Tesco's Business Environment: PESTLE, SWOT, and Organizational Types

This report provides a comprehensive analysis of Tesco's business environment, exploring various organizational types and legal structures, including private, public, and voluntary organizations. It delves into the scope and size of different enterprise categories such as micro, small, and large businesses, and examines the interrelationships between key organizational functions like marketing, finance, human resources, and research and development, emphasizing the importance of communication for achieving competitive advantages. The report then conducts a detailed PESTLE analysis of Tesco, considering political, economic, social, technological, legal, and environmental factors, highlighting both positive and negative impacts. Furthermore, it includes a SWOT analysis to assess Tesco's strengths, weaknesses, opportunities, and threats, and it concludes with a discussion of the strengths and weaknesses of the PESTLE analysis itself. The report aims to provide insights into Tesco's operations and its strategic positioning within the retail industry.

BUSINESS AND BUSINESS
ENVIRONMENT.

Table of Contents
INTRODUCTION...........................................................................................................................3
P 1 Types of organization and legal structure:-...........................................................................3
P 2 Scope and size of various types of organizations..................................................................5
P 3 Relationship between organizational functions.....................................................................6
P 4 Pestle analysis of Tesco........................................................................................................7
P 5 SWOT analysis of Tesco.......................................................................................................9
P 6 Strength and weaknesses of the PESTLE analysis..............................................................10
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
Business environment refers to the internal and external factors that affect the functioning
of company functions, it includes the employees, customers, management, demand and supply
and business rules and regulations. The function of company are affected by these factors and it
also affects the environment of business organization.
Tesco is the multinational companies which deals with the groceries and mechanize. It
has shops in seven countries. The headquarters of Tesco are in the Green city, Welwyn,
Hertfordshire. Tesco was found in year 1919 by Jack Cohen. Company has more than 6800
stores. The products in which the Tesco deals are, supermarket, hypermarket, convenience shop
and superstore. This report will evaluate the various types, purpose, size and scope of the
organization, it also includes the interrelation between organizational function and their links.
This report also includes the pestle and swot analysis of the Tesco and their influence in
decision-making process.
P 1 Types of organization and legal structure:-
There are many types of organizations for exam private, Public & voluntary:-
Private organization:- Private sector business are the ones which are owned by the private
individual and run by the private individual. Partnership, corporation, agency are private
organization and it is not operated in public and profit body. It includes all the profit to owner
and profit that are not government owned.
Purpose:-
The purpose of private organization is to get profit from the organization working and it
includes the way in which the business can get more of a profit for itself. The organization
creates the value of the company in market with its competitor. Private sector creates monopoly
and create their power in the market so that business grows, to rule the area and location the
business is running in and capture the most of the people (Bouckaert, Peters and Verhoest, 2016).
Legal structure: The legal structures include one Director, with the age more than 16, In
private sector there is no limitation to employees count, the director makes decision-making,
Finance comes from stakeholders, loans and profit retention. Private structure of business
controlled by one man direction.

Example:- Swire is a private company working in UK, and they work in the properties and real
estate and stores etc.
Public organization:- Public sector is owned and run by the government for their people. Public
sector business are worked for people and it gets financed by people who pay taxes to
government and this money is used in benefits of people by the government. Public sector
provides public services to people and use resources for the benefit of the community.
Purpose:- The purpose of public sector is to minimize the monopoly of the private sectors, The
public sector provides essential things in low and reasonable cost in relates to private sector.
They set up heavy industries which require money and are restricted to private sectors. Public
sector focus on providing helps to the needy one as poor people of a country, And they focus on
less to the profit and more to the public benefits of the country.
Legal Structure:- The legal structure of public sector is in two ways the general government
and public corporations. General government further divided into three categories that are
(central government, state government, local government)
Example:- Unilever is a public organization working in UK in providing the products and service
market.
Voluntary Organization:- Voluntary sector works on focusing the public sector benefits even
without thinking of any profit, Voluntary organization are also known as public welfares,
Voluntary sector organization does not generate revenue for their employees as it is a welfare
work and people choose to work by their own.
Purpose:- The purpose of Voluntary organization is to provide welfares in the society and help
the public sector so that they can directly benefit the people and work for society.
Legal Structure:- The legal structure works as Trustee or board which connects from regulation
and funders in organization, after that they connect with the CEO who further connects to staffs
and voluntaries and target audience to end up with the beneficiaries to the sector.
Example:- Save the children international is a voluntary organization which works for the
benefits of children on international level (Mackintosh and et.al., 2016).

P 2 Scope and size of various types of organizations
 Micro Enterprise
The investment is low as well as the number of employees which are working in this type of
business.
Size- There is less than even 10 employees which work in this organization because the turnover
is not that high.
Scope- There are a lot of micro enterprise which can be found in a developing country. These
businesses are small in size which is why they can take risks and growth in innovation is high for
these organizations. For example, Cancer UK is a small enterprise which is requiring low
investment in the organization and there is more flexibility and freedom which can be found in
this enterprise for employees (Vasilev and et.al., 2017).
 Small Enterprise
These enterprises are owned by individuals and there is less number of employees which are
found but a little higher than micro enterprise.
Size- The number of employees is not more than 50 and this team work is good for the company
to be able to grow in the market.
Scope- these are organizations which are owned by sole proprietors. For example, Tesco is
having partnership with small enterprises in the market so that they can increase their profit
margins in the market which is going to help the company be able to function effectively
(Khajeheian, Friedrichsen and Mödinger, 2018). This factor is also going to help the company
maintain their customers and control the management as well.
 Large businesses and medium enterprise
In these kinds of businesses both multinational and voluntary organizations can be
considered which have a great opportunity to be able to grow in the market very effectively and
efficiently.
Size- There are 250 members in a medium organization and more than 250 employees in a large
business which is present in the market.
Scope- There is organizations in the market which are dependent on government and
independent as well which are present. The revenue generation of this organization are very high.
For example Virgin Money which belongs from this category and to retain the customers is a
great challenge for these companies.

P 3 Relationship between organizational functions
To get a competitive advantage there must be a strong communication between all the
factors and departments of the organization so that there would be better functioning. There are a
lot of tasks which are present and for them to be accomplished there must be a better functioning.
Marketing function
There are a lot of changes which the market team gets in the company and for that to take
place effectively there must be a good relationship with the HR department which is going to
make the monitoring and controlling of those changes in the organization better. For all the
marketing goals the financial support from the finance department is a must which the company
must have so that there would be a better functioning.
Finance function
For any function to take place or planning to take place there is a requirement of finance
which is why all the departments would have to have a strong communication and a relationship
with this department. The marketing department is the most dependent on this department for the
planning and getting the funds from this department so that the organization will be able to get a
higher profit margin and brand imaging in the market (Kim, 2016). Human resource also needs
funds for the activities which are held by the firm for the employees so that there would be a
better functioning.
Human resource function
Human resource must have a good communication and understanding of each department
so that they can make the changes be implemented accordingly and also help the management to
be able to take the right decisions for the organization. There are a lot of factors which are
changing in the business so that the customer satisfaction level in the market can be increased.
There are talented employees which are hired in the company and it is the work of human
resource to help the employees be able to give their best in the company so that there would be
better functioning.
Research and development functions
Research and development team has to have an understanding and a good communication
with the marketing team because they have a direct interrelationship with the customers. There
are a lot of factors which have to be improved in the company so that there would be better

functioning (Paschek, Ivascu and Draghici, 2018). For research and development there is a
requirement of the right finance which is required which is why the company will have to have a
good relationship with the finance department as well in the organization.
It is very important that the different functions in the market are having an
interrelationship between all the departments so that there would be better functioning. There has
to be a strong communication in the market so that there would be team working and team
working always leads to a successful and faster goal achieving methods. There are a lot of
barriers but removing those and then having a one direction in the organization is a very essential
factor for the company (Tur-Porcar, Roig-Tierno and Llorca Mestre, 2018). There is a lot of
complexity in an organization to be able to function and operate effectively in the market but it is
very important for the organization to be able to do that.
P 4 Pestle analysis of Tesco
The pestle analysis of the Tesco :
Political Brexit,
Rates of taxes and incentives,
Economic Growth rate,
Change in interest rates.
Social Attitudes and behaviour
Level of education
Technological Development of technology
Cost structure impact
Legal Discrimination law
Health law
Environmental Change in climate
Laws of environmental pollution
Political factors: Political instability due to factors such as Tesco have great impact on
performance of organization. The positive and negative impact is as follows:

Positive: Amid the unstable political environment of Brexit Tesco has great opportunity to
enhance its profitability due to propose flexibility in trade and other regulations.
Negative: After Brexit it is also possible that Tesco may require paying higher custom duties in
certain regions of EU so that its profit margin will lower.
Economic factor: Due to covid 19, the rate of unemployment is increasing which results in
uncertainty. People are not in the situation to buy things at high price.
Positive impact: Company can start the products, with the lower prices.
Negative impact: The negative impact is it decreases the sales of the company.
Social factor: The attitude and behaviour of the people in UK frequently changes. Earlier people
likes to take fast food, but nowadays they are more concern about their health, accordingly they
have been shifted to the organic foods and drinks.
Positive impact: the company can start supplying the organic foods and drinks as soon as
possible.
Negative impact: As the social changes takes place, people will shift to new trend and it
becomes difficult for the employees to sell it out and the employees have to sell old stock at very
cheap rates, which results in the decreasing of profit.
Technological factor: Tesco is developing the technology in the company. It also affects the cost
structure in the retailing industry (Evans, 2018). This factor also affects the marketing and its
management.
Positive impact: brings new opportunities for the company like online shopping and self-service
check out points which increases the sales of the company, it also reduces the labour.
Negative impact: it requires high security as the chances of frauds and cheating are more and
also increases the cost.
Legal Factor: Health law is the important part of this factor. Tesco evaluated the market and its
environment before entering. Tesco is considering many legal practices such as anti trust law,
health and safety law etc.
Positive impact: legal factor will increase in the growth and reputation of the company.
Negative impact: the negative impact is the fine is charged for not following the law.
Environmental factor: Environmental factor is the basic factor of the company, because the
climatic variations are not predictable. Also, the companies have to follow the laws and order for
the environmental issues.

Positive impact: By increasing the social conscience in the consumers, Tesco is minimizing its
waste. The products are recycled by the Tesco, which minimize the waste. It helps in profitability
foe the company.
Negative impact: it increases the extra cost for the company.
Therefore, the pestle analysis of Tesco impacts positively as well as negatively in the
market.
P 5 SWOT analysis of Tesco
The internal and external analysis of the Tesco in influencing the decision-making are as
follows:
STRENGTH
The Largest grocery retailer
Large number of stores
Efficient chain network of supply
WEAKNESS
Strategies of low cost
Operating profit decreases
Financial error
OPPORTUNITY
Online supplying of goods
Market emerges
Strategic alliances with different brands
THREATS
Brexit
Economic crises
Fake farm
Strength: Tesco is one of the biggest grocery retailers and stood on number one in the category
of supermarkets in UK (Fatricia, 2017). Tesco has many stores amongst the country. The
efficiency in the policies of waste management, created the reliable chain for the supply of goods
and services.
Weakness: Though the company is leading in the UK market, its strategy of low cost leads to
reduce the margin. In October 2019, Tesco has proved to be the worst performer. The financial
profit of the company gets affected due to the high card and liability.
Opportunity: Tesco is growing even faster by the strategy of online shopping, as it is increase
sales by home delivery. Though the stores of Tesco are in developing countries but company is
more focussing on the more emerging countries, it is more profitable opportunity for the
company. Strategy of partnership with the reputed companies offers the great opportunities and
benefits to the company. It offers more products and satisfy them with the attractive products.

Threats: The disconnection of the country from the European union results in the posed a threat
for Tesco through the deals of trade and cost matters. The rules and regulation of the government
and economic crises affects the performance of the company effectively and efficiently. The food
products of Tesco have been supplying with the fake farm name, which affect the sells of the
company.
Therefore, SWOT analysis is important for the better performance of the company.
Sainsbury's is the main competitor of Tesco. The SWOT analysis of the Sainsbury are as
follows:
STRENGTH
Creative promotion strategies
Correct expansion moves
WEAKNESS
Switching the brands
Less margin
OPPORTUNITY
Growth in rural area
THREATS
Competitors
Strength: Sainsbury's started from the small groceries stores and reached to the one of the
leading companies in supermarket (FATRICIA, 2016). Earlier it deals with the groceries and
now expanded to the stores in supermarket which deals with the merchandise. The marketing
strategies adopted by the Sainsbury's are highly innovative and creative.
Weakness: Sainsbury's finds the challenge in retaining the customers as, it keep on switching the
brands, which results in the less satisfaction and trust for the customers. Company cuts down the
costs for attracting more customers, it results in the lower sustainability.
Opportunity: earlier the people in the rural areas do not prefer the branded things, but now they
begin with using branded products, which helps the companies in the growth of rural market as
well.
Threats: the main competitors of the Sainsbury's in the market are Resco, Asda, Lidl and Aldi.
Therefore, in this way, the Sainsbury's is the main competitor of the Tesco.
P 6 Strength and weaknesses of the PESTLE analysis.
Political factor

Strength: Brexit helps in freedom from the European union which results in the flexibility in
trading as the rules and regulations ave changed and UK is no more bounded with EU. New
stores can be open.
Weakness: Due to Brexit the price of food increases steadily, it results in the diminishing the
pound sterling. It also increases the price of importing the food to the retailers. Tesco have been
forced to seek the expensive. The prices of product of Tesco is already high, it decreases it sales.
Economical factor
Strength: due to covid 19, unemployment rates increases, it is difficult for all the consumers to
buy costly products. Company can produce the products related with the covid like, masks,
sanitizers etc, which helps company in increasing the sales.
Weakness: due to the lower cost products, the profit maximization and sales gets affected.
Social factor
Strength: company can produce healthy food products more according to the needs and
demands of the company, which increases the reputation of the company as health is the major
issue for the consumers.
Weakness: The social factor affects the Tesco according to the lifestyle of the people, as in UK
people started focussing on the health, they started taking organic food and less sugar etc., the
company already has the stock of drinks, faces the loss as the sales of the drinks decreases.
Technological factor
Strength: Tesco has started its online delivery of food, the uniqueness of its delivery is, it is the
fastest delivery and it delivers food within one hour.
Weakness: it requires large number of workers for delivering the food from place to place. The
cost of company increases as the employees are to be paid according to their work. The chances
of frauds and crimes are more in technology.
Legal Factor
Strength: health law is the kind of law, it should be followed properly as it results in the
maintaining reputation of the company and its brand.
Weakness: Punishment are given to the individual for not following the law practices.
Environmental factor
Strength: the latest trend in the market of UK is companies are strictly following the
environmental law practices, they are using paper instead of poly bags.

Weakness: it increases the cost of the company, as the implementation of the environmental
practices should be followed properly.
CONCLUSION
From the above report it can be concluded that to achieve the objectives and goals it is
very important for the company to be able to understand the size, scope and legal structures of
the market. There are a lot of strategies which are present in the market which have to be
achieved and planned according to the competition which is present. There are a lot of
opportunities which are present in the market which have to be analysed and then implemented
in the company so that there is a better functioning and the productivity of the organization does
not get affected.