Macro Environmental Factors Impact on Tesco PLC (Unit 1 Report)

This report delves into the macro environmental influences affecting business operations, focusing on the public, private, and voluntary sectors, with Tesco PLC as a case study. It examines the different types and purposes of organizations, their legal structures, and the size and scope of various entities like BBC and OXFAM. The report analyzes the relationships between organizational functions, such as marketing, HR, IT, and finance, and how they link to organizational objectives and structure. It identifies the positive and negative impacts of the macro environment on business operations, conducting internal and external analyses to assess strengths, weaknesses, and their interrelation with macro factors. The report highlights the importance of understanding the business environment for organizational success and sustainability, providing a comprehensive overview of the external and internal factors influencing business performance.

UNIT 1
MACRO
ENVIRONMENTAL
INFLUNCE

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK1 ............................................................................................................................................1
P1 Explain different types and purpose of organisation and their legal structure......................1
P2 Explain size and scope of range of different types of organisation.......................................3
TASK 2............................................................................................................................................6
P3 Relationship between different organisational function and link to organisational
objectives and structure...............................................................................................................6
..........................................................................................................................................................7
TASK 3............................................................................................................................................7
P4 Identify positive and negative impact the macro environment have on business operations 7
TASK 4............................................................................................................................................8
P5 Conduct internal and external analysis to analyse strength and weaknesses.........................8
P6 Explain how strength and weaknesses interrelate with macro factors.................................10
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment refers to the integration of all the factors including external and
internal factors that have more control over the organisation operations and profits. It involves
the various forces like customers, inverters, technologies, market conditions etc. that may
influence the overall performance of the business firm. In this all ventures that is public, private
and voluntary sectors are aware about the regular changes so that they can easily deal with it. In
this Tesco PLC is one of the public limited company that is largest grocery British multinational
store deals in household and non household range of products. It includes the public, private and
voluntary sector businesses that have variant in their size, scope and purpose and also have
different legal structure. In this linkage between the various department helps in smooth
functioning of the business and at last interrelationship between external and internal factors
have been elaborated(Elias and et. al., 2019).
TASK1
P1 Explain different types and purpose of organisation and their legal structure
Organisation refers to the form of that association which is designed by the human being
for attaining the goals of the organisation. The major purpose of operating the business firms is
to earn higher profits or doing the social welfare. Some of the organisations with their legal
structure can be shown below:
Public sector organisation
This refers to those type of organisation that are owned and funded by the government for
the welfare of the public. The main objectives of public sector is not to earn profits but doing the
things for the welfare of society. In this BBC is one of the best example that can provides the
broadcasting services to the public(Satalkina and Shpak, 2018). The main Purpose of the public
organisation is to offers the goods and services for the welfare of the people of society by
adopting and using the resources effectively.
Legal structure:
 Central government- This legal structure are controlling all the activities and
regulations that is beneficial for the public. As they collect the financial resources in the
form of income tax to the general public. BBC is that organisation which is controlled by
central government.
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 State government- This government has a specific power on the specific region or the
state and accountable in front of central government.
 Local government- As this can collected the funds from the charges received from
community that are formally known as council tax.
Private sector organisation
It refers to that sector organisation that is controlled and owned by the single person or
the group of individuals. The best example of this venture if Tesco PLC that is one of the public
limited company that can done their business in all over the world with their household and non
household items. The main Purpose of this is to earn higher profits and revenues that can helps
in gaining the competitive advantage within the organisation and helps in sustainability in the
marketplace(Otieno, Ogutu and Pokhariyal, 2019).
Legal structure:
 Sole proprietorship- In this one person is operating the business and offering goods and
services to the customers with the aim of feeding their individual family by earning a
small amount of profits. In this less legal implications are involved as in this profits and
risk can be handle by the single holder.
 Partnership- It refers to that association in which two or more than two persons are
involved. It involves several norms that was involved in the partnership deed due to this
operations within the organisation are carried out. In deed profits and loss sharing can be
included between the partners.
 Limited company- Every business need to be registered for becoming a limited
company. In this type of business enterprise profits can be belongs to the company entity
rather than their shareholders. As shareholders can get the profit as dividend in this
company can pay the corporation tax every year on the profit earning. Tesco PLC can
included in the public limited company(Chaouk, Pagliari and Moxon, 2020).
Voluntary sector organisation
It involves the group of individuals who are willingly involve in the purpose of catering
society for a good cause. This type of business are working for helping the society in an
appropriate way that helps in saving the society in various ways. In this OXFAM is the largest
charitable organisation that is working for eliminating the poverty within the country. The
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Purpose of this organisation sector is to work for social welfare without focusing on earning
profits.
Legal structure:
 Trust- It is a type of legal entity that means they cannot involve in the agreement with its
own name. They involves in providing the benefits to the society so that research and
expenses can be traced effectively. OXFAM is the trust based voluntary enterprise(Dunn
and et. al., 2018).
 Unincorporated Association- This is not a type of legal entity. In this there is no limit of
liability and they entered in the agreement on behalf of charity.
Difference between profit, Not for profit and non governmental organisation
Basis Profit organisation Not for profit
organisation
Non Governmental
organisation
Concept It defines that business
which is working for
gaining higher profits
by satisfying the needs
of the customers. For
getting the ownership
people invest in the
firm and become a
shareholders by
following some rules
and regulations.
As this type of venture
are not working for
generating profits as
they are working for
welfare of the society
and also maintains the
higher transparency so
that public can trust.
This ventures are nor
work under the
governmental
inventions they are
private type such as
clubs. In this
individual is working
with their self interest.
Scope That sector has high
scope in earning
profits.
It has high scope in
welfare of the public
by making
transparency.
In involves huge scope
in helping society
without government
help.
P2 Explain size and scope of range of different types of organisation
BBC
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BBC is a public owned enterprise that is recognised as a largest broadcaster in the globe.
The company is funded by the UK household and organisations who have TV. It can offers the
nine TV channels and also radio broadcasting.
Product and service- BBC offers 9 home country channels that inserts BBC news, BBC one,
BBC two, BBC iplayer etc(Rutkowski and et. al., 2015).
Size- There are around 20000 employees are working within BBC.
Scope- The major scope of BBC is to expand the emerging markets like India, China etc. where
they can delivers the technology, entertainment and news channels.
Vision- The major vision of BBC is to become largest creative organisation in world.
Mission- The mission is to provide the knowledge regarding the country and also entertain the
people's lives to the high extent.
Objectives- The main aim of BBC is to offers specialised content of education within UK and
many other countries so that people have knowledge regarding the controversies and essential
information that helps in engage within the world.
Tesco PLC
Tesco PLC is the public limited company that was established in 1919 and now it become
a world largest groceries retailing superstore in the world that can offers the huge range of the
products including household essentials and non household essentials(Castro and et. al., 2018).
Product and services- Tesco PLC can offers the wide variety of products and services including
clothing, food, financial services, home wares, cosmetics etc.
Size- The size of the company is very large as it has around 6800 stores in all over the world
having more than 40000 working employees.
Scope- The Tesco can enhance their market presence by dealing in frozen foods so that
customers can easily cook the food with in a minutes.
Vision- The major vision is to become a most valued business in the eyes of the customers and
making the loyal customers for a lifetime.
Mission- The mission is to earn high profits and revenues and sustain for a longer period of time
by offering quality products to the customers.
Objectives- One of the major aim of Tesco is to provide the healthy goods at reasonable cost to
the customers so that they can attracts the large base of customers. They also design their online
website so that they will easily connect with the foreign countries and enhance the profit margin.
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OXFAM
OXFAM is the non profit organisation that have extensive collection of activities like
working for handle the people from poverty and natural disaster. They generally work for ending
the injustice to the poverty.
Product and services- OXFAM works for providing education, health facility, removing
poverty, offering livelihoods etc. to the people of society.
Size- This company is working in around 94 countries in all over the world with including
thousands of local inverters to the organisation. The company are working for welfare of the
people including 50000 volunteers worldwide.
Scope- As population is increasing day by day and due to this poverty also increasing within the
country that has a wide scope in providing the major benefits to the people.
Vision- OXFAM vision in the world is to become a society that is free from poverty and where
people are values and treated fairly. They believe that together people will make a better world
that is free from poverty.
Mission- The major mission is to become a favourite charity organisation that is trusted by
public.
Objectives- The man aim is to offers better solutions to injustice to the poverty within the
country so that people will enhance their living standard.
Difference between micro, small and medium size organisation
Basis Micro organisation Small organisation Medium organisation
Meaning It refers to that society
that are working with
few resources and
capital. For example
Strydon
etc(Kormishkina and
et. al., 2015).
In this they earn
comparatively high
profits for micro
business to feed their
individual family.
In this high capital and
resources are involved
where employees are
working for gaining
more profits and
revenues.
Scope and size It includes less than 10
employees and also
limits to the
It involves around 50
employees who can
take initiative to
It includes 250
employees who has
presence globally
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geographically area. present globally. periphery.
TASK 2
P3 Relationship between different organisational function and link to organisational objectives
and structure
In organisation all the departments are very important and link from each other directly
and indirectly. In context of Tesco PLC there are various department and some of them can be
explained below:
 Marketing and HR department- Both the department are important for gaining higher
profits. In this marketing department is majorly depend on HR department because
human resource department can hire the candidate for managing marketing activities.
Due to this marketing department can enhance the company sales and profits for a longer
period of time. It is positively affects the operations of the organisation as the work can
be done smoothly and effectively. But at the same time it also carries a disadvantage of
creating conflicts between the departments.
 IT and Finance department- In this IT department can ensures that the equipments are
working properly so that information can be transfer on right time to right place and
goods can be delivers properly. In this finance department can plan and organising the
funds for IT department so that they can upgrade their software and company will gain
higher profits and revenues(Guerini and et. al., 2018). This will positively impact the
profits and sales of the company.
Organisational structure
Hierarchical structure- It refers to that type of organisational structure where people are
organised in a hierarchy way where information is transfer from top to bottom. In this Tesco
PLC can adopts this type of organisational structure in their store level department where top
manager can transfer the orders and responsibilities to the top most manager at store level. This
helps in gaining the higher profits and revenues. This structure also helps in accomplishing the
goals on time by the employees as they easily understand what they have done to achieve the
targets.
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Illustration 1: Tesco organizational structure at store level
TASK 3
P4 Identify positive and negative impact the macro environment have on business operations
Macro environment of Tesco PLC:
 Political factor- The political factor have influence more on the operations of the Tesco
that involves legislation, tax rate and political instability etc.
◦ Strength- Because of stable political condition in UK cost related to modifying
policies and rules within Tesco are also low(Mogaka, Kiweu and Kamau, 2015).
◦ Weaknesses- High import duty charged by the country have impacted the Tesco
profitability.
 Economical factor- As Tesco affected by the economic factor because it will directly
impact the consumer buying behaviour.
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◦ Strength- As buying power of people in UK are high due to this they can afford the
quality products of Tesco so that company market share is maximised.
◦ Weaknesses- Due to Brexit in UK inflation rate is high and this will impact the
purchasing power of customers and company will face the issue of low profit margin.
 Social factor- This factor reflects the changes in customer behaviour and demographic
changes that impacts the Tesco profitability.
◦ Strength- This factor is positively impact the company profits by delivering the
customer one stop shopping experience for saving their busy time.
◦ Weaknesses- Because of constantly changing behaviour of the customers on health
related products reduced the sales and profits of Tesco.
 Technological factor- In today's world using technology can be very essential to sustain
in the marketplace(Sonntag and et. al., 2015). As it also help the Tesco in satisfying the
customers needs and demands. It also impacts company profitability in two ways i.e.
positive and negative that can be shown below:
◦ Strength- In this Tesco has using the technology by providing the online shopping
experience to the customers so that they conveniently do their shopping and firm will
enjoy large amount of sales.
◦ Weaknesses- Due to high using of technology in satisfying the customers effectively
Tesco can invest more amount due to this its operating cost will be affected.
 Legal factor- Tesco can directly affected the laws and regulations that is imposed by the
government of country like equity law, safety law, consumer protection law etc.
◦ Strength- In this Tesco can fairly treat their employees by paying equally to them
according to their abilities and capabilities.
◦ Weaknesses- If Tesco cannot follow the rules and regulations related to employees
and customers than it will negatively affect the business profits and sales.
 Environmental factor- This factor is related with environmental and nature laws that
was followed by the company for securing the environment from harmful effects.
◦ Strength- As Tesco can adopts the jute bags instead of plastic bags that will attracts
the customers and it will not harm the environment also.
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◦ Weaknesses- Adopting the environmental laws have increasing the Tesco operating
cost and decreasing the profits margin(Kowo, Akinrinola and Sabitu, 2018).
TASK 4
P5 Conduct internal and external analysis to analyse strength and weaknesses
SWOT Analysis of Tesco PLC
STRENGTH WEAKNESSES
 Tesco is one of the largest grocery
company in UK that also have huge
market share.
 Another strength of Tesco is that it has
geographical diversified presence with
6800 stores in around 14 countries.
 The Tesco operations can failed in US
and japan market that is the major
weakness.
 Because of low cost strategy profit
margin of company also reduced.
OPPORTUNITIES THREATS
 Tesco can enjoy the partnership with
the reputed and recognised company
that helps in offering best opportunity
for the company.
 Opportunity by providing the online
services to the customers in the busy
life(Straková, 2017).
 Major competitors are present in the
market like Morrisons, ASDA etc. that
impact the Tesco sales.
 Because of Brexit trade deals are posed
that may impact the Tesco profitability.
SWOT Analysis of BBC
STRENGTH WEAKNESSES
 One of the major strength of BBC is
that it is largest broadcaster in UK.
 BBC has high brand image in the
market this helps in making more
profits.
 The major weakness is Biased opinion
in the news coverage.
 More operating cost affects the BBC
profits and enhances the image of their
competitors.
OPPORTUNITIES THREATS
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 Main opportunity is a enhancing the
business in India and China.
 Enhancing the global presence into the
kids channel, news and entertainment.
 High risk in using technology is the
major threat of the company.
 More competition is present into the
market affect the profitability of firm.
P6 Explain how strength and weaknesses interrelate with macro factors
Pestle analysis Strength Weaknesses
Political Because of stable condition
cost related to taxation would
be low due to this high
benefits can be enjoyed by
firm.
The rate related to import duty
is very high that will majorly
affect the cost of operations.
Economical Because of good buying power
of customers Tesco can gain
the higher profits and enhance
sustainability(Mathuki and et.
al., 2019).
Because of Brexit high
inflation rate is reflected the
consumer income due to this
profits and sales is affected of
Tesco.
Social Increasing population of the
country is the major strength
for Tesco as it helps in
enhancing the customers base
and profits.
Because of changing
behaviour in the customer
demand company production
cost is affected.
Technological Using advanced technology by
Tesco in providing the services
to the customers is the major
strength in terms of
technological factor.
Adopting high class
technology includes more cost
due to this operating cost is
affected.
Legal Tesco can follows the all the Avoiding the use of legal laws
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employment law by solving
the issues of the employees
and consumers due to this
performance and productivity
will enhanced.
that was imposed by the
government for safety of
employees and customers can
reduce the Tesco brand image
and profits.
Environmental Following all the
environmental laws helps in
enhancing the image of the
Tesco within the marketplace.
Adopting and thinking for
safety of the environment
Tesco have invested major
cost that will negatively affect
financial resources.
CONCLUSION
By the above report it is analysed that business environment is an essential term that
includes the various types of organisation with their legal compliances that was prevailing within
the company which is regulated by the country. Within the organisation proper coordination
between the different department helps in achieving the business the long term goals. The
extrinsic factor can affects the organisation in both positive and negative way on the regular
operations of the business. In this Tesco PLC can follows the hierarchical structure that helps in
ensuring the smooth functioning of the business for earning the higher revenues and large market
share.
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