Organisational Structure and International Expansion - TESCO

This presentation discusses the organizational structure and functions of TESCO, factors affecting its international expansion, PESTLE and SWOT analysis, and the impact of digital technology on its international business.

Organisational Structure and
International/Global Expansion
STUDENT NUMBER -

Table of contents
• Introduction
• TESCO that has expanded into international markets,
• Types of organisational structures
• Organisational structure of TESCO
• Influences/factors that have affected international expansion of
• PESTLE Analysis of TESCO
• SWOT Analysis of TESCO organisation:
• Impact of digital technology on the international business
• Conclusion
• References

Introduction
Organizational structure refers to organizational planning that includes branches, departments and activities in
which organizational activities take place (Henry, 2021). The global change with international trade is a
growth process that is supported by a strong organizational framework. This presentation will provide an
overview of the organizational structure and functions of TESCO. In addition, the report will address the
company's various needs to assess market conditions for its growth in the international market. Finally, this
report will highlight the effects of digital technology on business growth activities.

1) TESCO that has expanded into international markets
TESCO is a grocery store and retail organization based in Welwyn garden, London, founded in 1919. The effective
management and strategies of company assisted its growth and expansion globally (Tesco, 2021 ). This retail brand
deals in selling of mainly food products and operates in eleven countries with owing approximately 4600 stores
indicating its high market presence. This well established company is the third largest retail brand measured in
revenues.

Various activities across TESCO
There are several business functions at TESCO that are as follows:
• Financial function: TESCO's financial function covers a wide
range of functions such as organizing the organization's financial
policy, financial management, production costs, credit facility,
accounting, debts and salary management and customer payments.
• Marketing and sales: TESCO's marketing function has a major
responsibility to increase sales of the company's products (Bashan,
and Notea, 2018). There are other organizational marketing
activities, including export management, advertising, market
research, etc.
• Production Function: This activity is closely related to obtaining
production tools and services at low cost to maximize
organizational profits.

Types of Organizational Structure
In particular there are seven types of organizational structures that are as follows:
• Hierarchal organization structures: Contains a pyramid structure or a hierarchal structure in which the upper
person has higher authority and power which declines gradually as it descends.
• Functional organizational structures: This is similar to hierarchical structure but in this case with authority,
responsibility is at the same level and decreases gradually as it goes down.
• Horizontal organizational structure: It is the organizational structure with full organizational authority and
responsibility in which a senior manager manages all his subordinates.
• Divisional organizational structure: This type of organizational structure consists of the departments in
which they build their operating system in order to complete the task in consultation with other departments.
• Organizational structure of matrix form: This type of organization consists of collaborative relationships in
which all employees work effectively by working with each member.
• Team-based organizational structure: This type of organizational structure involves working in a group
where a few people with different skills are divided into one group to do the work.

Organizational Structure Chosen by Tesco
The TESCO organizational structure follows hierarchical structure in which the structure, position and
responsibility are divided properly ensuring constructive flow of operations. The hierarchical structure from top to
bottom, means that the higher person will have greater authority over his subordinates and have greater
responsibility on him.

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Influences/factors that have affected international expansion of TESCO

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The critical drivers of globalisation are identified below:
• Technological drivers: Rapid technological change is among the key issues in TESCO's global trade. The
development of ships, vast area network, cointaineering, low area network, cell phones, cellular network and
the Internet has facilitated international communication and led to a global trade process (Technology in
Tesco, 2016 ).
• Government / political drivers: As a result of international freedom policy the economies has witnessed less
challenges to global trade. The General Agreement on Taxes and Trade (GATT) established in 1947 and the
establishment of the World Trade Organization (WTO) in 1995 opened doors to companies in connection with
the united world trade.
• Market Drivers: Customer demand has grown significantly with availability of various products available
worldwide. This creates a need for markets to grow internationally and to opt for international trade.
• Cost drivers: The fact that product cost varies from place to place due to the availability of components
needed to produce the product. A major responsible feature of TESCO's international operations is the
availability of low-cost products to customers.

PESTLE
PORTERS 5 FORCES
SWOT/ VALUE CHAIN/VIRO

Evaluation of Models
• Pestle factors affects the external environment which is beyond the control of an organisation. The operations of
Tesco are likely to affect by impacts of Brexit which would cause trade restrictions for the company.
Economical factors directly affecting decision making of company through changes in employment wages act.
Social factors are favourable in context to Tesco as people are becoming more inclined towards high quality
fresh food products. In technological aspects, online marketing helps in enhancing customer base for the
company. In legal and environmental context the company ensures compliance with legal and environmental
standards.
• According to analysis of porter's five forces, the threats discovered in the model are very important to
determined for analysis of competitiveness in the market (Who are Tesco’s main Competitors, 2021 ). The
threats of new entrants is low as the it is not possible for a emerging business to compete with Tesco.

PESTLE Analysis of TESCO
PESTLE is framework which helps to evaluate external environmental factors that affect the industry and
companies or firms in an industry. Organizations such as TESCO can carefully evaluate these factors to
determine threats and organizational opportunities for effective growth. The PESTEL analysis is as follows:
• Political factors refer to those government-created situations such as tax policies, trade restrictions,
international exchange prices, etc. that affect the business.
• Economic factors are those economic conditions which includes factors that directly affects the economic
conditions of an area such as inflation, employment rate and other economic factors affecting the business.
• Social factors are the trends and practices that exist in the community or culture and that affect people's choices
that influence the organization's performance in a particular area.

SWOT Analysis of TESCO
STRENGTHS WEAKNESSES
 Strong foothold in the market and higher brand value
 Biggest grocery retailer in the UK
 Diversity of products and huge market area
 Huge market coverage and GDP contribution
 Europe’s largest private employer
 Located at multiple places
 Constructive supply chain
 Inability to expand in many countries
 Fraudulent practices and court trials
 Reduced operational profits
 Low cost tactics
 Negative Product recalls
 Inefficient operational performance in certain countries
 Indulgence in Unethical trade practices
OPPORTUNITIES THREATS
 Possibility of growth through strategic alliances
 Joint private/public ventures internationally
 Introduction to digital Business models
 Emerging new economies
 Cashless transactions
 comparison of prices with global economy
 Challenges for international growth
 Legality threat due to ‘fake farm’ issue
 Brexit situational crisis
 Competition and challenges from supermarket giants
 Economic or credit crunches or shortages
 Supply chain across borders internationally

Impact of digital technologies have on their international expansion strategy?
The biggest changes in the world are related to digital technology that occurred in last two decades.
Digital technology is a major factor in development. They also have an impact on public health. The
organisation communicate directly or indirectly, by new innovations, for example, TV or use an online
bank etc (Van De Sanden, S. and et.al., 2020). One of the highlights of digital technology is related to the
communication and transfer of data. Technology has made it possible to use communication tools in the
field of creating awareness that allow for the commencement and rise of awareness. Digital
advancements creates a virtual world across us that seems real to humans because of the features that
define the player in the visual environment. This has helped TESCO's development as an international
business and expanded its operations in many countries.

Conclusion
It is concluded from the above report that organizational structure holds a high significance in
maintaining overall functioning in the markets on global level. In the above report it is found that various
operational activities, such as financial functions, manufacturing, marketing operations etc. are performed
by the business. Also, the presentation reflected upon various organizational structures mainly
hierarchical structure, flat structure etc. which can be accepted by the organization. In addition, the report
provides a detailed analysis of the various components of foreign trade. In addition, the report provided
PESTEL analysis and SWOT analysis to assess environmental factors in domestic and foreign markets
during international operations. Correspondingly, the report highlighted the role of digital business in
foreign trade.

References
• Bashan, A. and Notea, A., 2018. A hierarchical model for quality management systems in global
organizations. International Journal of Quality & Reliability Management.
• Suwelack, T., Stegemann, M. and Ang, F.X., 2022. Understanding the Outside World: Customers and the
Surrounding Environment. In Creating a Customer Experience-Centric Startup (pp. 53-84). Springer, Cham.
• Henry, A., 2021. Understanding strategic management. Oxford University Press.
• Ahmad Tajuddin, S., 2021. Technology Entrepreneurship Project (ENT 600): Tesco PLC.
• Van De Sanden, S. and et.al., 2020. Digital signage in the store atmosphere: balancing gains and pains. In Retail
Futures. Emerald Publishing Limited.
Online
• Who are Tesco’s main Competitors, 2021 [Online] Available through;
https://www.investopedia.com/articles/markets/092315/who-are-tescos-main-competitors.asp
• Technology in Tesco, 2016 [Online] Available through; < https://ecommerceworkroom.co.uk/technology-in-
tesco-how-tesco-are-improving-online-and-offline-shopping/ >
• Tesco, 2021 [Online] Available through; < https://www.tesco.com/ >

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