Business and the Business Environment

This document provides an overview of the business and business environment, including the types and purposes of organizations, the relationship between functions of organizations, and the impact of macro environment on business. It also includes a SWOT analysis of Tesco.

BUSINESS AND THE
BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1: Various types & purposes of organisations...........................................................................3
P2: Types of organisations by size and scope wise.....................................................................5
LO2..................................................................................................................................................6
P3: Relationship between functions of organisations..................................................................6
LO3..................................................................................................................................................8
P4: Macro environment impacts on business..............................................................................8
LO4..................................................................................................................................................9
P5: SWOT analysis......................................................................................................................9
P6: Strength and weakness of Tesco with external macro factors.............................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Business and business environment refer to the working environment of the company in its
operations and other parts. Business environment refer to the resources a company use in both
the internal and external ways to make the business goal achieved. Business environment is the
most important thing to run a business as it’s important to understand all the aspect of the
business and its environment they are working in. Tesco is a leading retailer company in UK,
With the most of the market share of UK in retail marketing. Tesco provide all food and clothing
items and other household items including majority of brands in its stores and services. The
report will help in understanding the business environment of the Tesco and the internal and
external environment by the analysis of them to help the company in understand its customer and
market knowledge. The report further explains all the positive and negative aspect of the
organization and the industry (Prajogo,2016).
LO1
P1: Various types & purposes of organisations
There are various types of businesses and ventures exists in market place. All
organisation within market works different purposes (Cumming and Zahra, 2016). However,
gaining excellent outcomes in the main objective of these all organisations, but ways which an
organisation has followed to achieve this objective, is completely different from others. There
are organisations within market relates generally with three categories called; public, private and
voluntary. These all types of organisations have been discussed below which their respective
examples and purposes.
Public organisations
Public organisations are generally those organisations which always sells their shares in
market place, so that any person can simply enable to buy shares of these public organisations.
Currently Tesco is the best example of a public organisation, because this retail organisation
always offers its shares publicly. On the other side, businesses or companies which comes under
the category of public organisations mostly runs their business operations internationally. Top-
level management within these organisations always believes in adopting and using very hi-fi

technology within their daily operations. That’s why technology advancement always exists at
the high level in these organisations.
Private organisations
This is the second type of organisations, so that those businesses or ventures commonly
comes under this category which not offers their shares in the market to sell (Bojovic, Genet and
Sabatier, 2018). That’s no any person can get access to buy shares of a private limited company.
There are Iceland foods limited company is very appropriate example of a private company. A
private organisation offers its shares, but only to its close ones, like; relative, friend, family
member etc. Private businesses also believe in using different technological gadgets within its
workplace. Most private organisation within market are able to run their business operations only
at the regional or national level.
Voluntary/social organisations
This is last type of organisations called; voluntary or social. A voluntary organisation
always works in the welfare of society. People within these organisations has no aim of
generating huge profit, because these are only have aim to maintain a healthy and happy
environment within the society. For example; there are public health England is a social
organisation which works for promoting people’s heath and well-being aspects. The aim of this
organisation is making people very healthy. These voluntary organisations also use different
technologies within their business operations. Currently the charity and donation are key sources
of funding to these social or voluntary organisations.
LEGAL STRUCTURE
There are businesses or organisations which came from any type of organisations has
fully responsible to follow different considerations of legality and ethics (Triaa, Gzara and
Verjus, 2016). There are some key laws, standards and regulations has been discussed below;
Partnership act 1890: In this one of key act that every person has to follow and adhere while
running a partnership organisation. This act helps in removing different conflicts between
partners. That’s why role of partnership is necessary in the UK’s business environment.

Companies act 2006: Companies act is also a major act within the UK’s business law.
According to this law, every person is fully responsible to register its company or business
before starting its operations of business in any type of business called; public limited company
or private limited company.
Employment law: Employment law is the most important law in the UK’s business law system
that every existing business or venture of this country have to adhere. This law generally
provides basic rights to different employees, that’s why it is necessary.
P2: Types of organisations by size and scope wise
Currently lots businesses and ventures exist within the United Kingdom’s business
environment which belongs to different size and scope. There are generally four categories of
businesses available in the UK by size and scope wise; micro, small, medium and large-sized
businesses (Ramanathan and et.al., 2017). In this situation, these all categories of businesses
have been discussed below;
Micro: This is the first category of businesses, in which businesses which has 10 workers or
employees, generating turnover up to €2 million per years, so that these businesses are known as
micro businesses in the United Kingdom. Nowadays, number of micro businesses are very
higher in this country. On the other side, these micro businesses give their great contribution in
all over development of this country.
Small: Currently in the UK, ventures with 50 employees, and which are generating turnover up
to €10 million per year, so that these ventures are known as small ventures or businesses within
this country. There are thousands of ventures and businesses exists within the United Kingdom
which has small size and scope. These small-sized businesses give their great contribution in
generating great employment opportunities as well. That’s why role of these small businesses is
very essential for the development of the United Kingdom’s economic system.
Medium: In medium size and scope category of businesses, generally those business comes
which has less than 250 people as employees, and which are generating turnover up to €50
million under per year. There are medium-sized companies and ventures are also giving their
great contribution in all over development of the United Kingdom’s economic system.

Large: In this category of ventures, only those ventures come has commonly listed which has
than 250 people as employees, and which are generating turnover more than €50 million every
year (de Waal and Frijns, 2016). Currently there are lots of large-sized businesses also exists in
the United Kingdom’s business environment. These businesses generally help to government of
the UK for achieving great foreign exchange, because large sized businesses always able to run
their operations of businesses at the international level. So that, these business gains excellent
profit in the form of foreign exchange. There are Tesco, British Petroleum, Marks and Spencer,
Iceland foods ltd etc. are key examples of large sized businesses.
Size and scope of venture and businesses always projects their operations’ structure. For
example; the large-sized venture mostly has maximum size & scope, so structure of that venture
also always has in bis size.
Evaluation
Currently Tesco operates own operations of business under the category of Public
Limited Company (PLC). Existing retail business is a business of large-sized category as well.
Nowadays customers, employees, shareholders, suppliers and government etc. are prime of
major stakeholders of this organisation which are very satisfied with all over success of this
organisation in the place of market.
LO2
P3: Relationship between functions of organisations
Relationship between different functions should always have very effective and
productive, because this is very necessary in the terms of growing an organisation in very fast
manner (Valenzuela and et.al., 2018). Currently, Tesco’s all functions or departments have great
relationship with each other.
There are HRM and Marketing are two prime functions within the Tesco, in which these
both function departments always works together and properly coordinate with each other for
gaining better outcomes. For example; marketing team at Tesco has required different markers
within its workplace has great skills of marketing, in which the manager of this marketing

department contacts to HRM for recruiting and selecting some skilled people who have great
knowledge of marketing. In this situation, there are manager at human resource manager
responsible to recruit and select people with excellent marketing skills within organisation for
marketing department. After few practices of HRM, the marketing department enable to achieve
effective and skilled marketers in its workplace with the support of HRM. So that, these all
factors and actions of both functions’ projects their great relationship.
On the other side, there are IT (information technology) and production department also
has an effective relationship with each other (Grubor and Jakša, 2018). Suppose, Tesco’s
production department always has required to implement different technologies within is place of
work. In this situation, management of production team contacts to IT department for
implementing various new and modern technologies within production department for making
process of production function faster. So that, IT department of Tesco always takes responsibility
to implement these technologies. These all factors are enough to show the great relationship
between Tesco’s IT and production functions.
Critical analysis
Currently top-level management of this company always operates lots of functions, so
that it always has required to maintain an effective relationship between different functions,
because this is very necessary in the terms of achieving all organisational targets on time. That’s
why effective relationship between all functions plays very productive role.
Analysis of advantages and disadvantages
An effective relationship between different functions of organisation always very
positively affects to Tesco’s all over growth, so that this an advantage of this relationship. On the
other side, always maintaining this relationship between all the functions is very tough and
complicated task to company’s upper management, because many times, many conflicts raise
between different employees in the workplace. So that, this is the disadvantage of this
relationship.
Evaluation

Currently HRM, marketing, IT, production and finance, etc. are major functions within
the Tesco, so that these all functions of company are enough for achieving its various objectives
of better outcomes and excellent profit within market place (Badzińska, 2016). Currently this
public limited company (PLC) has very large size and scope in the market, because top-level
management of this company has succeeded in expanding this retail venture in lots of countries.
LO3
P4: Macro environment impacts on business
For analysing the impact of macro environment on Tesco, there are PESTLE analysis
model has used below. This model is very efficient in the terms of deifying different key macro
or external factors of business environment.
PESTEL Analysis
PESTLE analysis tool or model is currently used by many of companies and ventures
within market place, because this model plays great role for knowing the impact of different key
external factors. This model generally indicates six key external factors of Tesco’s business
environment, which has been mentioned below;
Political factor: Political factors of the United Kingdom always affects Tesco both manners. For
example; government of the United Kingdom has provided an effective framework of business
law which support to all businesses to run their operations ethically and legally, so that this
positive impact of these factors (Corradini, Polzonetti and Riganelli, 2018). On the other side,
imposed very high rate of taxation on different business, so that this negative impact of political
factors on Tesco.
Economic Factor: The UK’s economy always positively affects to this retail company, because
his country has well-developed conditions of economy, so this is a positive impact of economic
factor on Tesco. However, nowadays country’s economy facing some crisis just because of
coronavirus (Covid-19) pandemic, so this economic factor very negatively affects to Tesco in the
market.

Social Factor: Social factors of this country puts very positive impact on the Tesco’s different
business operations, because most of the people here like to buy quality products, and Tesco
already has provided quality product. On the other side, different perceptions of customers of
people always negatively impact this company.
Technological Factor: Currently with the support of the United Kingdom’s technology
advancement, Tesco able to develop its performance and productivity within market place. So
that this positive impact of these factors. The negative impact is, always implementing new and
new technology within daily operations of business is very expensive deal to company.
Environment Factor: Environmental factors also impacts Tesco in both manners, positively and
negatively (Ajmal, Helo and Kassem, 2017). For example; company always fulfil all obligations
which are relating to the welfare of environment, so this positive impact of these factors. On the
other side, fulfilling obligations on time it is tough time to company, so this a negative impact.
However, top-level management of this company has always required to ensure that, its no
function is negatively affecting the natural environment.
Legal Factor: Legal factors provides a specific framework to Tesco’s upper management for
running it’s all business operations legally and ethically. That’s why company considers this
aspect as a positive impact. On the other side, understanding and adhering all laws, standards and
regulations is very challenging to Tesco, so that this a very nagative impact of legal factors of on
Tesco.
LO4
P5: SWOT analysis
SWOT ANALYSIS OF TESCO
SWOT analysis helps in identify the factor of the company which need to be taken into
the consideration when developing the strategies of market and corporate. SWOT analysis help
in identify the strength, weakness, opportunities and threat of the company which can help the
company in identify the best plan and strategies to make the best ways to get organization
objective (Gürel,2017).

Strength: -
 Tesco is leading the market share in the UK in the retail sector because of its well quality
service and understanding of customer.
 Tesco focus on the product choices and the variety to be given to its customer from the
competitor is so well managed that it helps the Tesco in getting the more of the audience
from the market and improve the company performance.
 Tesco use the best and the latest innovation of technologies to make it easier for the
customer to buy things and the set up of the store structure is so well by Tesco that it
makes easy for the customer to understand the stores easily and find the products.
 Successful diversification of the product strategy gives strength to the Tesco and give
benefit to the customer in variety of choices.
Weakness: -
 Tesco been charged in fraud in 2017 which affect the market value of Tesco and they
need to focus on this as nothing should happen like this in future.
 Share price of the Tesco is decreasing.
 Wrong choices in brands by Tesco have affected the company in getting few losses which
they need to take care.
 Market competition is so hight in the retail sector and the strategies of the competition is
getting better to give the Tesco high competition.
Opportunities: -
 Tesco have introduced a lot of new brands in the stores which are attracting the
customers for example introduction of jacks have helped the company in low cost rival
Aldi & Lidl.
 Increase the premium range product to make the most out of the premium customer.
 Opportunities in growing the business online as the trend in the market is all for the
online facilities.
 Opportunities of new market and of new places to expand the business.
Threat: -

 Market sharing is a threat and there is competitor which are working in low cost product
and affecting the sale of Tesco.
 Retail sector is facing a lot of competition and it’s a threat if any of new competition
provide the better services can damage the sale of Tesco.
 Falling value of pounds is affecting the company and increasing the price of Tesco
products.
SWOT ANALYSIS OF SAINSBURY’S
Sainsbury’s is a leading competitor of Tesco.
Strength: -
 Strength of Sainsbury as providing the best wholesale and retail banking services.
 Expansion moves of the Sainsbury’s have been so well that they are getting good result in
them.
 Innovation in the market products and trends are affecting the competitor.
Weakness: -
 Brand switch is affecting the company as many brands are switching to different
companies.
 Low margins on the brand product affect the company profits and affect the growth.
 Growing cost is so hight that the expenses are so costly to the company to improve the
customer experience.
Opportunities: -
 Expansion and reaching to the villages are a wide opportunity to the company and
providing them the low-cost product can help in getting money.
 Online selling increases and its opportunities for the company to provide new offers to
the customer to attract more of them.
Threat: -
 Biggest threat is the competition in the retail market affect the working of the company
and new companies’ strategies affect the operations of the company (Hamilton,2018).

P6: Strength and weakness of Tesco with external macro factors
Political: -Tesco increase its strength with the use of external factor and also effected by external
macro factor such as political, economical, social, technological, environmental and legal factors.
Political:- After BREXIT, It is assuming that government give relaxation in terms of grants,
funds and taxes to new organization. BREXIT increase cost of raw material that has imported
from Europe. Tesco has multiple supplier all around the world hence it will have lesser effect in
terms of raw material exports after BREXIT but it can competitive advantage to manipulate
supplier market to restrict all resources for Tesco. But it can be affected from new entrants as
government decided to provide various tax relaxation policy new entrepreneurs.
Economical: -
Government focus on decreasing inflation and unemployment rates by decrease various
taxes related to industry. BREXIT create barrier for European tourist in the country and investors
again cross border policy related to custom duty and other subsidiary taxes increase for the
organization. Tesco has large number of investor from UK only which is one of strength of the
company on other side its competitor largely funded from Europe or other part of globe.
Company has highly invested in social media marketing and other platform hence it able to
attract large number of customer as the inflation and unemployment rate will decrease in the
country.
Social: -
UK customers welcome new market and new product this create opportunity for Tesco’s
competitor to decrease its market share. Company has significant advantage in attracting
customers in terms of taste and trend. Company offers = variety of product to British customer
according to their taste and trend and hence able to gain large market share continuously. UK
customers believe is one stop shopping and this again creating additional advantage for Tesco as
it offer all product under one store.
Technological:
Britain is technological advance country which gives opportunity to advancement in its
industry. Tesco is continuously investing large amount of profit in technological changes in

organization and hence it able to compete the market with advance technology Organization able
to gain large output for the same input in production as well efficiency, quality and productivity
increase compare to others by adoption of advance technology (Fatricia, 2017). However,
technological changes in the organization needs talented and skilled workforce which
organization unable to find. There are very limited numbers of employees for new technology
and hence its process delay.
Environment:
Environment policy of the Tesco and its CSR contribute in protection and sustainable
development of the industry. Company ban use of plastic bags in stores and started using paper
bags which can be recycle it increase good-will of the organization. It CSR Policy for various
environment and health sector again creating its impactful image in front of customer and helps
in gaining competitive advantage in the market. Large part of company’s profit invested for trees
plantation in different areas with its company tag again attract customer. It creates dual impact
such as trees plantation protecting environment and its tag creating its advertisement in that area.
However, large amount of profit investing in environment protection decrease its financial
capacity to meet future challenges.
Legal:
Tesco implement various laws in the organization to protect its workers for example
Employment act law which protect employee’s rights in the organization. This increase loyalty
of employees towards organization and hence decrease chances of retention (Heese, Srinivasan
and Kelley, 2019). So company is able to manage talent and also it increase quality, efficiency
and productivity of the organization (Kanetani and et.al., 2018). However, such laws increase
expenditure of the organization and decreasing it financial capacity for further expansion of the
business.
CONCLUSION
To be conclude there are three sectors, namely public, private and voluntary and further
divided according to size and scope; for example Tesco comes under private sector and size of
the organization is large and this decrease chances of quick decision expansion of the business.

Company suffers macro environment for example changing in economical policy by the
government can impact or effect on the growth of the organization. Again swot describe
company’s strength, weakness, opportunity and threat for example company strength is its
talented and skilled worker force. In the end report describe macro environment effect and
impact on strength and weakness of the organization.

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