Contemporary Business Environment

This document discusses the contemporary business environment and its impact on the behavior of TESCO, a British multinational company. It explores the economic and non-economic factors influencing the company's functioning and conducts SWOT and PESTLE analysis to analyze its internal and external environment. The document also provides insights into TESCO's market share and share prices.

CONTEMPORARY
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
Company Background.................................................................................................................1
LITERATURE REVIEW................................................................................................................1
Economic environment shapes the behaviour of TESCO...........................................................1
Non-economic environment and its impact on behaviour..........................................................1
DISCUSSION AND ANALYSIS...................................................................................................1
SWOT Analysis..........................................................................................................................1
PESTLE Analysis........................................................................................................................2
CONCLUSION................................................................................................................................2
REFERENCES................................................................................................................................3

INTRODUCTION
Contemporary business environment refers to the vast understanding of business
environment as it include huge competitive market that keeps changing at a frequent rate and for
this, the owner of business needs to be eligible enough to understand the need and development
that should be considered in an appropriate manner. Communication with the present and
potential stakeholders and general public in no longer becomes a matter of luxury but
competitive necessity (Barr and et. al., 2018). For this, it describes the marketing communication
strategies and put them into one picture. Moreover, it is quite important to clearly define the
goals and objectives and also clarify the vision, mission and purpose for the existence that
company requires to be in future. As in this, TESCO is considered which is a British
multinational company and supermarket store, headquarter in UK. In addition to this, it is going
to cover, various factors which impacts the functioning of company as it include economic and
non-economic environment which impacts the behaviour of company. It also conduct internal
and external analysis which is useful in determining those factors which impacts the processing
of company and for this, internal SWOT and for external PESTLE analysis is used which
describe those factors that impacts the behaviour of company.
Company Background
Drift in share prices of TESCO is determined with the help of below discussed chart:
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Thus, it is described that the share price of company gets fluctuate in continuous manner
as it influences the interest of shareholders in the company. Moreover, in year 2015 the price is
quite low as it is approximately 130 and the highest prices of shares were around 250 in 2018. by
determining the current share prices, it is around 250 and might rise in future.
To determine the market share of TESCO below chart is discussed that is determined as
under:
Thus, this chart describe that company hold around 29% of market share of UK as it is
highest percentage in many retail stores.
LITERATURE REVIEW
Economic environment shapes the behaviour of TESCO
Economic policies: With the impact of Brexit, it is concern with undermining the
stability of economic conditions. For this, the looming uncertainty of Brexit is represented and
country shows the economy as while considering the economic response of nation is delayed and
growth of GDP slows down the sustainability of country over the past years (Amankwah-Amoah
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and Wang, 2019). For this, the export sector also remains weak and the lack of clarity concerning
with the future of UK and EU nations and impacts the financial sector for the access of continent
on economy. Moreover, the economic framework is substantially transformed according to the
friendly conditions of market and for this most of the reforms were maintained after the election
of labour government. Moreover, the UK economy grew steadily and also endured a deep
recession during the financial crisis before recovering from 2013. moreover, weak demand of
euro zone of UK and its largest export market that is concerned with the economy which is too
reliant on the expenses of consumers that is sustained and too loose.
Economic conditions: The economic conditions of UK is quite free and score around
79.3% and also recently increased by 0.4 because of the improvements in government integrity
and fiscal health. For this, UK gained 3rd position among around 45 countries in the European
regions as it cover all the regional and world averages (Hamilton and Webster, 2018). Moreover,
the economy of UK slows down and also climbs the rank of most past decade as its GDP
becomes solid for around five years but due to Brexit is slows down. For this, the strong majority
is secured by the parliamentary election as it move forward with the procedure of Brexit.
Moreover, the economic disruptions in UK can develop new opportunities in order to expand
economic conditions and freedom and also reduce tax burden and government spending by
pursuing new trade agreements with other countries. The economic growth of UK is modest at
the time of more expansionary as fiscal policies need to support the growth activities and
uncertainty over the future of UK and EU trading relationship as it impacts the business
environment, investment and also slow down the economic and inflation rates because of the
outbreak of coronavirus. As the most possible unravelling of trade bargains with the EU and also
worsening the viral outbreak and downside risk. For this, focused economies also panelists the
GDP rate of project as it grows around 1% in 2020 that remains unchanged till now.
Economic system: UK has mixed economy that is based on the capitalist system that
relies on the free trade and global economic conditions that limits the establishment of
government (Boone and et. al., 2019). For this, the capitalist of economic system as it
characterised by free market conditions and with the absence of government and its intervention
in economy. In addition to this, most of the decisions in UK are taken by considering the market
conditions. Moreover, major decisions are taken by government that are related with the road
building and the infrastructure of nation.
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Non-economic environment and its impact on behaviour
Natural factors: Water represent 71% of the earth's surface and only 0.3% from it is
available for drinking or for human use. In addition to this, the quality of fresh water and surface
system put great impact on the potable water needs that is most appropriate for the mineral
content. As the surface water in rural areas and concerning environment impacts the natural
processes and anthropogenic influences as it becomes scarer and the population increases across
the world (Tarabasz, Selaković and Abraham, 2018). By considering the UK conditions
regarding the natural resources, it is determined that both the surface water and ground water is
influenced by natural and anthropogenic elements as it affects the quality of water rural and
urban areas. For this, the geological factors put great impact and contribution of geosphere to
ground water and its composition as it effects the chemical water and interactions in aquifers. In
relation with this, the main factors impacts the quality of water in wells and also drilled into
bedrock seems to be rock type and the mode of weather for the particulate minerals. For this, the
human influences the changing water conditions and also impacts the quality like weathering
conditions of bedrock and deposition of dust and salt by wind. Moreover, the natural procedure
like organic matter and nutrients from soil and hydrological factors leading the biological
procedure in the aquatic environment brings the relevant changes in physical and chemical
composition of water. Moreover, the natural procedure and environment contains dissolved and
undissolved solids and for this, significant components of good quality of water helps them in
maintaining the health of organisms that relies on the ecosystem and its concerning services.
Demographics factors: There are many demographic variables that are used in
considering the studies as it include gender, age, income level, education level and presence of
children and also reveals the impact and importance of these factors on the intention of consumer
regarding the green personal care of products (Lingeberzins, 2017). For this, consumers are
influenced by many issues that arises in the decision making and depicts many factors that
influences the buying decision of consumers in unique region. For this, demographics plays
significant factor in the decision making of UK and its consumer and also diversify the black
race people in the majority of population. As it make things quite easy for the manufacturing of
food for their targeted consumers and regarding the consumption pattern that is easily identified.
For this, ethical issues which is addressed and limit the opportunities in order to diversify the
country. Another factor which impacts the purchase decision is culture of nation as most of the
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purchase decision are developed on the basis of guidance of their influencers, friends and family
as it is most similar across the ethnic groups. Moreover, social values and perceptions are also
considered as the key factors that influences the consumers and their purchasing decisions as
most of the highly aspirational values reflects their spending on their habits.
Cultural factors: The cultural concept is viewed as the guidance and also directs the
behaviour in the considered context. For this, culture is considered as the most basic factor which
describe the wants and behaviour of an individual. As culture is the consumption that is
unprecedented the relationship in modern world and also argues about the relations of world and
economy that becomes increasingly cross cultural and also understand that how culture impacts
the behaviour of consumers and marketers as well (Aksenov, 2017). Moreover, noted factors
include behaviour of consumers that influences and motivate many factors such as culture,
lifestyle, personality, income, attitude, feelings and so on.
DISCUSSION AND ANALYSIS
SWOT Analysis
This framework is useful in conducting and analysing the internal environment,
capabilities and competencies that influences the business conditions of company. Its objective is
to analyse the strengths and weaknesses of TESCO and also explore the opportunities and threats
that are faced by company (Akhtar and et. al., 2018). This analysis is useful in determining the
internal capabilities of company and also have control over the change as it include patents and
intellectual property. Moreover, its opportunities and threats include external factors that are
required in the large market. For this, it is quite beneficial to protect against the threats and in
regard of this, companies take major step to analyse these threats and overcome them.
Strengths: TESCO is the most popular grocery and supermarket store in UK as it has
higher sales and revenues in comparison to other supermarket chains in Britain. As in accordance
to its 2018 annual report is operating profit raise by 28%. Moreover, it is one of the big four
supermarket as it dominates the grocery retail market with around 27% of market share as it
recently become the most famous supermarket in Ireland. Additionally, TESCO thrive the global
presence with more than 6800 stores in 14 countries and despite from this, Europe and North
America has huge market share in the Asian market as well (Cegliński, 2016). Furthermore, from
the number of 2008, TESCO operates 6966 grocery stores at worldwide. For this, its revenues
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every year increases and also additionally consider the operational chain in new stores.
Moreover, currently TESCO launched various forms of stores as it is diversified is stores into
many sections including TESCO homeplus, Metro, extra, express, and so on. The diversification
strategy of TESCO become successful as it has clothing range, home ware items, mobile phones,
music system and other factors across the globe. As TESCO offers more than 743K job
opportunities for their employees as it is acclaimed as the biggest opportunity in entire Europe.
Because of this, its successful commercial performance, company has achieved various awards
as it include British's favourite supermarket, drink award and so on. Moreover, with the
advanced technology TESCO uses optimised optimal way to enhance the shopping experience of
its customers.
Weaknesses: TESCO had exit form the American and Japanese market in 2012 and also
failed operations of export which is forced the company to close its stores in Japan. In 2017,
company was charged with fines and because of the false accounting reports and
misrepresentation of profits (Schaltegger and Burritt, 2017). Moreover, its share prices fell more
than 9% because of declining in operating profits and also proven the worst performance for the
company since the Brexit referendum. In addition to this, TESCO is price leader in UK market as
its low cost strategy can lead and also reduces the profit margins. Moreover, few stores and
grocery outlets of TESCO are not performing in an appropriate manner in certain countries and
depicts that TESCO did not carry out the sufficient market research before entering into these
markets.
Opportunities: TESCO recently introduces its new Jack stores which is a discount store
and also show down the significant growth and opportunity in order to grow the business and
successfully compete with the low cost rival such as Lidl and Aldi. Creating strategic plans and
partnerships with reputed companies can provide excellent opportunities for TESCO as it is
useful in enabling company to offer more products and also attract more customers (Nikitina and
Lapiņa, 2019). For this, there is am opportunity for the joint ventures in specific area ion which
TESCO stores are not performing in good and appropriate manner. For this, local companies can
offer profound market knowledge that helps in improving the performance is these areas. In
addition to this, TESCO can avail suitable opportunity for growing and updating its online
presence by offering home delivery services.
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Threats: TESCO faces social media recoil while launching its Christmas advertisements
in 2017. For this, people boycott its store by claiming a disrespectful act from TESCO against
Christians. In addition to this, TESCO was accused in regard of misleading with fake farm brand
names and marketing of its food products under the name of “Woodside farms” as it faced severe
legal threats in 2017. by rising growth and performance of Walmart, Aldi and so on as these are
the biggest competitors for TESCO as it threatened its position.
PESTLE Analysis
PESTLE Anslysis is defined as the framework or tool that helps manager of an
organisation in analysing and monitoring the macro environmental forces that impact on the
performance of an organisation (Anđelković, 2016). Marketers use this tool to analyse the impact
that macro factors have upon operations and strategies of company. The factors included in this
framework are political, social, economic, environmental, technology and legal forces which are
discussed below in context of company.
Political factor: As Tesco is operating worldwide, there are various factors that influence
its performance and operations. These factors involves current and impending legislation, tax
rates, economic condition of nation where it is operating, political instability, unemployment rate
etc. Brexit is one of the factor that impacts the operations of business (Erl, Khattak and Buhler,
2016). Due to this, the prices on food has increseae along with the devaluation of pound sterling,
which impacts the import of food products as it gets more expensive. Political stability of
country is the another factor that impacts the operations of Tesco. As United Kingdom is a
politically stable country, the laws and regulations are not change frequently, this helps the
company in running its operations effectively and successfully in UK market.
Economic factor: This factor inclued inflation, deflation, interest rates, tax rates, etc.
which impacts the operations of working of an organisation. Due to Brexit, the spending power
of consumers decline because of various factors like slow wage growth after brexit and
increasing inflation rate (Liu and Stening, 2016). This impacts the sales of company and resulted
to declining sales. In year 2018, the minimum wage rate is raised in United Kingdom by 4.4
percent. This upward shift in wage rate cost firm millions of pounds. Apart from this, due to
high unemployment levels, the demands for various goods decreases, this negatively impact the
demand require to develop such goods.
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Social factor: Changing needs and preferences of consumers, buyer's choice, behaviour,
perceptions, their attitude towards products etc. are the factors that impacts on the operations and
activities of business. Currently, the speread of virus on other countries like China, Korea, Italy
impacts the demand of food products in United Kingdom (Corey and Wyatt, 2020). Due to this,
the prices of products are also increases which ultimately impacts the sales of Tesco in an
adverse way. As due to increased prices, the buying power of consumers decline and resulted to
declining revenues of firm. The health and dietry trends in market also affects the sales of
products in market. Change in lifestyle of people is the biggest factor that influence the global
food and beverage industry in United Kingdom. People are becoming more concerned towards
their health and emphasize more on eating helathy food with specific focus on sugar. This trend
impacts the sales of food products of Tesco as it offers prossesed food and drinks in its
supermarkets that contains high sugar and artificial sweetners which impacts the health of
people adversely.
Technological factor: It is the another factor that highly impacts the operations of
Tesco. Advancement in technology and technological innovations are the factors that needs to
be consider by an organisation in order to effectively grow and success in market (Barr and et.
al., 2018) Tesco introduced RFID technology which helps in enhancing the in store experience of
consumers. This technology counts the stock automatically and remove it after the sales of it.
Apart from this, it also created its own mobile payment system through which customers can pay
easily and get loyalty points on each payment. This impacts the operations of Tesco positively
and helps it in gaining competitive advantage in market.
Legal factor: This factor is related to legal environment of business and includes factors
like laws and regulations made by government like consumer laws, employee contracts etc. In
year 2016, around 17 employees of Tesco took legal action in opposition to the employer for
the discrimination on the basis of age and gender. This impacts the image of company adversely.
If firm will not follow all the laws and legislations made by government, then it may have to
face leagal consequences (Amankwah-Amoah and Wang, 2019).
Environmental factor: This force involves climatic changes, seasonal variations, natural
calamaties etc. As people are now becoming more concerned towards protection of
environment, any practices of company that harms the environment may resulted to loss of
reputation of company. Tesco adopts various practices that contributes in protecting the
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environment like it encourage its buyers to shop on its online website tesco.com. Apart from this,
the van drivers of Tesco utilize fuel saving routes as well as gather unwanted plastic bags from
consumers and recycle them (Hamilton and Webster, 2018).
CONCLUSION
From the preceding discussion, it is concluded that business environment is dynamic in
nature as it carry lot of risk factor with it for the circulation and survival of business. In regard of
this, various appropriate frameworks are used which is used in determining the competencies and
capabilities of business and company and also useful in examining risk factor for company and
helps in eliminating them. Moreover, various economic and non-economic factors are discussed
which impacts the behaviour of company, employees and society too.
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REFERENCES
Books and Journals
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top management tangible competencies, relationship‐based business networks and
environmental sustainability. British Journal of Management. 29(1). pp.43-62.
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Economic Perspectives. 11(2).
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overview and new research agenda.
Anđelković, M., 2016. Some distinctive features of tax control in the contemporary business
environment. Zbornik radova Pravnog fakulteta u Nišu. 55(74). pp.161-173.
Barr, T.L and et. al., 2018. Development of indigenous enterprise in a contemporary business
environment–the Ngāi Tahu Ahikā approach. Journal of Enterprising Communities:
People and Places in the Global Economy.
Boone, L.E and et. al., 2019. Contemporary business. John Wiley & Sons.
Cegliński, P., 2016. Use of strategic marketing management tools in contemporary
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Corey, N. and Wyatt, J., 2020. The Dynamics in the Contemporary Business Managerial
Problems: An American Perspective. Journal of Strategic Management. 4(1). pp.41-51.
Erl, T., Khattak, W. and Buhler, P., 2016. Big data fundamentals: concepts, drivers &
techniques. Prentice Hall Press.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Lingeberzins, E., 2017. The Insight of Tourism Operators in Contemporary Business
Environment. In Tourism, Culture and Heritage in a Smart Economy (pp. 107-120).
Springer, Cham.
Liu, T.Q. and Stening, B.W., 2016. The contextualization and de-contextualization of Confucian
morality: Making Confucianism relevant to China’s contemporary challenges in
business ethics. Asia Pacific Journal of Management. 33(3). pp.821-841.
Nikitina, T. and Lapiņa, I., 2019. Creating and managing knowledge towards managerial
competence development in contemporary business environment. Knowledge
Management Research & Practice. 17(1). pp.96-107.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues, concepts
and practice. Routledge.
Tarabasz, A., Selaković, M. and Abraham, C., 2018. The Classroom of the Future: Disrupting
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