Business Environment Analysis

This assignment requires students to analyze the business environment of Tesco, a major UK supermarket chain. The analysis should utilize both the SWOT (Strengths, Weaknesses, Opportunities, Threats) framework and Porter's Five Forces model. Students will need to identify relevant internal and external factors impacting Tesco's operations and competitive landscape.

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Different types and purpose of public, private and voluntary organisation..........................1
P2 size and scope of different types of organisation...................................................................3
LO 2 ................................................................................................................................................4
P3 Relationship of various organisational function and its link with organisational objective 4
LO 3.................................................................................................................................................5
P4 positive and negative impact of macro environment on TESCO .........................................5
LO 4 ................................................................................................................................................6
P5 internal and external analysation of of TESCO to determine its strength and weakness......6
P 6 Relation of internal and external factor with the strength and weakness of TESCO...........8
Conclusion.......................................................................................................................................8
REFERENCES................................................................................................................................9
Books and journals......................................................................................................................9
online.........................................................................................................................................10

INTRODUCTION
Business environment refers to combination of external factor and internal factor that
influences the operational activities of business. it includes factors like introduction of advance
technology, influences of supplier and clients,government legislations, competitors, and social
and economic changes in market. present study is based on TESCO company that work as a
groceries and miscellaneous merchandise retailer. company offer wide range of product and
services to consumers such as clothing , baby products,health and beauty products, electric
appliances,gaming and technology.study will explain the different types and purpose of public,
private and voluntary organisation and its legal structure. further more it will describe size and
scope of different types of companies. It will state the relationship between organizational
function and link to objectives and structure. in addition report will explain the positive and
negative impact of macro environment on operations of business.
LO 1
P1 Different types and purpose of public, private and voluntary organisation
Public sector business
it is an organisation that is owned and regulated by the government and exist in the
market to provide various services to its citizens. these are the self-financing commercial entities.
It provide different goods and services under public ownership for sale. the main motive of
public sector is to earn and maximize profits for its enterprise for example TESCO company that
work as a groceries and miscellaneous merchandise retailer(Hamilton, L. and Webster, P.,
2015). it offers wide range of product and services
Purpose
 the main aim of company is to earn loyalty of its consumers by creating or offering
values goods and services for them.
 The company is aiming to provide wide range of clothing , groceries and electronic
goods and variety of services by using online platform.
 Business has objective to develop the online buying experience of its customers for
attracting large number of group of people. that will ultimately assist firm in achieving its
main goals(Khan, Alam and Alam, 2015).
Legal structure
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 TESCO is a multinational company that follows the legal structure in order to operates it
activities properly.
 Business has implemented the structure for corporate governance. They have complied
all the rules and regulations of UK corporate governance code.
Private sector organisation
this organisation is a part of economic system of country that is operated by companies
and individual without any regulations of government.. such as Wait rose is a supermarket that
operates in food retail division. It is largest employee-owned retailer in Britain.
Purpose
 the main objective of wait rose is to attract large number of customers for generating
more profit for company.
 The company wants to open large number of stores that will help in balancing cost and
enhancing the revenues for firm(Radu, 2015).
Legal structure
 its regulated structure is developed to safeguard the partnership's for longer duration and
to ensure the firm's integrity and prosperity.
 The partnership council of enterprises is unique in corporate governance. It is directly
elected by its partners they hold chairman into account. Company appoints five board of
director in partnership board.
Voluntary organisation
A group of people that comes into an agreement volute rely in order to form an
organisation for accomplishing any purpose or objective. This company relies on occasional
volunteers for performing various operations. for example Red cross is an humanitarian
organisation.
Purpose
 the main objective of firm is to prevent and improve human suffering around the world.
 Business has a purpose of protecting health and life of people suffering disaster and for
ensuring respect for society.
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Legal structure
 The rules governing a voluntary group are set out in constitution.
 There are three main legal structure used by voluntary sector such as association, trust
and company limited by guarantee(Savrul, Incekara, and Sener, 2014).
 There is no separate legal identity of voluntary sector in red cross organisation.
P2 size and scope of different types of organisation
There are three various types of organization such private, public and voluntary. In order
to that, all companies have different purpose, size and scope.
Criteria Private organization Public Organization voluntary
Organization
Purpose Private organisation are
operated by individual.
Such as waitrose. The
company wants to open
large number of stores
that will help in balancing
cost and enhancing the
revenues for
firm(Hamilton, L. and
Webster, 2015).
the main motive of public
sector is to earn and
maximize profits for its
enterprise. Such as
TESCO the important aim
of company is to earn
loyalty of its consumers by
creating or offering
valuable goods and
services to them(Radu,
2015).
The goal of voluntary
organization is to
providing services for
non profit. For
example Red Cross.the
main objective of firm
is to prevent and
improve human
suffering around the
world
Size There are 52590
employees are working in
company . Revenues of
company is £5,400.4
million
There are 476000
employees are working in
TESCO Revenues
generation is £55.9 billion
There are 3500 staffs
and 32500 volunteers
are working in British
Red Cross.
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Scope The net income of wait
rose is £173.5 million
The net income of £(54)
million (2017)
British Red Cross is
non profit
organization.
Competitive
Analysis
Waitrose is highly
competitive as compare to
ASDA
the company is highly
competitive as compare to
ALDI
British Red Cross is
society that work for
welfare of the people
suffering from disaster.
LO 2
P3 Relationship of various organisational function and its link with organisational objective
TESCO is a multi national company that operates as groceries and general store retailer.
The company is the third largest merchandised retailer in the world in term of its gross revenue
generation. Enterprises is aiming to provide wide variety of clothing , groceries and electronic
goods and variety of services by using online platform. They want to develop the online buying
experience of its customers and attracting large number of group of people. that will ultimately
increase the revenue generation trough sell(Prajogo, 2016).
Finance function: this function assist TESCO in keeping the record of various electronic
transactions relating money received on sell of grocery, electronic product and amount bill
payable to the various suppliers of goods in the entity. This information is further used in
making financial statement for legally operating the operations and for making taxation report
for the store. The detail is also helps in producing management accounts for making plans and
reviewing strategies. The plans are formulated by senior manager in company. in company the
finance department assist in allocating wages to workers in business by deducting all the taxes
and pension of employees.
Human resources function: the main role of human resources department is to recruit, select
most suitable employees for the organisation. This assist firm in getting the personnel having
following such as influencing skills, communication skills, strong negotiation power so that
company will be able to attract large number of consumers in the market(Savrul, Incekara and
Sener, 20140. human resources department also perform a functions of providing training and
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development to new employees for enhancing their skills and capabilities of sells that help firm
increasing the revenue generation and also in gaining huge success.
Sales and marketing function: the market depart in business helps in identifying and analysing
the needs and wants of consumers so that company is able to offer its customers various product
as per their requirement. This marketing function assist in developing suitable strategies for
satisfying the demands of target audience(Slutsky and et.al., 2016). Through Sales function helps
in influencing consumers to buy the final product of company that is manufactured by
conducting market research. They use various strategy to persuade people telephone selling ,
sending mails to potential consumers. that assist TESCO in promoting its grocery and electronic
product and generating awareness among the customers regarding the new offering of entity.
LO 3
P4 positive and negative impact of macro environment on TESCO
There are various external environmental factors that is impacting on the operations of
firm negatively and positively like
political factor: TESCO is a multinational retailing company that operates its operation around
the globe. The company performance gets affected by several political influencing factors such
as tax policies and taxation rates of government. Due to high taxation rates, company is unable to
generate high profits through sells. due to financial instability in the globe. Te government has
encouraged retailer to create employment opportunities for domestic population(Rastogi and
Trivedi, 2016). Tesco has also created various job opportunities for people and ultimately that as
helped in increasing the demand for its product and services and also diversified its manpower.
Economic factor: economic changes policies like changes in taxation policies of government ,
inflation rates. These changes impact on availability of profitability in the firm. Business has
enhanced its operational activities by operating its activities in global market but still its market
share is around 30 percent due to high tax rates of government. because of decrease in income
level of household people. TESCO has shifted its priorities by focusing promoting its brand
value through advertisements instead of providing luxurious quality product to consumers. that
strategy has improved its brand loyalty among target audience(Somerfield, Dashfield and
Warwick, 2018).
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Social factor: social changes i.e. changes in customers trends such as they have shifted their
focus on bulk buying and one-shop. so TESCO needed to maintain large variety of food items in
its stores. The type of product demand gets influenced by social belief and attitudes of
customers and also by social condition in market. The people are becoming more health
conscious and getting aware of several health issues due to this reason , company is continuously
making changes in its food. TESCO is implementing this change by accommodating the demand
and requirements for healthy and organic product. This essential steps of change leads to
achieve high loyalty of people in market(Khan, Alam and Alam, 2015).
Technological factor: new advantages in technology brings a lot of opportunities for TESCO
company. such as introduction of online shopping with home delivery services that provides
convenience to people and helped firm in increasing target market for product and self- services
point have offered convenience to consumers and reduced labour cost for organisation. it also
involve huge cost in adopting new technology.
Environmental factor: due to increased number of environmental issues company needs to make
changes in its operations for providing the benefits to society. TESCO has taken initiative to
reduce carbon footprints upto 50 percent. the company is taking steps to reduce its wastage in
its stores by enhancing social morality among customers that has helped in increasing the brand
images of entity in society.
Legal factor: government policies and taxation rates affects the performance of TESCO. like
Food retailing commission act 2004 has been introduced by law without any previous notice that
has forced firm to change its prices or demanding payments from suppliers of goods. Business
reduced the prices of fuel according to amount spend on grocery products. The company also get
an opportunity of generating high income due to decreased taxation rates of government(Slutsky
and et.al., 2016).
LO 4
P5 internal and external analysation of of TESCO to determine its strength and weakness
Internal analysis
strength:
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 the company has won various awards for its shopping experience and high retail
excellence and superior quality of customer services. Business has high brand equity and
recognition in the global market and it is famous for its quality of product and services.
 enterprises has improved the utilization of technology in its several operational functions
that has created higher cost efficiency increased the service experience of
consumers(Tesco SWOT analysis, 2017).
Weakness: some of the subsidiary companies of TESCO are not operating efficiently and also
its finance profit level has also affected by recent credit crises so they have to move from its
global operation. the cost of inventory of company has increased, because consumers have
stopped buying of large items due to low disposable income and entity has not make adjustments
in its inventory and selection.
Opportunities and threats:
company has an opportunity to achieve growth and success through online market as well as
offering convenient services to people through home delivery services. TESCO has an
opportunity for strategic alliances with so many brands in order to offer large variety of product
and attract large group of people in a particular market.
Threats : TESCO is facing the challenges of labour threat due to demand of increased wages
rates and other benefits across the globe that has increased cost of entity and also impacting its
pricing strategies. The rising in raw material cost is affecting the profitability of TESCO and
forced firm to enhance its number of suppliers in order to achieve suitable prices on its raw
material(Slutsky, and et.al., 2016).
External analysis of TESCO
Porter five forces Threat of substitute: company offer wide range of product and services to consumers
such as clothing , baby products,health and beauty products, electric appliances,gaming
and technology. supermarket chain have large number of substitute for its product that
lead to switch in demand of the customers towards competitor product and
services(Prajogo, 2016). this forces assist company in comparing its product quality and
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quantity and prices with its competitors. That ultimately helps in reducing the cost of the
firm(Porter five forces analysis of TESCO, 2017). Rivalry among firm: the competitiveness of TESCO's food and grocery retail operations
is affected by the amount of increased advertisement cost and enhancing differentiation
of its services and goods. the intensity of competition has increased due to fact that there
is no switching cost for consumers. Bargaining power of supplier:there are number of supplier for TESCO product and
services and there is no switching cost of supplier. Company make delay in making
payment to its suppliers in order to enhance its profit margin. That has negately impacted
the image of the brand in the market. but on the other hand they maintained good
relations with supplier that has increased their satisfaction with company.
 Bargaining power of consumers: the bargaining power of consumers affect the pricing
and quality of product and services of TESCO. the power of customer is high in case of
large number of sellers available of the product. so they may switch towards one
competitor products to another. The buying power of customer is weak in case they
purchase small amount of product and the business offering are offering exclusive quality
of product. that does not impact much to the operation of company.
P 6 Relation of internal and external factor with the strength and weakness of TESCO
TESCO has achieved high satisfaction level of its consumers by providing them high
quality of shopping experience . The increased brand of firm helps them in attracting more
consumers at the marketplace. enterprises has improved the utilization of technology in its
several operational functions that has created higher cost efficiency increased the service
experience of consumers. so at the time of changes in technologies they will be able deal with
those changes. the cost of inventory of company has increased, because consumers have stopped
buying of large items due to low disposable income and entity has not make adjustments in its
inventory and selection(Savrul, Incekara and Sener, 2014). Due to increased cost of entity. It will
be unable to adopt new technologies for its operations.
Conclusion
From the above study it can be concluded that offer wide range of product and services to
consumers such as clothing , baby products,health and beauty products, electric
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appliances,gaming and technology. The company is aiming to provide wide range of clothing ,
groceries and electronic goods and variety of services by using online platform. It has been
identified in report entity is using various strategy to persuade people telephone selling , sending
mails to potential consumers. that assist TESCO in promoting its grocery and electronic product
and generating awareness among the customers regarding the new offering of entity.
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REFERENCES
Books and journals
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Khan, U.A., Alam, M.N. and Alam, S., 2015. A critical analysis of internal and external
environment of Apple Inc. International Journal of Economics, Commerce and
Management. 3(6).pp.955-961.
Maqbool, N., Hameed, W.U.L. and Habib, M.U., 2018. Impact of political influences on stock
returns. International Journal of Multidisciplinary Scientific Publication (IJMSP), 1(1).
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics.171.
pp.241-249.
Radu, M., 2015. The impact of political determinants on economic growth in CEE
countries. Procedia-Social and Behavioral Sciences.197. pp.1990-1996.
Rastogi, N. I. T.A. N.K. and Trivedi, M. K., 2016. PESTLE technique–a tool to identify external
risks in construction projects. International Research Journal of Engineering and
Technology (IRJET). 3(1).pp.384-388.
Savrul, M., Incekara, A. and Sener, S., 2014. The potential of e-commerce for SMEs in a
globalizing business environment.Procedia-Social and Behavioral Sciences.150. pp.35-
45.
Slutsky, J., and et.al., 2016. Patterns of public participation: opportunity structures and
mobilization from a cross-national perspective. Journal of health organization and
management.30(5).pp.751-768.
Somerfield, P.J., Dashfield, S.L. and Warwick, R.M., 2018. The structure and organisation of
integral marine benthic communities in relation to sieve mesh size. Journal of
Experimental Marine Biology and Ecology.502. pp.164-173.
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online
Tesco SWOT analysis. 2017. [online]Available
through:<https://businessteacher.org.uk/swot/tesco.php>
Porter five forces analysis of TESCO. 2017. [online]Available
through:<https://joshaddo.wordpress.com/2017/01/18/porters-5-forces-analysis-of-
tesco/>
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