How Business, Cultural, and Natural Environment Shape the Behavior of Tesco

This article discusses how the business, cultural, and natural environment shape the behavior and attributes of Tesco, a multinational retailer in the UK. It explores the economic and non-economic factors that influence the organization, such as economic policies, technological advancements, and climate change. The article also covers the use of PESTEL and SWOT analysis to identify opportunities and threats in the market.

Contemporary
Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................2
How business, cultural and natural environment shape the behaviour or attributes of Tesco....2
Illustrate PESTEL and SWOT analysis ....................................................................................2
CONCLUSION................................................................................................................................2
REFERENCES................................................................................................................................3

INTRODUCTION
Business environment comprises of economic and non-economic environments.
Economic environment factor includes, economic policies, economic condition and economic
environment (Amankwah-Amoah and Wang, 2019). Whereas, non-economic environment
involves, technological, legal, demographic, natural, social and political environment. All theses
factors directly or indirectly affect the business activities in the open market place. This assist the
firm to gain competitive advantages against competitors which is a positive mark for the
organization. By scanning the business environment effectively top level management is able to
plan long term objectives so that business can be in the leading position among other. For the
completion of this report Tesco is selected. It is a multinational retailer in United Kingdom. This
leading organization is located in Hertfordshire, UK.
The first store of Tesco grocery was opened in the year 1931 near London, England. The
founder is jack Cohen and the CEO is Dave Lewis. Business provide distinguish subsidiaries
such as, Tesco bank, Tesco Ireland, Tesco Mobile and many more. In the competitive market
place Tesco's main purpose is to create value for customers in order to build loyal customers for
longer time duration (About Tesco, 2020). There are 6,800 shops worldwide which are serving
those goods and services which are meeting the emerging needs of customers. There are 450,
000 employees working day and night to full-fill- the set goals and objectives in the specified
time duration. company is able to gain huge revenue in the cut throat competitive world because
a wide range of high quality product such as, clothing, grocery related products, travel insurance,
household products and so on is offered by the firm. This assignment covers, how business,
cultural, and natural environment shape behaviour of Tesco.
Changes in the climate is a major concern for every business because they need to come
up innovative idea which is friendlily in nature. By this organization is able to survive and
sustain in the market over the years. Additionally, Pestle analysis (political, economical, social,
technological,environmental and legal factor) is determined in order to make necessary
improvements in the loop holes so that business can survive for longer time duration. By doing
so business is able to compete with rivalry prevailing in the global market. SWOT analysis is
evaluated by the company operating in the open market place in order to identify the
opportunities prevailing in the global market (Black, 2019) . On the other hand through this
analysis management is able to determine the future threats which will be impacting the business
1

activities greatly. It helps Tesco to make strong strategies so that impact of uncontrollable and
controllable threats can be reduced on company functions. Additionally, organization's strengths
and weaknesses are classified accordingly which guide the firm to grow and develop their
business accordingly in the intense competitive world.
TASK 1
How business, cultural and natural environment shape the behaviour or attributes of Tesco
In the open market place behaviour of Tesco is influenced by many factor like, cultural,
business and natural environment. All these affect the smooth functioning of the business in the
global market due to which set goals and objectives are not meet in the desire time frame. Below
are the brief expatiation of the aspects which shape the behaviour of Tesco which are illustrated
as under:
Business culture environment shaping the behaviour of Tesco:
Business culture and environment and environment greatly influence organizational
behaviour. In the open market place there are two types of business environment which are,
economic environment and non-economic environment. Economic environment covers,
economic policies, economic conditions and economic environment. While, non-economic
environment involves, legal, technological, demographic, social and political environment.
Cultural environment involves, customs, practices, behaviour and beliefs which are commonly
identified in the people living within certain population. It influence the Tesco regarding how
staff members are effectively managed and tackled based on their priorities and values. On the
other hand cultural environment is also impact organizations decision making process and guide
management regarding how to enter a new market successfully in the intense competitive world.
Business culture environment shape the behaviour of Tesco in positive way.
Economic policies: This impact the behaviour of the Tesco because long term plans
need to be changed accordingly. It shapes the behaviour of the employees working day and night
for the attainment of the set objectives because they are provided with trained according to the
new economic policies. It includes, redistribution of income from rich to poor, taxation,
circulation of money and decisions made about government investment (Blahova and Haghirian,
2017).
2

From the above graph it can be summarized that economic plays a vital role in shaping
behaviour of the organization. The main role of economic policy is to upgrade economic
growth . Pink colour refers to as rate of change of Gross Domestic Product (GDP) and OECD
since 1961. In order to accomplish theses goals governing bodies adopts certain tools that under
the supervision of the government. Tesco need to work effectively in order to operate the
business smoothly.
3

Economic conditions: In the dynamic environment economic conditions shape the
behaviour of the Tesco because they need to frame strong strategies in order to overcome the
challenges created by conditions of the economic. Management conduct appropriate sessions
regarding the economic conditions taking place in the nation in order to shape the behaviour of
the workers respectively. Some of the examples are, fiscal policy, inflation, unemployment rate,
monetary policy orientations and many more. By effectively following economic conditions in
an organization the chances of survival raises tremendously. It shapes the behaviour of Tesco in
positive way.
Impact of competition policy and other regulatory mechanism: the Tesco has been
operating on large scale and due to this they are highly affected by the competition policy that
has been prevailing within the country. There are various large players such as Morrisins, Aldi,
Sainsbury, ASDA in UK which exerts significant amount of competition on Tesco. Accordingly
they have to formulate their policies for managing the changes and impact of competitors.
Economic environment: It is another aspects which is shaping the behaviour of Tesco in
the cut throat competitive world. Interest rates, business cycle, debt and savings, labour market,
inflation and deflation, consumer confidence and many more. The behaviour of Tesco is shaped
because top level management need to work day to day operation activity. By this skilled and
potential employees can be retained for longer time duration in the working premises. It helps the
company to gain desire outcomes smoothly in short time duration (Domanović and Janjić, 2018)
4

From the above data it can be concluded that how business environment is shaping
behaviour of firm. The GDP% is 500 out of 900 which is stating that management of Tesco need
to work more hard in to other to be in the leading position.
Economic system allocating resources: the economic system affects the allocation of
resources for the organisation. In the economic system the resources can be allocated on the basis
of the nature of the market economy. For the grocery retailers the allocations are dependent upon
the market forces which imply that the prices and the demand are determined on the basis of the
market forces.
Natural environment shaping the behaviour of Tesco:
Natural environment are uncontrollable in nature but greatly contribute in shaping
behaviour of Tesco. Top level management of organization prepare policies by scanning the
external environment in order to reduce their influence on business behaviour. Business
5

associates keep eye on the natural environment in order to mould their business activities
accordingly.
Availability of natural resources: Resources are limited in number so organization
need to utilize them effectively and efficiently. This helps in shaping the behaviour of Tesco
because they will motivate and train their staff members to used them wisely. Also, various
sessions will be conducted where employees will be taught how to come up with productive
outcomes with minimum resources in the intense competitive world. It will the organization to
compete with the rivalry prevailing in the open market place which is a positive mark for the
business (Grant, 2016).
` Climatic condition: The raising global warming a major concern for everyone.
Organization need to come up with innovative idea which is ozone-friendly in nature. Also,
workers who are are the part of Tesco should be encouraged to come up with creative idea which
is safeguarding the surrounding. The raising climate temperature is a major concern and firm
need to look into it as soon as possible. All the long term plans and innovation idea should be
designed by keeping in minds the raising climate change which is occurring day by day.
Location aspects: The behaviour of Tesco is shaped by location aspects as well.
Location of the organisation plays a significant role in making the business successful (Yassin
and Guindy, 2017). Business located in prose area gather more revenue as compare to business
associated located in out area. The demand of the goods is more in local area so employees are
motivated to mould their behaviour accordingly so that customers needs preferences and demand
can be ascertained accordingly.
6

Illustrate PESTEL and SWOT analysis
Pestle analysis
Pestel analysis is deeply studied in order to better understand the external forces impact
on the business. By doing so business is able to compete with the external rivalry present in the
open market place. On the other hand business is able top grow and develop successfully in the
cut throat competitive world. This is because organization is well aware about the external forces
and strategies are prepared to overcome them. Pestle analysis directly or indirectly assist the
business associates to accomplish their set goals and objectives in the specified time duration.
Political, social, economical, technological and so on are stated as under:
Political factor: Foreign trade policy, corruption, labour law, trade policy etc. are
examples of political factor. Example: UK political factor is stable so Tesco business can be
expanded easily and huge revenue can be maximized (Hamilton and Webster, 2018) .
Illustration 1: Pestle analysis, 2018
Source: Pestle analysis
7

Economical factor: Some of the examples of economic factor are, tax rates, policies,
governmental activity etc. Examples: Tesco is able to attain set standards because economic
factor influence organization involving all essential trends in the economy (Temelkova, 2018) .
Social factor: It covers, education level, wealth, religion, purchasing habit so on.
Example: Tesco is able to compete with the rivalry prevailing in the market because management
is fulfilling society people expectation level on priority level.
Technological factor: It impact the business both positively and negatively depending
on the situation. Example: UK is technologically advance in nature people of this nation
welcome innovative goods and services more. Tesco come up with innovative goods in the
market due to which loyal customers can be build for the the years.
Environmental factor: Raising climate, pollution, etc. are sample of environmental
factor. Example: It impact Tesco because they need to use the limited resources in effective
manner. As well as need to come up with ozone-friendly goods which is not depleting the
environment. It will help the company to survive for longer time duration (Harris, and Roach,
2017) .
Legal factor: Consumer law, labour law, safety law and so on are involved in legal
factor. Example: Tesco's day to day operation is influenced by legal factor because adaption of
legal factor helps to retain skilled and potential employees for longer time duration in the intense
competitive world.
SWOT analysis
Organization is adopting SWOT analysis because it helps to examine both positive and
negative side of individual analysis as well as guide the how to compete in large open market
place (Rosenbach, 2018) . On the other hand it helps to business associates in designing a
business model particular to the company. Brief illustration of the SWOT analysis is done as
follows:
Strengths:
 Huge brand reorganization: Example: Tesco has huge brand recognition across the globe
as it has received many awards for its best customer services, shopping experience and
retail excellence.
8

 Maximize huge revenue: Example: Tesco is the biggest retailer in UK due to which
organization is able to gain huge profit in the intense competitive world.
 Loyal customers: Example: Organization is able to build loyal customers for their goods
and services because of their efficient supply chain network. This helps Teco to full-fill
customers demand and preferences in the set time frame.
 Creating job opportunity: Example: Tesco is the Europe's largest private company who is
offering 743K job opportunities and is raising the living standard of the people to a large
extent (Kurtz and Berston, 2019) .
Illustration 2: SWOT analysis, 2019
Source: SWOT analysis
Weaknesses:
 Close stores: Example: Organization has to close down their stores from japan and US
because they failed in export operations (Prowle and Lucas, 2016) . Due to which heavy
financial loss need to be beard by Tesco in the global market.
9

 Reduces goodwill: Example: The goodwill of the organization reduced because of
showing wrong accounting in the book. They presented misrepresentation of revenue due
to which Tesco's market value reduced tremendously.
 Wrong pricing tactics: Example: The pricing strategy adopted by Tesco for its goods and
services is creating tough challenges for them because low cost pricing strategy has cut-
down their profit margins (Namada, 2018)
Opportunities:
 New stores: Example: Tesco has huge growth opportunity in the market because recently
management has come up with jacks Discount Store which is capable enough to compete
with Aldi and Lidl. This is because it is providing high quality product at low price to its
targeted customers.
 Joining hands with other firm: Example: Tieing up with other top multinational
companies is a better growth opportunity for them. By doing so sales ratio of the Tesco's
product can be raised rapidly in the market.
 Grow business in other nation: Example: Another growth opportunity for Tesco is that it
can expand their business in other countries such as, Turkey, Indonesia and South Korea.
This particular step will help the company to raise customer base for their goods and
services tremendously.
Threats:
 Brexit referendum: Example: Brexit eferendum is impacting trade deals and cost which is
a emerging threats for Tesco in the open market place (Okeyo and Peter, 2016).
 Economic crises and credit crunches: Example: Instability in economy has greatly
influenced Tesco's operational efficiency and overall performance in critical region.
 Stiff competition: Tesco has been facing significant level of competition from other large
players such as ASDA, Aldi, and Sainsbury etc. as they have been adopting various new
technologies that enable them to increase their performance and enhance their growth.
CONCLUSION
From the above report it can be concluded that business environment plays a vital role in
the growth of the organization in the intense competitive world. Business environment comprises
of economic and non-economic environment which influenced the business day to day working
10

style tremendously in the intense competitive world. By identifying economic environment
factor which includes, economic policies, economic condition and economic environment and
non-economic environment that covers technological, legal, demographic, natural, social and
political environmental factor organization frame strategies accordingly in order to over come
the challenges created by them. By doing so set goals and objectives of the firm can be attained
in the specified time duration.
By determining the environmental factor organization is able to flourish in the
international market and are able to gain huge profit. However, these factor covers weather,
climatic, location, natural resources, topographical factor and many more. Natural environment
covers ecological and geographical factors that directly impact attributes of the business.
Organization behaviour aid in better management of the business functions as well as upgrade
employees skill. Through this productive results are attained as compare to competitors.
However, organisation behaviour helps to management to become more flexible in nature and
assist them easily adopt to the dynamic environment. Moreover, it helps to implement the
company on global scale. In order to conduct smooth functioning of the business in the working
premises it is important to study firm's behaviour.
There are distinguish factor which are impacting the behaviour of the organization which
are, ethical code of the company, legislation, government rules and regulations, social pressure
and so on. SWOT (strengths, weaknesses. Opportunity and threats) analysis is the most essential
aspects which need to be performed by the organization. By doing so business is able to train
their staff members to that they overcome the threats which is prevailing in the international
market. The another benefit which is gained by organization through SWOT analysis is that they
are able to capture opportunities present on the market for the betterment of the business in the
intense competitive world. It also helps management to work on the loop holes in order to attain
better results as compare to previous benchmark. Additionally, strengths are measured so that
business can work effectively and efficiently in order to sustain in the market for longer time
duration. Pestle analysis is another aspect which is important for the business associates to study
briefly. In order to grow the business successfully in the international market firm should be
aware about the political, social, economical and so on condition. By doing so less government
interference take place and business is able to capture huge market ratio. However, it provide
strategic planning to expand their business smoothly worldwide.
11

REFERENCES
Books and Journals
Amankwah-Amoah, J. & Wang, X. (2019). Opening editorial: Contemporary business risks: An
overview and new research agenda.
Black, K. U. (2019). Business statistics: for contemporary decision making. Wiley.
Blahova, M., Palka, P. & Haghirian, P. (2017). Remastering contemporary enterprise
performance management systems. Measuring Business Excellence.
Domanović, V. and Janjić, V. (2018). Enterprise Efficiency Sources in the Contemporary
Business Environment. Economic Themes. 56(3). pp.321-334.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Hamilton, L. & Webster, P. (2018). The international business environment. Oxford University
Press.
Harris, J. M. & Roach, B. (2017). Environmental and natural resource economics: A
contemporary approach. Routledge.
Kurtz, D. L. & Berston, S. (2019). Contemporary business. John Wiley & Sons, Incorporated.
Namada, J. M. (2018). Organizational learning and competitive advantage. In Handbook of
Research on Knowledge Management for Contemporary Business Environments (pp.
86-104). IGI Global.
Okeyo, W. O., Gathungu, J. & Peter, K. O. (2016). Entrepreneurial orientation, business
development services, Business environment, and performance: A critical literature
review. European Scientific Journal October 2016. 12(28).
Prowle, M. & Lucas, M. (2016). Management accounting in the contemporary business world.
Palgrave.
Rosenbach, W. E. (2018). Contemporary issues in leadership. Routledge.
Schaltegger, S. & Burritt, R. (2017). Contemporary environmental accounting: issues, concepts
and practice. Routledge.
Temelkova, M. (2018). THE RELATION “SWARM MANAGEMENT-SMART
LEADERSHIP” IN CONTEMPORARY DECENTRALIZED CRYPTO ECONOMY
AND COMMUNICATION. In Science and education: trends and prospects (pp. 272-
276).
Yassin, M. & Guindy, M. E. (2017). Management Accounting Change and the Contemporary
Business Environment: An Article Review. Journal of Empirical Research in
Accounting & Auditing. 4(01). pp.7-22.
Online:
SWOT analysis of Tesco. 2019. [Online] Available through<https://bstrategyhub.com/tesco-
swot-analysis-2019swot-analysis-of-tesco/>/.
Pestle analysis of Tesco. 2018 . [Online] Available through<https://blog.v-comply.com/pestel-
organization-success//>/.
12

About Tesco. 2020 . [Online] Available through<https://blog.v-comply.com/pestel-organization-
success//>/.
Graph of economic environment . 2019. [Online] Available
through<https://www.paypervids.com/factors-influence-business-environment//>/.
Graph of economic policies . 2019. [Online] Available
through<https://courses.lumenlearning.com/boundless-politicalscience/chapter/goals-
of-economic-policy//>/.
13