Business Environmental Analysis

This report provides an analysis of the business environment, focusing on the positive and negative impacts of macro environmental factors on business operations. The case study of TESCO, a well-known retail organization, is used to illustrate the concepts. The report includes a PESTLE analysis and a SWOT analysis of TESCO.

Business
Environmental
Analysis

INTRODUCTION
Business environment also known as market environment where analysis of both external
and internal factors are included which is required by to conduct business operations in a more
effective and efficient manner. It has became necessary for the management team of the
company to examine all these factors before operating their business operations at the
marketplace. In this report, TESCO has been selected that is a well known retail organisation
(Abushova, Burova and Suloeva, 2016). This is the company which mainly deals in households
and grocery items. Under this report, PESTLE as well as SWOT analysis are going to be
conducted which help in examining different factors available at the market which might
influence the business functions of the company.
TASK 3
P4. Positive & negative impacts the macro environment has upon business operations, supported
by specific examples
It is said that TESCO is considered as one of the fastest leading business company that is
dealing in groceries as well as general merchandise. It is a British multinational corporation
which deals in all over the world where business functions are majorly affected by internal and
external factors. Both micro & macro factors are going to be discussed as follows where
PESTLE analysis are as follows:
Political factor: It that component which consist of governmental policies, labor laws,
foreign trade policy, environmental laws and many more. All these factors have their own
positive & negative impact which might create affect on the business operations. In reference to
TESCO, it has been said that the company deals & operates across the world which includes
Japan, USA, Germany and many more. Changes in governmental policies highly affect the
profit margin of the organization (Eigner and et. al., 2019). This is considered as one of the most
significant and essential element which affects the functionality of TESCO. Positive impact: It has been evaluated that political condition of United Kingdom is quite
stable & it also support investments which creates positive impact on the business
functions of TESCO. Therefore, it is beneficial for the organization in order to conduct
there business operations in an effective manner.

 Negative impact: There are high number of international wars and terrorist attacks which
influences the whole political condition, which leads to impact negatively on the business
functions of TESCO. This as a result affect the overall business functionality in a
negative manner and reduce the overall outcome of the organization.
Economical factor: Another factor which affects the business functions is economic
method of a country. Some of the factors consist of inflation rate, interest rate, employment rate
and so on. In the present context of TESCO, it has been said that economic condition of UK have
strong economic position. Which highly affects the profitability and revenue of the company and
help them in gaining various opportunities. With the help of developing large number of job
opportunities, living standard of individuals will be enhanced (Gupta, Gupta and Gupta, 2019). Positive impact: Strong economic condition of United Kingdom help TESCO for
generating more profit and revenue at the competitive marketplace. Therefore, it will
assist in generating employment opportunities which leads to increase the standard of
living. With the help of this factor, individuals will be able to improve there living
standard in an effective manner which as a result improves the goodwill of the country. Negative impact: Due to rise in labor cost as well as increase in tax rates might affect the
reputation and profitability in an adverse way. This might affect the whole profit margin
of the organization at the competitive marketplace which limited the economic system of
the country.
Social factor: Another essential element is social factor which includes values, beliefs,
perception, tradition as well as culture. This factor can have a negative influence and effect on
the business operation. Therefore, it is required by the management team of TESCO to identify
the needs and wants of individuals before producing goods and services. In reference to TESCO,
it has been said that this factor if adopted by the company enhance the brand image and goodwill
at the competitive marketplace. Positive impact : With the help of this element, an organization will be able to satisfy the
needs and wants of customers in an impressive manner. This as a result increase the
brand image of the company (Muhammad Siddique, 2015). Therefore, it plays very
positive work in order to improve the living standard of people. Negative impact: Whereas, due to continuous change in requirements of customers needs
might affect the profitability of the company. Whereas, many times government force

organization in order to implement CSR activities, which affect their profitability of
TESCO.
Technological factor: In the current modern world, it has been said that technology plays
significant role in deceiving and attaining the objectives and goals of an organization in a more
effective manner and also in specified time limit. In reference to the present organization which
is TESCO, managers of the company modify their technologies within every four years so that
they can raise quality of products and services in order to remain at the competition. Apart from
this, if managers modify their technologies, it is essential to provide training and development
sessions to their staff members so positive results will be produced. Positive impact: With the help of adoption of new and upgraded techniques, managers of
the company produce high quality of products. Along with this, wastage of goods might
be reduced which leads to addition in the profitability and productivity of the company in
the competitive business marketplace (Nandonde, 2019). By using advance technology,
wastage of raw material will be reduced which improves the goodwill of organization at
the marketplace. Negative impact: Apart from this, adopting new and innovative techniques on a regular
basis minimize the profitability of the company will be reduced. Because of adopting of
advanced technologies, overall profit margin of the company reduces in a negative
manner.
Legal factor: In reference to the legal factor, it has been said that there are ample number
of legislation which might influences the overall business function of the company. Some of
these factors includes health & safety law, equal opportunity act, anti discrimination law and so
on, which affects the functionality of the organization. In the present context of TESCO,
managers apply such legislation so that they can gain positive advantage. This will assist in
providing security to the employees which helps in increasing their efficiency and performance. Positive impact: This will assist in developing positive environment at the workplace,
which might increase the efficiency of individuals working within the organization.
Therefore, by adopting all the legal factors in an effective manner organization will be
able to perform their task effectively and efficiently. Negative impact: Adoption of legal implications develop complexity within the
workplace as if it changes on a continuous basis it might influences the profit margin of

the organization. Along with this, change in policies and legislation occurs cost to
company due to which the overall revenue of an organization is decline and affect on its
market share negatively.
Environmental factor: It refers to the element which says that organizations need to
perform their business function in such a way that they may not lead to any kind of harm to the
external environment. In reference to TESCO, managers of the company adopt technologies
which help in producing eco friendly products and services to maintain their goodwill at the
competitive marketplace (PANDEY, 2017). Positive impact: It develop safe, healthy and secure environment to the people which
helps in attracting ample number of people towards the organization. Along with this,
company follow all the environmental that help in to increase its brand image in market
which in turn affect positively on the sales as well as profitability of an organization.
 Negative impact: Whereas, if the chosen organization implement technologies which
produce Eco friendly goods and services will increase the cost of the company. In
addition to this, Raise in the cost of company is directly impact on the overall
profitability and revenue of organization in a negative manner.
TASK 4
P5 Internal and external analysis of specific organisations in order to identify strengths and
weaknesses
TESCO is a well known and famous British multinational organisation deals in grocery
and merchandise products and services. Company was introduced in the year 1919 and is
currently having almost 7000 stores across the whole wide world. With the assistance of SWOT
analysis, the top management of this organisation will became capable of examine and
evaluating internal strengths as well as weakness so that they can develop strategies and policies
accordingly (Sarsby, 2016).
Strength Weakness
 It has been said that, strength of the
company is that it have strong
reputation of the company in the
competitive market area. This as a
 In context of TESCO, biggest weakness
of the company is that there is high fall
in credit rating of the company which
might reduce their number of

result help them in order to attract large
number of individuals in an effective
manner.
 In addition to this, TESCO provide
different variety of goods and service
which is one of the strongest point of
the company.
 It has also been identified that products
and services of the company highly
fulfil the needs of consumer which help
them in retaining their loyal customers
for a longer period of time (Singh and
et. al., 2018).
 The market presence of TESCO is
hight as it offer product in more than
6,000 locations that increases market
share of company.
customers. Along with this, it will
affect the brand image in a negative
manner.
 Furthermore, it has been said that
organisation is facing various issues
which might reduce their overall brand
image of the organisation.
 Due to BREXIT, there is downfall in
overall performance of TESCO which
act as a threat for the company.
Opportunity Threat
 With the assistance of modified and
upgraded technologies, TESCO can
provide goods and services through
online portals which increases their
brand image at the competitive
marketplace.
 Along with this, with the help of
merger & acquisitions, TESCO can
increase their business expansion
across the whole wide world in an
 It has been identified that biggest threat
for the company is that there is high
level of competition within the market
that is affecting the profitability and
brand name of this organisation in a
negative way.
 Whereas, due to continuous change in
government regulations, business
operations might get affected (Tahseen
and Karney, 2017).

effective manner.
P6. Strengths and weaknesses interrelated with macro environmental factors
There are various factors available at the marketplace which might influence the overall
business functions of the company in positive and negative manner. There is an interrelationship
among the strength & weakness of macro environment, which are going to be discussed as
follows:
Basis Political Social Economical
Strength TESCO is a well
known business
organisation mainly
adopts all the legal
policies, laws as well
as legislations
formulated by the
higher authority or
government of the
country. By using all
the political elements
in an effective manner,
company will be
capable to execute
their functions and
task in an more
effective and
appropriate manner.
Political factors assist
company to smoothly
implement out
business activities and
It is also very
important for the
management team of
TESCO to emphasis
on the living standards
of people so that they
can easily attain their
goals and objectives at
the competitive
marketplace (Zahari
and Romli, 2019).
TESCO uses eco
friendly techniques
which builds its
positive image in
market which act as a
strength for company.
As per this factor, it
has been said that due
to strong economic
condition TESCO will
be able to gain high
profitability at the
marketplace by
launching new and
innovative products. In
addition to this, it will
help company to
enhance their level of
profitability as well as
market share.

strengthen their market
position.
Weakness Due to continuous
changes in the political
factors of UK, cost as
well as working
condition of TESCO
might get affect in a
negative way.
In today's world, major
factor for an
organisation is that
health of customers
are more concerned
factor which highly
affects the business
operations of an
organisation in an
adverse way
(Abushova, Burova
and Suloeva, 2016).
It is said that TESCO
required to provide
their contribution to
the economic condition
of the country. But
sometimes due to
modifications in
external environment,
it might affect the
whole performance of
the company.
Basis Technological Environmental Legal
Strength By using all the
upgraded and
advanced technology,
TESCO will be able to
provide high quality
products to their
customers in order to
beat the level of
competition. In
addition to this, it
assist company to gain
leading position in
these sector which in
turn increases its
market share.
Management team of
TESCO highly adopts
eco friendly
technology with the
help of which they can
reduce negative impact
or pollution from the
external environment
of UK.
By adopting all the
legal acts and policies
in an effective manner,
TESCO will be able to
maintain their strong
brand image at the
competitive
marketplace (Eigner
and et. al., 2019).

Weakness Day-to-day alteration
in the technology
highly affects the
whole profit margin of
TESCO at the
marketplace.
It is essential for the
management team of
TESCO to follow
some specific laws and
legislations which
highly influences the
business functions of
the company.
Moreover, to follow
all the environmental
laws is difficult for
company due to which
its market image can
be declined.
TESCO needs to
implement some legal
policies which might
reduce the profitability
as well as brand image
of the company at the
marketplace. Alteration
in policies affect
negatively on overall
profitability of TESCO
as it incurs cost to
company.
CONCLUSION
On the basis of above stated report, it is concluded that business environment creates both
positive & negative influences on the performance of an organisation. It has been said that in the
present report, PESTLE analysis is done where all the factors are being examined by the
managers before doing any kind of business functions at new marketplace. Furthermore, SWOT
analysis is also conducted so that internal strength as well as weakness can easily be identified
and develop strategies to reduce threat and competition available at the marketplace.

REFERENCES
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