Business Environment Report: Tesco Analysis, Structure, and Functions

This report delves into the business environment, examining various organizational types—public, private, and voluntary—and their respective purposes. It explores the scope and size of different organizations, highlighting the key differences between sole traders, partnerships, companies, and franchises within the private sector. The report analyzes the relationship between organizational functions and objectives, using Tesco as a case study to illustrate how different departments like HR and finance contribute to achieving both short-term and long-term goals. Furthermore, it discusses the impact of macro-environmental factors on business operations and undertakes an internal and external analysis of Tesco, including an examination of its strengths, weaknesses, and their relation to the external environment. The report emphasizes the importance of adapting to the globalized market and the strategic alignment of various organizational functions to achieve overall business objectives.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types of organisations and their purpose................................................................1
P2 Scope and size of various organisations................................................................................3
P3 Relationship between organisational functions and objectives.............................................4
TASK 2............................................................................................................................................6
P4 Various macro environmental factors that make an impact on the business operations.......6
P5 Internal and external analysis of an organisation...................................................................7
P6 Relation of strength and weakness with external macro environment..................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
...........................................................................................................................................12
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INTRODUCTION
All the internal and external factors that made a impact on business are cover under
business environment. Customers, suppliers, government, employees, etc. they all have either
direct or indirect connection with an enterprise. Tesco is among table leaders in retail industry,
they have their presence in more than 12 countries across Asia and Europe. They have a clear
vision that they want to grow their business on continuous basis and explore various
opportunities so they can retain their position in market. They firmly believe in innovation and
appreciate new ideas in enterprise (Arastiand et.al, 2014). They want to win local market by
applying their skills globally. Cited company want to earn trust and loyalty from buyers,
workers, and community. Their mission is to make something better by taking complete society
in account. This report will include different types of organisation and sectors, function that are
performed by a firm and their link to objectives of an enterprise will also become part of this file.
Macro and micro factors that made some impact on business operations will be discussed under
this project.
TASK 1
P1 Different types of organisations and their purpose.
Business operation of an organisation highly depend on their size. If a
firm is preset in many countries than their structure will be complicated
compare to a company which is dealing with limited customers. Some types
of organisation which exist in environment are public. Private and
voluntary.
Main objective of a private company is to earn profit by providing
various goods and services to the society. They have to follow the legal
system of the country or state where they are operating. If they are dealing
in more than one nation than they have to follow all the rules and regulation
that is present in both land. Interesting thing about a private company is
that it can be run by a person or may be by more than thousand people. Its
size has vast scope, government and public do not have much involvement
in management of this type of firms. Their are mainly four kind of business
in private sector, first is sole trader, second is partnership, third is
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companies and last one is franchises (Boons and Lüdeke-Freund, 2013). In
sole trader, one person or entity is operates whole business operation. It is
very common as well as easy for an individual to form this type of private
company because it has simple structure and one person is responsible for
taken all the decision. Their is no chances of conflicts which is the main
reason decision can be taken in less time. Some examples of sole traders
are electrician, plumber, house cleaner etc. In partnership there are 2-20
partners who do make an agreements and do business according to it. They
share whatever profit they earn according to their partnership deed. There
was a time when registration of partnership deed was not compulsory but in
current scenario, and according to Partnership Act 2000, some business has
to be registered like in case of limited liability. Some partners do not take
profit in share, they take salary and execute the strategies made by
management. Companies are most popular type of business, they are legal
body and their registration is compulsory. They may operate at a small level
or may be at a large level. Franchising is a modern concept, in this system
an enterprise or individual take permission from a corporation in order to
use their idea or product so they can sell their goods or services by paying
some amount to that company. Money that is given to the organisation can
be a part of profit or a fixed fund (Cantwell Dunning and Lundan, 2010).
They have to make a legal agreement according to law because in some
industries franchising is not allowed.
Main difference between a public and private sector company is
involvement of government. In public company, public and government has
their presence in board on management. They also focus on earning profit
but their main aim is not earning money, their aim is to provide various
goods and services to the public at a competitive rate. Share of this type of
organisation can be purchased by general people. They have very strong
legal existence because of involvement of government authorities. They
have to follow all the rules and regulations because they are considered as
an example for other types of business organisations. Their was a time when
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these types of companies operates in domestic regions or in a particular
country, but in recent time they have started doing business with private
firms of other nation, globalisation is considered as the main reason for
change.
Voluntary organisation are very different from private and public
sector companies. Their main aim varies for association to association.
People with identical objectives make a group in order to work in the area
where they want change. Some unions are operating in fields like politics,
social, cultural etc. They do not have any legal existence and they do not
need to register their organisation at any government authority (Carroll and
Shabana, 2010).
Their was a time when some countries do not like to trade with other
nations but gradually they understand its importance and open their
economies for whole world. Globalisation play crucial role in development of
various countries, some businesses who were operating in domestic area
got more market which made a huge positive impact on their enterprise.
Current environment of international market is in very good position
because it is growing on continuously with out any hindrance. Some nations
in Asian continent who were not taking part in globalisation are now
becoming key players in growth of global business environment. Most of
governments in various countries have started new schemes in order to
increase their export which become significant factor in growth of
international business environment.
P2 Scope and size of various organisations.
Private firms are made by one or than people in order to earn profit. They play crucial
role in providing various goods and services to the economy because government can not do this
task with taking any help. Government do not have involvement in business operation of this
type of organisation (Cavalcante Kesting and Ulhøi, 2011). Their was a time private
companies were not allowed to do business in some sectors like arms, oil etc. but now they have
permission make every type of goods and deliver various types of services beside some
exceptions. Their vision is to solve problems of economy but their main objective is related to
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earning profit. Their mission is to expand and grow on continuous basis. Private sector has many
types like Sole proprietorship, partnership, company and voluntary organisation. A sole
proprietor do not have much legal binding because they do not have to register their business at
any place. In partnership, registration of a business depend on what business they are doing. In
case limited liability partnership, partners has to register their business with appropriate
government authorities because it is stated in Partnership Act 2000. Stakeholders of these types
of organisation are almost same like customers, suppliers (ChenChiang and Storey,
2012).
Private companies have strong base because they normally operates at a high level. They
have capacity to make and sale goods and service at many locations. Their area of operation is
more than sole proprietor and partnership. Their size varies as some companies have thousands
of employees but some have hardly 30 workers. Their vision and mission focus on perpetual
succession of business. Their objective is simple, they want to become table leader in the
industry they are present. They have to register their company to the government authorities and
they have to follow various legal rules and regulations. They have many stakeholders like
customers, government, suppliers etc. Voluntary organisation are made by people who want to
achieve similar goals. It is not necessary that they make any product or give any service in order
to earn profit. Their size depends on the resources available to them, their vision and mission
vary from organisation to organisation. They do not have to register their group with any
government authority but if they take part in government plans than they can avail various
benefits which is provide by different authorities (Christopher and Holweg, 2011). They
have wide scope of operations and they can deal in more than one sector. Their stakeholder can
be public, political or sports groups, etc.
P3 Relationship between organisational functions and objectives.
Tesco is known for their work in retail industry. In this sector they have to deal with
various types of suppliers and customers because they sell more than one product in various
location and countries. In order to achieve organisational objective every company has to
perform different types of function. Their was a time when business operations were limited to
production or purchase of goods and than sell it to customers but gradually with time and
expansion of size of various firms and industries tasks that is to be done in a business
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organisation become complex. All of the function performed in cited company are synchronised
so they can achieve firms objectives with out any hindrance.
Execution of polices made by top level management is necessary in order to reach
various goals. Tesco has both long term and short term objectives. In long run they want their
organisation to become a where employees can get proper work/life balance. They want to hone
their skill and improve their strength so their personal development can be done. This will help
cited company in replacing future manager with more talented and skilled workers (Haidar,
2012). They want to increase their sale of organic manufacture in next five years. For short
term they want to get strong in non food segments, currently they have around 6.5% of market
share in non food business. In order to achieve these objectives their human resource department
has to hire people who enjoy working in this sector so better customers satisfaction can be
provide to the customers. Their finance department should focus on optimum utilisation of
available resources, they have sound financial position but if they want to remain in this situation
than they have to invest their resources in areas which give them long term return, like open
stores in Asian countries.
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Illustrat
ion 1: Table 1

Most of the work the work should be done at store levels. Tesco has appoint regional
manager who is responsible for success of all the stores that are present in that particular region.
All the manager of store have to report him/her, he/she play crucial role in at the time of
formation of strategies. All the operations of cited company is divided into two part food and
non-food. Food section is divided further into two part, fresh food and ambient food. Vegetable
and fruits etc. are some items which has to be filled and removed on daily basis, but packed
eatables like biscuits, chips etc. do not need attention on daily basis (Harrison, 2011).
In non food items there are two wings, first is related to electronics and other is clothing.
Cited company is investing more resources in these segments because they understand that in
order to achieve set target they need to focus on these sections. Food department is responsible
for most of the profit they earn but it also has a limit. If a store want to provide quality goods and
service worker must possess some talent and skill that is required for do a particular task. It is the
duty of personal manager to solve various problems relating to employees and evaluate their
work on continuous basis. This will assist organisation in achieving their objectives efficiently
and effectively. Like of many multinational companies cited firm do not have different
departments for production, marketing, IT etc. Most of the work is done at store level because
targets can be converted in achievements if strategies are executed properly (KianShafaghi
and Leing, 2011).
TASK 2
P4 Various macro environmental factors that make an impact on the
business operations.
External factors can made a huge impact on business of an
organisation. If condition of macro environment is positive than company
will earn more revenue but if outer situation unfair than even a growing
firm can face loss. PESTLE analyse of Tesco is as follows:
Political factors – Cited company operates in more than one countries so
they have deal with different tax systems and legislations. Stability of a
country made a huge impact on business activity. Tesco mainly operates in
Europe but they are also opening their stores in Asia. Some nations in this
continent do not have good political stability which may affect their revenue
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in future. After Brexit they have to face new challenges in European
countries. Financial stability in many nations force government of different
countries to provide special assistance to retail companies. This can be
considered as a positive affect by political factors (Klapper and Parker,
2011).
Economic factors – Economy of a country or state made a huge impact on
business operation of a company. If an economy is growing at a high rate
than it will be easier of Tesco to grow with out any hindrance, but their are
some region whose economy is not in a good shape, these location are
generating much revenue. Internationalization and diversification are two
main strategies which is adopted by cited company. This has made positive
impact on business as their market enhanced with around 20% in 3 years.
But in some regions where they started new stored do not provide the
return organisation was expecting which reduce their earning. This made a
negative affect on overall growth of firm.
Social factors – Thinking of society is changing on a continuous basis, this is
the main reason that this organisation is moving towards bulk shopping.
They are also focusing on one stop shopping which is very popular in recent
trends (LeeOlson and Trimi, 2012). Goods that are demanded by costumers
have high connection with attitude and belief of buyers. Now a days society
is getting more height conscious so they are want products which do not
harm their health. This is the main reason that cited company is investing
more money in organic product so they can keep high growth in terms of
revenue. This is making a positive impact on their business because their
sale is growing on continuous basis but at the same time they have to invest
more funds in research and development which is not delivering results
according to their expectation.
Technology factors – Tesco has made two big changes in terms of
technology which is appreciated by customers. They have introduced online
shopping which is one of the most popular idea of this time. Company has
started home delivery of products which play crucial role in increasing their
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profits. Self service checkout points has changed the style in which
customers were shopping. Both of these developments increase sale of
organisation which can be considered as a positive impact. But these
technological changes involve huge investment which is enhancing cost of
operation. This negative impact is playing crucial role in decreasing their
overall revenue (Moutinho, 2011).
Legal Factors – Policies made by government and its institutions influence
various decision taken by board of management of Tesco. Food Retailing
commission made some code of practice which has to be followed by every
players of this industry. This made huge a negative impact as they have to
change current strategies. They could change price of product without
giving notice to the supplier but now they have to inform them about all the
variation they are doing in selling price.
Environmental Factors – Tesco is a multinational company so they have to
face more challenges relating to various environmental issue. This is the
main reason that they are going to reduce their carbon footprint by almost
50%. They are going to reduce wastage which they produce in their stores.
This will improve their image in society but at the same time it will increase
the cost of operations.
P5 Internal and external analysis of an organisation
If an organisation want to achieve set objectives than they have to
analyse various operation of business on continuous basis. Different
activities has to be examined externally as well as internally. This will assist
them in finding strength and weakness of firm which will help them in
making effective future plans in future (Palo and Tähtinen, 2011). Strength
of the enterprise should be used in correct6 direction in order to reach
goals rapidly, weakness of the company should be given special attention so
they can be converted into strength in short period of time.
Strength and weakness of Tesco is as followed:
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Strengths – They have strong position in UK which is the main reason that
they have attained a rank in top 100 world's most valued brand. They are
wide range of products and they are known to offer value right item at right
price. They are present in more than 12 countries where they have around
6553 stores. Another amazing fact about cited company is that they have
employee strength of approximately 500000. This help them in gaining trust
from large number of population, this also assist them in improving their
goodwill. They are doing innovations on continuous basis which is playing
crucial role in increasing sale of the organisation. They have started online
shopping and home delivery which is getting very popular among public.
They made self service checkout points which will reduce their cost of
business operation in long run. Governments in Asian countries are making
polices which is supporting many retailers, in order to generate
employment in their nations they are making rules and regulations which
are favour of companies like Tesco. Many expert of this industry feel that
this continent will play crucial role in in generation of profit in upcoming
time because market in these countries in not organised and population of
these locations is very high (Pikka, Iskanius and Page, 2011).
Weakness – One of the main disadvantage of operating at such a level is
that organisational structure become very complex. If they want to make a
simple change in their company than they have to wait for at least 2-3
months because they have around 500000 employees in their firm. They are
selling wide range of products which is the main reason that incidents of
bad debt from credit cards and increasing. Cases of household claims are
also enhancing which is the main reason that their profit are not growing at
desired rate. Tesco has specialization in food items but they do not have
much experience in other segments like clothing and electronics. They are
investing too much resources in these areas which is very risky. According
to initial result they are not giving the return according to the expectation
of the firm. One of the biggest trouble they are going to face in future
related to Brexit. Earlier it was easy to operate in various European
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countries but now they are going to face more challenges and they have to
follow various legal bindings. This political factor will influence the profit of
the organisation in upcoming time.
Strength and weakness of cited company have ability to influence
their various decision that Tesco is making and going to take in future. With
changing time this firm understood that they have to change the way they
were doing business so they started online shopping option which people
prefer more in current scenario. This enterprise has deep pocket so they
can invest in new technology. A company with less or few resources can not
initiate this kind of programme. Board of management understand that they
are not strong in non food segment, this is the main reason that they are not
diverting their attention from food segment which is responsible for
generating more of the revenue.
P6 Relation of strength and weakness with external macro environment.
An organisation need to evaluate their performance on continuous
basis. This can be done by SWOT analyses which reveals strength,
weakness, of a company (Pingali and Roger, 2012). It also present
opportunities available in front of a firm and thereat that they face in
upcoming time. SWOT analyse of Tesco is as followed:
Strength – They are present in Europe, south and north America, and in
some part of Africa and Asia. This diversity will help organisation in
expanding their business in more countries. They are investing heavy
resources in Asian countries which will help them in maintaining current
growth rate. Most of the companies in this industry has only one type of
store but cited organisation has various types of stores like hypermarkets,
convenience stores, supermarket as well as hard discount stores. Most the
product they sell in stores are acquired locally, this help them in achieving
operational efficiency. Their stores are large compare to other player of this
sector, they this is the main reason that they are selling all king of goods.
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