Impact of Environment, Culture, and Business Environment on Tesco

This report analyzes the impact of the environment, culture, and business environment on Tesco, a multinational retailer. It explores the role of business environment in determining opportunities and improving business performance. The report also discusses the economic, non-economic, cultural, and natural factors that affect Tesco's operations.

Contemporary Business
Environment

TABLE OF CONTENTS
INTRODUCTION.....................................................................................................................................3
MAIN BODY............................................................................................................................................4
Impact of environment, culture and business environment on Tesco...............................................4
PESTLE Analysis .................................................................................................................................8
SWOT Analysis ..................................................................................................................................9
CONCLUSION ......................................................................................................................................10
REFERENCES ........................................................................................................................................12

INTRODUCTION
Business environment refers as the collection of overall internal and external elements
which directly gives impact on organization performance. external elements include
customers, government policies, clients, demographical changes, technological changes, legal
laws and tax rate etc gives directly impact on organization performance. on the other hand,
internal elements can conclude employees, economical infrastructure, organizational
infrastructures, investors, suppliers, supply and demands etc. gives impact in organization
activities ((Grant, 2016). Business environment plays essential role in organization because it
helps company to determine opportunities which can generate high revenue. By analysing
current changes, organization can incorporate such kind changes in their plan which helps
them to gain sustain profit prolong time in the future. Business environment helps
organization to improve their business performance by scanning external and internal
environment which is not only supports organization to adapt current changes but also raise’s
good will of company in the business market. External forces support organization to
improves growth of business and leads sustainability in business market. Business
organization helps to grow market share of company and gains better it’s smart objectives
over the period. Generally business environment is classified into various types such as
technological environment, economic environment, natural environment, sociocultural
environment and global environment. Contempory words refers as the belonging which
comes at the same time. In simple word contempory business environment can defined as the
environment which has jam packed competitive market that holds changes at very fast mode.
While owner of the business is eligible enough to understand the needs and development
which is required to be fulfil in organization in term to grip the fast response in business.
There is an example of Tesco company to understand role of business environment within
organization. It is a British multinational groceries and general merchandise retailer company
which is headquartered in Welwyn garden city, England, UK. It comes in third position as
largest retailer across world on based on gross revenue. On the basis of revenue gets ninth
position as largest retailer in UK. Organization offers worldwide services to customer. It has
large number of product line such as home accessories, clothing, groceries, and financial
services. Tesco’s subsidiaries operate in various market such as hypermarket and hyper
market,
This report includes a brief study on business environment of organization which
analyse impact of internal and external elements on the business operations. The main goal of

the report is to give brief information about natural environment, cultural environment and
business environment of Tesco while developing their behaviour in market along with their
staff effectively.
MAIN BODY
Impact of environment, culture and business environment on Tesco
Business environment
Organization culture can be defined as the personality of the business in which
comprises assumption, values, norms and its objectives. It is important for organization
because helps builds good relationship between employees and management. A good
organization culture supports company to create positive changes around the organization
which directly raise brand image in business market. Good organization culture leads various
benefits in company for example when organization culture is good in company it maintains
wellbeing of staff within workplace that automatically leads economic benefits within
company. Even it also supports to identify threats which can directly give negative impact on
economic infrastructure of company (Jia, Guo and Barnes, 2017). Apart from this, it assists
company to coping with changes for example when organization aware of the current or
ongoing changes in the business environment such as political changes, technological
changes, emerging trends, changes in customer demand etc. then it can directly lead action of
company to deal with these changes. It also helps company to plan something drastic which
can generate high revenue within company. For example, when organization analyses their
business environment in that state easy to determine its weaknesses and strength. On the basis
of evaluation parameter can decide what plan can help organization to decline their risk by
enlarging their opportunity scale in global market. Apart from this, HR management can
motivate employees to organize classes instead of offering money as reward. Organization
cultural plays essential role in business because it supports to integrated overall staff for
enhancing the shared value towards common goal of the company to fulfil their SMART
objectives effectively.
Organization culture is not only supporting employees to improves their performance but also
builds health working environment. By the culture can manage productive working
environment of the company and enhance the quality of work performance while
coordinating ethics and morals. Good organization cultures help management to become
good leader and manager. Tesco is multinational company which offers their services across

the world. so it understand significance of culture, power and politics within business.
Manger of Tesco implements various strategies effectively which helps to identify power,
culture and politics. The main goal of the organization to generate high profit and enhance
satisfaction ratio of customers by offering standard quality products and services. It is crucial
concept for business organization to understand that overall factors are essential to make
decision and raises quality of their actions effectively. Generally, behaviour of organization is
basically dependent on the financial performance and its funding resources to perform
various operations as result helps to accomplish perceived values in the global market. There
are many market competitors like ASDA, MORRISON, SAINSBURY and ALDI etc. in the
retail market which retails similar product like Tesco so it is quite difficult for organization to
become market leader and achieves higher profit margins (Bohari, Hin and Fuad, 2017).
Economic environment
Economic environment refers as the overall economic factors which affects
economical and consumer behaviour. It includes all the external factors which can give
impact business operations and crucial for organization to determine overall elements for
enhancing it’s growth in the market and generates higher profit margin on products.
Economic factors are not controlled by organization which directly decline power of business
in market. Economic environment supports company to understand market opportunities by
developing effective marketing strategies that directly enhance purchasing behaviours of
customers. Economic factors include inflation rate, tax rate, exchange rates, income level of
customers, unemployment ratio and policies which can directly give impact on the financial
performance of company and decreases its business growth possibilities in the international
market. Macro environmental factors directly gives impact on economic performance and
indirectly affects business operation within company (Phadermrod, Crowder and Wills,
2019). Currently Brexit gives negative impact economy of UK. There are various changes
comes in polices, tax rate, trade relation, financial performance of customers, inflation rate
which is reduced due to lack of flexibility in retail market. Even organization also get
negative impact due to higher cost of employment rate and fewer potential employees
available in the market.
These changes directly lead changes in customers purchasing behaviour because they avoid
to spend more on their lifestyle. Thus, organization gets impact on their selling decision.
During recession period declines global economy in 2008 where several SME unable to
sustain in market due to heavy losses and requires high investment to continue their operation

in the market effectively. So, it is important for Tesco to analyse economic environment and
design of products based on the situation to enhance profit margin and improve customer
buying behaviours which automatically broader growth of economy. Thus, kind changes can
support organization to sustain in the market and generate higher market share within
country. Economic environment is very essential for organization because it assist to identify
economic factors and motivates them to enhance quality of products and their services for
boosting their knowledge and brand value in global market (vom Brocke, Zelt and
Schmiedel, 2016). UK’s bank increases rate of interest in loan which directly decline profit
merging of organization while operating in a wide market but boost brand image effectively
in retail sector. Due to high cost of raw material gets impact on demand of customers about
product which declines supply rate of suppliers that inversely gives impact profit margin of
Tesco.
Non-economic environment
It includes cultural, natural, demographical, technological and political factors etc
directly gives impact on business performance. Non-economic factors give impact on
customer buying decision as well. These factors are very crucial to understand because they
create growth of opportunities in organization in market (Gürel and Tat, 2017). Tesco is
multinational company and famous as general merchandise so it is very important to
understand impact of non-economical environmental factors which is used to enhance
product or their services efficiency and generates higher profit margin.
Cultural environment
Tesco is MNC which has high brand image in global market and well organized.
Organization has effective strategic management who helps company to implement better
decision which can lead prosperity within company. Manager and leader of the organization
works together while implementing decision to keep hope they will receive desirable
outcomes with in company. Manager provides various polices like health and safety polices,
compensatory polices and job securities which leads satisfaction in employees for their job s
well their family. Apart from this, leaders are very flexible with time which helps employees
to work pressure free and maintains their wellbeing with workplace. Organization encourages
team working which also creates values for company (Vij and Bedi, 2016). Organization
offers rewards to motivate employees so that they perform well at workplace. Due to high
incentives and policies enhance retention of talented employees within workplace.

Manager invites employees in decision-making process and gives values to staff while
listening their suggestion intently. Even organization gets positive outcomes of this initiatives
because gets creative ideas which can help company to generate high revenue over the
period. Manager involves performance management system to improves employee’s
performance within workplace. where performance management system helps manager to
analyse employee’s weak area which can give negative impact on their working efficiency.
On the basis of examination organize training sessions so that weak area of staff improves
and they perform better. Tesco takes strictness in policies so that they can build up loyalty set
for employees and customers which automatically raises brand image and can generate total
net income. UK is highly updated for new technology so that they can approach to customer
faster. Tesco has goal to offer standard quality products so that easy to meet customer
objectives (Gottdiener, 2019). It is clearly defined strategy which organization uses to set up
customer base so that can sustain in global market prolong time. Organization has high
stability in business market. The main reason behind is that they have high brand image in
global market which gives power to explore their retail market in other countries. Another
reason is that they focus on customer requirements and perceptions which helps them to fulfil
their demand time to time. So, it can interpret that organization culture is well organized
which helps to achieve long term goal over the period.
Natural environment
Estimated 70% businesses are affected by weather of country for example due to
climate change have to financial loss by organizations. there are several resources which are
available in the world that Tesco use effectively for executing in market. Climate plays
essential role in employees and customer’s life because when environment is good then
customer can buy product effectively. As same concept implements on employees when
weather is good then they can give high services to customers within workplace. Generally,
organization finds alternative resources which they restore and use them when they have
requirement (Barik and Kumar, 2018). Additionally, Tesco doesn’t allow to misuse
resources and save them for future so that they can give standard quality products to
customers. Even UK’s government also disclose several polices which industries have to
follow while retailing and manufacturing products as result can improves countries
environment. Even Tesco takes initiatives to comply with environment polices such as
sustainable food items and reusable packaging which establishes loyalty of customers on
brand and their products.

PESTLE Analysis
It is strategic tool which is used to analyse external environment of Tesco and
supports to determine risk and opportunities.
Political factors
Political stability, government stability, employment law and tax rate etc. are political
factor which gives impact on organization’s performance. For example, organization gets
political opportunities so that they get change to explore their products in different market.
On the other hand, Brexit gives negative impact because it leads political instability in UK as
well decreases growth opportunities in market due to prevent outsourcing of inputs
(Christodoulou and Cullinane, 2019). Even Brexit leads changes in foreign trade polices
which causes uncertainty comes in business and mainly get negative impact MNC’s because
they unable to gain higher profit in market effectively.
Economic factors
Recession period, inflation rate, tax rate and unemployment rate etc are economical
factors which also affect organization’s operations. For example, recession period directly
gives impact on economical growth of UK and raises inflation rate. It gives impact on
organization to sustain in market due to flexible liquidity of cash flow that automatically
enhance interest rates (Parsons, Maclaran and Chatzidakis, 2017). Brexit gives impact on
MNC’s financial performance by influencing currency of foreign exchange rate and increase
rate of unemployment in UK. Due to high cost of product reduces demand of products in
customers that decline profit margin of Tesco in retail market to compete with competitors in
UK’s market.
Social factors
It includes demographical changes, education level and financial performance of customers
which gives impact on organization performance. due to high unemployment decreases
income level of the public. It directly gives impact on organization’s sale infrastructure. Due
to shift in the customer trends and lifestyle continuously leads complexity in management
decision making process (Najam, Runnalls and Halle, 2016). Additionally, continuous
changes in products leads loss in organization financial performance because they unable to
meet each customer objectives.
Technological factors

E-commerce and RFID is most famous technology in UK which is highly used by
customers and industries. Where organization gets positive impact of e-commerce technology
because they can sell their product through online mode. New innovation in technology also
supports organization because they easy to explore their products in different by offering
online home delivery services to customers in return organization generates higher profit
margin.
Environmental factors
Economic factors are climate change etc, gives impact on MNC’s company because
UK’s government increase their norms and enhance awareness in customer that they buy
informatively. This enhance cost of organization because they have to give accurate
information to customers about their products but in return Tesco easy to influences
purchasing behaviours of customer within market (Tchamyou, 2017). Organization gets
negative during global warming but later on organization adapts corporate society
responsibilities which raises good will of brand and establish loyalty of customers on brand
and their products.
Legal factors
Tesco is multinational company which offers their services worldwide by their
subsidiaries. These subsidiaries are established across the world. So, it becomes vary critical
for organization to adapts various policies and comply with them. It automatically gives
impact on business efficiency and growth of organization.
SWOT Analysis
It is an analytical technique which support organization to analyse its internal
environment as well supports to identify market opportunities effectively.
Strengths
Organization high brand power which is major strength of company. It leads market
share presently at 28.1%. Additionally, organization has strong brand portfolio with wide
variety products. It has successful diversification strategy such as popular clothing rage along
with mobile phone services. It has highly skilled workforce due to high level training and
learning program ( Evans and et.al., 2017). Organization has high distribution network
which builds its strong market.
Weaknesses

Tesco got charge with fraud in 2017 due to mispresenting of profit that is major
weakness. In 2019 oct 7th below the peak of market share. UK’s market has highly
competitive pressure which lead price war so Tesco unbale to get profit margin on products.
Due to high unemployment rate leads less disposable income that automatically decline
purchasing behaviour of customers.
Opportunities
Organization has opportunity to enhance range of premium products. It has
opportunities to grow their business through online media. It has opportunity to grow their
business in other market which is developing. Organization has opportunity for strategic
alliance with other strong brand which can help business to promote more products that can
attract large number of customers in targeted market.
Threats
Britain leaves the European Union due to Brexit and according to law organizations
can’t trade deal with EU (Prajogo, 2016). When any organization importing input from EU
then they have to pay high tax. No regular supply of innovative product can decline
purchasing behaviour of customers.
CONCLUSION
It can be concluded business environment which supports organization to give shape
of organizational behaviours and assist to gain their objectives. Organization culture which
plays essential role in business because it helps to develop effective structure of the
organization which generates higher profit and enhance quality of making decision
effectively that is important to understand effectively. It provides understanding of culture in
organization which helps to evaluate efficiency of internal resources that can develop
systematic strategies by encompasses employees to achieve higher opportunities and gain
competitive advantage in competition market. Natural environmental factors impacted
organization performance where it had to develop strategic information about environmental
factor which leads difference in various market that can affect business operation. Even these
factors also support Tesco to improve high quality in existing product and add organic
products to generates high revenue and goodwill as well. To analyse economical and non-
economic environmental factors assist organization to understand effective market and
developed effective marketing strategies which helps to compete with competitors and
transform these strategies into opportunities which directly improves economic infrastructure

of company. Pestle analysis which has discussed in the report that political factors which give
impact on growth of organization that automatically reduced market share of company in
business market. While technological factor also gave negative impact on organization
because they had to give high interest rate. Higher unemployment rate reduced demand of
customer for product’s that impacted sell infrastructure. Tesco adopted effective strategies to
analyse market so that easy to identify current changes and trends of group of customers to
enhance their satisfaction rate and inspires customers to be loyal for company by organizing
customer loyal program. It helped Tesco to enhance their awareness about issues and
problems which customers founds in products and their services. Organization used Digital
marketing tool to resolve their issues and problem relevant products and their services and
generates higher market share effectively. Due to impact of environmental factors
organization formulated various strategies such as corporate society responsibilities
(CSR)which supported organization to develop sustainable products and increased customer
trust on brand and its products by reducing environmental harm. CSR supported Tesco to
comply with governmental polices that leads competitive advantage within company and
enhance reputation in business market. Apart form this, Tesco understood customer taste
which changed in food segment due to health concern, so adopted organic food product
strategy. It supported organization to give value to customers and retain employees within
company prolong time. Thus, organization managed internal environment of company.
Report has described impact of Brexit on countries economy and performance of Tesco while
surviving in the retail market due to high competition and gained high market share. It was
crucial for organization to understand that economical and non-economic factors impacted on
decision-making process as well. It shaped organizational behaviour in the market so that
gained high profitability within company.

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