Business Environment and Organization Performance

The assignment details provide an in-depth analysis of the business environment and organization performance of TESCO. It includes a SWOT analysis to identify strengths, weaknesses, opportunities, and threats, as well as a PESTEL analysis to examine the impact of external factors on the business. The report also discusses the importance of scanning the business environment and its interrelatedness with organizational performance.

Business and the Business
Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1Different types of the organisation with their purpose............................................................1
VOLUNTARY ORGANISATION.................................................................................................2
P2 Different types of firm according to size and scope...............................................................3
TASK 2............................................................................................................................................5
P3 The link between different organisational functions and their relation with structure and
objectives of organisation............................................................................................................5
TASK 3............................................................................................................................................8
P4 Optimistic and pessimistic influence of the external environment on the trading operations
of the organisation........................................................................................................................8
TASK 4..........................................................................................................................................10
P5 SWOT analysis of TESCO...................................................................................................10
P6 Interrelation of strengths and weakness with external macro factors...................................12
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1

INTRODUCTION
The environment of the organisation is referred as the totality of the inner and the outside
forces that influences the enterprise working culture and environment (Saleem, 2015). The report
intent to cover the different kind and forms of system which are public, private and voluntary
organisation. Private company chosen is TESCO whereas public is National Health services and
Voluntary is Oxfam. TESCO is leading supermarket deals in wide range of products and
services like, electrical, groceries, telecom services, etc. Further, the report will outline relation
between the functions and structure of business. Also, assignment will be focused on analysis of
micro and macro environment with the help of models like SWOT and PESTLE.
TASK 1
P1Different types of the organisation with their purpose
There are many different forms of organisation. These are as follows: -
PUBLIC ORGANISATION- These are the organisation which consists of government and
publicly dominated or publicly funded companies, agencies and other entities that delivers public
program goods and services. Public company taken here is NATIONAL HEALTH
SERVICES(NHS).
The organisation NHS was launched in 1948. NHS is more focused to provide good
health care to all, rather than wealth. It is an organisation which is funded by public. It is a
national healthcare system for England and is one of the major four National Health Services for
each constituent country of United Kingdom. The main purpose or aims is to supply a broad and
wide range of services to help in catering the needs, requirements and preferences of every
patients. It works continuously to improve the quality of service and to minimise errors (Huang-
Horowitz, 2015).
The legal structure followed by the NHS includes firstly it has to follow the guidelines
passed by the secretary of state for health and social care and secondly it includes governance
passed by the department of social and health care. The purpose of NHS includes maintaining the
high quality care of patient and clinical excellence. The scope of NHS is to encourage awareness
about specialist care, health and well-being.
PRIVATE COMPANY
it is a variety of company which is held by non- governmental administration or by a
relatively smaller amount of shareholders or organization members.
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TESCO Plc is a British international general merchandise and grocery retailer which is
headquartered in Welwyn Garden City, Hertfordshire. It is one of biggest retailers in the world
measured in the terms of gross revenues. TESCO is a type of private company but because the
shares of the company are purchased by the general public so it is considered as public limited
company. Understanding and analysing the customer needs and the requirements is the main aim
or purpose of the TESCO. The scope of TESCO is to increase its market share and the consumer
base by managing innovation and creativity in its services and products. The legal structure of
TESCO comprises of the use of policies which are based on of concept of corporate
administration, use of environmental friendly practices so the environment is not damaged or
harm, employment legislation, etc.
VOLUNTARY ORGANISATION
These type of organisation are defined or referred to as a group of individuals and
organisations which comes together mutually to form an agreement or a contract usually a
volunteer to form a body to accomplish the pre determined goals, purpose and objectives.
Common example includes environmental groups, learned societies, trade union, professional
association, etc.
OXFAM is an alliance of 20 independents benevolent organisation which mainly focuses
on the upliftment of the poverty at the global or the international level founded in 1942 and is
managed and led by the policies and management of OXFAM international. It is a type of major
not for profit organisation or group which have an large and extensive accumulation of
operations. Outlining innovative, practical ways to improve living standard of people is the
major extent and scope of the Oxfam.
The programmes conducted by the Oxfam address the different types of structural causes
of poverty and work primarily through local accountable organisation and is related to removal
of injustice in order to enhance their effectiveness and efficiency. The main goal or the objective
and the aim of Oxfam is to make productive and efficient decisions like improving the standard
of living, quality, improving the rights and justice for the people who are living under the
poverty line (mugurel-alin, 2019). The purpose behind the existence of Oxfam is to assist the
poor and underprivileged people by encouraging and empowering them to make and create a
risk-free and assured future. Legal structure of Oxfam is based on council of Trustees and
governing body of the Association of Oxfam.
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P2 Different types of firm according to size and scope
National Health Services
 Background: the organisation was established by Aneurin Bevan who was a Welsh
Labour Party politician. He spearheaded the establishment of National Health Services
whose aim and objective was to provide medical care for free.
 Products and services of NHS: It provides a wide range of services like services for
mental health services, urgent and emergency care, hospitals, dentists, pharmacies,,
opticians, etc.
 Size: the NHS is the biggest part of whole system which cater its services to a country
population of 54.3 million and also it provides employment to around 1.2 million people
in there hospitals. NHS deals with over 1 million patients every 36 hours.
 Scope: NHS manages public health in effective cost. It safeguards the financial resources
of public and help them to gain good health at minimum cost.
 Mission of NHS is to provide quality of care every day to every person.
 Vision of NHS is to deliver better care, better health and better value.
 Business Objective: Objective of NHS is to improve environment of hospitals for
service users as well as providers.
 Organisational structure: The organisational structure of NHS consists of both
functional and divisional structure of management. It has director for each department
separately for example, medical director, chief pharmacist, clinical directors, etc.
 Legal structure: it involves firstly it has to follow the guidelines passed by the secretary
of state for health and social care and secondly it includes governance passed by the
department of social and health care.
 Stakeholders: it includes competitors, commissioners, contributors, customers, channels,
commentators and many more.
TESCO
 Background: the company was founded in the year 1919 by Jack Cohen as a group of
market stalls. The TESCO name was firstly used in 1924 when Cohen purchased a
shipment of tea and named it as TESCO.
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 Products and services: It provides a variety of products like, Qualcast Classic Petrol
lawnmower, Toshiba Widescreen TV, Fairtrade roses with vase, Vax Rapide Carpet
Cleaner, Rose and lily cream bouquet, Rose and lily cream, Bissell Proheat Cleaner etc.
 Size: because TESCO is a leading retailer, it has 440,000 employees and over 6800 shops
all around the world.
 Scope of TESCO is to gain lifetime loyalty of customers and cover all the product line
like groceries, clothing, household and insurance including travel insurance.
 Vision: Wanted and needed around the world.
 Mission: Modern, innovative and full of ideas.
 Business Objectives: Objective of TESCO is focused on fulfilling expectations of
customers. Further, firm objective is to provide products and services as per expectations
of shoppers.
 Organisational structure: First comes the chairman, then the CEO who is supported by
Company Secretary and then comes the Directors who make decisions and run the
company.
 Legal structure: TESCO is a big company so it has to follow a lot of legal structure to
ensure that the business is operating properly and lawfully. One legal structure which
TESCO follows is 'Corporate Governance'. Legal structure followed by the company
complies of Equality act , environment friendly practises and occupational health and
safety.
 Stakeholders the major stakeholders of TESCO comprises of employees, shareholders,
customers, suppliers, legal community, government and trade union and many more.
OXFAM
 Background: the name Oxfam comes from the Oxford Committee for Famine Relief.
This organisation is founded in Britain in 1942.
 Product and services: as it is a service business it conduct different types of programs to
overcome poverty and injustice for this they organise different types of campaigns,
programmed, etc.
 Size: It is an international federation of 19 organisation which works together as partners
with the local communities in more than 90 countries. It has around 5001- 10000
employees.
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 Scope: Oxfam helps the people to get better life and safeguards global food supplies.
Also helps poor and marginalized women to claim their rights.
 Vision: the vision of Oxfam is to make or construct a world without poverty.
 Mission: the mission of the company is to prove that poverty can be eliminated or may
be preventable to help the people so that the poor people can change their lives for better.
 Business Objective: Objective of the organisation is to influence decision of society
which impact life of people across the globe.
 Organisational structure: It has a two- level administration structure which includes
board of supervisors and the executive board.
 Legal structure: It is a charitable organisation which works for societal development.
So, it is majorly governed by Corporate Social Responsibility. It also uses policy like
anti-slavery policy, gender equality policy, ethical environmental policy, etc.
 Stakeholders: stakeholders of Oxfam are partners, staffs, volunteers, donors, supporters,
government, private sector and academic institutions,
TASK 2
P3 The link between different organisational functions and their relation with structure and
objectives of organisation
Functions of TESCO
 Human resource – The main function of human resource manager of retail firm is to
manage its employees and to solve conflicts and confusion between them for efficient
working of the organisation (Makarova and Polyanin, 2015). Further, the functional are
ensure adequate knowledge and training of employees with regard to employee
satisfaction and employer employee relations.
 Marketing– The function of marketing manager is to increase the reach of product to
consumers by using innovation and creativity. The advertising manager makes sure that
the product is advertised properly on media, television etc to increase customer's base and
sales. Finance– The finance manager ensures adequate cash flow in all business units to ensure
proper flow of operations in every functional unit (Banica and Hagiu, 2015). Also, the
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unit in TESCO is responsible for outlining needs of maintaining cash reserves,
maximizing profit, etc.
Organisational Structure of TESCO: TESCO follows hierarchical structure, which is a
combination of functional and divisional structure. They use a hierarchical structure because
company is large and have couple of layers.
Figure 1: Organisational Structure of TESCO
(Source: Organisation structures, 2018)
Interrelation between various department
 Finance & Human Resource department: The finance branch is concerned with money
and HR department deals with human beings (Ibrahim and Primiana, 2015). Thus, HR
department of TESCO focuses on human capital which in turn leads to lower turnover
that directly benefits profitability of company. Recruitments done by HR is wholly
depend on Finance department because they help them by providing funds for the
recruitment. Both the departments work together to achieve goal and increases the level
of profitability and performance.
 Marketing & Finance Function: Finance and marketing are the 2 pillars on which the
development and earnings of corporation are established. Marketing done in TESCO is
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depended on the funds provide by Finance department. Finance department make a
separate budget for the advertisement and other promotional activities for the smooth
functioning of marketing department. Technology & Marketing: In the era of digitalization, technology helps marketing
department by promoting TESCO by direct mail, catalogue marketing, telemarketing, TV
and kiosks etc. to create awareness among customers worldwide regarding diversified
products of company through various IT tools like video conferencing, chatbots, emails,
robotic systems, etc. that helps TESCO in increasing their sales volume.
Advantages and disadvantages of inter relation of department
Advantages Disadvantages
 When departments are inter-related it
leads to increase in knowledge, skills and
innovation of employees.
 It gives the advantage of specialisation.
Each department is specialised in its
working and hence give the best result.
 It leads to quick customer response as all
departments are inter related, they
address customers very quickly. (Grigore
and Drăgan, 2015).
 It helps company to deal and cope up
with dynamic changes and technological
advances as all departments are inter-
related and also helps in achieving
economies of scale.
 When departments are inter related it
leads to competition between divisional
departments regardless of coordination of
functional units.
 It leads to lack of information between
different departments as all the functional
units of TESCO are working with
different objectives.
 This structure increases skills and
innovation of worker but leads to
confusion and frustration among
employees because lines of reporting are
unclear.
 Due to lack of communication and
internal departmental disputes and
conflicts, customer get frustrated by lack
of cooperation from the departments as
all the departments passes the
responsibility to one another which may
lead to loss of customer (Prajogo, 2016).
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TASK 3
P4 Optimistic and pessimistic influence of the external environment on the trading operations of
the organisation
For getting knowledge of the affirmative and destructive impact of the external
environment on the working of TESCO 's operations we will do a PESTEL Analysis of the
company.
Political Factor: TESCO operates in more than 12 different countries including Europe
and Asia. Because of trade with different countries the company is exposed to many political
factors that have an impact on its operations. It includes tax rate, political instability, economic
condition of country, unemployment rate etc. For example, if there is change in import duty on
commodities of TESCO, it impacts the stability of business because it imports many types of raw
materials and inventory from outside UK from countries such as China and East Asia so they
have to pay more taxes. Also, TESCO may able to take action regarding the current and
anticipated future legislation and can adjust their marketing policy on time.
Economic Factors: Economic factors refers to factors like profits, demand, cost, and
prices. These component of economic factors are of consideration and importance to TESCO
because the demand, cost, prices and profits of the company are majorly affected and impacted
by these economic factors. These factors are outside the control of the organisation because these
are external factors which cannot be controlled by an individual but it affect the performance of
the company to a large extent. For example, increase in minimum wages led to change in HR
wages policy of TESCO which hindered its cost effectiveness. Likewise, favourable changes in
exchange rates may lead to increase in exports in countries who have lower currency value like
China, East Asia etc.
Social Factors: It includes lifestyle changes, living condition, education etc. Now-a-
days, people have hard schedule and they want same day fast delivery. In accordance with this
factor, TESCO ensure sustainability in delivery system (Lenssen and Lenssen, 2018). In modern
era society is becoming more health- conscious because of which TESCO has implement
changes in its products like use of organic and herbal substances which led to tremendous growth
in sales of particular commodities. And social factors lead to negative aspect as if there are
regular changes in trends and choices this may affect decline in production and ineffectiveness in
the company.
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Technological Factors: The new technologies benefits both customer and the company.
Some years ago TESCO is facing some issues like poor customer experience, less promotional
efforts, technological backwardness and many more. But after the era of technological
advancement it brought many new opportunities for TESCO to retrieve the customer trust.
TESCO stores use latest technologies like, Intelligent Scales, Electronic Shelf Labelling, Radio
Frequency Identification (RFID). The launch of new Efficient Consumer Response (ECR) policy
initiative provided the drastic and positive shift that is now evident in the management of food
supply chain as it has improved a lot.
Environmental Factors: earlier these factors were not given much importance. The
emphasis on the environmental factors have become more important due to increasing scarcity of
raw materials, pollution target set because the raw materials are scarce and the competition is
high (Jaakkola and et.al., 2016). This factor includes all those factors which either influences the
organisation or are determined by the surrounding environment. For saving the environment the
van drivers of TESCO uses fuel saving routes so that fuel can be saved and also they collect
unwanted plastic bags from customers which damages the environment and then they recycle
them. Also, the company use renewable sources of energy and aims to generate 100% electricity
by 2030. Also, the company aims to decrease its use of carbon footprints up to 50% by 2020.
This objective has increased the interest of stakeholders like customers, shareholders and
investors.
Legal Factors: these includes use of certain laws which affects the business and its
working and operations in different countries because the legal regulation of every country is
different. While there are certain policies the company maintains for themselves. There are many
different types of government policies and legislations which have a direct impact and influence
on the profitability and performance of TESCO.
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Figure 2: Pestle Analysis
(Source: Scanning the environment, 2016)
TASK 4
P5 SWOT analysis of TESCO
Swot analysis is a framework used to evaluate organisational performance on the basis of
its strengths weaknesses opportunities and threats. It helps in understanding the micro
environment which includes employees, policies, culture which is directly related to company.
STRENGTH
TESCO a global retailing powerhouse proves to be leading MNC co. in retail sector
strengths of any firm which proves to be a positive factor in growth of an organisation. Strengths
of company is its award-winning experience and excellence in customer services, retail trends
and in providing easily accessible shopping experience. TESCO is as one of the profitable and
most largest supermarkets offering all the basic items needed by the customers across the globe
and also its financial status in terms of cash reserves and properties strengthens its liquidity
capacity in form of finance to think of new developments which venture can accomplish
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(Samiksha, 2017). Further, use of technologies has improved way of working and also decreased
the cost effectiveness of these factors is another reason behind the success of TESCO.
Weakness
Weaknesses basically frames the negative areas of an organisation. It characterises those
areas where company is lacking related to other companies in same context. TESCO also suffers
from some of the negative aspects like, relating to the price wars which affects the relations of
employees with the retailers. There is no proper attention given to all the markets. Lack of proper
team management leads to unbalance between all the tasks related to management of the
company.
Figure 3: Swot Analysis
(Source: Teece, 2018)
Opportunities
All the new upcoming elements in the environment, which a company can exploit for its
advantage forms a part of opportunity for any venture. For TESCO so many opportunities came
into existence like, opportunity to combine with the other brands and attract more customers and
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also opportunity like to grow online shopping as well as develop the method of home delivery to
more areas (Makarova and Polyanin, 2015). In countries where a firm is underperforming, it is
an opportunity for firm to undertake joint ventures which can help in getting advantage in
market and improving the performance in areas where it is not performing well at their level.
Threats
All the hurdles or breakdowns which comes in business and stops its growth comes under
the preview of threats. Threats leads to degradation of an organisation. For TESCO, many threats
hampered its functioning in terms of economic recession and credit crunches which reduced the
profitability and share of the firm in the market. Many competitive threats are coming from the
global retailers which is creating hurdles in the working of the firm. Labour threats in terms of
increased wages also affecting financial strategy of TESCO. Food prices have also increased and
decreased the purchasing power of the customers related to the lower disposable income.
P6 Interrelation of strengths and weakness with external macro factors
The major economic influence was decrease in disposable income and household income
levels because of which TESCO focused on advertising its value brands rather than advertising
its luxurious brands. Its strength is value products that lie in economical range (food items,
grocery etc) and it made it stronger by advertising it (Banica and Hagiu, 2015).
On the other hand, due to increase in taxes, TESCO is stripping out a layer of
management from its stores in a move that puts up 1700 jobs at risk which will lead to loss of
human resource which was considered as a strength of TESCO. Further, TESCO has cut down
its cost by removing its compliance manager, Health and safety manager who oversees 226
TESCO stores just because of their competition with Walmart, so that they can sustain in the
market with better technology and can invest the money in upgrading their technology and to
increase their market share. The growth of TESCO increased around 1.9 % during Christmas
season because of social and cultural demands of customers. It targeted its audience on the right
time with discounts and hence had an advantage of having large customer base (Teece, 2018).
TESCO recently booked high growth and profit because of inflation, the food prices boosted and
customers paid high prices for the food items which lead to loss of their personal disposable
income but increased the profit of TESCO. TESCO has the opportunity to increase its outlets but
it is unable to do it because of its specialisation in just food items and its non-food item sales are
really disappointing because of its lack of specialisation in non-food items. The biggest threat of
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TESCO is Walmart stores because of its speed of expansion. Walmart has 11,695 stores all
around the world whereas TESCO has just 6,966 stores. After buying Asda, Walmart emerged as
a biggest competition for TESCO.
Customer satisfaction and providing quality product is the strength of TESCO which the
company aspires to increase by 2020. UK government has warned companies to decrease their
carbon footprints and TESCO clearly committed itself to reduce its carbon footprints by the end
of 2020. TESCO, by doing this is contributing towards the society and will attract more
customers.
TESCO has a wide customer base in UK, but that is not enough to stay in the market.
Due to lack of technological advancement, and its specialisation just in the field of food items it
is unable to expand itself in different countries (Lenssen and Lenssen, 2018). For expanding its
outlets, it needs to upgrade its technology and will have to segregate its customer's need based on
the demographics and their cultural and social environment. Due to emerging competitors,
TESCO which was not so good in technology advancement earlier has now adopted and
improved the use of technology to face the cut throat competition through its operations, and by
creating greater cost efficiencies and enhanced service expertise.
CONCLUSION
The report 'Business and The Business Environment' concludes that there is a strong
relationship between the micro and macro environment with the business. The report also
highlighted the different types of organisation which are public, private and voluntary
organisations. It was possible with the help of SWOT analysis, to analyse the strengths and
weaknesses of the company TESCO and also the opportunities available for and the threats from
the external environment. PESTEL analysis helps the company in determining the impact that
every individual factor have on business working. The report also outlined the interrelatedness
of strengths and weaknesses that is SWOT analysis with its external environment that is the
PESTLE analysis.
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