Global Business Strategies for Tesco's Market Recovery

This assignment requires students to analyze the 2012 market share drop of Tesco using a range of global business strategies and theories discussed in class. Students should explore concepts such as leadership agility, emotional intelligence, service business development, and business models from the provided sources to propose strategic recommendations for Tesco's recovery.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Overview on different types of organization and international business environment
growth.....................................................................................................................................1
P2 Size ad scopes of different organization...........................................................................3
TASK 2............................................................................................................................................5
P3 Functions of the organization, by using an organization chart and their link to the
organization structure and objectives.....................................................................................5
TASK 3............................................................................................................................................7
P4 Various macro environment and their impacts by using PESTLE analysis......................7
TASK 4............................................................................................................................................9
P5 Internal and external analysis for Tesco plc. In order to identify current weaknesses and
strengths..................................................................................................................................9
P6) Swot analysis to identify strengths and weaknesses and its interrelationships with macro
factors.....................................................................................................................................1
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Business Environment is a group of various external and internal factors which affects
the operating system of the organisation. Business Environment is the combination of two major
components which are “Environment” and the “Business”. The term business can be defined as
human activities like services, production, sales and other activities, whereas, Environment is the
surrounding around the organisation which put direct effect behind the succession and loss in an
organisation. The activities in organisation also influenced by several other internal and external
factors and the condition of work in market, In this external factors includes many conditions
like economic conditions, development in technology and other factors like legal change and the
introduction of new rules and regulations by the system (Aula, 2010). On the other internal
factors includes the work-environment inside the company such as the behaviour of employees,
suppliers and other internal factors like Money, management, Man-power of the company,
Machinery and material. In direction to run the business smoothly, this is very much crucial for
enterprise to manage these factors significantly and to work in positive direction to achieve their
set objective and goals. The following report is providing an overview on the types of
organisation and on the growth of business environment and different vision, mission and other
set business objectives of Tesco plc. Along with negative and positive impacts of the Macro
environment on the business of Tesco company and PESTLE and SWOT analysis models are
provides which are focusing on to develop understanding and deep knowledge about Macro
environment.
TASK 1
P1. Overview on different types of organisation and international business environment growth
In the market of UK, there are many of the organisation working their. These
organisations are very much different form each other on the basis of their objectives and
purposes (Bill Pasmore , S.V.P. and CMC, 2010). These organisations are majorly of four types
such as Private, Public, Voluntary sectors and Charitable organisation.
 Private Organisation: - These organisations are run and on major privately operated by
the individuals. These private limited companies firms are widely situated only for profit
making to the particular business unit. In relation to this the expansion of the business is
also a part from which an organisation can increase its profit rate and develop further
resources for the future objectives. These organisations are run by private administration
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by taking successive decision by the management of these private companies, majorly the
objective of these private companies is to serve their customers with quality of services
and product to develop trust for their brand and to maintain customer relation. For
example, McDonald's, Virgin Group and other private companies.
 Public Organisation: - These Organisations are controlled and governed by the system
or by the Government (Cavusgil and et.al., 2014). The main aim and objectives of these
organisations are to offer variety of products and services, and by engaging them with
other business units with the help of offering their company's shares. These amount is
further taken in direction for the development of entity. These firms works to provide
satisfaction to their customers. Tesco can be considered to be the best example of Public
organisation. The objective of these public organisation is to serve community with their
best service quality. Profit making is the secondary purpose of these organisations mainly
these companies work in direction to provide customer's satisfaction and beneficiary
products to the community. These public organisation also promotes the employment rate
which indirectly affects in the development of nation's economy.
 Voluntary Sectors: - Main purpose of these organisations is to develop and encourage
the social wealth, not on the development of the material wealth. Although these sectors
are separated from public and Government organisation even sometimes these
organisations involves to help and provide support in the proceeding activities of
Voluntary sectors. Like as the name these sectors works voluntarily in delivering the
quality services to the society members. Many sectors such as Human rights watch,
World wildlife funds, etc. work voluntarily.
 Charitable organisation: - These firms are very much different from public and private
organisation. Charitable organisation works as a non-profit making organisation. These
organisations majorly works for the welfare of society and to help other private and
public companies. For these organisations profit making is not their objective, they only
work to provide and develop assets which can improve the society. These firms provide
standardize services to the community in relation to improve living standard and to live
healthy life (Colfax, Rivera and Perez, 2010). The profit which is gained from the
activities of these charitable organisation , is used to regain the amount which is used to
execute the process of charity and helping the community.
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All these public, private, charitable and voluntarily organisation works in progressive
direction to accomplish their set objectives and in direction to the development of international
business Environment.
P2 Size ad scopes of different organisation
BACKGROUND OF TESCO PLC
It is a multinational grocery and general merchandise retailer, it has headquarters which in
Welwyn garden city, Hertfordshire, England, united kingdom. This organisation earned more
profit so this organisation raise their business at world level. Number of this organisation in
world as largest retailer in 3 position, which is measured in profit and if measurement done in
revenue than number of this organisation is ninth (De Jonge, 2011). In UK the market share of
around 28.4% so it is known as leader in grocery market. Tesco is founded in 1919 by jack
Cohen as a group of market stalls. The name of Tesco is origin from name T.E. Stockwell and
Cohen combine those starting 2 letters of his surname.
BACKGROUND OF VIRGIN GROUP: it is diversified grouping of more than 200 privately
companies. The largest company in this virgin Atlantic airways. Virgin rail is the second largest
UK train operator other business of virgin group includes beverage maker, virgin coal etc. this
group generated estimate sale more than $2 billion in 1991 and the 41 year old brason continued
to lead.
VISION AND MISSION OF TESCO PLC
 Tesco always focused on long term success because the vision of this organisation is
clear by adapting all business strategy and practise continuously with changing world.
Tesco has seven part of business strategy which help to achieve vision soon. Vision
provide way to achieve business hopes. The vision of tesco is “To be the most highly
valued business by: the customers we serve, the communities in which we operate, our
loyal and committed colleagues and of course, our shareholders. “Pile it high, sell it
cheap (Gebauer, Paiola and Edvardsson, 2010). On the basis of five elements the vision
of tesco is described , elements are:-
 Tesco wanted to live around the world because it is necessary
 Itb have growing business full of opportunities
 vision on basis of innovative and modern ideas
 loyalty and trust from customers
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OBJECTIVES OF TISCO PLC.
 For people the objective of tisco is fostering team work, nurturing talent, enhancing
leadership capability etc.
 Offerings of tisco is to becoming the supplier of their own choice, delivering premium
product and devices and creating values of customers.
 Conduct of tisco is provided safe workplace, respecting environment etc.
 Policies of tisco is tata code of conduct, tata steels policies etc.
 Their innovative approach is developing leading edge solutions in technology.
Objective of virgin group is to determine the scope , deptyh, and overall direction of reserch. The
first objective is to choose the topic broadly so that answer of some question can be possible.
Research on those question is done which are:-
 Which aspect of leadership practices?
 An analysis of leadership practices in which country?
 Analysis of leadership practices in which company?
Virgin group have some ,mission and vision which are
 Thinking about the long term impact of business decision which we want tgo take today.
 Virgin group strategy gives positive effect on customers, peoples, communities, and the
environment
 advocacy as a global business leader and rising to the challenges.
THE LEGAL STRUCTURE OF TESCO PLC
Many organisations required complex law and regulations to operate the business and any
company. Invest guarantee, property right are secured , change in economic policy are effect
legal structure. TESCO has all legal resources which enables that do change according to the
advance change in developing strategy (Kang, Lee, and Kim, 2010). Legal rules and regulation
influence retail sector now.
SCOPE AND SIZE OF THE TESCO
 Scope of the tesco is decided by strategy as a planning, patterns, positions, perspective,
ploy etc. this growth over the last two or three decades has involved a transformation of
strategy and images. The success is based on “Pile it high, sell it cheap” approach is
given by founder of tesco. Size of tesco is reached at all over world because the purpose
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of this to create the value of customers to earn their lifetime loyalty. This is shown by two
lines:-
 No company tries harder for customers as tesco do
 Treat peoples as we like to be treated.
Resources are utilized in way so that proper strategy can be made to achieve the goal and
objective of organisation and satisfy the customers.
INFORMATION ABOUT TYPE STAKEHOLDERS
 A shareholder is any person who have at least one share of company stock they are also
owner of company. Stakeholder of tesco are most important part of their company who
invested their money and time into the growth of business. Shareholder also take interest
of the company on increasing profit because of this value of business is also increasing.
TASK 2
P3 Functions of the organisation, by using an organisation chart and their link to the organisation
structure and objectives
An organisational structure provide way to individual and group to coordinate with each
other. Coordination and management are two elements that are required for achieving the goals
by individual or team. Structure provides various channels for communication and it explains
how the individual role is important in accomplishing the objective of organisation. There are
many organisational structure and each and every structure has its own pros and cons. These
structures are-
Line organisational -It provide direct link between different levels in the firm. This structure
aims at achieving the primary goal of the firm. Its helps in promoting quick decision making and
it helps in clarifying the authority and responsivity of individual. The cons is that it does not
focus on specialised planning.
Functional - Further categorised in two line position: they are responsible for achieving
companies goal. Staff position:they provide support advice and expertise for the line position.
The disadvantage of this is that it may give rise to conflicts (Teece, 2010).
Divisional- It provides the path where organisation can have different basis on which
departments are formed. These are:-
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Human resource department-Their main role is to find the source for recruiting the staff in an
organisation, to analyse the scope of recruitment analyse the skills required in an organisation
and make recruitment accordingly.
Marketing department- The main aim of this department is to genera sales and increase revenue
for organisation. These department helps in evaluating the market strategies. These department
helps in making various plan for promoting product.
Customer service support- The main aim of this department is to focus target customer. They
help in building good customer relationship. They do this by with customer and solving their
problems, by providing after sales services this small services have positive impact on customer.
These aim at increasing the number of the customer by attracting them through there various
services.
Sales- The focus of sales department is to sale those products and services which produce profit
which directs organisation towards maximisation of profit.
Accounting and finance department-They are mainly responsible for arranging the sources of
finance and maintaining the records of accounting, taxation, cash flow of company.
Management department-The various role of this department include handling the day to day
operation, managing them, coordinating with other department, decision making. Eliminating the
barriers in flow of information and activities (Trkman, 2010).
Manufacturing- this department deals with manufacturing product. The responsibility of this
department is to produce quality and standard product. They are also responsible for holding the
inventory level as this all may affect the production activity in an organisation.
Operation department-their main task is to support production department and full fill their
demand and also to control the production in order top prevent misuse of organisational
resources.
Purchase-There are some factors that are to be considered by these departments purchase good
quality of raw material at low cost and to purchase right quantity of product, as these factor may
affect the pricing strategy of firm.
Different function, objectives and structures of an organisation are inter-relation to each
other. There are several departments in Tesco PLC. Such as their marketing department,
administration, Costumes services, their human resource department and finance department.
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These all departments of company works in progressive direction to work in for the completion
of their goals and objectives.
HR functions: - These function works in TESCO to help the organisation to achieve
their goals and objectives in progressive direction (Ullah and Lai, 2011). This function also
manages to maintain the work-environment in an organisation and to provide their employees
satisfaction. In addition to this HR department also performs several training activities to their
employees and other skill development acts.
Finance function: - The main function of this is to manage and allocate different funds
for the functioning of the department. This function performs different effective investments and
strategies that supports the organisation in direction to make high returns. Using this function
Tesco is able to make further profits and work in more efficient ways and effective manner.
Customer services: - This is another function of Tesco plc. which majorly focus on to
provide customers satisfaction and in the development of relation with their customers. These
function work as accordingly and performs activities such training and providing good
satisfactory salaries to their employees by which their employees can progressively work in
direction to serve company's.
TASK 3
P4 Various macro environment and their impacts by using PESTLE analysis Political factor: Political factors have a heavy impact on the business firms. This is
because political environment determine the business conditions that will be prevailed in
the nation. Political environment cover political parties and ideologies. Each and every
political party that is operating in the nation have specific attitude towards each and every
issue that is associated with the nation. This thing also applied in case of the business. It
can be observed that in single nation there are multiple political parties and they have
different opinion towards growing a business in the nation (Wild, Wild and Han, 2014).
Some parties have progressive attitude towards business and like to give much support to
the business. On other hand, there are some firms that believe in working more for
benefit of the people and perform public welfare activities consistently (UK business
environment positive and forward looking, 2017). Thus, it can be said that political
factor have heavy influence on the business firms. In the UK current ruling government is
fully committed towards supporting business firms to maximum possible extent. In this
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regard it is making an attempt to ensure that business friendly policies are prepared. It is
expected that in the upcoming time period many new reforms will be made in the
business in the nation and this will directly affect organization in positive manner. Thus,
better business conditions will be developed and this will positively affect Tesco. Economic factor: Economic factor have huge impact on business firms. Economic
environment cover number of factors like inflation, GDP and public expenditure etc. In
current time period economic condition of the nation is not good and this have negative
impact on the business firms. There is very slow rate of economic growth and this reflect
that economy of UK is growing at slow rate. Due to this reason banks are giving less
amount of debt to the business firms as there are chances of default of firms. All these
things, lead to cash crunch in business and affect performance of the firms like Tesco.
Due to poor economic condition of nation many people loss their jobs in past years (UK
business outlook economic and political uncertainty the main worries for 2016, 2016). As
a result their spending capacity declined sharply. Moreover, saving rate also declined
sharply. All these things are affecting people intention to buy products from retail shops
like Tesco. Rivals like Lidl and Aldi are offering product at much cheaper price then
Tesco and this further add on pressure on the firm. Thus, it can be said that economic
factor is badly affecting Tesco. Social factor: Social factor refers to the attitude, belief and ideology that people have
towards specific thing or any situation. Social factor have heavy impact on individual
purchase decisions. This is because if people have negative attitude towards products due
to any reason then in that case they will not purchase product. There are many casess
where it is identified that due to some reason product does not get acceptability from
people side and failed in foreign market. Thus, it can be said that social factor have
negative impact on the business firms. Social factor also have negative impact on Tesco.
This is because economic condition of nation does not improve to great extent. Due to
low saving rate common perception formed among people that less spending must be
done. This is the reason due to which people are prepared to make purchase product at
least price. Consequently, those people who were earlier customers of Tesco now are
making purchase from Lidl and Aldi. It can be said that it is the reason due to which
Tesco is facing loss in its business consistently.
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 Technological factor: Technology is the one of the important factor that have impact on
the business firms. Advancement in technology is happening at fast rate. Due to this
reason efficiency level of firms get improved. At same time new challenge comes in
existence and under which is firms will not make their technology advance they will lag
behind in competition. Tesco is in much better condition in terms of technology and it is
using advanced machines and techniques to manage its business. Thus, it can be said that
on this front firm is giving very tough competition to rival firms. However, this does not
mean that Tesco does not need to improve its current infrastructure. With passage of time
many innovations will happen across the globe and along with this, firm will need to
improve its current technology infrastructure. Environmental factor: Environment factor is the key component of the business
environment. It refers to the natural conditions and pollution that is around the
surrounding area where firm is operating its business. Tesco is well aware about
environment protection and it takes number of steps to improve environment in
surrounding area. It can be said that on this front firm is doing well in its business.
 Legal factor: It is the last and one of the most important component of the PESTEL
analysis. Legal factor basically reflect the rules and regulations that are in the nation in
association with the specific industry. In case firm failed to follow these rules and
regulations tightly then in that case strict action can be taken against it. In this regard
penalty can be imposed on company. Firm have serious threat on this front as there are
number of cases that on the firm like horse meat case etc. All these things heavily
damage Tesco image among target customers and it need to be very cautious now in
terms of compliance with rules and regulations (Yoon, 2012).
TASK 4
P5 Internal and external analysis for Tesco plc. In order to identify current weaknesses and
strengths.
After performing PESTLE and SWOT analysis it can be concluded that-
Internal analysis
Strengths-
 the name and trust on the Brand
Weaknesses-
 The company is having weak turnover
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 The organization is working great in
online presence which is introducing
new customer inflow.
 Company is using club card which
attract and promotes their new potential
customers.
 The company is having strong property
portfolio and a range of satisfied
costumes.
for the inventory.
 The organization is dependent on the
Market of UK and Europe.
 The image of brand had got down after
the scandle of commertial income,
2005.
External analysis
Opportunities-
 The company is having great
opportunity for its expansion in
international market.
 Company can grow its business further
in online shopping and their effective
marketing strategies can act as an
opportunity.
Threats-
 Any change in legislation can impact
company adversely.
 Rise in the market of food can harm to
sale of the company.
 Similarly, certain fluctuation in the
currency can affect the economy of the
company.
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P6) Swot analysis to identify strengths and weaknesses and its interrelationships with
macro factors
SWOT analysis of a company presents its strength, weakness, opportunities and threats
which make great impact on their planned growth and profitability. Tesco plc can identify its
potential, which are as follows:
Strength: Tesco plc is the largest retailer in UK. It has great command in UK's market
share which highly affect the taste and preferences of customers in a large scale. Apart from this,
cited company has some strength which enable it to make a good market position. These are:
 It makes UK's largest super chain which provide various kinds of products across the
world.
 Company also has good brand image in the market which provide strong financial power
in compare to their competitors.
 It acquires its place as a third largest retailer after Walt-mart.
 Tesco plc also make its great presence in the world, it specially deal in 15 countries. Use of advance technologies for marketing their products is one of most important
strength of Tesco.
Illustration 1: Market share of Tesco
(Source: -Tesco's market share drops, 2012)

Weakness: Tesco plc also has some of their weakness which make negative impact on its
growth. These are as follows:
 Company deal in diversified culture in different areas. It is difficult for the cited firm to
makes focus on every geographical areas.
 Cited firm highly depends on UK market for operating their activity.
 Due to delivery of goods and services, Tesco plc spent heavy amount in transportation
areas. Employees are hired which have less experience on dealing of customers and insurance
markets.
Opportunities: Tesco plc also has some opportunities which is useful for increasing its
profitability and achieving their goals by an effective manner. These are:
 Company make partnership and strategic alliance with another companies by which it can
acquire great market position.
 Tesco plc also have opportunities to adopt advance techniques such as online marketing
or selling so that it can sell their products in global level.
 Organisation also increases its profitability by entering into Asian market. Tesco also opens its stores or branches so that it can expand its business and make great
presence in the global market.
Threats: Every organisation have its own threat which make positive and negative impact
on their operational activity. It also motivates the firm by which it can adopt various changes for
accomplishing its desire goals. Tesco face various threats, which are as follows:
 Facing great competition with Walmart which provide quality products in an affordable
price to the customers.
 Tesco also face the changes in their tax rate which affect its financial position.
 Cost of raw material is also increases, which make negative imp[act on their product's
price.
By analysing the SWOT of Tesco plc, it can be analysed that cited company deal with
different customers in diversified areas. In respect to this, company can utilized their resources
effectively and make complete forecasting of their resources. In addition to this, cited firm also
face the big weakness by their competitors which make negative impact on their product's price.
Hence, cited adopt various changes so that it can overcome its weakness.

CONCLUSION
The above report is focusing on various factors such as macro environment as well as
throwing light on their various impacts on various business activities. Along with all these the
report is providing a overview and explaining about the different types of organisation and their
growth in international market. The main objectives of public firm is to serve their costumes with
quality of services and assist them to work in direction to develop brand satisfaction. Tesco plc is
having several functions such as their administration, finance management, HR and others who
are working in such progressive direction to serve their costumes and in the accomplishing of set
targets by the organisation. From the above report the positive and negative impacts of micro and
macro environment can also be conclude. The macro environment puts vital impact on the unit of
business and in this relation their strategies and decision could be taken in such a way to make
progressive decision and strategies which further can help to achieve the set goals and objectives
of the organisations. The report is also providing information about the internal strengths and
weaknesses of business and the importance of their inter-relation with external macro factors by
using the PESTLE analytical way and telling about the strengths and weaknesses of these
external macro factors by using SWOT analysis.

REFERENCES
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Cavusgil, S.T. and et.al., 2014. International business. Pearson Australia.
Colfax, R.S., Rivera, J.J. and Perez, K.T., 2010. Applying emotional intelligence (EQ-I) in the
workplace: Vital to global business success. Journal of International Business Research. 9.
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De Jonge, A., 2011. Transnational corporations and international law: accountability in the
global business environment. Edward Elgar Publishing.
Gebauer, H., Paiola, M. and Edvardsson, B., 2010. Service business development in small and
medium capital goods manufacturing companies. Managing Service Quality: An
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based ontologies. Expert Systems with Applications. 37(4). pp.3274-3283.
Teece, D.J., 2010. Business models, business strategy and innovation. Long range
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Trkman, P., 2010. The critical success factors of business process management. International
journal of information management. 30(2). pp.125-134.
Ullah, A. and Lai, R., 2011. Modeling business goal for business/it alignment using requirements
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Wild, J.J., Wild, K.L. and Han, J.C., 2014. International business. Pearson Education Limited.
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Online
Tesco's market share drrops, 2012. [Online]. Available through:
<https://www.tutor2u.net/economics/blog/tescos-market-share-drops>. [Accessed on 11th
August 2017].