Business Environment: Tesco's Governance, Structure, and PESTEL Analysis

This report provides an overview of Tesco's governance and structure, evaluates the importance of PESTEL analysis, and analyzes the external environment using the PESTEL framework. It examines the political, economic, social, technological, environmental, and legal factors impacting Tesco's performance.

Business Environment

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Task 1 ..............................................................................................................................................3
Examine how your chosen company is governed and structured...............................................3
Task 2 ..............................................................................................................................................5
Evaluate the importance of carrying out PESTEL analysis for an organisation.........................5
Task 3 ..............................................................................................................................................7
Use the PESTEL framework to analyse the external environment of your chosen company....7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
books and journals ....................................................................................................................10

INTRODUCTION
Business environment can be define as that area of business where the organization is
working with all its resource for achievement of business objectives by operating business longer
period of time (Alotaibi, 2016). There are various function in business which has to be perform
by business organisation in particular time for gaining maximum advantage for long period of
time. This all are related to business environment. The present report is cared on Tesco which is
a British multinational retail company and deals mainly in food and clothing products at global
level. The starting of this report is consist of a detail overview on Tesco where the organisational
structure used by Tesco is also discussed. In middle, importance for using PESTEL analysis will
be discussed. In the end of this report, there will be detailed dissection about the PESTEL
analysis of Tesco where it is trading.
MAIN BODY
Task 1
Examine how your chosen company is governed and structured.
Overview of Tesco
Tesco is leading retail giant in British markets as well as global world where it sales
variety of products to its customers and become the largest retailer in UK with more than 6500
stores. History of TESCO is very vast, it was started by Jack Cohen in 1919 as the line shop.
Company get its existence in retail market after Jack purchased tea from a listed company and
names it as Tesco (Bashir and Verma, 2017). In starting company is famous for selling war
surplus groceries in retail market. According to research it is seen that the period of 1950-60 is
golden period for this firm, where it expended its operations to global level as well as started
biding new organisation and stares in whole UK. Company also diverted its operation form part
time retailer to full time retailer where it boosted its product range. In current time Tesco is
serving as big retailer in global world where it also stared online sale of its products so that firm
can chive its best and can serve its quality products to each and every individual.
Organizational structure of Tesco
Tesco is leading organisational as well as it also performing its business functions at
global level so it is important for it to use effective organizational structure so that it can achieve
its business objectives. This is the reason that Tesco is using hierarchical structure in working so

that it can achieve all its business objective by managing it functionary for performing at global
level (Bereznoy, 2017). It is that type of organisational structure which help organization in
management and division of work in appropriate manner so that entire organization can be entitle
in one structure and can easy perform its function in at global level. This structure states that one
person will be superior in organisation and all other have company powers according to there
role in organisation.
Tesco includes 10 members in its board of directors currently and it changing
continuously. Tesco organisational structure is prone to changes where organisation change its
CEO and boards of directors continuously so that it can maintaining fresh talent in organisation
and can easy deal with motivation in BOD by doing so (Crowley and Jordan, 2017). From the
above mentioned figure it can be seen that Tesco is following hierarchical structure in
organisation to perform different task ans assignment of roles and responsibility to different
individuals within organisation so that management can easing the task to each and every
individual. Dave Lewis is serving as current CEO or Tesco. He joined company in September,
2014 as CEO. There are some names of people who are serving on different post in Tesco. These
are John Allan Non-executive Chairman, Dave Lewis Group Chief Executive, Alan Stewart
Chief Financial Officer and Deanna Oppenheimer Senior Independent Director.

The above mentioned chart shows the internal flaw of work ans structure within Tesco.
The flow of work starts from regional manager, where they work for maintenance of there staff
at region level. Than it goes to different manager in store manager where they has the
responsible to manage the work within there respective stores (Hillary, 2017). Further, tesco
divides its work in sub category where the work is divide on the basis of specialization in
different department to facilitate smoothness in work and manage productivity by elimination of
conflicts which can be arise due to improper allotment of work. This all help in management of
work and gaining advantage in qualified workforce to perform at global level by managing
success in competitive environment.
Task 2
Evaluate the importance of carrying out PESTEL analysis for an organisation
PESTEL analysis: It can be define as that kind of framework which is used by firm to
identification of different factors related to external environment where organisation is trading
and will help firm in management of different operation. This also help organisation
management of different function and making decision related to different polices which are use
by organisation current or going to use in near future for achievement of its business goals. This
framework includes study related to political, economic, social, technical, economic and legal

environment factors which will impact the working of organization and manage steps toward
success of its business operations by facilitating long run.
Importance of conducting PESTEL analysis by organisation
It is important framework which is use by organization to achieve its business objectives
and manage success by making effective decision-making in organisation. This also help firm in
achieving its business objectives. Below. There are some points which states the importance of
conducting PESTEL analysis.
Help in identification of business changes: This analysis help organisation in
identification of different changes within the outside work of organisation environment. This is
because it study various factors which can impact on performance of in respective marketplace.
This also use to identify the impact and help firm in framing polices in this concept and
ultimately help in identification of different challenges and task which are trending in outside
market.
Strategic planing: PESTEL is also important for organisation because it help firm in
management of different function which are related to strategic planing in organisation. This is
because it identify various factor which has there direct and indirect impact on functioning of
organisation, this all will help manage to know all these factors as well as their impact so
function of strategic planning can be performed (Holotiuk and Beimborn, 2017).
Cost reduction: One more importance of using this framework is that it help firm in
saving various type of cost. This is because, it clearly examine the trends which can impact
organisation negatively and must be consider to identify the trend. This will facilitate proper use
of resources and manage functioning in organisation so that firm can use its maximum benefits
and will lead to minimum wastage of resource. This minimum wastage ensure low cost and
reduce the cost of product and services.
Develop alertness: It is important for organisation to achieve its working requirements
and develop future alertness so that it can achieve its goals and objectives. Future alertness is
important for organization because it help firm in management of situations which can be arise
because of dynamic business environment and continuous changes in business practices. If
organisation use this analysis than it will be able to identify different function related to practices
alertness in organisation for unforeseen situations in business and time of complexity (Kolk,
2016).

Identification of opportunity: PESTEL is also important to business enterprises
because it also help them in garbing the opportunities which are presented in market where
organisations trading by using the resource. This is because while analysis it also identify various
kinds of opportunity which are going in market and can be use by organisation for making long
run. This will also help firm in management of different resource like it identify the trends in
business environment related to social factor and help in manage these function and trends
according to organisation where it can use them for maximization of sales and increase profitably
in market.
It can be evaluated the there are various benefits of and importance of PESTEL analysis
to business organization. This all will leads to maximization in profit as well as increase the
productivity where firm can perform the task and manage the work according to requirements of
clients and use the maximum part of there resource for achieving goals and objectives in timely
manner.
Task 3
Use the PESTEL framework to analyse the external environment of your chosen company
PESTEL framework for TESCO PLC
Political factors: Political factors are those which are directly rules regulations and
polices of government of there nation where organisation is going to start its business operation
or doing operation in current time so that it can achieve goals and objectives which it use to
identify it success. Tesco is leading organisation where it is operating its business in different
nation so it is important for organisation to deal with rules and regulation of each and every
country. There are two major political factor which are impacting on the performance of
organisation in retail industry. First, organisation have to deal with BRIXET. This impacting
both positively and negatively on organization. This is because, due to this organisation will get
new opposites to expand its business to different nation because of changes in polices of
government. This will also impact on preference of firm negatively because it has to form
various new rules and regulation because of changes in government polices (Korcsmáros and
Šimova, 2018). The other factor which impacting on performance of tesco is terrorism. This is
major factor in political factors which is impacting on performance of tesco in current business
environment as firm have to make policy changes in terrorism effective nations which mainly in

Arabian side where there is large market for Tesco to run its operation and grab different market
opportunities.
Economic factors: It includes those factors which are directly related to functioning of
organisation. There are various factors which has there impact on performance of tesco in
market. Some of there are , exchange rates , employment rate , GDP growth and many more. In
context of Tesco, the main business of organisation is in UK, where it is operating at more than
36% share. In retail industry there are various factor which can impact the perforce of
organisation and can impact on performance (Lu, Wang, H and Xu, 2019). The global economic
condition is one of those factor which is impacting on performance of tesco in current time. This
is impacting negatively on firm because there is slow demand in global market which leads to
decline in sale of products and services offered by organisation. Growth rate in UK is impacting
organisation in positive-manner to tesco because there is continues growth in it. Which help firm
in serving and managing its different functions. Due to higher growth in UK, it serves tesco to
use expedition policy in organization and can manage the loss arise because of low economic
growth on global level.
Social factors: It incudes all those factors which are related to society where the firm is
trading currently. All the social factor which are around the business of organisation like culture,
trend, social behalves and many other factors are included in it. Tesco is global firm so it have to
deal with all social factors related to various nation and there culture. Tesco also faces various
kind of social factors as well as there direct and indirect impact on functioning of organisation.
This can be seen that is major impact of social factor on Tesco is because of changes in trends
within society. Here, There is continuous changes in social trends related to taste preference and
choice of individual of different products offered by Tesco. These impact Tesco negativity as it
give rise to various problems related to dead stock. This will leads to decline in profit of firm
because of dead stock.
Technological factor: Technology is key to success for every origination in current
times this is because it help organisation in increasing the efficiency of individuals and managing
them towards particular direction. This facto includes all the changes and new development in
technology which will help business in smothering its functions as well as achieve goals and
objectives in timely manner (Saleem, 2017). In relation to tesco, it is performing its function in
an effective manner so that it can achieve all its target related to technological development.

Firm is prone to develop technology which help it remaining in business and increasing worth of
organisation in market. This also impact negatively on organization because regular changes can
impact on cost and will decrease net profit of organisation.
Environment factor: It include those factor which are directly related to function of
organisation towards environment. These are climate, nature and geographic condition where the
business organisation is operation to earn profits. In context of tesco, organisation fulfilling its
liability regarding environment and also maintain its function where it is performing various kind
of function to promote environment protection. Tesco is using various solar energy in
organisation so that it can contribute towards environment. This also help organisation to build
sound image in market and impacting positivity on organisation.
Legal factor: This includes those factor which are directly related to organisation
performance can make it difficult for firm to survive without following them. These are some
rules and regulations which has to follow by firm while doing bushiness an maintaining
resources to perform different function in organisation to use its resources so that there is no
legal liability of organisation in current marketplace. In context of tesco, this can be seen that
organisation is performing its function effectively related to laws and rules in area where it is
working. This is making an positive impact on organization because it will help firm in attracting
large number of customer because of increase image in market and self-fulfilment of all legal
rules and regulation (Vij and Bedi, 2016).
It can be seen from above mentioned analysis about Tesco that there are various factors
which can impact on organisation and will leads to success within current environment but
manager of organisation has to keep this in mind to formulate effective strategy.
CONCLUSION
It can be concluded from the above mentioned report that there are various factor which
have there direct impact on functioning of organisation as well as this will also impact on
profitability of firm for longer period of time. This can also be seen that there are various factors
in PESTEL analysis which will impact on organisational performance and these are related to
political an economic factors of organisation. This can be deal by TESCO by the use of effective
framework in organisation and formulation of trending polices.

REFERENCES
books and journals
Alotaibi, Y., 2016. Business process modelling challenges and solutions: a literature review.
Journal of Intelligent Manufacturing, 27(4), pp.701-723.
Bashir, M. and Verma, R., 2017. Why business model innovation is the new competitive
advantage. IUP Journal of Business Strategy,14(1), p.7.
Bereznoy, A., 2017. Corporate foresight in multinational business strategies. Форсайт, 11(1
(eng)).
Crowley, F. and Jordan, D., 2017. Does more competition increase business-level innovation?
Evidence from domestically focused firms in emerging economies. Economics of
Innovation and New Technology, 26(5), pp.477-488.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Holotiuk, F. and Beimborn, D., 2017. Critical success factors of digital business strategy.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business, 51(1),
pp.23-34.
Korcsmáros, E. and Šimova, M., 2018. Factors affecting the business environment of SMEs in
Nitra region in Slovakia. Oeconomia Copernicana, 9(2), pp.309-331.
Lu, Y., Wang, H. and Xu, X., 2019. ManuService ontology: a product data model for service-
oriented business interactions in a cloud manufacturing environment. Journal of
Intelligent Manufacturing, 30(1), pp.317-334.
Saleem, M.A., 2017. The impact of socio-economic factors on small business
success. Geografia-Malaysian Journal of society and space, 8(1).
Vij, S. and Bedi, H.S., 2016. Effect of organisational and environmental factors on
innovativeness and business performance relationship. International Journal of
Innovation Management, 20(03), p.1650037.