Impact of External Factors on Tesco's Performance: A PESTLE Analysis

This article discusses the impact of external factors on Tesco's performance using a PESTLE analysis. It explores the political, economic, social, technological, and environmental factors that affect Tesco's overall performance and efficiency. The analysis helps understand the implications of these external factors on the largest retailer in the global marketplace.

Business in practices
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Contents
INTRODUCTION...........................................................................................................................3
SECTION-1.....................................................................................................................................3
Discuss about the different types of organization where how they are working in the global
marketplace..................................................................................................................................3
SECTION-2.....................................................................................................................................5
Discuss about the different types of organizations such as sole trader business, partnership,
public liability business and limited liability enterprises, cooperative........................................5
SECTION-3.....................................................................................................................................6
Discuss about the different organizational structure and explain how it’s directly affects on
business productivity...................................................................................................................6
Describe that how external factor affect on the overall performance of enterprise by using
PESTLE.......................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Business in practices is considered the tactics, activities which will be conducting to reach
the specific goal and objective. It is the way in which attempt to do something cost effective
manner. The report is mainly used the Tesco as retailer supermarket store of private organization.
Therefore, it will be identified the positive as well as negative impact on the external
environment on the enterprise.
The report will discuss about the understanding of different companies and how they work
together. Therefore, it will be identifying the characteristic of micro, small and medium size
enterprise. Furthermore, documentation will describe the companies from sole traders to
cooperatives as well as limited liability partnerships. However, it will considerable of various
organization structure, layout which affecting on the overall business productivity as well as
profitability in marketplace. At lastly, it will use the pestle analysis as tool or platform which
primarily examine the overall performance and efficiency of organization.
SECTION-1
Discuss about the different types of organization where how they are working in the global
marketplace.
Various type of enterprises which mainly defined as processes, performing the different
activities such as designing launching, running the business. It is the most effective way in which
identify the different entrepreneurship such as micro, small, medium and large scale enterprise.
Sometimes, it also consists as topology which applicable in the business venture. Each and every
enterprise that have different unique identities, characteristics for running operation and function
in global marketplace.
Micro business
enterprise
Small business
enterprise
Medium scale
enterprise
Large size
enterprise
Definition Owner who
running the
business that
have least
This enterprise is
start with the
business by
implementing
This type of
enterprise is
focused on
increasing the
The enterprise is
increasing the
popularity within
international
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number of
employee in this
business and
generate less
revenue with
profit margin.
innovation and
always tried to
increase revenue
of enterprise in
global
marketplace.
productivity as
well as
profitability in
marketplace
(Cristofaro,
2020).
market. It also
generate more
and more
revenue in yearly
basis.
Revenue An average
revenue of micro
business
approximately $2
million
(Moellers, Visini
and Haldimann,
2020).
An average
revenue of small
business
approximately 5
million
An average
revenue of
medium business
approximately 29
million.
An average
revenue of large
business
approximately
$120million
Goal The primary goal
of micro
enterprise that
have generate the
more
profitability, in
order to establish
the business
position in global
marketplace
(Moellers, Visini
and Haldimann,
2020).
This type of
organization is
implementing the
innovation in
their product as
well as service.
Therefore, it
become easier
for increasing
demand in global
marketplace.
The medium
scale
organizations are
generating a lot
of profit while
achieving their
specific goal and
objective.
This type of
organization
always tried to
sustain the
business in
marketplace,
bringing the new
product as well
as service
(Moellers, Visini
and Haldimann,
2020).
Structure Micro enterprises
have no specific
Small enterprise
have consider the
It either use
partnership as
Large scale
enterprise that
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structure because
it is running the
business
individual by
sole trader.
suitable division
structure to
assign specific
task of each
members
(Moellers, Visini
and Haldimann,
2020).
well as
corporation
structure to
maintain
coordination
between multiple
operation and
function.
has complex
structure which
totally depending
on the business
type.
Size Micro enterprise
that can have
only maximum
10 employees
Small business
that can have 10-
20 employees
working in the
organization
Medium-sized
enterprise can
have up to 200
employees
(Orive and et.al.,
2020).
Large scale
enterprise can
have more than
500 employees.
Examples The most
common
example of micro
enterprise such
as courier
service, catering
services and
online tutoring.
Example of small
business such as
courier service,
cleaning service,
business
consulting.
Example of
medium scale
enterprise such
as supermarket
chain.
Example of
largest scale
enterprise such
as IT companies,
super market
retailer.
Table: 1
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SECTION-2
6

Discuss about the different types of organizations such as sole trader business, partnership,
public liability business and limited liability enterprises, cooperative.
There are different type of enterprises that performed the different operation and function.
In various enterprise, manager is responsible person that can easily handle large number of
business activities (Orive and et.al., 2020).
Public liability enterprise
This type of organization is generally run by state government. Its primary aim is to
provide the public service and also utilised the essential resources in best way. In this way, it
help for other community to give better advantage, opportunities. For Example- ESPO is based
on the public sector enterprise in UK (Orive and et.al., 2020). The primary function of
organization is to provide wide range of good as well as service. Government always focused on
the maintaining the coordination with enterprise and generate more profit in marketplace. On the
other hand, the primary characteristic of public liability enterprises that consider as autonomous
nature. The direct control of government in the business functionality even established under
specific act.
Sole trader
A sole proprietorship which is also known as sole trade, individual person that is owned
or run the business in marketplace. In this organization, it should not include any legislation
distinction between different enterprise entity as well as owner (Moellers, Visini and Haldimann,
2020). For example- it operates the enterprise such as restaurants, electricians and plumbers.
These are operating their business in market, setting up as sole trader which relatively follow
simple processes. The characteristics of sole trader proprietorship that will provide the enough
structure and easy to setup polices as well as procedures.
Partnership
It is based on the formal arrangement by two or more parties that involved in the
organization. Both parties are managing and operating the business, afterwards, it can easily
share its profit (Orive and et.al., 2020). In particularly, each and every partners are sharing the
liabilities as well as profit equally. For Example- Red bull and GoPo are considered as
partnership to run the business in global world. In this organization, involvement of two or more
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parties which are performing the different operation and function. The characteristics of
partnership that will provide the enough structure, also followed the specific policies and
procedures to handle the business activities.
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Limited liability sector
A limited liability is based on the enterprise whereas individual owner is not personally
liable for organization debts or liabilities. This type of organization is consider as hybrid entities
that mainly combined with characteristics of other corporation (Moellers, Visini and Haldimann,
2020). For Example- Anheuser-Busch, blockbuster are considered as limited liability companies
that mainly followed the proper structure to handle the business activities. On the other hand,
Main characteristics of corporation which can easily implemented the limited liability,
continuing lifespan. In most of cases, it help for managing and controlling the overall
professional management functionality in proper manner.
Private enterprise
This type of organization is owned and run by other individuals, its primary aim is to earn
a lot of profit in marketplace. In this enterprise, there are limited involvement of government, it
make a proper structure on the basis of business need and requirement. This type of organization
is also known as citizen sector (Rejikumar, Aswathy Asokan and Sreedharan, 2020). For
Example- JCB is a type of Multinational Corporation and their headquartered located in UK.
This company is based on the manufacturing which providing the various equipment’s related to
the construction, demolition, agriculture and waste handling.
SECTION-3
Discuss about the different organizational structure and explain how it’s directly affects on
business productivity.
Tesco is based on the British multinational grocery and general merchandise seller
organization, generally, it follows the hierarchical organizational structure and position, also
dividing the obligation into different parts to ensure work done effectively (Orive and et.al.,
2020). It is one of the top of enterprise pyramid, which have maximum responsibilities as well
as authority.
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Figure 1
According to figure-1, Tesco governance the entire structure which comprises different
committees, reporting to the TESCO plc. board. There are total 11 committee members in Tesco
which performed the significant task (Moellers, Visini and Haldimann, 2020). Chief executive
Dave Lewis for handling the entire business operation and function. The major role played in the
structure division with implications on the entire management structure.
The current structure of tesco is highly hierarchical which reflecting on large size of
enterprise. At every level, there are different management layers support to handle the large
number of physical stores. It is an essential to manage or control the different structure which
reflecting on size, location and wide range of other store specific factors.
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Figure 2
In above analysis, it is mainly categorized into different management layers within single store.
It may create the unnecessary bureaucracy with negative implication on the flow of data or
information across the different management layers (Shpak and et.al., 2020). Therefore, the
senior level management require to consider the better delayering opportunities which increase
the flexibility of enterprise operation. In order to change with physical store, accelerating the
flow of data or information while reducing management layers.
Tesco is related to the retailer organization which provide the various product as well as service.
It has a huge structure hierarchy structure of management. The board of direction has finalized
the different business operations such as planning, marketing, development, technology and
other network services (Moellers, Visini and Haldimann, 2020). In above figure, it is mainly
dividing the different specific role and responsibilities of individual, performing the function to
achieve desirable goals. Tesco use this hierarchical structure to handle the complex situation
while increasing overall business profitability as well as productivity in marketplace.
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Describe that how external factor affect on the overall performance of enterprise by using
PESTLE.
A pestle analysis is based on the tool or framework used to analyse or monitor the macro-
environment factors. It has profound the impact on the overall business performance and
efficiency. In this way, Tesco may use this tool to identify that how its directly affect on the
performance of organization.
 Political: Tesco operates the business across different nations. It is consider as largest
retailer in global world. It has follow the rules and regulation that ensure compliance,
safety of its products (Waweru, 2020). Another way, it directly affecting on the Tesco
due to increase political instability. In order to minimise the production and sale. In this
way, Tesco has been battling to gain more ground of sales since tempering of markets by
trade war among different nations.
 Economic: in this factor, Tesco encompasses wide range of product as well as service but
organization need to change the economic condition and operates the business in global
world. This factor will affect on the overall revenue, distribution, sales and profit because
changing the taxation policies (Moellers, Visini and Haldimann, 2020).These are
leverage the similar for its own advantage. In case economy is under pressure and
increase taxation rate so that it directly affecting on the overall business performance.
 Social: In this factor, many people are preferred to buying everything, based on the latest
trends. Afterwards, Tesco has planned to provide the best quality of facilities and
services. Each and every products that are demanded by existing consumer, depending on
their social influence. Therefore, it may change the demand of customer in regards of
specific product as well as service. Sometimes, it also affecting on the overall
performance of Tesco.
 Technological: modern technology has rapidly changing at fast pace, it is an essential for
Tesco to keep change their technology for attracting large number of consumers. Tesco
has been experimenting with different aspects of retailing, achieving the success on few
endeavours(Moellers, Visini and Haldimann, 2020). Afterwards, it directly affect on the
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overall business capabilities because Tesco has created new technology for cashier less
billing in order to support entire retail shopping experience of consumers.
 Environmental Factor: in this factor, it has identified that Tesco initiatives in order to
help for improving the current environment or culture. It provide the more sustainable
society as well as community. Generally, Tesco has performed the different functionality
in order to eliminate or reduce non-recyclable plastic (Moellers, Visini and Haldimann,
2020). It help for maintaining and controlling the overall pollution level. As per identified
that there are lot of environmental issue occurred due to large retailer because they can
eliminate the waste materials. Therefore, it directly affecting on the performance of
organization.
 Legal Factor: government policies are changing, directly affect on the business operation
and function of organization. Sometimes, it require to follow the international as well as
locate market legislation. it help for continuously maintain the business operation and
function. Moreover, there are various allegations which imposed on the Tesco in regards
of gender bias, age (Moellers, Visini and Haldimann, 2020). In this way, it directly
affecting on the entire work culture or environment. Sometimes, the organization being
sued for unequal pay scale among women and men. At that time, it should be applicable
the different legislation which help for maintaining the business reputation in global
marketplace.
From analysis, it has identified the certain aspects of overall business in term of performance and
efficiency. PESTLE analysis will help for identifying the different factors that directly affecting
on the Tesco in context of positive as well as negative manner.
CONCLUSION
From above discussion, it concluded that business practices are important strategies that
always supports for organization in term of growth and development. It help for achieving the
suitable goal or objective. In this report, it has summarised about the understanding of different
companies and how they work together. It can be determined the specific characteristic of micro,
small and medium size enterprise. Documentation has explaining the conceptual thing about the
companies from sole traders which are becoming cooperatives and limited liability partnerships.
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Furthermore, it can be determined the overall business structure, layout which always support
for identifying current situation or condition in context of productivity as well as profitability in
marketplace. Also used the pestle analysis as tool or platform which help for identifying the
overall performance and efficiency of enterprise.
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REFERENCES
Book and Journals
Cristofaro, M., 2020. E-business evolution: an analysis of mobile applications’ business
models. Technology Analysis & Strategic Management. 32(1). pp.88-103.
Moellers, T., Visini, C. and Haldimann, M., 2020. Complementing open innovation in multi‐
business firms: practices for promoting knowledge flows across internal units. R&D
Management. 50(1). pp.96-115.
Orive, A.C. and et.al., 2020. Strategic Analysis of the Automation of Container Port Terminals
through BOT (Business Observation Tool). Logistics. 4(1). p.3.
Rejikumar, G., Aswathy Asokan, A. and Sreedharan, V.R., 2020. Impact of data-driven decision-
making in Lean Six Sigma: an empirical analysis. Total Quality Management & Business
Excellence. 31(3-4). pp.279-296.
Shpak, N. and et.al., 2020. THE USAGE OF MODERN INSTRUMENTS OF BUSINESS
PLANNING ADMINISTRATION FOR SMALL ENTERPRISES: A CASE STUDY
ANALYSIS. Central European Business Review, 9(1).
Waweru, N., 2020. Business ethics disclosure and corporate governance in Sub-Saharan Africa
(SSA). International Journal of Accounting & Information Management.
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