target customers. (Vaiman, Sigurjonsson and Davidsson, 2011).
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 Stockholders: Funding and capital needed for growth and expansion of a company are
key roles of stockholders.
 Government: They focus on providing standard products or services and protecting the
interest of customers. Various policies and legislation that directly or indirectly affect the
performance and functioning of the company are also imposed by the government.
 Vendors: A company depends upon the availability of raw material. The more suppliers
delay in delivering the supply of raw material, the more adverse will be its impact the
company's manufacturing unit (Welford, 2013). The firm is dependant upon its suppliers
for the products so that they can fulfil customer’s requirement within the stipulated time
period. The firm focuses on providing a good quality of goods and services to its
potential customers. Satisfaction of customers' requirements within the given time-frame
is the responsibility of the company. Mainly, TESCO deals in providing merchandises
and grocery products to its customers.
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Category 1: Low power and Low interest Stakeholders
In this category, people who have invested less as well as who possess less interest in the
company falls. Sleeping partners come under this. They possess little concern towards proposed
strategy of the company (Wetherly, 2014). Customers of Tesco, for example.
Category 2: Low power and high interest stakeholders
In this category, stakeholders possess little interest in the company but they hold adequate power,
that is sufficient to influence company's operation and it's functioning. Employees of Tesco, for
example.
Category 3: High Power and low interest stakeholders
In this category, Stakeholders show less interest in the company's operation but they hold a high
power in terms of providing financial assistance. In-fact such kind of people possess power to
block or at least slow down a proposed development. Here, Tesco's aim is to satisfy these
stakeholders. Investors, for instance.
Category 4: High Power and High Interest stakeholders
This category consists of the CEO, MD and the top management level of TESCO, who are much
interested in knowing what's going on in the company. Moreover, they have authority to control
the overall functioning and operation of Tesco.
TASK 2
P3
TESCO Plc is a leading British multinational merchandise and grocery retailer,
headquartered in England, UK. It is the 3rd largest retailer in the world in terms of yielding higher
profit. The company is currently operating in 12 countries across Europe and Asia. There are
different functions and department that works collectively towards attaining their objective.
Department such as marketing, human resource, financing possess different responsibilities but
still they are inter-linked with each other when it comes to achieving organisational objective.
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Function of one department deals with providing guidance and direction to other
department (Yoon, 2012). Effective relation among several department promotes positive
working environment, better co-ordination, team building, improved communication etc. This
further assist the company's like TESCO to perform their function and attain objective in an
effective manner. Inter-relation among functions and department of referred firm are described
below:
Human Resource Department: It is considered as the most essential department in a business
enterprise. The main function of this department is to design effective strategies for its workforce
so that they can achieve task in a cost-effective and timely manner. They laid stress in recruiting
most talented and qualified who with their skills and efficiency attain objective of other
department as well (Thomson, 2015). Talented personnel with their innovative skills yields
higher profit for the company.
Finance Department: This department deals with providing financial assistance to company so
that they can perform its day to day operation in an effective manner. It also perform various
function regarding preparation and arrangement of budget. These budget act as standard for
various department as they perform according to that standard. Optimum allocation of resources
and funds aid in achieving objective of firm. Proper allocation of fund enable other department to
set their standard accordingly.
Marketing Department: The main responsibility of this department is to research about needs
and desire of market and also identifies the views of potential buyer regarding the views of the
customer in terms of product, services etc. The information collected from the customer will be
beneficial production department as they will further manufacture the goods accordingly.
Organisation Structure:
1. Function Based: Organisational structure is classified on the basis of different functions
of TESCO that is currently operating in the company. For example:Whole organisation is
divided into finance department, human resource, production department, finance etc.
2. Consumer Based: Products are categorised on the basis of needs and taste of customer
and also keep eye on frequent change in the like and dislike of target customer.
3. Product Based: Under this structure, total product of TESCO divides or classified as
product as per its range such as different products comes under grocery section whereas
products like clothing, apparel comes in the category of household (Stroke, 2016).
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Illustration 1: Organisational Structure
(Source: Organisational Structure, 2017)
Illustration 2: Organisational Function
(Source: Organisational Functions, 2017)
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TASK 3
P4
Tesco is leading company which deals with providing various of luxurious product in
various countries. Due to implementation of various operation in different countries there are
various number of macro- environmental factor which give impact on the different business
processes of company. There are different types of macro environmental element like political,
economical, technological, social, environmental and legal. All these elements have positive and
negative impact on the various business operation of Tesco (Chamorro, 2015). It's the
responsibility of manager of company is determine these elements and implement different types
of strategies in order to deal with the areas which are connected to the various business
operation. By determining such factor aids to improve performance of organisation in stipulated
time period. As there are different marketing condition in different countries so management
have determine these condition and implement different strategies in order to control the
different operation of organisation. This element helps to attain goals and objectives of
organisation. The positive and negative impact of external environment factor on the business
operation of Tesco which is mentioned below:
Political factor: it is concerned with rules and regulation impose by government, various
types of tax policies which is implemented by government and various international laws. All
these factors have their negative and positive impact on various operation performed by
company. In present time, the political situation in UK is very efficient for performing different
operation of Tesco. Rather there are different issues which are faced by organisation in UK it
give negative impact in order to attain goals and objectives of organisation. The positive and
negative impact on the organisation are given below:
 Positive impact: The present political situation in UK is in stable condition and this give
positive impact on organisation which help to attain growth of business. The rules and
regulation made by the government help to explore the business in different area. It also
help to accomplish different business operation in stipulated time period.
 Negative impact: If there is complication occurs in government it is difficult in
accomplishing different business activities because at that time government impose some
strict rules and regulation which make difficult to perform various activities of operation
(Copper, 2014).
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Economic Factor: This is most essential factor which are concerned with economic condition
of nation. It is related to cash flow, condition of inflation, and deflation, credit of cost, supply of
labour. The positive and negative impact of this factor is mentioned below:
 Positive impact: If economical conditions of organisation is good then Tesco have large
opportunities in order to expand different function of organisation. Lots of funds
available to implement various types of technology in organisation (Reamesh and Chai,
2016).
 Negative impact: if buying power of person in UK is low then it is negative impact
because individuals cannot be able to purchase products. It reduce profit of organisation.
Technological factors:
In order to implement implement different types of new and innovative technology which
impact various function of Tesco. These impact are mentioned below:
Positive Impact: Implementation of new and innovative technology help Tesco to perform
various activities in effective manner.
Negative Impact: If management of Tesco not able to implement different innovative
technology it affect the brand image and loose large number of share.
Social factor: Tesco determine these factor in order to know taste of customer. Tesco
segment customer on basis of age there behaviour, and occupation. This factor give positive and
negative impact on organisation given below:
Positive impact: there is large number of young generation present in country then leads to give
positive impact to increasing sales.
Negative impact: there is less number of youth present in organisation it leads to reduce the rate
of sales of different product which are manufacture by Tesco (Desai, 2015).
TASK 4
P5
Internal Analysis: These are those factors that are present within the organisation and possess
adverse influence on company's operation and functions.
Strength:
 Use of advanced technology in its
operations, generating higher cost
Weakness:
 Pressure from competitors led to price
wars that erode profit margin of retailer
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efficiencies and improved services
experiences.
 Company has a strong presence in UK
and as it deals in variety of products so
this help in generate more number of
profits every year.
when Tesco focus to get competitive
benefit.
 Various subsidiaries of TESCO are not
generating profit. In situation of
financial crisis profit level of firm was
diminished.
Opportunities:
 Different areas are there in which
company is not performing well and in
order to improve its performance
company can go for joint ventures for
improve its performance and to
increase its market share.
 Tesco can undergo strategic alliances
with huge and respected brands as well
as multinational companies. This would
help the company attract more potential
buyers in its target market.
Threat :
 With its branches all around the world,
increased wages or benefits given to
labour can be a major threat for the
organisation's pricing strategy.
 In many countries, companies face
threats from factors like economic
recessions and credit crunches. During
such times, the market share and the
profitability of the company becomes
vulnerable. It faces a reduction in
consumers as they tend to save more
money and purchase less of their
products.
External Analysis: These factors are present outside the business and also holds the power to
impact the overall functioning of company.
Pestle analysis : Tesco is a merchandise and a grocery retailer. Along with these, it deals in
cosmetics, electronic gadgets, financial services and insurance.
Political: Every country works under its political boundaries, these include tax policies, political
stability, regulations, legislations, etc. These factors influence how companies work. The
company implements different strategies and contributes in increase of employment
opportunities by diversifying the manpower and increasing demands for its products (Bruce,
2015).
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Economical: The company should be familiar with the changes or modifications of economic
factors like tax rates and policies, which influence the accessibilities of the company's financial
resources . Tesco now focuses on advertising the brand instead of opulent products because of a
reduction in disposable and household income.
Social: Due to drift in social changes, it depicts that bulk and one-stop shopping are attracting
UK customers. Therefore, the company is emphasizing more on its non-food products for sale.
Social factors like attitudes, culture and beliefs influence customers' requirement for services and
products.
Technological: It reduces the labour cost as it administers convenience and ease for buyers.
Moreover, the firm also invests a certain amount of money on energy efficiency projects and
technological advancements so that reduction in carbon footprint can be achieved along with its
other objectives.
Legal: A suggestion from FRC which was received by the firm suggested that to ban practices
like changing price, demanding payments, etc., a code of conduct must be introduced. In today's
competitive business environment, Tesco's business will remain proactive by assessment of these
factors. (Forshier, 2011).
Environmental: Rise in social ethics in the customers has resulted in minimisation of waste
produced in the firm's sales outlet.
P6
Political Factors: Since the company is operating their business operations all around the world,
which has become its major strength as it helps in gaining huge competitive advantage over its
rivals all across the globe. Due to ongoing financial instability in UK, government bodies
encouraged retailer to create more job opportunities which emerges as a strength for them as
more talented and qualified people will be hired without much expenditure on job hunting.
Economic Factors: Any change in economic policies leads to impact the overall functioning of
the company such as frequent change in taxation affects the financial accessibility of firm which
comes out a weakness for them. Though the company is growing internationally, but they are
still dependent majority on UK market which is their biggest weakness.
Social Factors: Due to frequent change in the taste and lifestyle of people, TESCO is
continuously changing their product line which is creating problem for them. However, TESCO
is dealing with this situation in an effective manner (Hauer, 2014). Apart from that, they are
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offering organic foods to its potential buyers which indirectly aware them about health issues.
This serve as a strength for the company as customer start purchasing their product so as to
increase their awareness.
Technological Factors: Advancement in technology comes out as a biggest strength for the firm
as first they have introduced their online shopping with facilities including home-delivery.
Secondly, self-service checkpoints provide much ease and convenience to customers which has
reduced their overall labor cost.
CONCLUSION
As per the above mentioned report, it can be summarised that top management play a big
role in managing various operations perform by entity to attain its set goals and objectives.
Different type of organisation operates in business environment with the aim of satisfy needs and
wants of its target customers in order to generate more revenues. Tools such as SWOT and
PESTLE can be use by firms to in order to carry out internal and external analysis of firm. With
this, company can develop effective strategies and can take better decisions to sustain in market
for long run.
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REFERENCES
Books and Journals:
Online:
Organisational Structure. 2018. [Online]. Available through:
<https://www.tutorialspoint.com/management_principles/management_principles_orga
nizational_structure.htm>.
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