Different types of Organizations
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This document provides an analysis of different types of organizations operating in the UK market, including Tesco PLC, Asda Stores Ltd, Barclaysbank, and Sainsbury’s. It discusses their background, size, products, and competitors. The document also explores the organizational structure and functions of Tesco, as well as the impact of the macro and micro environment on its operations.
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BUSINESS ENVIRONMENT
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Management 2
Table of Contents
Introduction...............................................................................................................................................2
LO1 Different types of Organizations......................................................................................................3
1.1 Tesco PLC description........................................................................................................................4
1.2 Asda Stores Ltd............................................................................................................................5
1.3 Barclaysbank......................................................................................................................................6
1.4 Sainsbury’s.........................................................................................................................................7
LO2 Organizational structure and organizational functions.................................................................8
LO3 Tesco microenvironment analysis..................................................................................................10
3.1 PESTLE Analysis of Tesco..................................................................................................................10
3.1.1 Political.....................................................................................................................................10
3.1.2 Economic..................................................................................................................................11
3.1.3 Social.........................................................................................................................................11
3.1.4 Technological............................................................................................................................12
3.1.5 Environmental..........................................................................................................................12
3.1.6 Legal..........................................................................................................................................13
3.2 Tesco SWOT Analysis.......................................................................................................................13
3.2.1 The strength of Tesco...............................................................................................................13
3.2.2 Weaknesses of Tesco................................................................................................................14
3.2.3 Opportunities............................................................................................................................14
3.2.4 Threats......................................................................................................................................14
LO4 The impact of micro and macro environment on Tesco...............................................................15
4.1 Microenvironment impact on Tesco................................................................................................15
4.2 Impact of the macro environment on the Tesco strategic direction................................................16
Conclusion................................................................................................................................................17
References................................................................................................................................................18
Introduction
Business within the UK market has attracted the growth of various companies within the
market and this is also spread across the international business market platform. There are many
Table of Contents
Introduction...............................................................................................................................................2
LO1 Different types of Organizations......................................................................................................3
1.1 Tesco PLC description........................................................................................................................4
1.2 Asda Stores Ltd............................................................................................................................5
1.3 Barclaysbank......................................................................................................................................6
1.4 Sainsbury’s.........................................................................................................................................7
LO2 Organizational structure and organizational functions.................................................................8
LO3 Tesco microenvironment analysis..................................................................................................10
3.1 PESTLE Analysis of Tesco..................................................................................................................10
3.1.1 Political.....................................................................................................................................10
3.1.2 Economic..................................................................................................................................11
3.1.3 Social.........................................................................................................................................11
3.1.4 Technological............................................................................................................................12
3.1.5 Environmental..........................................................................................................................12
3.1.6 Legal..........................................................................................................................................13
3.2 Tesco SWOT Analysis.......................................................................................................................13
3.2.1 The strength of Tesco...............................................................................................................13
3.2.2 Weaknesses of Tesco................................................................................................................14
3.2.3 Opportunities............................................................................................................................14
3.2.4 Threats......................................................................................................................................14
LO4 The impact of micro and macro environment on Tesco...............................................................15
4.1 Microenvironment impact on Tesco................................................................................................15
4.2 Impact of the macro environment on the Tesco strategic direction................................................16
Conclusion................................................................................................................................................17
References................................................................................................................................................18
Introduction
Business within the UK market has attracted the growth of various companies within the
market and this is also spread across the international business market platform. There are many
Management 3
different types of organization within the UK market operating within different industries. Tesco
Limited is one of the largest companies in the UK market will larger operation revenue. In
addition, the organization has a larger number of employees and stores spread across the
international business environment. The company operates within the retail market, online
business and financial market. Some of the competitors of Tesco are Sainsbury's, Barclay's bank,
and Asda stores. Asda stores are primarily a retail store and compete with Tesco on the retail
category and the second largest store after Tesco. Sainsbury's is a diversified organization that
competes with Tesco at the retail industry and at the financial category through its Sainsbury’s
Bank. Lastly, Barclays Bank is a financial institution and majorly competitor of Tesco in the
banking industry. The organizational structure show interrelationwith the organizational
functions and position that performs these functions. Another area that has influence in the
operation of the company is the macro and microenvironment that affects performance leading to
the achievement of strategic objectives. The following paper analyses operations of Tesco
Limited incomparison with its three competitors.
LO1 Different types of Organizations
There are different types of competitors that operate different types of businesses that
range from banking, retail and many other types of businesses. The three competitors are Asda
Store Ltd, Barclays Bank and Sainsbury’s.
different types of organization within the UK market operating within different industries. Tesco
Limited is one of the largest companies in the UK market will larger operation revenue. In
addition, the organization has a larger number of employees and stores spread across the
international business environment. The company operates within the retail market, online
business and financial market. Some of the competitors of Tesco are Sainsbury's, Barclay's bank,
and Asda stores. Asda stores are primarily a retail store and compete with Tesco on the retail
category and the second largest store after Tesco. Sainsbury's is a diversified organization that
competes with Tesco at the retail industry and at the financial category through its Sainsbury’s
Bank. Lastly, Barclays Bank is a financial institution and majorly competitor of Tesco in the
banking industry. The organizational structure show interrelationwith the organizational
functions and position that performs these functions. Another area that has influence in the
operation of the company is the macro and microenvironment that affects performance leading to
the achievement of strategic objectives. The following paper analyses operations of Tesco
Limited incomparison with its three competitors.
LO1 Different types of Organizations
There are different types of competitors that operate different types of businesses that
range from banking, retail and many other types of businesses. The three competitors are Asda
Store Ltd, Barclays Bank and Sainsbury’s.
Management 4
Figure 1: Market share for major retailers
1.1 Tesco PLC description
Tesco is a Britishretailer that deals in different types of general merchandise and
groceries that are based at Welwyn Garden City. Many reports have ranked Tesco as the third
largest retail company within the country. The size of the company is considerably large
reaching seven Asian and Europe countries despite being the largest grocery within the UK. The
company has a market share of 30.6 percent making it leads other organizations in the category
of groceries (Tesco PLC 2019).
The background of the organization can be traced back to 1919 when the company was
founded as a group of a market stall. The organization opened its first shop in 1931 from where it
has expanded to reach more than 100 retail shops across the country. The company has also
reached more than eleven countries throughout the world and is currently selling more products
Figure 1: Market share for major retailers
1.1 Tesco PLC description
Tesco is a Britishretailer that deals in different types of general merchandise and
groceries that are based at Welwyn Garden City. Many reports have ranked Tesco as the third
largest retail company within the country. The size of the company is considerably large
reaching seven Asian and Europe countries despite being the largest grocery within the UK. The
company has a market share of 30.6 percent making it leads other organizations in the category
of groceries (Tesco PLC 2019).
The background of the organization can be traced back to 1919 when the company was
founded as a group of a market stall. The organization opened its first shop in 1931 from where it
has expanded to reach more than 100 retail shops across the country. The company has also
reached more than eleven countries throughout the world and is currently selling more products
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Management 5
under the portfolio of clothes, books, electronics, furniture, software and telecoms among many
other products (Kelly 2013).
The company is currently ranked the largest company within the company after
suppressingAsda and Sainsbury’s stores. The size of the company is large with 6569 shops found
in different locations and with many different headquarters (Ryle 2013). Currently, the company
has more than 460, 000 employees and operating under the income of £1,644 million, a total of
£57, 491 million revenue making a net income of approximately, £1,208 as at 2018. Tesco has
more than nine subsidiaries operating under different business portfolios but under the Tesco
brand.Some of the common subsidiaries include Tesco Stores Ltd, Tesco Bank, Tesco Family
Dining Ltd and Tesco Mobile among others. Some products that are sold under the Tesco brand
are superstores, supermarket, convenience store and hypermarket (Mason & Barry 2015).
The strategic plan of Tescoincludes vision, mission and business objectives. The mission
of the Tesco is anchored on the statement “We make what matters better together”. The core
value of the company is based on the need to treat everyone the way one needs to be treated
(Wood 2010). This implies that customers are treated as they expect to be treated well. The
vision of the organization is based on what is needed, a growing business, modern and
innovative, winning locally and globally, and inspiring and earning at the same time from the
loyalty of customers (Euromonitor 2012).
1.2 Asda Stores Ltd
Asda is another UK based retail store that has its headquarter at Leeds, West Yorkshire
UK. The company was founded in 1949 through merger of supermarket and Associated Dairies
under the portfolio of clothes, books, electronics, furniture, software and telecoms among many
other products (Kelly 2013).
The company is currently ranked the largest company within the company after
suppressingAsda and Sainsbury’s stores. The size of the company is large with 6569 shops found
in different locations and with many different headquarters (Ryle 2013). Currently, the company
has more than 460, 000 employees and operating under the income of £1,644 million, a total of
£57, 491 million revenue making a net income of approximately, £1,208 as at 2018. Tesco has
more than nine subsidiaries operating under different business portfolios but under the Tesco
brand.Some of the common subsidiaries include Tesco Stores Ltd, Tesco Bank, Tesco Family
Dining Ltd and Tesco Mobile among others. Some products that are sold under the Tesco brand
are superstores, supermarket, convenience store and hypermarket (Mason & Barry 2015).
The strategic plan of Tescoincludes vision, mission and business objectives. The mission
of the Tesco is anchored on the statement “We make what matters better together”. The core
value of the company is based on the need to treat everyone the way one needs to be treated
(Wood 2010). This implies that customers are treated as they expect to be treated well. The
vision of the organization is based on what is needed, a growing business, modern and
innovative, winning locally and globally, and inspiring and earning at the same time from the
loyalty of customers (Euromonitor 2012).
1.2 Asda Stores Ltd
Asda is another UK based retail store that has its headquarter at Leeds, West Yorkshire
UK. The company was founded in 1949 through merger of supermarket and Associated Dairies
Management 6
company within Yorkshire. The company was ranked the second largest retailer in the UK in
2003 and 2014. The company is currently the second largest company after Tesco since 2019
where it has regained its growth momentum.The company was acquired by Walmart and has
remained within the second position interchangeably with Sainsbury’s in the UK market. Since
the acquisition of the company, Asda has remained operational on its brand name thereby
gaining a brand position within the market (Ruddick 2014).
Size of the company is equally large being the second largest retail store as of 2019 in the
UK. The company has more than 633 stores located across the country and is operating four
common products. These products are grocery, general merchandise and financial services
leading to total revenue of £21,666 million as of 2016. The operating income of £791.7 million
and a total of 165,000 employees. The company is a subsidiary of Walmart and also has two
main subsidiaries called Asda Mobile and Asda Money (Smithers 2018).
1.3 Barclaysbank
Barclays Bank is another competitor of Tesco under the financial categories and has been
a financial institution for many years.Barclays bank is a financial and investment organization
that offer various financial services to customers in the country. The bank is based in London
from where it offers services such as personal banking, corporate banking, investment
management, and wealth management services. The company traces its background to 1690
when it started financial services to goldsmiths in London. The bank has since been able to
spread to other parts of the country and is currently multinational bank with more than 79000
employees (Yan 2014).
company within Yorkshire. The company was ranked the second largest retailer in the UK in
2003 and 2014. The company is currently the second largest company after Tesco since 2019
where it has regained its growth momentum.The company was acquired by Walmart and has
remained within the second position interchangeably with Sainsbury’s in the UK market. Since
the acquisition of the company, Asda has remained operational on its brand name thereby
gaining a brand position within the market (Ruddick 2014).
Size of the company is equally large being the second largest retail store as of 2019 in the
UK. The company has more than 633 stores located across the country and is operating four
common products. These products are grocery, general merchandise and financial services
leading to total revenue of £21,666 million as of 2016. The operating income of £791.7 million
and a total of 165,000 employees. The company is a subsidiary of Walmart and also has two
main subsidiaries called Asda Mobile and Asda Money (Smithers 2018).
1.3 Barclaysbank
Barclays Bank is another competitor of Tesco under the financial categories and has been
a financial institution for many years.Barclays bank is a financial and investment organization
that offer various financial services to customers in the country. The bank is based in London
from where it offers services such as personal banking, corporate banking, investment
management, and wealth management services. The company traces its background to 1690
when it started financial services to goldsmiths in London. The bank has since been able to
spread to other parts of the country and is currently multinational bank with more than 79000
employees (Yan 2014).
Management 7
The size of the company is large with many branches spread across the world through its
London head office. The bank has three main divisions namely, Barclays Wealth, Barclays
investment and Barclays card. The company has its operations organized into two main clusters
and these include corporate and investment banking is grouped together with wealth and
investment while the other cluster is retail and investment portfolio (Wallace 2016).
The organization structure is based on the mentioned clusters of the company that enables
the company to compete within the financial sector. Firstly, the corporate and investment
banking together with wealth and management forms cluster with various products and services.
Some of these services include corporate banking, investment management, investment banking
and wealth management. Secondly, the retail and business banking forms another cluster with
services such as Barclaycard, Africa banking, business banking, UK retail and Europe banking
(Vitali, Glattfelder & Battiston 2011).
1.4 Sainsbury’s
Sainsbury’s is one of the largest retail stores within the UK and is currently ranked as the
second-best retailer in the country. The company control market share of at least 16.1% of the
retail market. The company has often been ranked interchangeable with Asdawithin the market
and is currently ahead of Asda (Tovey 2018). The strength of the company is based on its
customer-friendly culture that enable the company to attract a large number of customers within
the country. Sainsbury’s has more than 1415 stores spread across the country more than the close
rival Asda Stores Ltd. The company has a strong online store that is fairly competing with
market leader Tescolimited. The company has products such as hypermarket, forecourt shop,
superstore, and convenience shop. The company over the past years come up with subsidiaries
The size of the company is large with many branches spread across the world through its
London head office. The bank has three main divisions namely, Barclays Wealth, Barclays
investment and Barclays card. The company has its operations organized into two main clusters
and these include corporate and investment banking is grouped together with wealth and
investment while the other cluster is retail and investment portfolio (Wallace 2016).
The organization structure is based on the mentioned clusters of the company that enables
the company to compete within the financial sector. Firstly, the corporate and investment
banking together with wealth and management forms cluster with various products and services.
Some of these services include corporate banking, investment management, investment banking
and wealth management. Secondly, the retail and business banking forms another cluster with
services such as Barclaycard, Africa banking, business banking, UK retail and Europe banking
(Vitali, Glattfelder & Battiston 2011).
1.4 Sainsbury’s
Sainsbury’s is one of the largest retail stores within the UK and is currently ranked as the
second-best retailer in the country. The company control market share of at least 16.1% of the
retail market. The company has often been ranked interchangeable with Asdawithin the market
and is currently ahead of Asda (Tovey 2018). The strength of the company is based on its
customer-friendly culture that enable the company to attract a large number of customers within
the country. Sainsbury’s has more than 1415 stores spread across the country more than the close
rival Asda Stores Ltd. The company has a strong online store that is fairly competing with
market leader Tescolimited. The company has products such as hypermarket, forecourt shop,
superstore, and convenience shop. The company over the past years come up with subsidiaries
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Management 8
such as Sainsbury’s Bank, Argos, Habitat, Nectar and Sainsbury’s supermarket. Currently, the
company has more than 186 900 employees as of 2018 and controls a total of £28,456 billion in
revenue (Museum of London 2012).
The company slogan is based on the statement live well for less that also drive the idea of
the relatively cheaper cost of goods within the store.The management of the company is lead by
CEO as the top management and the company has passed through numerous CEOs since its
founding date. The company has been trading in a number located within the country and
advocate for the low cost of good among its stores. The organizational structure of the company
majorly consists of various division that operates under the Sainsbury's brand. These functional
divisions include Sainsbury’s Bank. In addition, the company has been operating other acquired
stores autonomously under the brand name of Sainsbury’s. Sainsbury’s development of
Sainsbury’s bank has been enabling the company to compete well with Tesco a larger market
retailer and financial institution (Butler 2016).
LO2 Organizational structure and organizational functions
Tesco organizational structure is hierarchical that interrelate with position and functions.
The organizational structure composes of board members and executive members each
performing a specific function. The organization is large in size and there has diversified
organizational structure that enables the company to manage its corporate functions (Johnston,
Clark & Shulver 2012). The executive members of the organization management are the office
bearers and include financial officer, directors, CEO, staffs. The company organization structure
furtherconsists of the management of various functional divisions that include subsidiaries
(Wood 2015). For instance, the Tesco bank has a different structure that fits the banking or
such as Sainsbury’s Bank, Argos, Habitat, Nectar and Sainsbury’s supermarket. Currently, the
company has more than 186 900 employees as of 2018 and controls a total of £28,456 billion in
revenue (Museum of London 2012).
The company slogan is based on the statement live well for less that also drive the idea of
the relatively cheaper cost of goods within the store.The management of the company is lead by
CEO as the top management and the company has passed through numerous CEOs since its
founding date. The company has been trading in a number located within the country and
advocate for the low cost of good among its stores. The organizational structure of the company
majorly consists of various division that operates under the Sainsbury's brand. These functional
divisions include Sainsbury’s Bank. In addition, the company has been operating other acquired
stores autonomously under the brand name of Sainsbury’s. Sainsbury’s development of
Sainsbury’s bank has been enabling the company to compete well with Tesco a larger market
retailer and financial institution (Butler 2016).
LO2 Organizational structure and organizational functions
Tesco organizational structure is hierarchical that interrelate with position and functions.
The organizational structure composes of board members and executive members each
performing a specific function. The organization is large in size and there has diversified
organizational structure that enables the company to manage its corporate functions (Johnston,
Clark & Shulver 2012). The executive members of the organization management are the office
bearers and include financial officer, directors, CEO, staffs. The company organization structure
furtherconsists of the management of various functional divisions that include subsidiaries
(Wood 2015). For instance, the Tesco bank has a different structure that fits the banking or
Management 9
financial market as compared to Tesco mobile product line. Furthermore, the organization
through its online functional unit has tried to integrate most of its products to include its core
business linked to online business. This is complex and affects most of the functional units of the
business. For instance, integrating the Tesco bank with a retail store is complex and is
determined by the organizational structure of the company (Ghani 2012).
Figure 2: Tesco Organization structure
The organizational structure of Tesco has been criticized for its complexity and its
relationship to the organization's performance in the market. The organization structure that is
used by Tesco has operational efficiencies that determine performance in the market. The
organization structure of Tesco is almost similar to that of Sainsbury’s a close competitor that
has also diversified its product portfolio to include financial services.Asda stores have a bit
different organizational structure that is also interlinked to its function since Asda is a subsidiary
financial market as compared to Tesco mobile product line. Furthermore, the organization
through its online functional unit has tried to integrate most of its products to include its core
business linked to online business. This is complex and affects most of the functional units of the
business. For instance, integrating the Tesco bank with a retail store is complex and is
determined by the organizational structure of the company (Ghani 2012).
Figure 2: Tesco Organization structure
The organizational structure of Tesco has been criticized for its complexity and its
relationship to the organization's performance in the market. The organization structure that is
used by Tesco has operational efficiencies that determine performance in the market. The
organization structure of Tesco is almost similar to that of Sainsbury’s a close competitor that
has also diversified its product portfolio to include financial services.Asda stores have a bit
different organizational structure that is also interlinked to its function since Asda is a subsidiary
Management 10
of the Walmart company. Asda has therefore been linked to its parent store leading to another
organization structure that rests on its market functions. The complexity of the organizational
structure of Asda is based on the interrelationship with the parent store Walmart (Duncan 2015).
LO3 Tesco microenvironment analysis
The macro environment where Tesco operates has both positive and negative influence in
the operation of the company. Macro environment of Tesco require understanding political,
economic, social, technological environmental and legal factors and this forms the basis of
PESTLE Analysis (Freeman 2010).
3.1 PESTLE Analysis of Tesco
3.1.1 Political
The politicalenvironment of the UK has changed over the past period of time that has an
impact on the operation of Tesco Ltd in the market. Firstly, the government increased VAT tax
in 2011 and this has increased the price of products leading to a falling in demand. The sale
revenue to the company therefore, significantly fall following the government policy (Hartley-
Brewer & Merrick 2015). In addition, the adoption of overweight measures of the government
reduces purchases of food products that may cause obesity leading to low sales. Secondly, the
government of the UK has recently developed measures to improve the economy of the country
in order to realize a favorable economicenvironment that enables Tesco to excel. For example,
the government increased VAT tax from 17.5% to 20% thereby increasing the price of the
product sold withinTesco retail stores (Brooks 2013).
of the Walmart company. Asda has therefore been linked to its parent store leading to another
organization structure that rests on its market functions. The complexity of the organizational
structure of Asda is based on the interrelationship with the parent store Walmart (Duncan 2015).
LO3 Tesco microenvironment analysis
The macro environment where Tesco operates has both positive and negative influence in
the operation of the company. Macro environment of Tesco require understanding political,
economic, social, technological environmental and legal factors and this forms the basis of
PESTLE Analysis (Freeman 2010).
3.1 PESTLE Analysis of Tesco
3.1.1 Political
The politicalenvironment of the UK has changed over the past period of time that has an
impact on the operation of Tesco Ltd in the market. Firstly, the government increased VAT tax
in 2011 and this has increased the price of products leading to a falling in demand. The sale
revenue to the company therefore, significantly fall following the government policy (Hartley-
Brewer & Merrick 2015). In addition, the adoption of overweight measures of the government
reduces purchases of food products that may cause obesity leading to low sales. Secondly, the
government of the UK has recently developed measures to improve the economy of the country
in order to realize a favorable economicenvironment that enables Tesco to excel. For example,
the government increased VAT tax from 17.5% to 20% thereby increasing the price of the
product sold withinTesco retail stores (Brooks 2013).
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Management 11
3.1.2 Economic
The economic environment within the UK market has a positive and negative influence
on the operation of Tesco. The economic growth of the country has seen Tesco realizing growth
as the company remains the largest in the retail industry. The estimated growth of the UK
economy was 2.7% which reflect a positive growth rate transferred to the operations of the retail
business. Secondly, as the UK was in the economic recession, Tesco was affected as customers
had low spending and the result was low sales revenue. Labor cost is another economic factor
that affects the remuneration of staffs working withinTesco. For instance, the government
increases the wage by 4.4% in 2018 to forms the minimum wage rate and this affects the wage
bill of Tesco (Farrell 2015).
3.1.3 Social
Consumer trend and population composition are social determinants of shopping
withinTesco. The composition of the population of the UK is majorly elderly and the aged
population is increasing which has an effect on the taste of products that Tesco sales. Firstly, the
increase in elderly people within the country has led to a flourish of online business launched by
Tesco as products could be delivered to elderly people in their residents. Moreover, elderly
people within the country has high income that increases the spending on Tesco products.
Secondly, the negative effect of the aged population is based on the change in taste as this affects
the sale of some products. Matching the taste of these population can sometimes be difficult as
the company has to spend time understanding the preference of population. For instance, obesity
is a social issue that has affected the shopping trend within the UK since the government came
up with a measure to reduce obesity (Tesco PLC 2014).
3.1.2 Economic
The economic environment within the UK market has a positive and negative influence
on the operation of Tesco. The economic growth of the country has seen Tesco realizing growth
as the company remains the largest in the retail industry. The estimated growth of the UK
economy was 2.7% which reflect a positive growth rate transferred to the operations of the retail
business. Secondly, as the UK was in the economic recession, Tesco was affected as customers
had low spending and the result was low sales revenue. Labor cost is another economic factor
that affects the remuneration of staffs working withinTesco. For instance, the government
increases the wage by 4.4% in 2018 to forms the minimum wage rate and this affects the wage
bill of Tesco (Farrell 2015).
3.1.3 Social
Consumer trend and population composition are social determinants of shopping
withinTesco. The composition of the population of the UK is majorly elderly and the aged
population is increasing which has an effect on the taste of products that Tesco sales. Firstly, the
increase in elderly people within the country has led to a flourish of online business launched by
Tesco as products could be delivered to elderly people in their residents. Moreover, elderly
people within the country has high income that increases the spending on Tesco products.
Secondly, the negative effect of the aged population is based on the change in taste as this affects
the sale of some products. Matching the taste of these population can sometimes be difficult as
the company has to spend time understanding the preference of population. For instance, obesity
is a social issue that has affected the shopping trend within the UK since the government came
up with a measure to reduce obesity (Tesco PLC 2014).
Management 12
3.1.4 Technological
The technologicalenvironment within the UK market is a key determinant of the
operations of Tesco. Tesco Ltd has highly invested in technology as the company uses
information technology to manage its supply chain. Firstly, the advancement of technology
within the UK market has place Tesco ahead of its competitors within the market. The company
has used its technologies to reach more customers through the online store within the country
and regionally. In addition, technologies help the company to integrate its business portfolios
within the core company management. Mobiletechnologies, for instance, has increased the use of
mobile to select products sold within Tesco stores. Secondly, the negative impact of technology
is based on the disruptive technology that may result in customers moving to old technologies as
compared to new ones used by the company. For instance, Tesco has RFID technology that
assists customers shop withinTesco stores (Tesco PLC 2014a).
3.1.5 Environmental
The UK is a country that value the environmental policies that are set by international
communities and this has an effect on business operating within this market. Tesco is highly
influenced by environmental policies in both a positive and negative way. Firstly, the company
has adopted a sustainability policy that aims to complies with the requirement of
environmentalsustainability. The company has a sustainable policy that consider clean energy
consumption, reduction of greenhouse gases and limited waste production. The company over
the past has restructured its stores in compliance with environmental requirements. For example,
Tesco has 50% carbon footprint by 2020 as an environmental plan (Zhao 2014).
3.1.4 Technological
The technologicalenvironment within the UK market is a key determinant of the
operations of Tesco. Tesco Ltd has highly invested in technology as the company uses
information technology to manage its supply chain. Firstly, the advancement of technology
within the UK market has place Tesco ahead of its competitors within the market. The company
has used its technologies to reach more customers through the online store within the country
and regionally. In addition, technologies help the company to integrate its business portfolios
within the core company management. Mobiletechnologies, for instance, has increased the use of
mobile to select products sold within Tesco stores. Secondly, the negative impact of technology
is based on the disruptive technology that may result in customers moving to old technologies as
compared to new ones used by the company. For instance, Tesco has RFID technology that
assists customers shop withinTesco stores (Tesco PLC 2014a).
3.1.5 Environmental
The UK is a country that value the environmental policies that are set by international
communities and this has an effect on business operating within this market. Tesco is highly
influenced by environmental policies in both a positive and negative way. Firstly, the company
has adopted a sustainability policy that aims to complies with the requirement of
environmentalsustainability. The company has a sustainable policy that consider clean energy
consumption, reduction of greenhouse gases and limited waste production. The company over
the past has restructured its stores in compliance with environmental requirements. For example,
Tesco has 50% carbon footprint by 2020 as an environmental plan (Zhao 2014).
Management 13
3.1.6 Legal
UK market has some laws that affect the operation of the business and Tesco is one of the
largest companies within the country is affected by these laws. Firstly, the government of the UK
has adopted laws that increase subsidies to farmers and this is positive to Tesco which rely on
farmers for grocery products. Most food products that are sold within stores are sourced from
farmers and this will reduce the cost of food products supplied to the company. Secondly, Tesco
being a financial institution has been affected by the Financial Act enacted by the government in
2012 that regulates loans, credits, and other banking services. In addition, the Prudential
Regulatory Authority seeks to reduce the impact of disruptive financial services (Tesco PLC
2014).
3.2 Tesco SWOT Analysis
Tesco as an organization has both strength and weakness that interact with the external
environment to affect the performance and operation of the company.
3.2.1 The strength of Tesco
The company is the leading market share holder within the UK market and this increase
the performance of the company in the market. The company has a diversified product portfolio
that increase the performance of the company within the market as a failure of one product is
offset by the performance of another product. Product diversification as the internal strength of
the organization enables customers to choose the product they want hence increase share
(Krajewski, Ritzman & Malhorta 2013).
3.1.6 Legal
UK market has some laws that affect the operation of the business and Tesco is one of the
largest companies within the country is affected by these laws. Firstly, the government of the UK
has adopted laws that increase subsidies to farmers and this is positive to Tesco which rely on
farmers for grocery products. Most food products that are sold within stores are sourced from
farmers and this will reduce the cost of food products supplied to the company. Secondly, Tesco
being a financial institution has been affected by the Financial Act enacted by the government in
2012 that regulates loans, credits, and other banking services. In addition, the Prudential
Regulatory Authority seeks to reduce the impact of disruptive financial services (Tesco PLC
2014).
3.2 Tesco SWOT Analysis
Tesco as an organization has both strength and weakness that interact with the external
environment to affect the performance and operation of the company.
3.2.1 The strength of Tesco
The company is the leading market share holder within the UK market and this increase
the performance of the company in the market. The company has a diversified product portfolio
that increase the performance of the company within the market as a failure of one product is
offset by the performance of another product. Product diversification as the internal strength of
the organization enables customers to choose the product they want hence increase share
(Krajewski, Ritzman & Malhorta 2013).
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Management 14
3.2.2 Weaknesses of Tesco
Internal operational weaknesses of Tescois increasing making the external environment
of the company become weaker. Poor organizational reporting that results in the
misrepresentation of company profits caused the company to be charged with fraud in
2017.Misrepresentation of profit is also connected to poor internal management and is a
weakness that makes the company ruin its reputation in the market. Poor integration with other
subsidiaries has been a major weakness of the company that leads to loss when Tesco sold
Giraffe restaurant due to lack of integration. The integration of the company with other business
influence a company's market share prices as subsidiaries is reported to trade at lower market
shares (Zhao 2014).
3.2.3 Opportunities
The diversification of products is offering Tesco many opportunities in the UK market
that may result in high performance of the organization. Tesco has the opportunity to perform
more in the market through diversification of the banking product portfolios as this will help the
company to compete with competitors such as Barclays Bank. The company has another
opportunity to take a larger market share in the online business that will enable the company to
compete favorably in the market with companies such as Asda and Aldi stores. Moreover, due to
its market share, the company has the opportunity to introduce a premium range of products to
the already available market. For instance, research shows that more than half of UK customers
normally spend their time online and this could act as a market for Tesco (Simpson 2014).
3.2.4 Threats
3.2.2 Weaknesses of Tesco
Internal operational weaknesses of Tescois increasing making the external environment
of the company become weaker. Poor organizational reporting that results in the
misrepresentation of company profits caused the company to be charged with fraud in
2017.Misrepresentation of profit is also connected to poor internal management and is a
weakness that makes the company ruin its reputation in the market. Poor integration with other
subsidiaries has been a major weakness of the company that leads to loss when Tesco sold
Giraffe restaurant due to lack of integration. The integration of the company with other business
influence a company's market share prices as subsidiaries is reported to trade at lower market
shares (Zhao 2014).
3.2.3 Opportunities
The diversification of products is offering Tesco many opportunities in the UK market
that may result in high performance of the organization. Tesco has the opportunity to perform
more in the market through diversification of the banking product portfolios as this will help the
company to compete with competitors such as Barclays Bank. The company has another
opportunity to take a larger market share in the online business that will enable the company to
compete favorably in the market with companies such as Asda and Aldi stores. Moreover, due to
its market share, the company has the opportunity to introduce a premium range of products to
the already available market. For instance, research shows that more than half of UK customers
normally spend their time online and this could act as a market for Tesco (Simpson 2014).
3.2.4 Threats
Management 15
Stiff competition that is posed by the company rival competitors that sells low-cost
products such as Aldi and Lidl cause threat to Tesco. Price increase of major products sold
within Tesco stores has caused fall in the customers base and sale. The company has, therefore,
losing customers to rival companies that sell low-cost products to customers. In addition, the
company has been affecting with the Britain relationship with the EU as the company has
international operation scope.The relationship between Britain and other companies has,
therefore, resulted in poor company international operations especially the supply of goods
(Datamonitor 2011).
LO4 The impact of micro and macro environment on Tesco
4.1 Microenvironment impact on Tesco
Tesco has micro-environmental factors that play an important role in the growth and
attainment of the strategic objectives of the company. Firstly, the operational management of the
company particularly the integration of the internal operations with the external factors play an
important role in strategic attainment. In addition, the company reporting has to lead to poor
growth objective of the company leading to a declining in brand value. Secondly, the company’s
strength especially the market share of the company is linked to internal success factors and has
contributed to achieving growth objectives (Henry 2011). Thirdly, the company product
diversification is another area that has enabled the company to make a decision regarding the
business acquisition. The company has growth objective and microenvironmental factors such as
product diversification have an impact on decision making. Lastly, the opportunities that the
organization has influenced the decision on the type of online market requirement. The company
Stiff competition that is posed by the company rival competitors that sells low-cost
products such as Aldi and Lidl cause threat to Tesco. Price increase of major products sold
within Tesco stores has caused fall in the customers base and sale. The company has, therefore,
losing customers to rival companies that sell low-cost products to customers. In addition, the
company has been affecting with the Britain relationship with the EU as the company has
international operation scope.The relationship between Britain and other companies has,
therefore, resulted in poor company international operations especially the supply of goods
(Datamonitor 2011).
LO4 The impact of micro and macro environment on Tesco
4.1 Microenvironment impact on Tesco
Tesco has micro-environmental factors that play an important role in the growth and
attainment of the strategic objectives of the company. Firstly, the operational management of the
company particularly the integration of the internal operations with the external factors play an
important role in strategic attainment. In addition, the company reporting has to lead to poor
growth objective of the company leading to a declining in brand value. Secondly, the company’s
strength especially the market share of the company is linked to internal success factors and has
contributed to achieving growth objectives (Henry 2011). Thirdly, the company product
diversification is another area that has enabled the company to make a decision regarding the
business acquisition. The company has growth objective and microenvironmental factors such as
product diversification have an impact on decision making. Lastly, the opportunities that the
organization has influenced the decision on the type of online market requirement. The company
Management 16
has the opportunity to increase its online market and this will enable the company to achieve its
strategic objective (Heizer & Render 2011).
4.2 Impact of the macro environment on the Tesco strategic
direction
The external environment of the company has a huge impact on the strategic direction of
the company in the market. Firstly, the political environment of the country affects the policies
that are developed by the company. The objective of the company is to grow both locally and
globally a move that highly influences the government relationship with the international
community. Secondly, the environmental policy of the country has influenced the operation of
Tesco as the company has to develop its policies in compliance with the requirement (Kotler,
Armostron, Agnihotri & Huque 2012). Thirdly, the legal development especially the recent
financial acts and other financial regulatory enactments has an impact in the Tesco bank
operations. This requires high company efficiencies in the banking industry in order to realize its
objectives of making the customer happy. Economical environmenthas influence in the decision
making especially when deciding the product prices. The economic growth rate, for instance,
determines the growth of retail industry where Tesco is a market leader and this influence the
product prices. Technological factors within the UK market has influenced the decision-making
process as the companyincreases its technological capability to meet the current business
requirement. Moreover, some products of Tesco are majorly technological such as mobile
portfolio relay in technology and all decision are made based on technological factors
(Aboubacar 2012).
has the opportunity to increase its online market and this will enable the company to achieve its
strategic objective (Heizer & Render 2011).
4.2 Impact of the macro environment on the Tesco strategic
direction
The external environment of the company has a huge impact on the strategic direction of
the company in the market. Firstly, the political environment of the country affects the policies
that are developed by the company. The objective of the company is to grow both locally and
globally a move that highly influences the government relationship with the international
community. Secondly, the environmental policy of the country has influenced the operation of
Tesco as the company has to develop its policies in compliance with the requirement (Kotler,
Armostron, Agnihotri & Huque 2012). Thirdly, the legal development especially the recent
financial acts and other financial regulatory enactments has an impact in the Tesco bank
operations. This requires high company efficiencies in the banking industry in order to realize its
objectives of making the customer happy. Economical environmenthas influence in the decision
making especially when deciding the product prices. The economic growth rate, for instance,
determines the growth of retail industry where Tesco is a market leader and this influence the
product prices. Technological factors within the UK market has influenced the decision-making
process as the companyincreases its technological capability to meet the current business
requirement. Moreover, some products of Tesco are majorly technological such as mobile
portfolio relay in technology and all decision are made based on technological factors
(Aboubacar 2012).
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Management 17
Conclusion
In conclusion, business operations require an understanding of various macro and micro
environmental factors. The organizational structure of an organization is a major contributor to
success especially in terms of functions and decision-making process. Tesco is a market leader
with a diversified product portfolio that has been designed to help the organization compete with
other businesses such as Sainsbury’s, Asda, and Barclays Bank in the market. The company’s
strength and weaknessescontribute largely to the success of the organization in the external
environment. Different types of organizations have different types of organizational structure
that in turn contribute to organization market competition and performance. The complexity of
the organizational structure reflects the size of the organization and its functional divisions.
Conclusion
In conclusion, business operations require an understanding of various macro and micro
environmental factors. The organizational structure of an organization is a major contributor to
success especially in terms of functions and decision-making process. Tesco is a market leader
with a diversified product portfolio that has been designed to help the organization compete with
other businesses such as Sainsbury’s, Asda, and Barclays Bank in the market. The company’s
strength and weaknessescontribute largely to the success of the organization in the external
environment. Different types of organizations have different types of organizational structure
that in turn contribute to organization market competition and performance. The complexity of
the organizational structure reflects the size of the organization and its functional divisions.
Management 18
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Management 19
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Management 20
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Management 21
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Management 22
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