Evaluation of Business Environment of TESCO

This report evaluates the business environment of TESCO, including SWOT analysis and PESTLE analysis. It discusses the internal and external factors that impact the company's performance and sustainability.

Global Business
Environment

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Portfolio Paper 2: Swot analysis in relation to business environment:.......................................1
Portfolio Paper 3: Operational Impact analysis:.........................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................5

INTRODUCTION
Business Environment consists of factors that influence performance of company, it can
be internal or external. It is an collection of various forces that have huge impact on survival of
business as well as its profitability and growth opportunities (Dima, Dima and Mahagaonkar,
2018). Basis of this report is evaluation of business environment of TESCO. This organization
has it headquarter in UK and its operates in retail sector. Foundation year of company is 1919
and founder is Jack Cohen.
MAIN BODY
Portfolio Paper 2: Swot analysis in relation to business environment:
Swot analysis is an internal evaluation technique that is utilised by companies for
enhancing their strategy making capacity. It addresses the pros and cons of working of an
organization, which helps in development of business and achievement of its targets (Kannan
and Miah, 2019). Hence, Swot analysis serves a source of strategic planning for TESCO. It helps
firm to align internal business environment with goals of an enterprise. Following is the Swot
analysis of an entity:
STRENGTHS WEAKNESSES
 Constant innovations and invention is
TESCO serves as a strength for firm.
 Company excels in retail sector and
hence, is a market leader.
 Upholds cost effectiveness as due to
highly expert team of management,
which enhances profitability of
company.
 Its operations are highly dependent on
UK.
 Firm faces food safety issues as
customers complaints about lapping
adherence to safety guidelines provided
by government in relation to food.
 Inventory management policies of
TESCO is not appropriate.
OPPORTUNITIES THREATS
 There are various untapped areas which
firm can target.
 TESCO can incorporate strategic
alliance with other companies for
 Increasing number of competitors are
increasing competitive threat of
TESCO.
 Rising prices of food leads to reduction
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improving experience of buyers.
 Improvement can be initiated in online
services of TESCO and also its delivery
services.
in customer attractiveness.
For the purpose of analysing external forces that impacts operations of business, firm
applies pestle analysis. PESTLE stands for political, economic, social, technological, legal and
environmentally. Hence, it studies all aspects of external factors along with level of its impact of
working of an enterprise. Pestle analysis of TESCO is described below:
 Political factors: It includes political policies by government, policies related to foreign
trade, taxation policy, political stability of country, etc. Political stability of UK have
positive influence on TESCO as its management team can effectively plan strategies for
future operations as there is stability in government rules or regulations.
 Economic factors: It involves growth rate of economy, interest rate, unemployment rate
etc. As interest rate charged in UK is high, it impacts TESCO negatively, as it hinders its
expansion plan. Because firm requires loan for expansion activities but due to high
interest charges, expenses of business also increases which reduces its profitability.
 Social factors: It covers attitude of people towards lifestyle and health. Further, cultural
barriers, growth rate of population etc. are also involved. Concern about health is
increasing among people nowadays, while on the other hand TESCO is facing issues is
providing adequate safety to food items. Hence, it has negative influence on firm and its
has shifted most of its focus towards non-food items, hence, reduces food items in its
product portfolio (Nadakavukaren and Caravanos, 2020).
 Technological factors: It includes innovations or automations. Advancement in
technology enables TESCO to reduces its labour cost and implementing advance
equipment leads to decrement in requirement for manpower. Hence, it has positively
impacted firm as it improved its efficiency.
 Legal factors. It studies legal requirement of business and alterations in legalisation
policies. Increasing concern towards consumer protection law, helps firm in increasing
customer experience as well as satisfaction level.
 Environmental factors: It studies concern towards environment. Implementation of
Corporate Social Responsibility in TESCO enables firm to improve its brand image and
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value. Additionally, it also provides opportunity to increase attractiveness of customer
towards an organization.
Portfolio Paper 3: Operational Impact analysis:
Functional areas of business indicate performance and regulation of different functions of
an organization. Main purpose of formulating different functional areas is ensuring that all
activities or operations of business are effectively carried out. Strengths or weaknesses that
company possess have huge influence on these functional areas (Usunier, 2018). Impact of main
drives of swot analysis of functions of TESCO are explained below:
 Marketing: This department is responsible for promotion of company's products and
services. In other words, marketing department ensures reaching of brand name and
effectiveness to its target customers. In context to TESCO, as customers have negative
impact towards firm that it possesses incapability in maintaining quality of its food
product range. It pertains burden on marketing department that its focus should be
directed towards approaching customers that TESCO provides quality products. This can
be achieved by directing promotional strategies and campaigns in such a way that
message of high quality is conveyed to buyers.
 Finance: Department of finance maintains and interprets data related to funds. Role of
this department is to increase profitability of an organization. As TESCO has work
efficiency as its cost effective, it has positive impact on finance department of company.
Reason is that high profitability indicates high earning capacity of business which
improves availability of funds. Hence, various reserves and invested opportunities are
boosted by this department which further improves firm's productivity (Trad, 2020).
CONCLUSION
From the above report it can be concluded that evaluation of business environment plays
an important role in monitoring performance and sustainability of an organization. Business
environment consists of two factors, that is internal and external. Former can be evaluated
through swot analysis which identifies strengths, weaknesses, opportunities as well as threats
imposed in an enterprise. However, for analysing later pestle analysis is approached. Further, it is
identified that forces of business environment have huge influence of functioning of an
organization.
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REFERENCES
Books and Journals:
Dima, A. M., Dima and Mahagaonkar, 2018. Doing Business in Europe. Springer.
Kannan, S. and Miah, S. J., 2019. Integration of Knowledge Management and Business
Intelligence for Lean Organizational Learning by the Digital Worker. In Applying
Business Intelligence Initiatives in Healthcare and Organizational Settings (pp. 130-
140). IGI Global.
Nadakavukaren, A. and Caravanos, J., 2020. Our global environment: A health perspective.
Waveland Press.
Sharma, M., Gupta, R. and Acharya, P., 2020. Prioritizing the critical factors of cloud computing
adoption using multi-criteria decision-making techniques. Global Business
Review, 21(1), pp. 142-161.
Trad, A., 2020. Applied Mathematical Model for Business Transformation Projects: The
Intelligent Strategic Decision-Making System (iSDMS). In Handbook of Research on IT
Applications for Strategic Competitive Advantage and Decision Making (pp. 269-308).
IGI Global.
Usunier, J. C., 2018. Intercultural Business Negotiations: Deal-Making or Relationship Building.
Routledge.
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