Assessing the Impact of Macro Environment on Business Organization

This article discusses the positive and negative impact of macro environment on business organizations. It explores the use of the PESTLE model for analyzing the external factors affecting a business. It also applies the PESTLE model to a chosen organization, TESCO, and evaluates its strengths, weaknesses, opportunities, and threats. Additionally, it examines how the strengths and weaknesses of a business are related to external macro factors. Finally, it evaluates the impact of micro and macro factors on business objectives.

INTRODUCTION
TASK 1
1.1 Assess the positive and negative impact of macro
environment
It can be defined as concept of marketing principle, used by
various business enterprise in order to track the external
environment in which they are operating or thinking to
introduce new product or services. Marketers used this
framework to monitor the external factors in terms of
government intervention, technology, indefinite laws that
have an adverse impact on the functions of business
organization. Management uses PESTLE model to
understand current working condition and arrange
themselves for future contingencies. Though this model is
helpful, but it also contain certain flaws which are
described as follows:
Positive impact of Pestle analysis:
 Cost Effectiveness: It can be done on a simple piece
of paper with a pen. No Hi-tech is required in order to
analyses the factors of macro environment related with
the company’s operation. Thus, this analytical tool is
cost effective and saves time, which firm can used in
order to carry out other important functions.
 Deeper Understanding: Environment affects the
various operations and functions of business directly
and indirectly. Thus, an urge for PESTLE model
created which determine external factors in terms of
political, legal, environmental that affects the business

environment. For instance, company can overlook
laws related to safety and consumer while making the
sample of a particular product. Also the firm
determine technological barriers and competitive
level.
 Alertness Development: Business entities can use
PESTLE strategic model in both broad and narrow
sense. Such as when a company wants to launch its
new product, they can narrow down their analysis in
terms of specific target market, competitors,
technology etc. PESTLE enables the firm examine
changes thoroughly and make plan that decrease the
final cost.
 Exploit Opportunities: PESTLE model helps the
firm to determine their strength. For instance if an
entity is using this model to assess the latest
technology trends, they will found out that, how now a
days company’s are using digital media platform
which serves as an opportunity for the cited firm as
they can also use such latest technology and gain
higher competitive level.
Negative impact of PESTLE analysis:
 Constant Reviewing: The major drawback of this
tool is that it determine the impact of external
environment on business enterprises which is
changing very rapidly. Thus enabling management
to study such factors on regular basis which is
wasting time and money. For instance, Government

has increase taxation rate which directly impact the
firm’s profitability. Analyst will provide measures
to the company in order to prepare them for future
uncertainty. Then suddenly in next month
government encompass subsidy to firm which
positively affect the operation of business. Hence,
this method creates ambiguity and hassle the
functions of organization.
 Numerous People Needed: PESTLE requires large
number of people who critically assess the external
factor affecting the ongoing operation of company.
Knowledge and suggestion of different people
towards a similar scenario, makes it difficult for
firm to end up one collective decision. Also
company has to bear the additional cost in hiring
such people.
 Need for Resources: As Pestle deals with political,
economical, technical, legal factors and in order to
analyses the impact of such factors company
requires resources on the basis of which they can
assess or interpret them. This requires huge time
and money which serves as a disadvantage for the
entity.
 Subjective Analysis: Final outcome of PESTLE
analysis is based on the opinion and judgment of
numerous people which hired by company itself.
Result are often subjective and elucidation may
vary from person to person depending upon their

level of thinking and for this company might bear
heavy loss because of such vague misinterpretation.
1.2 Apply PESTLE model to chosen organization
Pestle analysis of TESCO are described below:
Political: UK government has increase the VAT rate by
5% which results in lowering the consumer spending, thus
affecting the profitability of TESCO.
Economical: Higher GDP rate and economic growth rate
of UK enables TESCO to take advantage of higher sales
ratio and revenues.
Social: Increased life expectancy of an individual serves as
an advantage for TESCO, as they can take into
consideration the current change in terms of customer taste
and preferences. For instance, they are selling their product
online but they don’t know whether old people have
sufficient knowledge to access their website or not.
Technology: TESCO is using mobile technology which
enhance their distribution channel. Along with this they are
promoting their products on various social networking sites
which serves as a latest trend among new generation.
Legal: Laws related to the agriculture sector influence the
operations of TESCO. Government keeps on changing the
price which makes it difficult for TESCO to take decision
effectively.
Environmental: TESCO is opting various measures which
results in conserving natural resources and environment
such as use of greenhouse gas.
TASK 2

2.1 Conduct internal and external analysis in order to strength
and weakness
Internal analysis: SWOT Tool is used by the business enterprise
in order to develop particular business prototype according to
the available capabilities and resources, considering the
environment which in which they operates their operations and
functions. SWOT compromises of Strength, Weakness,
Opportunities and Threats available to the company while
dealing externally. It is useful tool used by firm to know where
they lack, at which part they need to improve themselves and
how competitive advantage can be attain with strength and
opportunities
Strength:
 TESCO carrying out their
business operation across
North America, Asia,
South America, Europe
and Africa
 In their initial year of
rising, TESCO adopted
the innovative business
approach which includes
formation of stores in the
form of TESCO Express
and TESCO Metro.
These small store is
created in order to satisfy
customer wants more
conveniently.
Weakness:
 TESCO inventory cost is
high as compared to their
competitors which serves
as a disadvantage for
them, when consumers
are having low
disposable income.
 Highly dependent upon
Europe and UK which
holds major share in the
form of revenue and sales
factor.
 Strong competitive
pressure
 TESCO lacks in
conducting effective

 Using multilevel format
hierarchy- supermarket,
hypermarket,
convenience store and
hard discount stores
 Provides large range of
product and services to
locally sourced resident
which help TESCO to
attain operational
efficiency.
 Sell products with their
owned brand label which
ultimately increases their
brand image.
marketing research to
understand the latest
trend and demand of their
target consumer.
 Ratio of bad debt and
insurance claim is quite
high as compared to their
rivals.
Opportunities:
 Marketing expansion
through digital media
 TESCO Offers own
brand gadgets in the form
of smartphones and tablet
to their investors so that
they can communicate
and co-ordinate easily.
 Focused on promoting
growth of TESCO’S
private label brand
 Expand their market
reach among other global
countries
 High assurance and
Threats:
 Highly influence by the
External factor which
adversely affect their
overall sales and profit.
 Stakeholder dominate the
TESCO operation
adversely on cost basis.
 Government new laws
and regulation is putting
pressure on all over
performance of Tesco.
 Hold low operating cost.

credibility which helps
them to gain success for
longer period
.
2.2 Describe how strength and weakness related with external
macro factors
2.3 Conduct SWOT Analysis on chosen organization
Below mentioned is the SWOT analysis of TESCO
Strength
 Major cash reserves and
strong financial position
 Strong brand image with
global recognition
Weakness
 More jeopardize to
external factors
 Strong Competitive
pressure
Opportunities
 Can take the advantage of
Joint venture and
strategic alliance
 TESCO can provide
home delivery services to
their loyal customers
Threats
 Increase in food prices
affects the buying
behavior of potential
customer
 Strong stakeholder
pressure
2.4 Evaluate the impact of micro and macro factors upon
business objectives
According to Brunce, 2015 business organization runs their
operation in micro and macro environment which largely affect
their decision making. Micro factors consist of customer,

stakeholders, employees, competitors which affect the
profitability of TESCO as all are considered as an important
asset of the company. On the other side (), macro factors give
competitive advantage and sustainable growth to TESCO. Such
factors enables the cited firm, to alter themselves with the
dynamic changes and produce goods and services by taken into
consideration various laws and regulation that are imposed by
the UK Government.
CONCLUSION
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