Business Environment and Organizational Growth

The provided study emphasizes the significance of business environment in promoting organizational growth. It highlights the hierarchical structure of organizations, with management divided into various levels, and the impact of external factors such as politics, economy, technology, society, law, and environment on business performance. A PESTEL analysis is proposed to understand these external influences. The assignment also touches upon governance rules and strategies that companies must follow to achieve their objectives without hindering trading processes.

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Table of Contents
INTRODUCTION................................................................................................................................3
TASK....................................................................................................................................................3
1. Examine how TESCO company is structured and governed.......................................................3
2. Discussed importance of PESTEL and effects of external factors environment on Tesco .........6
CONCLUSION ...................................................................................................................................6
REFERENCES.....................................................................................................................................6

INTRODUCTION
Business environment reflect the external and internal element that impact organisation
functions. These both factors affect customers and employees management. Supplying products and
services to client according to their demand. All these process are called business environment.
Supplier and customers are included in this environment. Legal activity of government can help
organisation to grow successfully. It is very important in company, because it helps in improving
there performance at every stage (Harper, 2015). TESCO is public limited company, it is a British
international grocery and general product retailer. They established their headquarter in Welwyn
garden city, England and UK successfully. It is measured as third biggest retailer industry in the
world. TESCO is owned by many partners in business because it is a private limited company. In
this unit it explains the structure of organisation and its management process governed by the
government. Also describe the effects of external and internal factors of the company.
TASK
1. Examine how TESCO company is structured and governed
Structure of TESCO: this company follow the hierarchical structure, it focused on every department
in business. The main purpose of using this structure is to mange overall work in large company
which has many layers of work performance. TESCO is a British multinational retailer industry,
they used hierarchical structure to achieve business objectives and aims of organisation (Hoch, and
Kozlowski, 2014). Its very large size firm within many levels of departments.
Source: Tesco's Board and Executive Committee. 2018
In structure it divided position into various parts to assure that work has completed smoothly and
Illustration 1: TESCO board structure

efficiently in company. Firm is constructed in 5 administrative by board reports. Dave lewis is the
CEO of company, he leads 11 members of TESCO committee. In company there are few changes
has around the work area consists by their board of directors with 10 members. These all changes in
committee include that Johan Allan is newly appointed as Chairman of board and also it includes
new three non executive directors in company. In the year 2014-2015 there are some changes in
board at their financial time period. According to this structure the organisation divided department
as store level. In this stage the management of store make effective collaboration and coordination
between their managers (Hunter, 2017). They can easily mange the overall work in firm. It makes
flexibility in their performance which helps to increase flow of information. In this structure of
organisation both level are stay connected with each other for the purpose of transferring basic data
at each and every stage of management. All the level play there important role at workplace. Within
different strategy and planning for achieving business goals and objectives. Regional manager
instruct store leader about all information of company, after that process between them store
manager lead 3 management levels under these structure such as food trading manager, personnel
manager and non food trading manger. They all are work for company but with different style and
functions.
Illustration 2: TESCO hierarchical structure
Source: Organisational Structure of Tesco. 2016
There role is to mange trading work or motivating their employees for performing there
level best. High performance work impact on company productivity, growth and also in business

environment. In every sector of firm environment should be healthy and positive because it effects
TESCO employee's and other management system. To creating healthy environment company
motivate workers through reward, compensation, and incentives for their good performance at
workplace. All this effort create a good brand image of firm in marketplace, which helps to attract
the other people towards buying TESCO grocery products, it increases their productivity and
profitability (Jameson, Prevost, and Puthenpurackal, 2014). Thus, in the structure of hierarchical it
defines the places of management and their role which they are played for firm to raise there
success in business world. Tesco store structure is slightly different to other store. Hierarchy in
Tesco using various stage of authority or command of chain which help to manage business activity.
This authority has a power of managing or controlling the other levels under working them.
Subordinate and superior make communication between them for the purpose of getting information
about company and employees. Hierarchy has reflected as a pyramid, that explain all management
levels of firm according to their roles and responsibilities.
Tesco governed : Tesco is governed by government according to their rules and policies. Every
company has to follow government policy for managing their work performance. Tesco manage
their employee and firm by following rules and planning according to government system. For
supplying products without any barriers in another country they have to follow the process which
has been governed by higher authority of state. There are few limitations in governed process which
they need to manage according it. Law make organisation in manageable way. Tesco have to follow
some laws which helps employees for making stability in their financial conditions. All the process
of governed increase business growth and productivity. It is a British company, so for this they have
to work according to their government system rules. This system help firm in the process of trading
their goods to other country. Government rules are also applied over the authority of firm, they
need to mention all the points of it. Tesco committee follow law and also applied in their overall
work performance in company. Authority support firm by giving flexibility in their system for
company growth and the process of trading successfully without any barriers. But on the other side
if any organisation does not perform under the government rules it might be decrease their
productivity and growth of expanding business. That is the reason that Tesco worked according to
policies of government which helps to expand their business in all over the world through supplying
good quality products and services of groceries. Share holder are also very important for
establishing business in country. They providing financial support to company. By certificate of
incorporation firm are governed. In the organisation higher authority make strong relationships
between their employees through supporting, motivating and rewarding for their high performance
work in work area with the aim of succeeding business or achieving objectives, trust and strong
understanding is the source of their bounding in firm. They also make relation with public sector by

creating products according to their demand, needs and requirement.
2. Discussed importance of PESTEL and effects of external factors environment on Tesco
PESTEL analysis is very important for getting all information about their product and
production effect in marketplace. This tool is used to analyse the capabilities and effectiveness of
firm. By using this tool it helps to monitor external factors of surrounding business environment.
Political, social, economic, technological, environmental and last legal is the mean of PESTEL. It
helps company launch external elements that effect decision making in the firm. In conducting this
analysis for Tesco is important for their business. Effects of external environment factors are
reflected on Tesco at such point:
1. Political environment: political factor effect business properly because Tesco run their
organisation according to rules of British government, which help them to increase their
business perfectly without any issues in trading process. This environment creates healthy
atmosphere at all over the marketplace. But in somehow conditions change of government
effect company in their growth and progress. Thus, after changes in laws also make changes
in organisation business and overall management functions which highly effect productivity
and performances. This modification in government create problems in operating business.
In every country their government make policy and apply taxes on their production and
trading system, for this Tesco is also paid taxes to government. After having changes, new
government create plans which is different from the old authority. It makes rules and
taxation policy that effect directly to business of Tesco. Taxation policy is based on income
of money in organisation by supplying their products (Valverde, and Nikolas, 2017). All this
changes impact over the relationship of employee, management and higher authority of
company. Government changes effect company business totally in to ways either positive or
negative.
2. Economic factors: it is the best technique of analysis business, economic environment play
an important role for deciding how company make decision such as in financial stages. This
factors are related with services, money and goods, which directly affect business. Global
and local business affected by economy on high level. The reason for analysis is that the
economy of state decide such important information which has to come in company, include
the topics like taxes, costumer demand or needs and resource value. High rate inflation
effect not only business, but also to customer and country. 1. Consumer purchasing is the
affect of inflation, in this point organisation raise pricing of products which impact
negatively on productivity and growth of Tesco. For succeeding in business they make
changes of reducing prices. Continuously raising prices will create a sudden rate hike,

competitors of Tesco take this chance as opportunity of growth. 2. Inventory costs, rising
prices rapidly effect consumers as well as the businesses cost for paying in purchasing
inventory. 3. Price changes, is the another effect of inflation. If Tesco make changes in their
services and products rates including to production process, which need more money to
modify price tags, new menu and correcting price or ingredient list. Borrowing, investment,
employee wages and foreign exchange is the effect of inflation.
3. Social factors: Social environment effect business because its continuously make changes in
according to people taste and their fashions. Population growing is the reason of changes in
social factors. Eduction level and lifestyle impact people needs. Increasing rate of
immigration and emigration is the point of affecting business. In society there are many
things which effect business. Changes in behaviour means that people choose products
according to their preference. Attitude toward heath and diet is another effect on company
because this behaviour of people wants food products with nutrition and without calories.
Population changes in behaviour directly impact on organisation. People demand and needs
force company to make as possible changes in their services and products.
4. Technology factor: technology is the most important part of successful organisation
business. Using technology at work areas increase productivity and decrease money and
time. Thus, for the purpose of achieving goals in business Tesco use the latest technology
which increase their work efficiency. Using new and latest technology in company raise
their production process and also save their money and time. It helps in development of firm
at marketplace. New technology grow or improve company services and products growth.
These factors help firm to explore there business in new ways within different techniques of
communication and interacting to other people in business's world. For using this latest
technology Tesco can faced against their competitors in marketplace. They need to create
more technology which is better or powerful to the other organisation in country or world.
According to the demand and requirement of economy or people in products, company
needs to change their technology or techniques and also create new latest technology which
can help to fill up people needs.
5. Environmental factors: Climate is the biggest barrier of succeeding in trading. Organisation
need to analyse environmental factor because it effects business at large level. Changes in
climate such as flood, tornado and earthquake impact on company trading process. Country
and economy buy those firm products and services which are environment friendly. This
type of products adopt by society and take a good response which help to motivate
employee and other management of firm. Changes in climate is business and environment

issue. Potential domestic cap and trade legislation, price changes for services and goods,
changing weather patterns, demand changes for goods and last changing people perceptions
of company, all these ways of climate change affect organisation. It highly impacts on
trading process in business. Result of changes in climate slow down the activity of trading
which decrease the growth of industry, and also make instability in financial conditions.
Strom make big loss for company insurance policy. In tesco trading process heavy rain fall
stop there supplying of products and services which is the opportunity of their competitors
to make new ideas for successfully trading. Climate change increase the price of products.
Customer effect by these changes in price which decrease growth of achieving business'
objectives and goals. At this tough time organisation face a lot of problems in production of
business because people need those products which is according to climate change.
6. Legal factors: legal factors is also important as the other external environment factors has.
Product safety, customer laws and rights, safety and health, and equal opportunity all are the
issues of legal factor. Tesco operate their business successfully by following regulations and
rules of British country where they operating their business. This factor should has
understood by all the company in order to analyse all these factors. By getting all the
information about laws help organisation in making there plans and strategy according to it.
Changes in law system affect Teco and other companies totally. Government plan or make
rules to manage the overall performance of organisation. By using this process firm get
success in their business and trading. But on the other side changes in laws by government
create issue for company because according to these new changes they need to start or
modify the whole process of organisation. These changes reflect in country tax and process
of import and export of products. For the company it is the biggest problem to run their
business successfully. They need to make changes in whole process of product making.
CONCLUSION
It has been concluded in above study that business environment played an important role for
the organisation growth. It also explains that for the purpose of running business successfully
management is very important in company. Business get effect by external factors which impact on
their productivity and growth. In this unit it mentions the structure of organisation by following
hierarchical. It reflected as a pyramid which has included all levels of management authority. This
hierarchy structure divided company management in various stages such as manager or higher
authority. Company aim is to achieve business objective and goals, by following government rules
and strategy governed by it. This system of rules helps firm without creating any barriers in trading
process. PESTEL analysis is the best way to understand the impact of business and also get details

of all the factors which effect business or company such as political, economical, technology, social,
legal and environment. At in the last it concluded that business get effect by many external factors
environment.

REFERENCES
Books and Journals
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Wetherly, P., 2014. The business environment: themes and issues in a globalizing world. Oxford
University Press.
Online
Tesco's Board and Executive Committee. 2018 [ONLINE] Available
through:<https://www.tescoplc.com/about-us/board-and-executive-committee/board/>
Organisational Structure of Tesco. 2016 [ONLINE] Available through:
<https://prezi.com/-l58wxtvlexb/organisational-structure-of-tesco-and-ty-hafan/?webgl=0>