Risk Review: Analysis of Risk Factors for Business Innovation

Business Environment

Table of Contents
INTRODUCTION ..........................................................................................................................4
MAIN BODY...................................................................................................................................4
Microeconomic factors-industry level evaluation.......................................................................4
Macroeconomic factors ..............................................................................................................5
Summary of strongest risk factors ..............................................................................................7
Proposal to mitigate the risk .......................................................................................................8
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment basically refers to the collection of external and internal factors
such as employees, customers, management, demand and supply, innovation in technology,
market trends, social trends and economic changes etc. These are the factors which affects the
performance of company into direct or into indirect manner. In the present report, TESCO is
taken into consideration(Ananthakrishnan.,2015).The review of risk is very important at the
organisational level in order to meet out the organisational goals and objectives as well. It is a
multinational company which is British retailer that is headuartered in Welwyn Garden City,
England. The present report will cover discussion about micro economic and macro economic
factors which basically include political risk, security, environmental and social factors. The
report also consist of the strongest factors of risk and also about proposals in order to mitigate
those risks.
MAIN BODY
Microeconomic factors-industry level evaluation
The industry level evaluation can be done with the help of microeconomic factor which
basically include Porter's five forces analysis which is defined into the following manner:
Porter's five forces analysis of TESCO
Bargaining power of customers: The main factor which is concerned with customers
bargaining power which is due to large number of retailers into competitive manner into the
market. The products which have been given through the store are majorly have relationship with
basic needs of customers. These stores also have the capability to choose the storeswhich gives
maximum level of economic scale. Here the customers power of bargaining assumed to be low
and the product are of that kind that has lowest level of of hope of creating loyalty with them.
The cost of switching which includes shifting the store from one to another is also less for the
customers when products consideration is from the TESCO company.
Bargaining power of suppliers: In context to TESCO company, suppliers have less
power of bargaining and there are large number of suppliers who have provided the retail stores
with their products. (Aven.,2016). The negotiation power is only into the hands of owners of
retail and they have upper hand into the context of closing the deal through deciding the price.

It gives an opportunity to retailers to select products of those vendors which provides
them at the lowest price which assumes that they have the same quality. This makes the power of
suppliers bargaining power weaker when its about TESCO operations.
Competitive Rivalry: The sector in which TESCO company has been dealing has higher
level of competition and these competitors are Wal mart, Carrefour, ASDA etc. These are
basically established firms with logistic networks and strong supply chains which are barely
different from each other(Elshandidy and et.al.,2018). Companies have basically tried to
position themselves in a different manner as compared to their competitors by their diverse
marketing campaigns. The products which have been sold out by the organisation is for the
purpose of basic needs of people and the wars of price have the significance in the realm of
competitive world.
Threat of substitutes: There are variety of products that can substitute the products
which are real and the products sold by the company of TESCO has to fulfil the basic needs.
Here the substitutes threat is very low where price is the main factor for those customers who are
regular for their products. It has been observed that when somebody offers that product which
are on lower range then people generally buy from them which fulfil their needs which are
related to the daily basis. It basically lowers down the substitute threats to further levels which
are into lower terms and the company is basically famous for their products lines which are into
the finest terms that provides the major importance into the market. In this case, the substitute
threat will be external force which are into moderate terms that affects the whole operation od
company of TESCO.
Threat of new entrants: The main factor which affect the TESCO company operations
which is the threat due to the new entrants into the market. For a new entrant, starting a store into
positive manner requires a lump sum amount of capital requirements(Foster and et.al., 2015). A
new player into the market finds it very difficult in order to provide a high level of discount or
offers to their products which act as disadvantageous factor. In context to TESCO company, the
threat of new entrants act as the weak force in order to perform properly into the market.
Risks: There are major risks related to substitute products and competitors of TESCO company
which creates challenges for the organisation.