Business Environment and Competitive Priorities

The assignment involves conducting a SWOT analysis and Pestle analysis to identify internal strengths and weaknesses, as well as external opportunities and threats that affect companies in their business environment. The Pestle analysis considers macroeconomic factors that influence businesses. The document also references various studies and journals related to business environment and competitive priorities.

Business and the
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
P1 Different types of organisation and its purpose................................................................3
P2 Size and scope of different types of organisation.............................................................5
P3: Interrelation among different organisational department and their link..........................7
P4: Positive and negative impact of macro environment upon business operations ............9
P5: Internal and External analysis of Tesco to identify its strength and weakness..............10
P6: Interrelation of strength and weakness with macro environmental factor.....................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Business is the function that includes carried out activities by an organisation in order to
generate income and profits (Avramenko, 2012.). Each businessman requires a perfect
environment, some form of investment and enough customers for selling its output to clients
according to their demands. Business environment is collection and total of all internal and
external factors like as employees, supply and demand, management, suppliers, clients, customer
needs and expectations etc.
To understand the concept of business and its environment Tesco has taken. It is a British
multinational general merchandise retailer and groceries company. Its aim to develop the online
shopping experience and increase in number of customer.
In this report some topics are covered such as types and purpose of different
organisations, their size and scope, relations between organisational functions and link to
objectives and structure, positive and negative impact of macro environment on business,
internal and external analysis of specific enterprises and interrelation of strength and weaknesses
with external macro factors.
P1 Different types of organisation and its purpose
Organisation is a collection of people or organised group with particular intention, like
government or business department. It also involves association and institution that is structured
and managed to meet a demand and work together to achieve goals. It states the relationship
between the different activities and employees and assign roles and responsibilities. It includes
three types of organisation such as public, private and voluntary organisation which is discussed
as below-
Public company- This means an enterprise is able to raise amount of capital by issuing
securities publicly. Shares and debentures of a public organisation are freely traded on stock
exchange and distributed at wide range. As per Securities and exchange commission (SEC), any
organisation that has more than $10 million in assets and 500 shareholders would be required to
register with SEC (Bovee, Thill and Raina, 2016). Its purpose is to sell its shares to the public
through a stock exchange and give benefits to public. For instance, National health
services(NHS) is public funded company that arrange its capital by issuing shares publicly. It is
the biggest single payer health care system worldwide. It provides health care in England, patient

care, long term attention, dentistry and medical speciality. The UK government is responsible
and accountable for NHS department that provides social care, health security, controlled by the
secretary of state for Health and social care.
Purpose:
Its main purpose of NHS is to improve the productivity and quality and to stop confusing
all clinical disciplines with non-care manufacturing activity.
Legal structure:
 State government: This is a federal form of that shares its political power with national
or federal government.
 Central government: It states regulation and control on united states for holding
absolute supremacy.
Private company: This means an enterprise who raise its capital by its own sources
instead of issuing securities publicly. Private company can issue its shares and securities to their
shareholders within the organisation. Private organisation cannot issue shares as initial public
offer(IPO) and cannot trade on public exchange. Tesco is a private company that is dealing in
grocery store, clothing, electronic goods and online services. It is a multinational company that
focuses on customer demand and help to meet their needs. The main Goal of Tesco is to serve
good quality of product at great value and take social responsibility which provides good return
on investment to shareholders. Its purpose is to create a brand demand and make solid strategy
that helps to meet profitable organisation. It is profit making organisation that increases its
earnings by providing or serving their products or services in a large number.
Purpose:
The main purpose of Tesco is to create values for customer, create lifetime loyalty,
increase in number of sale, introducing new product, and reach at global level. In addition, to
seeks market requirements and changes in customers taste and try to bring new innovation for
their clients. (Cai and Yang, 2014).
Legal structure:
 Partnership: This means when two or more person work collectively as per
contract in order to achieve organisation's goals. Under this type of legal structure
every partner would be liable for gains and debts of firm.

 Limited liability: It contains joint stock company, under this business possess
separate legal entity from owners. Moreover, it allows each partner to have their
limited liabilities.
 Sole proprietorship: This is also a type of legal structure that contains single
ownership while doing business. In this type of business not need to arrange a big
amount of capital.
Voluntary company: A voluntary union is a group of people who entered independently
into an contract or agreement to complete task for common interest. It is also called non profit
organisation that involves work done, given willingly and made without pressure or being forced
to anyone. Some examples are included in voluntary company such as trade union, institution,
trade association, societies and environmental groups. For instance, Save the children is an
international non governmental organisation that focuses on children's rights, their education,
provides relief, and support them in development of countries. This company believes that each
child deserves a bright future and good education. Their vision is every child attains the right to
survival, participation, protection, and development.
Purpose:
The main purpose of SCI is to motivate and inspire people that helps to make them
independent, to provide safe life supplies, to improve children's life lives and provide quality of
food and healthcare.
Legal structure:
 Trust: It contains trustees that carries out the business on behalf of trust members and
trustees are not separate legal entity.
 Association: This is a type of legal structure under which people works together for
common objectives without the aim of making profit. .
P2 Size and scope of different types of organisation
Size and scope of any business is depend on its internal and external structure of capital
and reach that includes number of workers, large size of business, market share and
organisational culture.
Public company(NHS):
Background: NHS is a public funded national health care system, which was established
in 1948 with its headquarter in London.

Size: This includes capital structure of any organisation who raise its fund by issuing
shares publicly. For example, National health services (NHS) is biggest public company that
lining or catering to a population of 54.3 million and employing around 1.2 million people.
Scope: Public company has wider scope that are related with manufacturing process of
product and services to managing and controlling economies of scale. For instance, National
health services (NHS) used to increase profits from the wider range of sources then it would be
work in various nations (Chavis, Klapper and Love, 2011.).
Product and services: NHS provides health care services in England, patient care, long
term attention, dentistry and medical speciality.
Mission and vision: Its mission is to provide quality of care services to each person
every day and vision is to deliver good health, better values and better care.
Objectives: The main objective of NHS is to improve the productivity and quality of care
services and to stop confusing all clinical disciplines with non care manufacturing activity.
Private company(Tesco):
Background: This is large shopper market which was established in 1919, mostly out of
town supermarket that stock almost all of its product range, where as some are in the centre and
inner city location.
Size: Size of private company is depend on transformative transaction, annual revenues,
structures and capital worthiness. For instance, Tesco is listed on London stock exchange (LSE)
and constitutive to the FTSE 100 index..
Objectives: Its main objective is to provide better quality of product and services that
help to meet customer needs and their expectations.
Stakeholder: NHS includes stakeholders such as physicians, government, insurance
companies, patients, employers etc.
Scope: Tesco has wider scope in market, it is the third largest retailer in the world that is
measured by gross profit. It has branches in seven countries across Asia and Europe. It diversify
in to areas such as clothing, furniture, toys, electronic, retailing of books software, financial
services, telecom sector, petrol and internet services. It follows some strategy to expand its
business such as strategy as plan, pattern, position, ploy and perspective.

Mission and vision: Mission of Tesco is to stay leading retail super market and provide
better quality of product and services at a lower cost and its vision is to focus on increase its
number of customer and production for gaining profits.
Stakeholder: It includes customers, trustees, donors and trade union.
Product and services: It deals with retailing product and online shopping.
Objective:
Its main objective is to create a big demand of product and services and to become
starring super market.
Voluntary organisation(Save the children)
Background: It is established in 1919 to motivates and encourage poor child.
Size: This includes increasing variety of groups, scale range, culture, enterprises structure
size of membership and mission. For instance, save the children is a non governmental
organisation that has 29 other national save the children organisation worldwide.
Scope: Save the children seeks the gain confidence and attention by providing food and
clothing to poor children.
Mission and vision: Its vision is every child would attain rights to survival,development,
participation and protection and their mission is to inspire people and treat equally children.
Objective:Its main objective is to improve living standard of poor child, development of
countries, provide better education, health care and economic opportunities.
Product and services: It motivates and encourage poor child by making plans toward
their better life. Save the children organisation provides helps to poor children and make them
independent. .
P3: Interrelation among different organisational department and their link
Organisation includes various types of business enterprises that includes number of
employees, which are working to complete task and helps to achieve organisation's goals. It
includes finance, marketing, HR and operation department.
Different types of department and their interrelation
Tesco is one of the popular and well known organisation that tend to provides retailing
product and services, online shopping and superior quality of services to their customers at
global level (Commander and Svejnar, 2011). It is very successful business organisation that

play an important role by their department such as finance, marketing, HR and operations. Role
of these department and its relations are mentioned as below-
Finance and marketing department: This is crucial requirement for every business,
without money any business cannot be able to manage and regulate their business operations
effectively that is controlled by finance department. The main objective of Tesco is to increase
finance and improve overall performance of their company and business functions. Department
has certain responsibility and accountability that interrelates with marketing and HR functions
which helps to raise of capital by using other sources. HR function gives appraisals to employees
after analysing their performance with the development plan that contribute to fulfil their basic
standards.
Advantages: In Tesco, it helps to give a proper communication process that make easy to
fill finance requirement by discussing with superior.
Disadvantages: Drawback of relationship of finance and marketing departments is There
would be lack of understanding across various department because of miscommunication hence,
can not render budget as per demand.
HR and marketing: This department includes promotion and advertisement of product
and services that helps to increase in number of sale. In context, Tesco is focusing on increasing
production and number of customers.
Advantages:It helps in all responsibility that makes market analysis and examination and
helps Tesco to give clean and clear information about demand of customers. Marketing
department has relations with customers that gets information about customer needs and
requirements and helps to meet with customer expectation (Cuervo‐Cazurra, 2011).
Disadvantages: In Tesco managers would not be suitable best candidate and fails to
analysis market because of insufficiency of marketing department.
Operation and HR: The first motive of this department is to optimise all valuable
sources that provides good quality items to their close customers. It manages day to day business
activities and keeps record of them. In Tesco, operation department should have common duty
that can examine the information which is provided by marketing department for assessing the
needs and demands of various products in different market. It helps to interrelate the organisation
structure with Tesco's function such as, to assist the activities of manager to control their

operation work as per requirements and fill the gap between demand and supply of supply of
product by recruiting employees.
Advantages: In Tesco helps to interrelate with its functions and organisational structure
that determines coordination of roles, power and responsibilities and assignment within a
business. It maintain flow of information between various level of management that relates to
legal structure and business ownership.
Disadvantages: It is very difficult to maintain all information and to coordinate with all
department in a organised way and would not be possible to examine the valuable resources.
P4: Positive and negative impact of macro environment upon business operations
It order to perform business operation worldwide Tesco uses PESTEL framework to
identity the external factor and their impact in the performance of company.
Political factor: Political factor includes the intervention of government, political
stability within the country, tax as well as trade policy. These factor directly affect the operations
of company. Hence, before diversifying Tesco should know existing as well as anticipate future
laws.
 Positive: Tesco's major operations takes place in developed countries where government
remain stable due to which it earns huge profit.
 Negative: Tesco being UK based company, then also government refused the Tesco tax
proposed by local council in order to avoid price hike.
Economical factor: Economic factor refer to purchasing power, inflation rate, disposable
income etc. that affect the cost, price and profitability of company.
 Positive: Wide networks of supermarket chain in different countries helped Tesco to
maintain its market share.
 Negative: Upward shift in wages for workers in Tesco has decreased the profit of
company. Thus, it affects company in making future financial decision.
Social factor: Social factor are again matter of concern for above mentioned company as
it includes factors like population, age distribution, lifestyle and culture of people.
Positive: In order to meet the need of its customer Tesco provide wide range of goods
under one roof. They also came into the fast delivery of goods and services to support its existing
business operations.

Negative: To sustain in dynamic environment company has to adopt changes. Thus, this
whole process of adopting new ways takes time. Due to which company's decision making
process suffer for certain period of time.
Technological factor: Technology factor refer to new ways of producing and
distribution goods and services as well as communicating with target market. These changes take
place due to innovation and technology awareness.
 Positive: Tesco has adopted new innovation effectively to run its business operations
efficiently. They make the use of internet to keep a check on their inventories like they
had introduced RFID technology that automatically count the stock and help supplier to
refill it. It has strengthen decision making process of Tesco.
 Negative: Initially, customer of Tesco used to suffer because of poor customer services
and unavailability of required items (Halbert and Ingulli, 2011).
Environment factor: It plays an essential role within the company as resources are
limited and human wants are unlimited. These factor ensure business run ethically by making
optimum utilisation of resources.
 Positive: To promote CSR activities respective company encourages their prospects to
shop from their website and save fuel. In addition, they recycle plastic bags by collecting
it from customers. This helps company to achieve sustainable development.
 Negative: Company faces huge pressure from government regarding environment issues.
Legal factors: Legal factors refer to the employment law, discrimination law, labour law
etc. If company operate overseas, then it is very essential to take care of external affairs for
smooth operations and effective decision making.
 Positive: Tesco is performing its actions according to strict code and practices of food
retailing commission. Hence, build huge market trust for its operations.
 Negative: The workers of tesco took legal actions against it for gender discrimination as
well as they mislead their investors through accounting frauds.
P5: Internal and External analysis of Tesco to identify its strength and weakness
Tesco is a British supermarket grocery store has profitable and biggest supermarket
chains. They provide multiple utility items (i.e. food and non food) under one roof has wide
network due to which it gained dominant position and competitive edge over its rivalries.

Strength: Tesco is known worldwide for its supermarkets, convenient customer services
and excellent shopping experience. It has huge cash reserve due to which they keep on
expanding their retail outlet chains without any hurdle. Along with that it brings innovation,
adopting new technology to perform its day to day operations. Additionally, innovation helps in
enhancing customer service experience (Hamilton and Webster, 2015.).
Weakness: Though Tesco has global presence but still due to competition pressure they
have to go for price wars which lowers down the profit of company. Along with that there are
various chains of Tesco which is not performing well due to external factors.
Opportunity: In order to gain the dominance and reduce the competition pressure Tesco
can go for alliances with other brands. Especially countries where respective company is
underperforming it go for joint venture to sustain its business and wider its reach. Moreover,
with the huge operation and distribution network Tesco go for quick home delivery services.
Hence, these opportunity helps to bring additional revenue for company.
Threat: External environment factor like political instability, recession and inflation
affect profitability of the company. Thus, it is the biggest threat to company as it lowers the
market share of company. Other than this change in prices of food and raw material as well as
fluctuation in labour wages are threats to Tesco.
Hence, Tesco must do SWOT as well as TOWS analysis for better understanding and
effective decision making process. TOWS helps in identifying the alternatives or method to deal
with weakness or threat to company.
Strength and opportunity: Strength and opportunity together defines the way by which
Tesco can uses its strength to gain opportunity. For instance, process by which company can uses
its core competencies like financial resources to exploit the opportunity (joint venture or
alliance) to gain the dominance in global market.
Strength and threat: Moreover, Tesco can take the advantage of its strength like global
presence that help it to avoid its real or potential threat.
Weakness and opportunity: It refer to opportunity Tesco can use in order to overcome
weakness. Like, geographical areas where the sales of Tesco is not good their the company can
provide additional offers and home delivery facility to gain revenue from unprofitable business.
Weakness and threat: The objective of Tesco is to gain long term competitive
advantage. To fulfil it they must keep on minimise their weakness and avoid external threat. For

instance, rather than setting high price Tesco should set its price according to its rivalries price.
Otherwise, it will lose its existing as well as potential customers.
P6: Interrelation of strength and weakness with macro environmental factor
PESTEL analysis is done to analyse strength and weakness of Tesco with external
environmental factors.
Political factor: Political factor is a part of macro economic factor which include
government intervention, political stability, government policy, foreign trade policy, tax policy
of a country etc. It has been seen that government implication makes huge implication on the
overall growth of the company.
 Strength: Political stability encourages companies to establish worldwide. Thus, Tesco
has generated huge employment opportunity to fulfil the demand of diverse workforce.
 Weakness: It's difficult to anticipate government regulation, in case government adopt
new policy related to taxation then whole company has to change its existing method and
abide by the law.
Economic Factor: It includes Income of consumer, purchasing power, demand and
supply of particular product in a country, disposable income, interest rate, inflation rate etc.
These factors are further broken down into macro and micro economic factor. Macro economic
factor include demand and supply of particular product in an economy and micro economic
factor includes income, purchasing power, disposable income of customer.
 Strength: Tesco majorly depends upon in its home market that is UK for its revenue.
 Weakness: Any change in policy like decrease in disposable income affect the overall
financial position as well as growth of company. By shifting the focus of company from
advertising its brand to re-establishing its market share.
Social Factor: Social Factor includes population, demography factor, lifestyle of people,
distribution channel, culture of economy etc. These factors are very important to understand
because they directly affect the buying behaviour of consumer. For instance, with change in
need Tesco moved from one stop shopping to bulk buying shopping.
 Strength: As customer are becoming health conscious day by day due to which Tesco
has changed their approach for food items like organic food.
 Weakness: With increase in number of women working outside has lead to decrease in
footfall at Tesco outlet.

Technology Factor: It includes innovation, research and development activity,
technology awareness etc. Moving with change in technology works in favour and helps in
smooth functioning of company. So they much always find new and easier way of doing the
work, promoting their brand, communication with their target market etc.
 Strength: Adoption of advance technology has not only benefited to Tesco but to
customer as well like the mode of electronic point of sales and electronic scanner have
increase the efficiency of serving customer.
 Weakness: Company has to incur huge expenditure in adoption of new technology. This
affect the functioning of overall business.
Environmental factor: It includes climatic condition, tourism, CSR responsibility etc.
These factor encourages business to work ethically and promote sustainable development. Also
the customers want their offerings should be environmental friendly and made from ethical
process or source.
 Strength: Tesco tries to reduce the dependency on natural resources along with that it
minimizes environmental damage.
 Weakness: Tesco pays huge tax on advertising processed fatty food item due to which its
wide range of product suffer.
Legal factor includes employment law, labour law, health and safety law, product
labelling, product safety, copyright, discrimination law etc. It is very important for a company to
abide by all the rules and regulation for its stable functioning in global market.
 Strength: Government policies along with low bargaining power of buyer has limited the
entry for new entrant.
 Weakness: Although, Tesco is a powerful company but sustaining in competitive
environment is very tough. Due to intense competition and price war the overall profit of
company has decreased.
CONCLUSION
From the above report it has been concluded that business environment plays a
significant role in analysing internal as well as external factor which are responsible for the
operations of business. Company whether it is public, private and voluntary uses SWOT analysis
to identify the internal strength and weakness. These internal factor help company to overcome
external threat and exploit opportunity. Moreover, to do analysis more effectively pestle is used

that include whole macro economic factor.

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