Contemporary Business Environment

This document discusses the impact of economic and non-economic factors on organizational behavior in the contemporary business environment. It includes a case study on TESCO, analyzing its background and conducting a SWOT and PESTEL analysis.

Contemporary Business
Environment

Table of Contents
1. INTRODUCTION.......................................................................................................................1
1.1 Company background.......................................................................................................1
LITERATURE REVIEW................................................................................................................2
2.1 Economic environment on impact on organisation behaviour.........................................2
2.2 Non- economic environment and its impact on organisational behaviour.......................2
DISCUSSION AND ANALYSES..................................................................................................6
3.1 SWOT Analysis................................................................................................................6
3.2 PESTEL Analysis.............................................................................................................7
4. CONCLUSION............................................................................................................................8
5. REFRENCES.............................................................................................................................10

1. INTRODUCTION
Business environment is essential aspect of businesses. The several forces that consist of
business environment are their suppliers, media, competitors, economic conditions, government,
investor and media etc., Contemporary business environment are increasingly dynamic and
competitive. It is changing rapidly with fast pace and as per there are changes in new concept of
accounting control that should be developed for coping up with change. Organization would
have to develop reliable and logical strategies for business and to utilize tools for management
accounting in order to support control, plan and the decision-making (Nazarko and et.al., 2017).
The contemporary business environment includes the macro ad micro environment of business.
Interaction among the business company and their environment represent manager with several
opportunities and threat which are associated with organization. Contemporary business
environment indicates circumstance and idea of current time in into business environment. It
reflects the current situation of market which can affect the overall business to the great extent.
The report ends with PESTEL and SWOT Analysis through which all macro and micro factors
which are associated with the business can be analyzed and further utilized in the business for
gaining particular goal and objective of business.
1.1 Company background
TESCO is the multinational general and grocery merchandize retailer across the world. Its
headquarter is situated at Welwyn Garden City, Hertfordshire, England, United Kingdom. The
company had market share of 28.4%. It is ninth biggest retailer across globe as per their revenue.
Company owns 6,800 shops across the world. The total revenue of company is 63,911 million.
They are employing more than 450,000 employees into their company. The above report
includes the discussion of how business, cultural and natural environment shape the behaviour in
organization through which they can easily achieve their goal and objective (Danzig, 2018). The
company with appropriate business, natural and cultural environment can have a positive
behaviour within the organization through which they can enhance performance of their
company and sustain in market for long term. This environment can affect the business to great
extent. The two type of business environment are as follows economic and non-economic
environment. This influence the organizational behaviour across the company and this could
significantly affect the overall business operation and functionality.
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LITERATURE REVIEW
2.1 Economic environment on impact on organisation behaviour
This business environment is referred to those factor that are external force in
organization's activities and thus immediate environment is not being concerned under this.
These are the factor that directly affect working condition and operation of organization as
whole. These factors are not under the control and thus to control this company is incapable and
powerless. The business environment could be divided into economic and non-economic
environment. Hence, business is generally an economic activity and environment of the business
for national and the international businesses both are getting importance(Düking, Holmberg and
Sperlich, 2018). Economic environment of TESCO will include economic system, financial
system, business cycle stage, government's economic policies and macroeconomic parameters.
The non-economic environment contains government policies, political system, cultural values,
legal structure, technological development, macroeconomic parameters, social system and
natural environment of the nation.
Economic systems
Economic system is the institutional and legal framework by which all economic
activities are being undertaken. There are three kinds of economic system across globe that is
capitalism, socialism and the mixed economy. The capitalist economy contains main decision-
making of economic that is what to produce, how to produce and for whom to produce are taken
by organization. Whereas socialist system, overall decision-making is done through planning
control. If there is high rate of income growth then the demand of several products which are
produced by TESCO will also enhance. The stable pricing protects interest of business enterprise
and consumer both.
Economic conditions
If interest rate are high then no company prefer to make investment that is why profit of
firm get affected. This influence the behaviour of organisation to great extent. Economic stability
is another major factor which influence the organisation behaviour. For example, if there is
stable currency value then entity will be able to manage its export and import well hence it
would be better in sustaining in market for longer duration. The business economic environment
contains all factor which had an economical impact on the business. The business environment
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which had to play their roles as per the existing economic environment. They work with
objective of the profit maximization. Hence, economic decision of the TESCO has been
determined by macro and micro economic environment. The business economic environment of
modern times are hugely complex. The decision-making in business has been taken through all
the complex forces which consist of economic environment into the businesses.
Economic policies
EU policies have high impact of the behaviour of companies, if these policies are rigid
then entity may face issue in managing its operations globally smoothly. Brexit has affected
overall country as trade agreements were changed this has affected profitability of business
baldy.
2.2 Non- economic environment and its impact on organisational behaviour
Natural environment
The natural environment of the organization has a great influence on the overall business
activities of company. The natural environment affects business in diverse way. Industrial
activities are no doubt greatly influenced by the technological and scientific development but the
natural endowment are still playing a significant role in maintenance and establishment of the
industrial activities. During the early times effect of industrial activities on the ecology was not
such serious (Singh, 2016). But nowadays as the activities of industry is growing have created
serious damage to the exhaustible natural resources, that is forest resource and minerals along
with polluted air and contaminated water to be considered greatly. All of this could have serious
damage to environment. The suitable natural environment is essential component of the non-
economic environment of businesses. Hence, business environment of the county also require
natural support that contains suitable climate, natural environment, balanced weather that is free
from drought and flood etc., Maintaining eco-friendly environment among the company and
country is important for promotion of the developmental activities across economy and TESCO.
So the manager and management require analyzing trend in natural environment of country
where they are operating their business (Almalki, Al-fleit and Zafar, 2017). They must consider
the availability of raw material and another inputs, fluctuation in cost of the energy, environment
pollution level and the fluctuating role of the government for protecting the environment. The
changes in the natural or physical, environment that can be global warming, would heavily affect
the daily routine life and functioning of TESCO with the wide range of consequences. This had a
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great influence on individual's behaviour within the organization. If a company is having a huge
contribution towards the sustainable business practices then this could have great impact on the
consumer and employees thus further they could significantly enhance their productivity through
positive attitude of workers. The company can greatly expand their business operation by having
a greater influence on to the natural environment. It consists of ecological and geographical
environment which indicate that how an organization effectively shape the behaviour of
individual within the company. Natural structure of particular area whether it is hilly, plain or sea
cost affects various strategic decision-making across business (Newman and et.al., 2020).
Factories and manufacturing unites will also not suitably easily run into the hilly regions as they
can face difficult in transportation, the suitable climatic condition justifies the location in that
particular region. As if TESCO will be having their stores away from city centre or at hilly areas
the number of consumer will eventually decline and thus they need to have a store the location
where individual could easily get through store and had their shopping there. For preserving the
society, it is very essential for a company to protect the environment. Each and every business
must took several measures for protecting the environment rather than damaging them. Thus, all
this factors significantly influence the behaviour among the TESCO to great extent.
Demographics
The non-economic environment is essential for business vivacities across the country. It
could be broadly classified into Political-legal, socio-cultural, demographic, natural and
technological. Political-legal environment had a significant importance into the business. The
political environment includes legislature, judiciary and executive which had an essential role in
directing, shaping, controlling and developing the business activities. Demographic environment
contains factors such as growth and rise rate of population, sex and age composition of the
population, religion, rural, caste, language and ethnicity etc., this had also helpful in shaping the
behaviour into the business to great extent. The business formulate their business strategies and
policies which are helpful in controlling the organizational behaviour of TESCO. To become a
successful business an organization needs to take care of their cultural sensitivity and diversified
society as they want to capture market for their goods and services (Nazarko and et.al., 2017).
Technologies are changing very quickly and thus business needs to develop more and more
technologies so that they can have appropriate organizational behaviour across the TESCO.
Overall these factors are helpful in shaping the organizational behaviour within the organization.
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Culture:
The cultural environment of country had an impact on the behaviour organization. The
positive culture had a great impact in shaping the appropriate culture within the society. Cultural
environment will include norms, facts, value and behaviour pattern. Every organization has its
own culture and thus it depends on how their member interact and behave with each other.
Whereas the social culture among the country also influence the behaviour of an individual to the
great extent that who they will be acting, behaving and reacting to the things. Thus, if the culture
of the organization is positive and appropriate they it could have a great impact on business.
TESCO should have work culture that motivate and encourages there employees to work
accordingly. If they are not having a culture with as per the local societies then the employees of
there company could not survive within the organization and hence the overall goal and objective
of company will not be achieved. The company must modify organizational culture as per the
present culture of the society where they are operating their business activities. By following this
TESCO could easily attract the local crowd towards their store and thus there employees can
easily render the satisfactory services to them. If it is not being done then the employees could
not understand the culture of local individual, and then they could not be able to render the great
services to the consumer as whole. The cultural environment had a huge impact on the growth
and development of TESCO as whole. It indicates that how there employees are following the
culture of the organization as whole. Each and every organization has their specific internal
culture. Management or the manager of company particularly helps them for maintaining
common behaviour (Danzig, 2018). The company is supported by three essential elements that
are values, assumptions and goal. Each plays an important role in the growth and development of
company. The social and cultural environment of the businesses generally influence welfare of
business that is concern within long run of the business activities. Thus, it is very important for
TESCO to follow the cultural and social environment for gaining the competitive advantage
across the business activities throughout the business. An organization can greatly achieve the
overall objective through several policies and strategies which enhance the overall culture of
organization. They must motivate their employees for working positively with great attitude of
doing the things with perfection. This will be helpful for them in to gain a huge competitive
advantage through productive employees. If company is performing well then it indicates that
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they had appropriate cultural environment into their organization. This could have a great
influence on overall company's success and profit.
DISCUSSION AND ANALYSES
3.1 SWOT Analysis
SWOT Analysis is strategic technique for planning which is utilized for helping
organization to identify strengths, weaknesses, threats and opportunities which are associated to
business (Cepel and et.al., 2018). This can be explained below-
Strength-
TESCO has a leading market share of 28.1%. They provide wide range of variety and
choice to their consumers. TESCO is following diversification strategy that are range of popular
clothing and business of mobile phone also which is successfully running. They had more than
6800 stores in 14 countries across world.
Weaknesses-
TESCO was charged with the fraud in 2017 due to the misrepresentation's of profits. The
market share of company has been declined which state that performance of TESCO has been
declining greatly (Hamilton and Webster, 2018). They had also faced the failure of business
across the Japan and USA. After the trading of 9 years, TESCO had closed down their operations
in USA and Japan.
Opportunities-
TESCO has announced introduction of the Jacks to compete with its rivals present into
the market. They had opportunities for growing their business and positioning themselves as the
low cost rivals. They can enhance the premium range of products for their consumer. TESCO
had an opportunity to enhance their business to more developed countries as whole. They also
had an opportunity to grow their business online and attract wide range of costumer to the stores.
Threat-
TESCO is facing the biggest threat from its rivals Aldi and Lidl present in marketplace.
Thus, the business activities of company is hugely affected (Lee, Oh and Kim, 2016). The fallen
value of pound also affected the company to great extent as pricing of product has been
significantly raised and thus it could have affected sale of company as whole.
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3.2 PESTEL Analysis
It is the tool and framework which is utilized by the marketer for monitoring and
analyzing macro environmental factor which had an impact on organization as whole. It can be
stated below-
Political Factors-
The tangible effect of Brexit had affected food pricing, which had steadily enhanced. It
had an adverse effect on the overall businesses in the United Kingdom (Achchuthan,
Umanakenan and Kajenthiran, 2017). The step taken by government had an affected the business
of TESCO also as the pricing of products has been declined and then further their profit margin
had also declined.
Economic Factors-
The Brexit had impacted business to great extent. Due to the situation of Brexit there is
inflation in market which bounds consumer as their purchasing power has been declined. So this
directly affected the business across the country as TESCO as well as the consumer are not
having such amount of money that they can spend on other expenses. Thus, the sale of TESCO
will greatly decline and so the profit of company will also fall down.
Social Factor-
The changing preference and needs of consumer must be identified by the TESCO and
must update their product and services as per to that so that they can greatly influence the
consumer to the company's store. TESCO by this could greatly satisfy their consumer by
rendering them goods according to their preference (Moura, 2017). This is helpful for company
to gain huge revenue and profit. They can also render organic foods to their customer as the more
and more consumer are getting aware about their health and thus it will attract consumer to great
extent.
Technological Factors-
TESCO had introduced the RFID Technology for enhancing the in-store experience of
their consumers. The stock can be automatically counted and removed after the sales. They had
also developed their own mobile payment system known as PayQwid. Consumer can download
this application and link it with NFC technology and Clubcard through which they can pay for
shopping and get loyalty points for it.
Environmental Factors-
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Many of the companies are facing extreme pressure from the government agency for
addressing environmental issues. They arr liable to respond for the issues which benefits the
society greatly. TESCO is committed for using the renewable resources and further generating
their 100% of electricity by 2030. the organization promises for minimizing up to 520% of the
carbon footprint till 2020. TESCO is also using fuel saving route along with that they also
gathered unwanted plastic bags from the consumer and recycle them.
Legal Factors-
TESCO had to conduct their operation as per the Food Retailing Commission (FRC)
which is strict code of the practice. They had faced many legal action for the accounting fraud
and misleading their investors, they had to pay for it GBP 12 million for settle down that legal
action (Kontić, Vidicki and Domanović, 2017). For achieving the overall goal and objective of
company TESCO had to follow the legal law and regulation so that they can have their business
operation and functions smoothly.
4. CONCLUSION
From the above report it can be concluded that organization had to follow the analyzation
of business environmental factor that effects the company. There are various factors which
affects the business as whole. If all factors are analyzed and determined than a company could
easily gain their objective effectively and achieve great success across market. These all factors
had a huge impact on organization and thus there operations and functional activities are also
affected to the greater extent. If companies are performing well in the market by analyzing macro
and micro economic environmental factor then they can sustain in market for long term.
Company can easily satisfy their consumer to the great extent. By creating a positive work
culture into the organization they can gain interest of employees toward the growth of company.
They can motivate and encourage their employees by rendering them a good working
environment across the company. The company can also easily create a competitive advantage
among its rivals in marketplace. They can earn huge revenue and profits by attracting wide range
of customer to the company. Organization could achieve great success within the market so that
through implementing policies and strategies as per the current market situations. They can also
satisfy their consumer by rendering them goods ans services as per their demand and requirement
of customer which helps them to retain their consumer for long term. Company can also compete
with its rivals with in the market. Thus, they can easily create their brand reputation among the
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marketplace and through developing various strategies they can gain huge success. This all
factors are helpful for gaining their objective to great extent and thus their company could
achieve overall growth and development. The macro and micro economic environment had
impacted the company's performances that how these companies will effectively perform their
business activities into the marketplace.
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5. REFRENCES
Books and Journals
Achchuthan, S., Umanakenan, R. and Kajenthiran, K., 2017. Comprehensive model for
understanding and enhancing pro-environmental purchase behavior: Towards a
conceptual framework. Journal of Business Studies. 4(1).
Almalki, M., Al-fleit, S. and Zafar, A., 2017. Challenges in Implementation of Information
System Strategies in Saudi Business Environment: A Case Study of a Bank.
International Journal of Computer Trends and Technology. 43(1). p.60.
Cepel, M. and et.al., 2018. Business environment quality index in the SME segment. Journal of
Competitiveness. 10(2). p.21.
Danzig, R., 2018. Alternative Future Scenarios of Agriculture In Florida: PESTLE analysis to
assess the possible alternative future scenarios for Florida agriculture within the coming
30 years.
Düking, P., Holmberg, H.C. and Sperlich, B., 2018. The potential usefulness of virtual reality
systems for athletes: a short SWOT analysis. Frontiers in Physiology. 9. p.128.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Kontić, L., Vidicki, D. and Domanović, V., 2017, October. TESTING CORPORATE
ENTREPRENEURSHIP ASSESSMENT INSTRUMENT IN TRANSITION
ENVIRONMENT. In DIEM: Dubrovnik International Economic Meeting (Vol. 3, No.
1, pp. 67-78). Sveučilište u Dubrovniku.
Lee, M.W., Oh, M.J. and Kim, S.C., 2016. Effects of IT Resources on the Work Efficiency and
Corporate Performance in The Mobile Smart-Work Environment. Journal of Digital
Convergence. 14(5). pp.165-176.
Moura, P.D.V.D., 2017. Small panels for lower ranges: an interdisciplinary approach to
comtemporary Portuguese comics and trauma.
Nazarko, J. and et.al., 2017. Application of enhanced SWOT analysis in the future-oriented
public management of technology. Procedia engineering. 182. pp.482-490.
Newman, C. and et.al., 2020. Corporate social responsibility in a competitive business
environment. The Journal of Development Studies, pp.1-18.
Singh, A.K., 2016. Selecting Regional Postponement Centre Using PESTLE–AHP–TOPSIS
Methodology: A Case Study in a Pharmaceutical Company. Global Business Review.
17(5). pp.1266-1268.
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