Impact and Influence of Macro Environment Factors on a Business Organisation

This report analyzes the impact and influence of macro environment factors on a business organization, using Tesco as a case study. It examines the political, economic, social, technological, environmental, and legal factors affecting Tesco's operations and management decisions.

Business Strategy

Table of Contents
TASK 1............................................................................................................................................3
P1: Impact and influence of macro environment factors on a business organisation............3
M1: Critical analysis of of macro factors to determine the management decisions...............5
TASK 2............................................................................................................................................6
P2: Analysis of internal environment and capabilities of the organisation............................6
M2: Critical evaluation of internal environment and the capabilities....................................8
TASK 3..........................................................................................................................................10
P3: Analysing of competitive environment of a organization..............................................10
M3: Appropriate strategies to improve competitive edge and market position...................12
TASK 4..........................................................................................................................................13
P4: Theories, models and Concept helping in strategic planning of a organisation.............13
M4: Strategic marketing plan...............................................................................................13
D1: Critical interpretation and analysis of information.......................................................15
CONCLUSION....................................................................................................................17
REFERNCES.................................................................................................................................18

INTRODUCTION
Strategies are the action plans that are undertaken by various business organisation. It is a
set of actions that are used for fulfilment of various objectives of a business. It is very helpful for
organisations in improvement of employee performance and attainment of a competitive
advantage. It is a path that us used by organisation for regarding to their desired objectives for
future planning of organisational goals. These strategies are formulated for the purpose of
achievement of business targets in a more better manner. The present report is based on retail
organisation that is Tesco (Anderson, 2019). It is UK based retail organisation and it has its
headquarters present in UK. There are approximately 12 stores that are present across world.
There is a analysis of internal environment, macro environment and analysis of organisation's
capabilities with help of models and frameworks. In the present report there is analysis of
external environment, micro environment by use of PESTLE, SWOT analysis and further there
is development of strategic plan used for achievement of certain laid objectives.
TASK 1
P1: Impact and influence of macro environment factors on a business organisation
The business is functioning in a dynamic and complex environment that is completely
changing and is never constant (Anwar and Hasnu, 2016). There are certain organisational
factors that provided opportunities and threats for business organisation in case of Tesco this
company is also operating in a external business environment and there are many factors that are
possessing influence on their overall functioning of business. There is a analysis made of such
factors by use of PESTLE analysis as discussed below:
POLITICAL FACTORS : These are the factors that are used for identifying the overall impact
of various actions and plans of government.
Positive: Government of UK is taking initiates for promoting growth of retail sector for
which they are providing incentives. It is giving Tesco a opportunity for increasing demand of
their products.
Negative: There are certain political factors that cam posses a negative impact on
business such as BREXIT is a recent referendum that is posing a impact on overall demand of
products especially retail industry is getting negatively impacted because of this political issue.

ECONOMIC FACTORS : Economic factors are those that are use for determination of those
factors that are related with economy of a country and is posing a direct effect on functioning of
a company.
Positive: There has been reduction in the price of retail products that is leading to
reduction in the prices of products offered by TESCO such as ready to eat food etc.. Tesco can
benefit from this by having a pricing advantage in the external market (Belz and Binder, 2017).
Negative: There are many stability issues that report of economic environment such as
financial performance specially in countries such as Asia & Europe.
SOCIAL FACTORS : There are many social conditions that are related with social trends of
the market in which organisation is functioning. It is responsibility of management in a company
that they have to maximize overall benefits from such social factors.
Positive: There has been lot of social changes that are taking place in the external
environment. Such as customers in UK moving towards a trend of bulk shopping or one stop
shopping. Tesco has also been able to increase their non food items and offering them for sales to
support this trend.
Negative: on other hand there has also been a shift in the belief and attitude of customers
for ready made food they are moving their preference towards a healthy lifestyle for this it is a
requirement of Tesco to change their food products towards a healthy ingredients (Dahlberg,
Hokkanen. and Newman, 2016). Such changing attitude and belief of people is creating a
continuous change of policies and products on a continuous basis.
TECHNOLOGICAL FACTORS : Technological factors are those that are related with
advancement of technology as a opportunity to be adopted by retail organisations.
Positive: TESCO has introduced a RFID technology that is helping them in saving their
time and efforts of their labour which can be be further utilised in any other productive work.
Negative: There are many technologies that are disruptive for Tesco such as introduction
of e grocers has resulted into sales of offline stores getting impacted in a negative manner.
ENVIRONMENTAL FACTORS : There are certain factors that are posing a impact on global
warming and various consequences associated with the adoption of new technology.
Positive: Tesco is focussing on utilising various greenhouse gases and reducing overall
consumption of energy.

Negative: Many times for adoption of environment friendly measures there are lot of
changes that have to be adopted by organisations such as Tesco that is resulting in high amount
of investments that have to be done by the company (Doluca,., Wagner and Block, 2018).
LEGAL FACTORS : There are many legal factors that are related with laws and regulations of
a company.
Positive impact: Government of UK is focussing on lowering down of subsidies that is
affecting the farmers ability to meet various set standards by Tesco.
Negative impact:
Tesco is a organisation that is facing different threats as apart of supermarket industry in UK.
There are may competitive firms whose financial health is more better than Tesco (Fontana,
Sastre-Merino. and Baca, 2017). Hence it is a requirement that Tesco has to focus on
improvement of this threats in given period of time.
M1: Critical analysis of of macro factors to determine the management decisions
Macro environment includes the presence of all factors that have impact over
organisation and not in their control. The different number of factors includes political, social,
economical, technological, legal and environmental. All these have their own presence within the
nation on the basis of conditions present and functions are operating by an organisation in
market. It is determined from the analysis of macro environment of UK that political, economic
and technological has positive impact over the operations of all organisations. These will help
Tesco to grab the opportunities present in market like implementation of AI for detection of
consumers and sending message about their offers. Others like environmental, legal and social
has negative impact. For ex., changing preferences impacts the availability of product of their
nature.

TASK 2
P2: Analysis of internal environment and capabilities of the organisation
SWOT analysis of Tesco:
Strength Weakness
 Tesco is one of the biggest grocery
retailers of UK. It has higher revenue
and sales in comparison wit other
supermarket chains of UK (Gattorna,
2017).
 Tesco has successfully launched
various different forms of stores such
as Tesco Extra. Tesco Express, Tesco
Home-plus etc.
 Tesco is one of UK's largest private
employers. They are offering approx
743k opportunities of jobs to people of
UK.
 TESCO had to leave America & Japan
as they failed to export and close their
stores after a period of nine years.
 Tesco is a price leader in markets of Uk
built its low cost strategy has lead to
reduction in their profit margins.
 In some countries Tesco outlets are not
performing well as there is not
sufficient research of market that is
being conducted by Tesco in such
markets.
Opportunities Threats
 The newly opened store that is Jack is
showing chances of growth and is
providing opportunity for Tesco to
grow in coming future and face their
big rival firms such as Lidi and Aldi.
 Tecso is using the opportunity by
focussing on up-gradation and growth
of technology by adoption of online
business transactions and additional
services such as home delivery
services.
 In the year 2017, Tesco was accused of
misleading its customers by use of fake
names of farm in marking of their food
products it leading to lot of negative
impact on their brand image .
 Three is a rising growth of various
supermarket giants such as Aldi and
Carrefour it is leading towards threat to
existing market position of Tesco.
 With the implementation of Brexit
referendum in European union cost has

 Tesco has opportunity for adopting
joint ventures in those areas where they
are underperforming. There are many
local Companies that posses adequate
knowledge of local people and such
information can be utilise for growth
of business firms such as Tesco.
impacted Tesco and increase overall
threat faced by this business
(Ghemawat, , 2016).
Above discussed is the SWOT analysis of Tesco apart from this there is further sue of
VRIO analysis model for understanding pother resources that are proving this brand a
competitive advantage.
VRIO Framework is based on four factors that are Value, rareness, imitiability & organisation.
This framework is further used in context of Tesco as discussed below:
Value This factor is related with use of capabilities of
a organisation that are very valuable for them
in functioning of business and their survival as
compared to other similar companies. Such
resources of Tesco includes their distribution
network, cost structure, local food product and
global presence are very valuable for this
organisation (Hart, Sharma, and Halme,
2016).
Rareness This is the attribute that is connected with the
factor that whether resources posses by a
organisation are rare or not. In context of
Tesco, distribution network, cost structure,
local food products are the three resources that
are very rare for TESCO .
Imitaibility This is the factor that is having relation with
resource or capabilities can easily be adopted
by other organisation or not. If a resources is

easily imitable by other organization then it
will not be able to provide a competitive
advantage to a company. Overall cost structure
and local food products are the resources that
cannot be imitated by the competitors of
Tecso. It is helping in attainment of a
competitive advantage by the organisation
(Idemudia, 2017).
Organisation It is necessary requirement that organisation
has to utilise all their capabilities and keep the
resources organised manner. Such resources
result into competitive advantage in the macro
environment. The most important resource for
Tesco has the overall cost benefit that they
posses and is helping them in becoming a
market leaders in terms of cost of their
products.
After making a detailed analysis of internal environment of Tecso it can be said that there
can be easy formulation of strategies by Tesco, in achievement of their objectives.
M2: Critical evaluation of internal environment and the capabilities
Internal environment includes the factors that are present within the factor and have
impact over organisational operations. These are of such nature which can be controlled by
management. Tesco is big organisation and having efficient number resources. Afterwards, there
are some limitations that can impact organisational functioning. Results attained from the above
analysis of internal environment is presented below regarding internal capabilities, structure and
skill set in different conditions;
Internal capabilities
 Availability of high amount of human resources
 Handling of same is difficult due to different regulations and legislations
Internal structure

 Good flow of communication due to the use of SIS like TPS
 Paying high amount due to employing expert employee for handling same activities
Skills set
 Almost all skills exist
 Conflicts due to preference over someone

TASK 3
P3: Analysing of competitive environment of a organization
Porters Five force model: The five force model of Michel Porter is helping
organisations in identification of various competitive forces that can posses influence on
organisation. This is a model that is used for analysing factors of a industry (Johnson, 2016).
Model is providing five forces that are facilitating organisation in determination of their overall
competitive strategies and attractiveness in the industry. Various five forces of Tecso are
discussed below:
 Competition in the industry : There is a increased rivalry in the number of competitors
that are present in the macro environment. There has been a positive growth of retail
market in some recent years (Lai, Melloni. and Stacchezzini, 2016). There can be exit
barriers for already existing companies that is resulting into high competition for Tesco.
All the competitors of Tecso poses diverse strategies that are very unique and is helping
organisations in dealing with overall rivalry
 Threats of the Substitutes Products : There are are very less number of substitutes that
are available in case of products in which Tesco is dealing. There are some similar brands
that are offering substitutes to Tesco but at same time number is very low as it is very
difficult to match overall standard of product offered by Tesco in their price range. It
leads to difficulty for preventer customers of Tesco to substitutes the offerings of this
brand.
 Powers of the suppliers : Number of suppliers that are part of UK retail market are very
high in number. This is the reason that suppliers posses less control over prices of
products and this leads to weak bargaining power of suppliers. There are no any other
substitutes of products that suppliers are offering in case of some suppliers all this is
leading to a situation that suppliers do not really posses a credible threat for Tesco and is
very helpful for Tesco in taking cost advantages from products offered by their suppliers.
 Powers of the customers : Power of customers are related with overall switching cost
possess by customers of Tesco. There is advantage of cost benefit that is provided to their
customers by Tesco that prevents them from switching to other firms or organisations.
The target buyers of Tecso are people who belong to low income group and such

customers posses the pressure to make their purchases of products at low prices. Usually
buyers are very price sensitive in such cases. It results into weakening of the overall
bargaining power of buyers in the society (.Lim, Chalmers and Hanlon, , 2018). Hence,
it can be said that there are very less chances of Tesco getting impacted by overall
bargaining power of buyers in the industry.
 Potential new entrants : Overall economics of scale that is possess by Tesco is very
difficult to be adopted by any new entrant in the given period of time. Also, there is very
high requirement of Capital by any new company that is willing to enter the retail
markets of UK. This factor which makes it difficult for nay new entrant to increase the
amount of competition for Tesco but there are some more factors such as distribution
network that is easily accessible and can be used for entering the retail industry of UK.

M3: Appropriate strategies to improve competitive edge and market position
The strategies on the basis of outcomes will be use of discounting and Omni channel
marketing approach.
Discounting help to grab the attention of exiting consumers. This strategy persuade their
buying behaviour and manipulate to stick with the purchase of their products and availing
services. This can provide competitive edge and builds unique position in market.
Omni channel market is used for the purpose of attracting potential customers. This will
help to carrying buyers directly to their site from the link. The main aim of this strategy is to
spread awareness and influencing behaviour of new customers to purchase their products. This
will help to improve base that automatically aid in attainment of competitive edge.

TASK 4
P4: Theories, models and Concept helping in strategic planning of a organisation
Strategic marketing plan is a process that is helping in determination of strategy and
overall direction that is helping in making decision of allocating various resources that are
available with a business organisation. Strategic direction is very helpful in increasing overall
productivity of the organisation (Lozano, 2018). Strategic direction is related with overall
mission and vision sued for defining purpose of the organisation.
For making analysis of various strategic options for Tesco as discussed below:
Market penetration: this is a strategy that can be used by Tesco where organisation is
operating in the market with their existing products. For achievement of this strategy there is a
need for high promotion to create awareness amongst their customers. Tesco can make use of
this strategy by adoption of more promotional strategy that are innovative enough to attract
customers.
Market development: This is the strategy that is sued by organisation when they are
planning to launch their exiting product in new market. For this there is a requirement of
understanding the market (Madhushree, Kumar and Aithal, ., 2018). Tesco has to conduct a deep
research of their target market before implementation of this strategy.
Product development: This is the strategy that can be used by Tesco if company is
introducing new product in the exiting market by undertaking detailed research of market
according to taste of their customers. Tesco can adopt primary research Methods for developing
an understanding of taste and preferences of their customers.
Diversification: This is a strategy that can be adopted by Tesco if organisation is
planning to enter the market with new launch and in new target market. It is very essential for a
organisation to take risks so that they are able to expand their business to some new market.
Tecso can adopt this strategy when they are willing to increase their present market share.
M4: Strategic marketing plan
Strategic marketing plan
Strategic marketing plan for Tesco us discussed below:
Vision: Overall vision of Tecso is to increase the scope of business for long term growth by
expanding in large and new markets.

Mission: Mission of this brand is creating value for their customers by earning a lifetime loyalty
by quality of their products (Tsai. and Liao, 2017).
Objectives: The overall objective of Tesco is to increase the present market share of by 10% and
enhancement of revenue by 15% in coming period of five years.
Tactics: Tactics can be used by Tecso for development of marketing mix strategy as discussed
below:
Product The overall products category offered by Tesco is very wide, they are trying to
catering to need s and preferences of their target customer.
Price Tesco is following a leadership pricing sartget. In this strategy tesco is using
this strategy to bring down cost of their products so that they are able to offer
their products at prices that are low enough as compared to other competitors in
the macro environment (Moseley III, 2017).
Place Tesco is having its presence in 11 countries across world. There are different
types of stores that are build up by Tesco according to the product category
which they are offering such as Tesco extra, Tesco Superstore etc.
Promotion The overall pricing strategy of Tecso is related with advertising of their
products base don prices at which they offer their products. Further there is use
of television advertisements, hoardings, promotional channels etc.

Implementation: It is very important for a organisation to implement a plan that has
been formulated. For this there is requirement of a specified budget that helps in allocation of
resources in a more effective and efficient manner (Nixon, 2019). In case of Tesco, budget
prepared by Tesco is discussed below:
Evaluation: Evaluating performance of a organisation is very important that can be done
with the help of keeping a regular check on overall activities that have to be done for the
fulfilment of various laid down objectives in the plan (Theoharakis, Bicakcioglu and
Tanyeri.,2019). It is very important to keep a check on different aspects of a plan so that there is
timely following up of various objectives for successful completion of all the objectives.
D1: Critical interpretation and analysis of information
Critique and interpretation of information related to environment and competitive
analysis is provided below for further development of strategic direction, objectives and tactical
decisions;
 Political stability creates the opportunities in respect to attaining growth through focus
over activities of market penetration and market development. Market development is
not easy as the regulations exist in nation will definitely impacts over the operations.
 Competitive position of Tesco is high in market. This creates the opportunity in manner
of persuading buying behaviour of consumers. There are many other big players that
reduces this capability with the aid of adopting new technologies.
 The high nature of technological environment provides the opportunity to tackle
competition from other big organisation in the form of implementing AI. The negative
impact ascertained in the way of increasing in cost.
Strategic directions

 Focus over market penetration
 Adoption of new technologies
Objectives
 To growth market base by 5%.
 To improve profitability by 10%
Tactical actions
 Training and development
 Continuing analysis of change

CONCLUSION
It can be concluded from above mentioned topics that strategies are very important for
every business organisation for achievement of various laid objectives. It is necessary for a
organisation to identify the influence of overall business environment that consist of both micro
and macro environmental factors. PESTLE and SWOT analysis are used in understanding the
influence of these factors. Further VRIO framework is also very helpful in understanding of the
resource that are providing a competitive advantage to a organisation. Further, the strategic plan
is also used for preparation of strategies to achieve some specific objective that have been laid
down by a organisation.

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