Understanding the Business Environment

This article discusses the importance of Porter’s Five (5)-Forces model for Tesco to have a better understanding of the competitive environment and to formulate effective strategies to have higher profitability and competitive strength. It also includes a stakeholder analysis process on Tesco plc to recognize the company’s stakeholder group and a comparison of different types of business organizations. The article is relevant for students studying business and management courses.

Understanding the
Business Environment

Table of Contents
Task one...........................................................................................................................................1
Compare following organisational types under a classification system that is often adopted for
its practicality.........................................................................................................................1
Task Two.........................................................................................................................................3
Define terms and apply stakeholder analysis process on Tesco plc to recognize the company’s
stakeholder group...................................................................................................................3
Task Three.......................................................................................................................................5
Importance of Porter’s Five (5)-Forces model.......................................................................5
Task 4...............................................................................................................................................7
Explain how the application of monetary and fiscal policy might be used to stimulate a
country’s economy. Use an example of a country with which you may be familiar.............7
REFERENCES................................................................................................................................9

Task one
Compare following organisational types under a classification system that is often adopted for its
practicality
Business organization tend to includes and comprises of the entity and firms that are tend to
be formed for the purpose and main of the carrying on commercial set of the enterprise. Beside
this, based on the systems of law governing along with the based on legal structure and contract
and exchange, property rights, and incorporation the business organisation are tend to be divided
and bifurcated into many types. A discussion about the some come set and type of business
organisation has been provided and discussed as below:
Public sector- these comprise of the business organisation which are tend to be controlled
and managed by the central or state government. Besides this, the main aim and purpose of the
public sector organisation is to meet the basic needs and rights of the citizen of the nation. Thus,
the main focus of the public sector firm is not profit maximisation but includes of serving the
basic needs of the citizens along with earning a sufficient amount of review. Apart from this, the
finding and revenue earning of the public sector organisation is tend to meet through the taxation
revenue and reserves of government (Zainaddin, 2022). Beside this, based on the legal structure
the public sector is tend to be divided into three main categories which tend to include of the
central government, statute government and local government firms.
 Central government - The central government firms are being controlled and
managed by the central government which consist of firms that provide national
secure and other basic needs such as army of a nation.
 State government- the state government comprise of the one that have their business
operation in some specific state and its operation are management by that particular
state such as organisation providing education and health facility.
 Local government- the local government organisation consists of the municipal
corporation that are controlled by local governmental body that meets the basic
needs such as cleanliness of the local society (Mariappan and et. al., 2022).
Voluntary and charitable sector- Theses set of business organisation comprises of the one
which are being formed with the main aim of serving the society and not focuses on earning of
higher profit. The main purpose of charitable sector is to create a sense of equality and
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supporting the vulnerable group of the society to have and meet their basic rights. For instance,
save the children is a well-known charitable organisation that is serving and working for the
welfare of the child across the world. Beside this, based on the legal structure the charitable
sector can be inform of trust and community interest companies.
 Trust- The charitable trust is mainly managed and controlled by the its members and
the financial needs of charitable sector are being made by the donation made by its
members (Sara, 2022).
 Community interest companies- These are the company which tend to operate and
work with the primarily social positively whose surpluses are principally reinvested
for that purpose in the business and the well fare of the community, rather than being
driven by the need to maximize profit for shareholders and owners.
Private sector- this sector tends to comprises of the business firm that work with the main
aim and purpose of the profit maximisation and higher growth level. The private organisation are
being created, managed and controlled by the private individuals or group of individuals.
Further, based on the legal structure the private sector tend to comprises of three main types of
organisation consists of sole proprietorship, partnership and company.
 Sole proprietorship- The sole proprietorship are the one which tend to be created and
managed by a single private individuals thus, it has limited legal formalities and all
the risk and profit is being beard by a single individual.
 Partnership- partnership tend to includes and comprise of a group of 2-20 people
who are working together to achieve a common set of target. Further, the rules along
with profit and risk sharing of the partnership firm are controlled and lead by
partnership deed in written form (Mariappan and et. al., 2022).
 Private companies- These tend to have a speared legal status from its members which
are known as shareholders who investment funds and money for the meeting day to
day expenses. Private companies comprises of organisation that are quite larger in
size and includes of the larger workforce the main purpose of which is to earn higher
level of profit along with focusing on growth at global level.
Comparison in various types of organisation
Basis Public sector Voluntary sector Private sector
Purpose Meet basic needs of Ensuring equality in Aim at profit
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citizen society and meeting
needs of vulnerable
group
maximization and
higher growth rate
Funding From government
revenue and taxation
Donation from
members
Investment by
Shareholders or
private individuals
Controlled and
managed by
Government Private members Private individuals
Types State government
Central government
Local government
Trust
Community interest
companies
Sole proprietorship
Partnership
Companies
Task Two
Define terms and apply stakeholder analysis process on Tesco plc to recognize the company’s
stakeholder group
Stakeholder: A stakeholder is any individual or organisation with a stake in the business or
project. Stakeholders will have a substantial effect on a firm's operational and financial choices.
Owners, lenders, workers, and even the surrounding area are instances of stakeholders. In
summary, stakeholders might be a much bigger set of organizations than the much more typical
group of shareholders that control a corporation. Stakeholders can be both inside and external to
the organisation. Internal stakeholders are people inside a corporation who have a provides jobs,
financial, or finance interests. Workers, executives, trustees, contributors, and financiers are
examples of internal stakeholders. Exterior stakeholders are individuals who are influenced
unintentionally by either a firm’s choices or consequences (Brocato and et. al., 2022).
Shareholder: A shareholder is a person or entity that has made a financial investment in a
firm in consideration for a "share" of property. The company's possession is reflected by
ordinary or preferential share capital more by corporation and retained (i.e., owned). Important
and common stocks are priced differently, expose stockholders to various percentages of the
income statement, and may or may not have voting power. Shareholders in small & mid
corporate entities are frequently active in company governance. This is significantly less
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common in bigger, public listed companies, wherein groups of management make day-to-day
judgments (Raut, Sakpal and Soni, 2022).
Stakeholder analysis: Stakeholder Analysis is a method that is widely was using to
investigate specific the protective shield generated either by person or group of people who can
impact or is affected by a firm's accomplishment of goals. SA analyses the methods in which
users may affect or be impacted either by employee's performance, and also their attitudes to
towards the organisation and its goals. SA is a component of stakeholder analysis and is often
performed after stakeholder analysis. Transformation supporters can know how to effectively
satisfy constituents based on facts about their values and ability to resist change, ensuring that
measures proposed are politically feasible and durable (Zheng and et. al., 2022).
There are numerous stakeholders associated with the organisation, which may be divided
into internally and externally analyses (Saha and et.al., 2021). Workers, managers, and
ownership are examples of team members. External stakeholders, but at the other hand, include
shareholders, rivals, vendors, investment firms, and so on. Stakeholder analysis is focused with
determining who's interests can be taken into account.
Keep satisfied
These are high influence and low stake so
required to be handled with care
customers
 Sponsor
 Regulator
Managed closely
These are high influence & high stake which
is top priory
 Management
 Investor
 Customers
 Partners
Monitor
Low influence & low stake is low priority
 Trade unions
 Consulting admin
 Sales executive
Keep informed
Low influence & high stake need help to
participate
 Workers
 Suppliers
According to that stakeholder analysis, every stakeholder has a distinct amount of influence and
interests in the organisation. Here on account, it is possible to say that they are impacted.
A business association's vital stakeholders
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 Consumers: These would be the folks that buy things from stores in order to ensure the
safety truly needy. Customers desire dependable items at reasonable pricing.
 Owners, directors, and managers are examples of workers.
 Directors: Investors have a personal financial'stake' in the company since they took a
chance through participating in it.
 Managers: Supervisors are in charge of achieving goals and establishing a positive work
environment for Tesco employees. Every management is accountable for accounting,
legal, advertising, marketing, and manufacturing (Lašáková Remišová and Bohinská,
2022).
 Suppliers: They provide industrial items to Tesco. They provide commodities to various
departments. Companies are always in contact with Tesco in order to obtain supplies.
 Owners: They run the company, own the resources, and compensate the employees.
Pressure organizations do not run election campaigns, but instead seek to change national
policy norms.
Tesco values all of its stakeholders. They are, however, not extremely relevant or strong. Certain
stakeholders wield significantly greater power than some others. For example, the chairperson,
shareholders, and other top executives outline the organizations corporate and directing
subsequent. Nevertheless, key decisions must be approved by the shareholders. Several
investors, for example, were opposed to Tesco's acquisition of Booker, a restaurant supplier.
Eventually, Tesco eventually completed its £4 billion buyout of Booker after more than 85
percent of its shareholders ruled in support of the deal.
Task Three
Importance of Porter’s Five (5)-Forces model
the Porter’s five force model tend to provides and supports a framework that is used by a
company to analysis and review its competitive environment. Beside this, it has been seen that
the making use of the porters five force analysis is tend to be important and significant as it
supports a vital tool for having better understanding about the main set of the competitive forces
at work within the specific industry. Beside this, the making use of the Porter’s Five (5)-Forces
model is also important and vital to help the effective access to the attractiveness of the industry
based on reviewing the key pinpoint areas that supports better strategy formulation to have
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higher competitive strength and profitability level. Along with this, the Porter’s Five (5)-Forces
model tend to be an important and vital part of the marketing strategy of a firm that helps to
effectively analysis the level of prefeasibility industry opportunity and threats along with getting
higher information about the competitors to come up with and have improved strategy
formulation (Chowdhury and et. al., 2022). The key five (5) most critical influences arising from
the competitive market environments both at the nationally and internationally level are
discussed below in context of Tesco with the help of determinants of the Porter’s Five (5)-Forces
model:
Bargaining power of the customers- it has been seen and analysed that the Tesco tend to
serve million of customers on a regular basis through its stores and online website. However, a
large number of competitor retailer are also present within the retail sector of UK. Thus, the
customers are having a larger options to get shift to. Thus, the customers of Tesco are having a
high bargaining power. Therefore, Tesco needs to have effective strategy such as offering higher
discounts and other packages to attract and cater a large number off customers along with
retaining them for a longer period of time.
Bargaining power of suppliers- it has been seen that retail industry of UK is having many
suppliers that offer quality product at reasonable price. Thus, bargaining power of the suppliers is
tend to be low because of the presence of many larger suppliers within the retail industry.
Threat of new entrants- It has been seen that the Tesco is tend to face a low and limited
threat from new entrants as Tesco is being a very big multinational brand Thus, the new and
emerging stores could not be able to have that much investment to caret risk for Tesco. Beside
this, it is also not feasible for new entrants to have enough money and expertise to access the
distribution network and expertise to explore the target audience of Tesco.
Threat of substitute product- Tesco is offering a larger variety of products and services
along with wide product portfolio. However, its competitors are also being dealing in the similar
products and services. Thus, a considerable level of threat of substitute is being faced by the
Tesco within the retail industry of UK. Thus, it become vital and essential for the Tesco to
continuously lock out for having regular innovation and creativity within its product and services
to makes its product better than the other competitors in the market (Roelandt, 2022).
Rivalry among the competitors- a high level of competition is being prealing within the
retail sector of UK having many big brands that is creating cut throat competition for Tesco.
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Many multinational organisations such as Asda, Sainsbury, Marks and spencer, etc are leading a
high threat of competition for Tesco. Thus, to overcome and mitigate the challenge of high
competition Tesco needs to effectively focus on improved marketing strategy to attract and cater
a larger number of customers.
Based on above discussion about the five-force model in context of Tesco it has been
seen that to gain competitive strength within its target market Tesco needs to mitigate the risk of
high competition along with bargaining power of customers and substitute product. Thus,
offering discounted products and services along with exclusive offers could be made by Tesco to
have higher competitive strength. Along with this, focusing on leading improved quality product
would also supports higher competitive power. Beside this, making use of digital marketing and
social media platform would also lead to enhanced competitive strength based on having better
communication and interaction with target audience (Sahoo, Kumar and Upadhyay, 2022).
Task 4
Explain how the application of monetary and fiscal policy might be used to stimulate a country’s
economy. Use an example of a country with which you may be familiar
Monetary policy: The amount of funding moving all through business is determined by
monetary policy, which is a crucial element in a country's economy. The Reserve Bank
administers macroeconomic policy in the United Kingdom, which impacts economic activity
through managing the nation's monetary base and credit. The Federal Reserve oversees monetary
policy by modifying borrowing costs and the sum of funds banks are required to maintain in
deposit. Monetary policy is the actions done by a nation's central bank to manage the amount of
money in circulation to maintain economic security (Chen, Nguyen and Ha, 2022). The
Authorities of the UK are effectively making the use of the monetary policy to enhance the
growth of the economy for instance, use instruments like as lending rates, deposits, securities,
and so on to regulate money movement in order to increase jobs, GDP, and non - inflationary.
Beside this, it has been also seen and find out that the UK monetary policy is set by the Monetary
Policy Committee (MPC) of the Bank of England. Further, the Bank of the England are tend to
be Independent in setting and fixing of the interest rates but still they need to have to try and
meet the government’s inflation target Along with this, it has been also seen that the Bank of
England is also responsible to set the base rate as well as the rate commercial banks that are fixed
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to borrow from the Bank of England. It has been seen and find out that the monetary policy is
tend to be concerned with the managing and leading the changing within the supply of the money
stock through adjusting the rate of interest (Duncan and et. al., 2022). Thus, a vital role is being
played by the monetary policy of UK is leading and setting out higher stability in the economy
along with supports it improve growth based on leading full employment and higher potential
output level by the way of influencing the level of the aggregate demand. Beside this, it has been
also seen and find out that the at the times of recession a vital role is being played by the
monetary policy by the way of involves the adoption of some monetary tools which are vital and
helpful to increase the money supply as well as the setting the lower interest rates so as to
stimulate aggregate demand in the economy. However, at the time of the inflation, the monetary
policy of the UK tends to seeks to contract the aggregate spending by tightening the money
supply or raising the rate of interest. Thus, a vital and crucial role is being played by the
Monetary policy in bring higher stability and growth in the economy of UK (Storm, De Marigny
and Thakhathi, 2022).
Fiscal policy: Fiscal policy is the process through which a government modifies its tax
levels and expenditure levels in order to impact and manage an economic growth. This is a sister
technique to financial regulation, in which a banking system influences a country's monetary
base. Almost all of these strategies are used in varying configurations to guide a nation's
economic objectives. In opposition to fiscal policy, which really is concerned with taxes and
social spending increases and is overseen by a federal agency, monetary policy is concerned with
the nation's interest rates and is frequently overseen by the nation's banking supervision
institution. Further, it has been seen and find out that the fiscal policies are the one that are used
to influence the overall level of the economy by the way of the manipulating tax rates along with
having modification in the interest rates, and also comprising of the adjusting the government
spending. Along with this, it has been also seen and analysed that the UK economy is one of the
most globalised economics in the world thus it need to have a better fiscal control to effective
manage its revenue for better growth and development of its economy. A major role is being
played by the fiscal policy in managing the economy by the way if the leading a balance in the
economy through modifying the effective of tax rates and other public spending. Along with this,
the fiscal policy of UK is based on Expansionary fiscal policy that is effectively used to stimulate
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aggregate demand and boost the rate of economic growth by the way of the having of the higher
spending and lower taxes to supports higher growth rate of its economy (Mobus, 2022).
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