Analysis of Global Business Environment and Strategic Challenges

This report provides a comprehensive analysis of the global business environment, examining key factors such as cost, market dynamics, competition, and environmental influences that drive globalization. It delves into the strategic challenges faced by organizations operating in the global market, using Tesco as a case study. The report explores the complexities of these challenges, including issues related to targeted audiences, overseas market performance, market conditions, brand consistency, pricing strategies, and public perception. It evaluates the global business environment through PESTLE and SWOT analyses, assessing the influence of globalization on organizational governance, leadership, structure, culture, and function within Tesco. Furthermore, the report examines decision-making processes and the effectiveness of various strategies implemented by Tesco. Finally, it researches and recommends strategies for companies operating in a global environment, offering valuable insights for businesses seeking to succeed in international markets.

Global Business
Environment

Table of Contents
INTRODUCTION ..........................................................................................................................4
P1 Key factors of cost, market , environment and competition that drive globalisation......4
M1...........................................................................................................................................6
P2 Explain complexity of strategic challenges faced by the organization. ..........................7
M2.........................................................................................................................................10
P3 Evaluate global business environment by using PESTLE and SWOT analysis. ..........10
M3.........................................................................................................................................12
P4 The influence of globalization on organizational governance and leadership, structure,
culture and function within Tesco........................................................................................12
P5 Evaluate how decision making has effectively worked/ not worked while implementing
different strategies in Tesco..................................................................................................14
P6 Research what strategy needs to be adopted by the company operating in a global
environment and provide recommendation. ........................................................................16
M4.........................................................................................................................................17
CONCLUSION..............................................................................................................................18
REFERENCES .............................................................................................................................19

INTRODUCTION
Global business is the term which is used to define the international trade of the
organization who conduct its business all over the world. Global business environment can be
defined as, method of conducting business in the different countries of the world in order to
increase the productivity and profitability of the organization. It also influence the decision
making process and the uses of resources and there capabilities. Global expansion of the
organizations comes with various challenges and limitations, it is very important for the
companies to construct well structure plans and policies, in order to make firms work effectively
and efficiently in International Market. Global business environment are highly sensitive and
competitive so it is very essential for the business organizations to implement there working in
the desired manner. The main aim of this assignment is to analyze key factors of environment
and competition that drive global commerce, complexity of strategic challenges faced by the
organizations in operating there business in global market and influences of ethical and
sustainable globalization on organizational functions.
P1 Key factors of cost, market , environment and competition that drive globalisation
To standout in the market place in this era it is important to expand the business at global
level. Various factors related to cost, market, environment and competition affect this global
expansion. Cost is one of the factor to be considered while exploring the business. Pricing of the
product must be done in such a way so as to make the product affordable for the general
customers (Ferraro and Briody, 2017). This is one of the way to attract more number of
customer. If any company is providing online services, the cost of transportation or shipping
should not be carry forward to the customers. Attractive packaging should be at the cost of
company only. These factors have to be considered to associate with the more number of
customers. Sine because of the new technologies' transportation cost has become low which
serves as a driving force for globalisation.
Market condition also plays a vital role while globalising the business. Demand and
supply equilibrium has to be maintained to satisfy the needs of the customers. Economic factor
has to be kept in mind while manufacturing any product. Customers feedback must be reviewed
at regular intervals to make such products which are actually liked by the customers. This is one
of the way to keep the customers satiated by fulfilling their needs. Online services has made this
possible in the favour of globalisation (Wild, Wild and Han , 2014). Tax rates also influence the

market. Hence, while pricing this has to be considered to provide cost efficient products to the
customers. Multinational business always try to increase sales, profits and the stakeholders.
Global expansion assists in the same but at the same time prevailing market conditions have to
be analysed with the help of stock exchange trend.
Similarly, environmental conditions also affects the globalisation. Various social,
political, legal, cultural and the technological factors prevailing in the environment also affects
the globalization. Sound decisions have to be taken my the managers to set an image in the target
market. If the company is working as per the norms set by the authority , it can gain the
competitive advantage easily. As per the culture prevailing in the society people buy the
products. One has to take care of this while operating in another nation. This will serve as a
business driver. One has to associate with the eco-friendly production methods for the sake of
the community (Savrul, Incekara and Sener , 2014).
In this age of competition, everyone wants to stand out in front of the target market. This
competition is working as a catalyst to drive the globalisation. Every company is trying to
makeP1 Key factors of cost, market , environment and competition that drive globalisation
To standout in the market place in this era it is important to expand the business at global
level. Various factors related to cost, market, environment and competition affect this global
expansion. Cost is one of the factor to be considered while exploring the business. Pricing of the
product must be done in such a way so as to make the product affordable for the general
customers (Ferraro and Briody, 2017). This is one of the way to attract more number of
customer. If any company is providing online services, the cost of transportation or shipping
should not be carry forward to the customers. Attractive packaging should be at the cost of
company only. These factors have to be considered to associate with the more number of
customers. Sine because of the new technologies' transportation cost has become low which
serves as a driving force for globalisation.
Market condition also plays a vital role while globalising the business. Demand and
supply equilibrium has to be maintained to satisfy the needs of the customers. Economic factor
has to be kept in mind while manufacturing any product. Customers feedback must be reviewed
at regular intervals to make such products which are actually liked by the customers. This is one
of the way to keep the customers satiated by fulfilling their needs. Online services has made this
possible in the favour of globalisation (Wild, Wild and Han , 2014). Tax rates also influence the

market. Hence, while pricing this has to be considered to provide cost efficient products to the
customers. Multinational business always try to increase sales, profits and the stakeholders.
Global expansion assists in the same but at the same time prevailing market conditions have to
be analysed with the help of stock exchange trend.
Similarly, environmental conditions also affects the globalisation. Various social,
political, legal, cultural and the technological factors prevailing in the environment also affects
the globalization. Sound decisions have to be taken my the managers to set an image in the target
market. If the company is working as per the norms set by the authority , it can gain the
competitive advantage easily. As per the culture prevailing in the society people buy the
products. One has to take care of this while operating in another nation. This will serve as a
business driver. One has to associate with the eco-friendly production methods for the sake of
the community (Savrul, Incekara and Sener , 2014).
In this age of competition, everyone wants to stand out in front of the target market. This
competition is working as a catalyst to drive the globalisation. Every company is trying to make
the products different from the others. Special packaging is provided by them to grab the
attention of the customers. With the help of online websites and blogs different discount scheme
is also provided to them. Online services helps to connect with more people across the globe. To
beat the other competitors everyone is trying this. Hence, we can say that all these factors serves
as a driving force for the globalisation. the products different from the others. Special packaging
is provided by them to grab the attention of the customers. With the help of online websites and
blogs different discount scheme is also provided to them. Online services helps to connect with
more people across the globe. To beat the other competitors everyone is trying this. Hence, we
can say that all these factors serves as a driving force for the globalisation.
M1
Global business environment is the external environment which gives direct impact on
the business activities. Some global environment factors are political, legal, political, social,
technological, environmental etc. all these factors influence business activities, product pricing
trategies, business policies and plans. Out of which some factors helps to grow the business or
some of them are decrease the business sells and profit revenue.

P2 Explain complexity of strategic challenges faced by the organization.
TESCO is the multinational grocery and general merchandise retailers, the organization is
one of the third largest retailers of the entire nation and it has stores in approximately more than
12 countries, there are various kinds of challenges which are being faced by the organization.
Complexities are inevitable part of the business functions, in each and every business
organizations there comes a time where complex situations takes place in the working of the
organization. Leaders and managers of the organization come up with various policies in order to
provide solution regarding such situations that occurs in the organization. Strategic challenges
are those challenges which influence the position of the organization, generally these are affected
by the external factors of the environment. External strategic challenges of the business are the
challenges which are related to the needs and expectations of the consumers, technological
changes that occurred in the business environment and all the other needs of the business
organizations (López, 2016).
The major strategic challenges which have been faced by the TESCO while dealing in global
markets :
TESCO doesn't have any targeted audience: TESCO's one of the most prominent strategic
issues is that, the company does not have any targeted audience, the supermarket is being
dominated by the major discounters like Lidl and Aldi, because these two are the major
supermarket chains of the United States and cover very large range of audience so it becomes
very difficult for the TESCO to figure out there targeted audience.
The company lost it's advantage overseas: TESCO's overseas popularity is demeaning day be
day, it's popularity is nothing to what it was years ago. As pr the report the few stores of TESCO
in United States has been shut down due to the losses it is facing.
The Retail market of the UK is slow: The conditions of the retail and grocery market of the
United kingdom is very difficult, as because of the economic recession that occurred in the
country. The sales of the TESCO is declining from so many months, as per the reports of the US
market the company faced the loss of approximately 3.7 percent.
In TESCO there is lack of consistency and clarity: There has been lot of confusion regarding
the brand identity and management in the company. The strategies followed by the company are
not well defined and thus it created huge impact on it's working. It is one of the major strategical
challenge that is being faced by the TESCO. The pricing strategies of the company is not well

defined, the company need not to follow the policies of cost effectiveness it's just need to be little
bit transparent and clear about there pricing policies.
TESCO isn't very appreciated: The rational approaches which has been followed by the
TESCO is very famous the main emphasis of the supermarket is upon the fast growth and
customers bargain strategies while on the other hand the requirements of the market is to
promote the customer care services and have healthy relationship with there suppliers. The major
rival of the company is Sainsbury, and one of the biggest issue faced by the organization is, the
scandal of horse meat, which brings its popularity down.
Management strategies of TESCO is not clear: The management strategies followed by the
company is not transparent and it often create so much difficulty for the firm many the company
has to construct the plans and policies (Wood, 2016).
Example of the strategical challenge faced by TESCO – (Horse meat scandal)
It was the biggest challenge which has been faced by the company, as it creates huge
impact upon its popularity and working, approximately has been deduct from £300m the value
of the TESCO when it comes under light that there are numbers of burgers in which the company
uses the meat of horse. The major impact was laid upon the quality of the products and services
provided by the TESCO,and it becomes very difficult for the organization to rebuild the trust and
loyalty of their customers.
The performance of the organization (TESCO) is very unstable since last few years, there
are various kinds of risks factors which are present for the organization.
Performance Risk: Because of the indicative sales growth, the functioning of the TESCO is
under pressure. The working of the business doesn't match with its plans and policies, and thus
company under performs against its competitors. As the business fails to meet its strategical
policies it turns into the economic drop of the organization.
Reputational Risk: TESCO is very huge brand as it covers large variety of products and
services. But the company is insufficient in sustaining it's image and brand reputation, and it
losses the trust and loyalty of there customers. After the horse meat scandal of 2013, the
company has faces a very big drop in its reputation.
Diversification can be seen in the policies and the implications of the company as the
company adopted the six point plan to build the better TESCO, this plan includes training,

developing price optimization and the members of the organization are concentrating upon it
very deeply in order to improve the working of the organization (Doh, 2015).
Illustration 1: Supply chain flow
Illustration 2: Graphical representation of TESCO's performance

M2
Strategic challenges are usually gives negative impact on the business marketing plans or
other plans. Strategic challenges gives adverse impact on company resources, risk flexibility and
other functional elements.
P3 Evaluate global business environment by using PESTLE and SWOT analysis.
Global business environment can be defined as, method of conducting business in the
different countries of the world in order to increase the productivity and profitability of the
organization. It also influence the decision making process and the uses of resources and there
capabilities. TESCO is the multinational grocery and general merchandise retailers, the
organization is one of the third largest retailers of the entire nation and it has stores in
approximately more than 12 countries, there are various kinds of challenges which are being
faced by the organization (Pawliczek, 2016).
PESTLE ANALYSIS of TESCO:
POLITICAL: The current tax policies adopted by the United Kingdom lay emphasis upon the
working of the TESCO. Government of United Kingdom has increased the rate of VAT from
17.5 % to 20 % in 2011. The aim of the government is to increase the profit by 13 billion per
year. There are various policies of the government which had created a bad impact upon the
working of the TESCO, various types of threats are being faced by the company which created a
big impact upon its profit.
ECONOMICAL: The economic conditions of the United Kingdom are overcoming from the
situations of the financial crises that occurred in the country. A growth in the economy of the
country is turn out to be the positive sign for the TESCO operating units. The economic growth
also shows some positive results in the supermarket sectors, the area in which TESCO deals.
Economic recession and the economic growth are two different situations which have very big
impact upon the working of each and every organization of the country.
SOCIAL: Because of the baby boom generation the number of elder people has been increasing
in United Kingdom, in past few years the the rate of the birth has been reduced and the life
expectancy rate has been increased. TESCO has very positive response upon this social changes
occurring in the country. As they provide there products online and as per some reports, the
elder people who have high source of income are in favor of interested for acquiring goods and
services offered by the organizations like TESCO.

TECHNOLOGICAL: For the supply chain management of the TESCO, the applications of
technology are very critical, the company uses supply chain management system to gain the
competitive edge in the market and to increase there cost efficiency. It is very important for the
management department of TESCO to be attentive regarding the disruptive technologies that are
available in the organization.
ENVIRONMENTAL: TESCO lay emphasis upon the environment and work in a manner that it
does not create any kind of the harmful effects upon the environment. The management
department of the TESCO claims that whenever store adjustments take place they keep the
environmental factors in mind.
LEGAL: There are various numbers of products in which TESCO deals so it is very important
for the organization to manage there legal norms and legislative procedures in order to ensure the
effective working of the organization.
SWOT ANALYSIS of TESCO:
The SWOT analysis of the firm, help in generating information regarding there current
position in the market.
STRENGTH:
The company has won various kinds of awards for the services provided by them, and the overall
shopping experience of the individual at the stores is also very pleasant.
TESCO is considered as the one of the largest retail unit of the world.
The cash reserves of the company has various kinds of the significant effect upon the economic
cycle of the country.
Through its various kinds of operations the company has improved its technology.
WEAKNESSES:
The number of subsidiaries of the TESCO are not in a very good condition, and on the other
hand they are also prone to the external factors that are present in the environment.
The pressure of competitors is very high on the working of the TESCO as the company is not
able to gain and maintain there targeted audience.
The scandal of horse meat 2013, was also one of the biggest weakness of the organization, as it
brings down its popularity among the customers.
OPPORTUNITIES:

TESCO can build alliance with other famous and successful brands in order to rebuild the trust
and loyalty of there core customers.
The company can also follow the criteria of joint ventures in the country where it has been under
performing since very long time.
There are various number of opportunities for TESCO in private label market.
THREATS:
Economic recession that can take place anytime in the country s the biggest threat for the
organization. (Savrul, 2014).
There are number of competitors are present for the TESCO in the market,which can act as the
biggest rivals of the company.
Interference of the stakeholders, regarding the environmental ad social challenges of the
company is also big threat for the TESCO.
Complexities are inevitable part of the business functions, in each and every business
organizations there comes a time where complex situations takes place in the working of the
organization. Leaders and managers of the organization come up with various policies in order to
provide solution regarding such situations that occurs in the organization.
M3
Overall theories or structure of the organisation are highly influenced by external global
environment. This provides the best effective goal making task for the organisation to get
overcome. Global environment influence many factors of company development process. For
that company needs to apply different theories or models to sustain in the competitive market
position.
P4 The influence of globalization on organizational governance and leadership, structure, culture
and function within Tesco.
Red by Tesco for making presence in the global market. The social factor will help to
boost the sales and increase the profit while the environment factor required to considered to not
affect the business by wrong practices of the firm which can be impact on the environment and
create any imbalance in that nations(Sifianou, 2013). This will make a negative impact if the
firm will not consider for the global market. Hence, social factor influence the customer while
environment factor will include the natural resources.