Tesco Business Environment Analysis

This assignment provides a comprehensive analysis of Tesco's business environment, including a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis and a PESTLE (Political, Economic, Social, Technological, Legal, and Environmental) analysis. It also includes a review of the company's organizational structure and its impact on business operations. The assignment aims to understand the influence of micro and macro factors on Tesco's business and provides insights into the company's strategies for success.

BUSINESSES AND BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
.........................................................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types and purpose of organisation..........................................................................1
P2 Size and scope of organisation...............................................................................................2
TASK 2............................................................................................................................................6
P3 Interrelation between organisational functions and their link with business objectives and
structure.......................................................................................................................................6
P4 Impact of macro environment on business operations...........................................................9
TASK 4..........................................................................................................................................11
P5 Internal and External analysis to outline strength and weakness.........................................11
P6 Interrelation of strength and weaknesses with macro environmental factors.......................13
CONCLUSION..............................................................................................................................14
REFERENCES................................................................................................................................1

INTRODUCTION
Business Environment means, sum total of all the factors and forces that are outside the
control of an organisation and they affects the functioning and overall performance of the
business. It includes, customers, technology, media, investors etc. The report will outline
different types of organisation that is public, private and voluntary. The assignment is based on
analysis of business environment of Tesco which is UK based multinational retailer deals in wide
range of sectors that is clothing, accessories, grocery, etc. Thus, the report will imply use of Swot
and Pestle analysis to determine influence of macro and micro factors.
TASK 1
P1 Different purpose and types of organisation
PUBLIC ORGANISATION
Public Organisation are the firms which are under government control and they work for
welfare. Their main aim is to serve society and work for the betterment of society and not for
earning profit. Public sectors are state or centrally owned enterprises self-financed organisations
that finance themselves by their own funds (Reim, Parida and Örtqvist, 2015).
National Health Services was founded through taxation where this firm was set up with
an idea of providing good healthcare . It is formed on 5th July in England . It's headquarter is in
London. Department of Health and Social Care is the parent department of National Health
Service. It is the largest healthcare system which is funded by public. It provides many services
like, long term healthcare, dentistry etc. It's core principles are providing free services, fulfilling
the needs of everyone.
The purpose is to provide care and services that society wants and to serve them whatever they
need free of cost. However, the long-term goal of National Health Services is to enable society to
live healthier and secure life. It is regulated by The Secretary of state for Health and Social Care.
Legal structure: Department for Healthcare Services ha the main responsibility of
raising funds for the operations of National Health Services. NHS England is the umbrella body
which has the responsibility to oversee the functions of National Health Services. Clinical
Commissioning Group is responsible for local area.
PRIVATE ORGANISATION
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Private organisation like ' Tesco' run by individuals and companies those work for profit they are
not having any concern regarding benefit of society they work with motive of gaining profit.
These types of firms include plumbers, sole proprietors, designers, small and medium sized
businesses, etc. Main aim of private based venture is to earn profit.
Tesco is a British multinational retailer which offers groceries and general merchandise.
The purpose of Tesco is to manage customer satisfaction by providing them quality products so,
that the company can earn customers’ loyalty. Tesco includes groceries, cloths, insurance and
general merchandise in its portfolio. Legal structure of Tesco includes Five governance
committee and the company cannot violet this rules & regulation.
Legal structure: Tesco legal structure includes five committees such as audit, corporate
responsibility, nomination, remuneration & discloser committee. Legal structure defines all the
rules & regulation imposed by government which is mandatorily followed by the company.
VOLUNTARY ORGANISATION
Voluntary organisation are the enterprises which serves society with no motive of earning
profit. It is third sector other than private sector and public sector. It is a non-governmental
organisation basically serving benefits to the society which is in the interest of the upliftment of
society.
Oxfam is an international organisation which is working to stop injustice of poverty. It
is a confederation of 20 independent charitable organisations that focus on alleviation of poverty.
Oxfam is founded in 1942. It aim at promoting right to livelihood, services, security, identity and
long-term vision of Oxfam is to make society free from poverty and provide all justice and their
human rights of which they are rightful. Initial concern of Oxfam is to provide food to relieve
feminine. It also provides certain tools to become self-supporting and independent.
Legal structure: Oxfam has a Council of Trustees that has responsibility to govern the
organisation. They are appointed because of their skills and experience that helps them to fulfil
their responsibilities of trusteeship of charity.
P2 Size and scope of organisation
PUBLIC ORGANISATION: ( National Health Services)
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 Background: . It was established on 5th July in England. It’s headquartered is in
Richmond House, London. it is one of the largest healthcare system in the world. it is
founded on 5th July in England. It is fully funded by public.
 Products and services: Various services of NHS are-
Commissioning of services related to health, service of dentist, pharmacists, local healthcare
services, Ambulance service, hospitals etc. All these are led by Clinical Commissioning Group
(CC G).
 Size and scope: NHS have topped the list of UK’s most cherished institutions as per
Mintel's latest flagship British Lifestyles report. It has approx. 300 community hospitals
in which 219 are beds. It plays an important role in managing acute and non acute conditions
(Scope and Interdependencies, 2018).
 Mission: The mission is to protect, promote, and advance the health and safety of our
Nation, as America's uniformed service of public health professionals
 Vision: Delivering better health for our communities through population-wide and
individually focussed initiatives. These aim to maximise health and wellbeing and
prevent illness. It’s all about trying to keep people well. Delivering better care through
quick access to modern services.
 Business objectives: One of the main objective of company is to make continuous efforts
and to work for welfare of different populations in the country. And to fulfil various
needs and preferences of patients and to provide quality services to all.
 Stakeholders: Main stakeholders of Oxfam are, Academy for Healthcare Science
(AHCS), National School of Healthcare Science (NSHCS), North West Healthcare
Science Network, Government, etc.
PRIVATE ORGANISATION (Tesco)
 Background: Tesco is a multinational retailer headquartered in Welwyn garden city,
England offers its products & services in many counties across the world. It is the 3rd
largest retailer in the world.
 Products and services: Tesco company offers various products such as cloths, insurance,
groceries and general merchandise through super market, hypermarket, superstore &
convenience store.
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 Size and Scope: Tesco is a global retailer it serves its product in United Kingdom,
Ireland, Malaysia, India, Thailand & hungry. Company employees 4,67,000 employees
and it is the largest retailer of UK (Average number of employees at Tesco, 2018). The
firm owns 28. 8% market share in UK which makes it one of the leading retailers (Our
businesses, 2019).
 Mission: Mission of Tesco is to become a largest retail brand in the world and to earn
long term customer loyalty and to enhance its market share.
 Vision: Vision of Tesco is to provide Eco- friendly products at an affordable price to
satisfy needs of its customers.
 Business objectives: Business objective of Tesco is to enhance its customer base, market
share and profitability, employee retention and long-term customer loyalty.
 Organisational structure: Organisational structure of Tesco is hierarchical because it
has a large business and it has four layers of management, which includes store manager,
food manager, non-food manager and personal manager. It is combination of functional
units and divisional structuring.
 Stakeholders: Tesco has multi stakeholder’s initiative, individuals from various countries
make investment in the company’s shares. And it further comprises suppliers, customers,
employees working with Tesco across international boundaries.
VOLUNTARY ORGANISATION (Oxfam)
 Background: It is a confederation of 20 independent donation based firms that focus on
removal of global poverty. It was founded in 1942 and it is led by Oxfam International.
It's headquarter is in Oxfam International, England. Oxfam provide services worldwide.
 Services: Oxfam mainly focuses on economic justice, essential services, rights in crisis,
and gender justice. It helps to provide Economic justice to farmers that are involved in
Agriculture work and labourers that are living in poverty. Frames rules for people of poor
countries and works to reduce the impact of climate change and energy shocks.
 Size and Scope: It has a council of trustees who are responsible for governing charity,
assets and liabilities and constitution of Oxfam. Size of organisation and reach to large
number of peoples helps it to be a world leader in removing poverty.
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 Mission: Mission of Oxfam is to address the structural causes of poverty and injustice.
And to work through accountable organizations, it seeks to improve effectiveness of
working.
 Vision:It's vision is to create a world without poverty. Where people can have an effect
on decisions that have an effect on their lives, enjoy their rights, and expect their
obligations—a world wherein every person is valued and handled equally.
 Business objectives: One of the main goal of Oxfam is to bring positive change in the
lives of people who are living in poverty. To achieve this goal, it has established central
commitments and twelve goals that are outlined in 2014-2019. strategic plan.
 Organisational Structure: Oxfam International has two-tier governance structure,
comprising an Executive Board and a Board of Supervisors. Top level authority includes
current members of the Board of Trustees, and divisional directors and Oxfam Great
Britain's role is to work whin Oxfam International Confederation.
 Stakeholders: Main stakeholders are employees either full time or part time. Managers,
Donors, outside organisations that are interested in growth of the company, government
agencies. It Includes the people of the communities where they work, its partners and
allies, staff and volunteers, donors and supporters, coalitions and alliances, suppliers,
governments, private sector companies, academic institutions, public and the external
environment.
TASK 2
P3 Interrelation between organisational functions and their link with business objectives and
structure
Organisational functions – Every company has to perform certain functions so that, it can
produce goods or can provide services. At every level of the organisation these functions are
performed by various peoples. Ex. Finance, Research and Development, Production etc.
Organisation Structure- Every organisation has its own organisation structure which
includes the duties, responsibilities and authority of people working in the organisation at
different levels.
Various functions that are performed in Tesco are as follows:
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 Finance- Team of finance helps this venture to manage their business effectively this
finance team pull together budgets. Forecasts and trading report for the group and
also looks after payroll and accounts.
 Human Resource-The company consider their people inclusive employees and
customers as their brands and the HR of company is responsible for bringing best out
of them. They accomplish their goals through the optimum use of their expertise
which leads to organisational development and simultaneously increases employee’s
motivation.
 Information Technology- IT teams of Tesco are also working so effectively as it
provides easy online access to all the issues related to shopping results in providing
more flexible services for their delivery and collections.
Interrelationship of functions with business objectives and structure
Figure 1: Organisational Structure of Tesco
(Source: TESCO COMPANY ORGANISATIONAL STRUCTURE CHART, 2018)
Relationship between Operational functions and HR Departments-
As Operations and HR both are different fields but they are having some link and
interrelationship between them. These different departments have some link between them as HR
managers normally discuss on the matters related to administrative issues regarding payroll and
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salaries and operations are the functions which always explains or moderate the effect of HR
functions as training, performance appraisal, staffing, recruitment etc. This good management
between operation functions and HR departments of Tesco leads its employees to be satisfied
and work effectively with efficiency resulting in good outputs in terms of profits and achieving
objective of Tesco, which is to enhance its customer base, market share & profitability by
offering Environmental friendly products and by offering quality products to fulfil its customer’s
needs.
Relationship between Information technology and Marketing departments
Tesco objectives is to keep their customers updated regarding their products and services through
advanced technology like chatbots, e-mails, print media etc. As in today's scenario everything is
processes out smartly with the help of technology which is proving very helpful in carrying out
our work smartly in optimum time. It is becoming very crucial department nowadays in most of
the organisation to have open conversation between IT and marketing department on day to day
basis as it is very much helpful for covering areas as website development, CRM (customer
relationship management), marketing automation. Employees of Tesco owns well-trained IT
department which is enabling their marketing of products more approachable and convincing
with use of technologies or online advertisements which in return helps in making good customer
base and image of our brand in the market. Thus, the IT department of Tesco helps the marketing
department to promote its products in the market through digital marketing such as social media,
e mails etc.
Relationship between Production function and Finance departments
The objective of production department of Tesco is to reduce the cost of output by
maximising profits, thus they coordinate with finance department for optimising the use of
monetary resource. Finance and production are the two backbone departments on which growth
and profits of the co. are dependent both are needed together to produce good results for the co.
As main duty of production function is to produce goods and for this, they need raw materials,
labour and other expenses for paying all the cost production department needs funds which will
be provided by finance department. In Tesco when production department needs finance to carry
out its functioning to manufacture good output and to increase its capacity to manufacture new
products can be increased through good budgets and financial status and it can be achieved only
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through strong finance department. As coordination between production and finance helps Tesco
in terms of good productivity which results in good sales.
Advantages and disadvantages of interrelation of department with reference to structure
Advantages Disadvantages
1.There is good flow of communication
between different levels of hierarchy.
1.There is lack of transparency between
different levels of hierarchy.
2.There is comfortable atmosphere for all the
departments to work separately.
2.There arises a scope of confusion between
different departments.
P4 Impact of macro environment on business operations
Figure 2: Pestle Analysis
(Source: Reim, Parida and Örtqvist, 2015)
Political Factors
The changes in legislation has made easy trading for retailers like Tesco. This law has
contributed a significant growth in the revenue E-commerce Retailers in UK. Tesco has a
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prominent invasion of sales from online shopping. Tesco get affected by number of political
factors like political instability, unemployment rate, economic condition etc but recently Tesco is
mainly getting affected by tax rates of the countries. As the countries like China and Japan from
which Tesco imports some inventory, has increased their import duties on their products which
will negatively affect the expenditure and profit of company whereas countries like India,
Malaysia and Pakistan has decreased its tax rates and duties to expand globalisation and it will
positively increase profit of the company. Recently in 2017 Tesco announced its partnership
with Limestone private limited in Pakistan.
Economic Factors
There are lot of economic factors affecting Tesco like inflation, recession, demand and
supply but recently what is affecting it the most is labour factor. In 2018 UK minimum wage rate
increased by 4.4 % which negatively affected Tesco and costed around millions of pounds
whereas in Asian countries labour wage rate is quite low in comparison to UK therefore Tesco
got benefited in countries outside the UK (Our businesses, 2019).
Social Factors
As we know that consumers are becoming more and more aware regarding their health
thus, their perception towards food is changing. The demand for food items is also affected by
the attitude, beliefs of peoples. And nowadays demand for organic products are increasing to
fulfil the demand. Tesco has increased the production of organic food. Also, the company aim at
managing production trends according to market demand which helps the business in meeting
customer expectation. Implication safe practices and trending approaches creates positive impact
on growth of retailer as it supports consumer acceptance. As social factors like age, gender,
education , income of employees affects Tesco in achieving their targets as Tesco is more
focusing on unhealthier products in comparison to healthier products which is affecting
customer base of this company.
Technological Factors:
Day by day new advancements are happening in the technology and it is vital for the
business to remain aware with such changes and also need to update the technology of producing
goods and services. To remain competitive, Tesco has introduced the concept of online shopping
with home delivery facility to its customers. And it has also invested huge amount of funds on
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energy efficient projects (Begg and et.al., 2018). This helps the managing positive attitude of
buyers towards products and services of company. Tesco has started an online app for its
customers to save their time and labour cost. Also, it enables them to shop, tag products and get
loyalty points. This app is called PayQwid. The technological advancement positively affected
Tesco to increase its sales but only in London and Edinburgh, but the stores situated in other
countries does not have updated technology which negatively affected Tesco and decreased the
sales of Tesco.
Legal Factors
Various legislations have been put in place that has to be followed by the company to
protect its employees and employers at workplace like, National living wage, Work Place
Diversity and Health and Safety. Tesco supplies a Code of Conduct Guidebook, which includes
the process of setting up new factories and auditing, minimum ethical trading standards, and
working practises on labour topics. The company is committed to maintain a safe work
environment to their staff creates positive impact on managing stakeholder expectation and
interest (Velu, 2016.) In UK, 17 workers has taken legal action against employer of Tesco on the
basis of gender and age discrimination. Workers are extremely frustrated after noticing low pay
rates for night shift and it declined the image of the company and many employees left the
company as a negative impact and on contrary that lead to a positive impact of creating
employment opportunities for neighbouring countries other than UK.
Environmental Factors
It comprises different policies which the company follow when undertaking the work on all
the brands. Tesco complies an important policy called ethical trading policy which has highly
detailed section about all that they do. Environment practices by Tesco PLC creates positive
impact on stakeholders of firm which supports growth and innovation of business (Hillary,
2017). There are number of environmental factors that can affect companies like global
warming, no to plastic bags campaign etc. Recently the government of UK has warned tesco to
reduce its carbon footprint by 50 percent by 2020 which negatively impacted its image and on
the other hand, as Tesco committed itself to minimise its waste it will attract customers and its
corporate social responsibility will increase.
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TASK 4
P5 Internal and External analysis to outline strength and weakness
Swot analysis is a technique of determining the performance, potential risk and
opportunities for a company . This firm build itself by analysing its strengths, weakness,
opportunity and threats.
STRENGTHS
 Highly skilled workforce- Tesco's have high skill work force for which company
organises regular training and development session. The focus of firm is on investing
huge amount in learning programmes for its employees (Vij, 2016). The company
also focuses on motivation programme for their employees like incentive,
appreciation, bonus, etc. This helps the firm in managing employee productivity and
profitability of business.
 High level of customer satisfaction – Tesco analyses its market through research with
the motive of providing suitable product according to the customer need (Hamilton,
2018). The company have a good relationship with their customer and also complies
with customer relationship management software to manage regular interaction with
potential buyers.
 Good cash reserves – Tesco have significantly good cash reserves which helps the
company in managing innovation and generating good return on their expenditure.
Company have a strong financial position which helps the business in maintaining
stability during economic crisis
 Good distribution channel – Company have a large distribution channels in all over
the world which help to company increase their sales or productivity in different area
or region company establish their store in different location in addition company
expand their business in al over the world.
WEAKNESSES
The company is vulnerable to certain threats.
Ex. profit level of Tesco has negative impact during recent crisis and it has yet to be rebound
from this global event.
 Tesco increase the competitive disadvantage because their prices of the product is high
compare to the rival companies so competition is leading the price war. Firm obtain that
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Some retailers or store are incurred the losses or company also get the negative impact on
their profitability (Reim, 2015).
 Tesco needs to put more money in technology to enhance the product quality right now
the investment in technologies is not according with the vision of the company.
OPPORTUNITY
 Joint ventures are the opportunity which can assist Tesco in managing growth and
improvement in performance.
New technology provides opportunity to Tesco to make use of pricing strategy to
increase the growth over the company (Dyllick, 2016).
 Tesco use the market development strategy to enter in new market like personal sector
provided the local or physical needs to customer and increase the production to satisfy the
customer. Adoption of new technology and government free trade agreement has
provided Tesco have an opportunity to enter a new market.
 Decrease the transportation cost for reduce the cost of production company have an
opportunity to increase the market share or also increase the potential customer who
easily purchase the product.
THREATS
 Economic recessions are creating threats for the markets and affecting its profitability
resulting in reducing purchases by consumers.
 Food prices are also increasing as a result it impacts the profits of the company as well as
purchasing power of all customers will be unequal. .
 New imposed regulations by the government also affected organisation structure of Tesco
leading to ineffective functioning of company.
 Greater pressure from stakeholders and societies also affected Tesco cost factor.
P6 Interrelation of strength and weaknesses with macro environmental factors
Economic factors that impact Tesco is Economic growth, exchange rates, inflation rates,
international economic stability, and taxation system. Consumer Price Index (CPI) which are
inflation rates, is an important indicator for investors and for Tesco. Planning permission strict in
the U.K. it a drawback or weakness point for retailer. Unlike exchange rate devaluation are some
economic factors that impact Tesco (Al-Saleh and Mahroum, 2015).
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There are certain political factors that are affecting the company like, Tesco is a global
retail company and it has operations world wide. So, it has to follow certain rules including
quotas, tariff and tax etc. It is an opportunity for the company that, by creating employment
opportunities , the demand of products of the company will increase.
The growth and success of Tesco depends upon how fast company is making changes in
technology . There are many opportunities for the company like, introducing the concept of
online shopping for consumers. Company has also invest huge amount in developing mobile
applications, energy efficiency projects to reduce the release of carbon dioxide.
There are certain legislative factors that impacts the operations of Tesco like, policy of
government regarding safety of consumers has direct impact on working of the company. Some
of the policies of government results in reduction in price of different products of the company.
(Hallward 2015)
As Tesco is minimising the use of waste and doing a bit for its society and will decrease its
carbon footprints which will lead to decrease in pollution and global warming and as its strength
is numerous awards for its retail excellence, customer service, and overall shopping experience,
therefore decreasing its carbon footprints will get Tesco another award of CSR and its strength
would be strengthened (Tregear, 2015).
CONCLUSION
The Report summarized about businesses and business environment of different types of
organisations that is Public (NHS) National health services, Private (Tesco Plc) and Voluntary
(Oxfam). This study outlined SWOT and PESTLE Analysis of Tesco which helps in
determining influence of micro and macro factors on business.
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REFERENCES
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environment/>.
Dyllick, T. and Muff, K., 2016. Clarifying the meaning of sustainable business: Introducing a
typology from business-as-usual to true business sustainability. Organization &
Environment. 29(2). pp.156-174.
Hallward-Driemeier, M. and Pritchett, L., 2015. How business is done in the developing world:
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Hamilton, L. and Webster, P., 2018.The international business environment. Oxford University
Press.
Hillary, R. ed., 2017.Small and medium-sized enterprises and the environment: business
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Reim, W., Parida, V. and Örtqvist, D., 2015. Product–Service Systems (PSS) business models
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Tregear, R., 2015. Business process standardization. In Handbook on Business Process
Management. 2. (pp. 421-441). Springer, Berlin, Heidelberg.
Velu, C. and Jacob, A., 2016. Business model innovation and owner–managers: the moderating
role of competition. R&D Management. 46(3). pp.451-463.
Vij, S. and Bedi, H.S., 2016. Are subjective business performance measures justified?
International Journal of Productivity and Performance Management. 65(5). pp.603-621.
Online
TESCO COMPANY ORGANISATIONAL STRUCTURE CHART. 2018. [Online]. Available
Through: < http://www.orgcharting.com/tesco-company-organisational-structure-chart-
example/>.
Average number of employees at Tesco. 2018. [Online]. Available through:
https://www.statista.com/statistics/490882/tesco-group-united-kingdom-uk-number-of-
employees/.
Our businesses. 2019. [Online]. Available through: <https://www.tescoplc.com/about-us/our-
businesses/>
Scope and Interdependencies. 2018. ([Online]. Available through:
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