Analysis of Business and Business Environment: Tesco Report

This report provides a comprehensive analysis of the business environment, focusing on different types of organizations, their purposes, legal structures, and the size and scope of their operations. The report examines the interrelationship between various organizational functions and objectives, using Tesco PLC, the British Armed Forces, and the British Red Cross Society as examples. It delves into the application of PESTLE analysis on the UK retail sector and applies SWOT and Porter's five forces analysis to Tesco PLC. The report also explores the positive and negative impacts of macro-environmental factors on businesses and concludes by summarizing how strengths and weaknesses are interconnected with external factors. The analysis includes the organizational structures, missions, visions, objectives, stakeholders, and the relationship between functions like HR, production, marketing, and finance. The report highlights the significance of understanding the external environment to ensure business success.

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
SECTION 1......................................................................................................................................1
Different types and purposes of organizations.............................................................................1
The Size and Scope of range of different types of organizations................................................2
Relationship between different organizational functions and their interrelationship with
organizational objectives.............................................................................................................4
PART 2............................................................................................................................................5
A) PESTLE Analysis on UK retail sector....................................................................................5
B) Application of SWOT and Porter's five forces analysis on UK Super market.......................6
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business refers to an activity of buying and selling of goods and services whereas
business environment means critical analysis of internal and external factors that effects and
influence the organizational activities. The project report will outline different types of
organizations and will define their purposes and legal structures. The assignment will explain the
size and scope of different types of organizations. The project report will define the
interrelationship between various organizational functions and their link with organizational
objectives and structures. Project report will further identify the positive and negative impact of
macro environment factors has upon the business. The assignment will further conduct Pestle
and Swot analysis of Tesco plc. Lastly the report will explain how strengths and weakness are
interrelated with external macro factors.
SECTION 1
Different types and purposes of organizations
Private Organization – Tesco plc
Tesco plc is a British multinational groceries and general merchandise retailer in United
Kingdom. The Company is founded in the year 1919. Its founder is Jack Cohen. The
headquarters of Tesco plc is situated in Welwyn Garden City and Hertfordshire in England.
Purpose – The Purpose of Tesco plc is to serve there shoppers a little better everyday. To fulfil
and meet the needs of the customers. To be responsible for their communities.
Products and services – Tesco plc offers diversified products like food & beverages, clothing,
software, toys, furniture, electronics, book etc. Tesco plc is the largest supermarket chain in UK
where they offers range of product varieties to satisfy their customers needs.
Legal and organizational Structure - Tesco plc follows hierarchical organizational structure
and this structure further divided into functional divsions in order to assure work should be
accomplished smoothly and efficiently (Kozubíková, Homolka and Kristalas, 2017). Tesco plc
has sepearte legal department that ensures the legal framework and organizatianl polices are
conducted in a proper form. It also ensures that Tesco plc meets all the legal obligations &
requirements and procedures that a business should have.
Public Organization – British Armed Force
The British Armed force provides military services responsible for defence in United
Kingdom. The armed force is in action since the formation of a kingdom of great Britain is being
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done in the year 1707. The Headquarters is situated in Ministry of Defence in London. The
British Armed forces is now consist of the Royal navy.
Purpose – The Purpose of British Armed Force is to assure the public safety and providing the
best defence services to the people of United Kingdom.
Products and services – The British Armed forces are providing the best military and defence
services to protect the lives of the people in UK.
Legal and organizational Structure – The British Armed forces is similar to Royal Navy and
Royal Air force they have four star general equivalent field commands. They fulfil all the legal
criteria and documentation which is required by the UK government.
Voluntary Organisation - British Red Cross Society
The British Red cross Society is the impartial humanitarian network in the United
Kingdom. The British Red crosss was established in the year 1870. The Chief executive is Mike
Adamson.
Purpose – The purpose of British Red Cross Society is to provide better healthcare services and
support to trafficked people and anyone in forced labour.
Products and services – The British Red Cross Society is delivering best care and support to
trafficked people.
Legal and organizational Structure - The British Red cross Society follows hierarchical
organisational structure in which they have various functional sector of their various charities.
The Size and Scope of range of different types of organizations
Private Organization – Tesco plc
Mission – The Mission statement of Tesco plc is to be the champaign for their customers and
helping them to enjoy better quality of life and an easier way of living.
Vision – Tesco plc vision revolves around five elements -
 They want themselves to be needed all around the world.
 They want to create a growing business with full of opportunities.
 They comes up with modern and innovative ideas.
 Winners locally whilst and applies their skill globally.
Organizational objective – Tesco plc business objective is to make shopping cheaper for the
average household. The objective is to introduce more healthy products in wide variety of
groceries.
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Size and Scope – Tesco plc business is widely spread all over the globe. They have
supermarkets in seven nations across Europe and Asia. The company also provide their products
in Ireland, Thailand and Hungary. The Company has large size of business structure. They have
in total of 450,000 colleagues and tthey serve millions of cutomers everyday.
Information about Stakeholders - Employees, workers, government, suppliers, customers,
financiers are the stakeholders of Tesco plc. Government permits the company to expand their
business all over the world (Hillary, 2017). The employees contributes them by producing best
quality of products and suppliers helps them by distributing goods and delivering services to the
end cuustomers.
Public Organization – British Armed Force
Mission – The Mission is to provide peacetime security. Providing the Security of the overseas
territories.
Vision – Vision is to see world in peace providing the best defensive services.
Organizational objective – Objective of British Armed forced is to support peace and
humanitarian operations. To provide warning and readiness preparations times to forces required
to counter a strategic attack.
Size and Scope – British Armed force has total 146,500 active personnel, 44,250 reserve
personnel and 11,000 Deployed personnel.
Information about Stakeholders – The stakeholders of British Armed force are the military
forces, government, facilitators, providers and army officers.
Voluntary Organisation - British Red Cross Society
Mission - The mission staement of British Red Cross society is to mobilise the power of
humanity so the individuals and communities can prepare and deal with crisis.
Vision -Vision staement of British Red Cross society is to inspire, encourage, facilitate and
promote all times forums of humanitarian activities.
Organizational objective -
 To reduce the deaths, injuries and impact from the disasters.
 To increase the local community, civil society and Red Cross Crescent.
 To promote the respect for diversity and human dignity and also reduce the
discrimination in the society (Kolk, 2016).
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Size and Scope - The British Red Cross Society has total 32,500 volunteers and has total 3,500
staff.
Information about Stakeholders - The British Red Cross Society stakeholders are the
hospitals, doctors, public trustees and blood donations organisations. The Red Cross Society
provide employment to about 30,000 people.
Micro enterprise - It is small business that employees small number of employees. It usually
operate fewer than 10 people and started with small amount of people capital.
Small Medium and large organisation- It is the enterprise that has investment in plant and
machinary is more than 5 crore but does not rs 10 crore.
Relationship between different organizational functions and their interrelationship with
organizational objectives
Interrelationship between different organizational function of Tesco plc -
Interrelationship between Human resource and Production function
Production function of Tesco plc is dependent on the manpower without the labour forces
products of the company cannot be manufacture. The Company cannot produce its products
without the help of sufficient employees and skilled labour (Kljucnikov, Belás and Paseková,
2016). The Human resource function assures the product quality and improvise it if the found
any fault or default in it. Through this business objective of Tesco plc got achieved the efficient
human resource improves the overall capacity of the production function and increase
productivity.
Interrelationship between Production and Marketing function
Production function is interrelated with the marketing function of Tesco plc. The
marketing function do research and conduct market analysis which is helpful for analysis the
current trend and customers choices and prefers. The information and data which is collected in
the marketing research is given to the production department and production function use the
current data to manufacture the products of Tesco plc in accordance with the customer taste and
preferences. This is helpful to achieve the business objective of Tesco plc which is to increase
the customer satisfaction.
Interrelationship between Marketing and Finance function
The Marketing function is interrelated with the finance function. For promoting the
products of Tesco plc and telecasting the advertisement of its products on television it generally
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occurs high costs (Prajogo, 2016). The marketing function is dependent on the Finance
function. Finance function provides enough funds to marketing function of Tesco plc. For
conducting the promotional activities of Tesco plc the finance function manage the funds. This is
helpful for achieving the business objective of Tesco plc which is to increase the market share.
Interrelationship between Human resource and Marketing
The Human resource department is interlinked with the marketing function. The
Marketing function cannot be perform without the human resource and manpower. Tesco plc
needs marketing person and experts to sale their end products to the customers (Hamilton and
Webster, 2018). For doing promotional activities they need salesman. This is helpful for
achieving the business objective of Tesco plc which is to increase profitability.
PART 2
A) PESTLE Analysis on UK retail sector
It is the framework that analyse and monitors the macro environmental factors. It is the
tool especially useful when set up a new business or entered into foreign market.
PESTLE Analysis Tesco plc
Political Factors – Tesco plc operates its operations from twelve countries which includes
Europe and Asia. Thus, it is affected by many political factors that includes Tax rates and
political instability. Import duty affects the company because it imports raw material from
outside the UK from countries like East Asia and China. The tax on large super market is applied
is known as 'Tesco tax' which is planned by the local council of UK government (What is Five
Forces Analysis, 2018). They are refuses to take initiative due to the price hike. The tax burden is
impacting the company in negative term.
Economic Factors – Labour cost is one of the important economic factor that effects the Tesco
plc. Annual wage bill of company is amounting GBP 4.5 billion. In the year 2018 UK minimum
wage is increases by 4.4% for 25 years. Thus, the upward shift has cost million of pounds to
Tesco plc in UK. Factors like costs., prices and profits are impacting the company. The
Company can increase the costs and prices and decreases its profits for a duration. This will
affect the brand reputation and cost leadership strategy is introduced.
Social Factors – Consumers choices, preferences and shopping trend is constantly changing
from time to time. People generally have hectic schedule, they prefer fast delivery with a flexible
goods return policy. Customers wants all the things at one roof (Nohria, 2017). Hence, the Tesco
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is relying on the needs of their customers and also understanding and providing the services in
order to meet these issues. Consumers are demanding for organic food as the obesity is another
issue in the society. Tesco should consider the changing behaviour of the customers and must
produce healthy food products to fulfil the consumers needs.
Technological Factors – The Tesco plc is facing issues like poor customer experience. To
overcome this they are doing technological advancement. They have introduced RFID
technology in order increase the store experience for the customers. This technology has capacity
to count the stock at automatic mode and it also remove it once the sales is being made. This also
facilitates the supplier to replenish the store when it is required (Gavurova, Packova and Smrcka,
2017). The company has also developed its mobile payment system called PayQwid this is
giving customers an ease to make online payments. The app is linked with the Clubcard and
NFC technology. The customers are earning earning loyalty points and are getting various
discounting offers through this app. This leads to increase the sales of Tesco plc.
Environmental Factors – Tesco plc is facing immerse pressure from the UK government
related to the environmental issues. It supports its customers to shop at tesco.com as the Tesco
Van drivers is are not only using fuel saving routes but also collects the plastic bags from the
customers and this plastic go through recycling process (Ji-fan Ren, Fosso Wamba and Childe,
2017). Company is committed towards the renewable sources and had to generate 100% of its
electricity till the year 2030. They are committed to minimizes the carbon footprint till the year
2020.
Legal Factor – Legal laws are affecting the business of Tesco plc as in the year 2016, 17
workers of Tesco took action against the employer on the basis of gender and age discrimination.
The workers are frustrated after noticing low pay rates for the night shift and bank holiday shifts.
This makes company's bound to follow Equality Act 2010 and Employment Rights Act 1996 .
Lastly, the matter is settled in the agreed price of GBP 12 million.
B) Application of SWOT and Porter's five forces analysis on UK Super market
SWOT Analysis of Tesco plc
This refers to strategic planning technique and used to identity the Tesco plc strengths,
weaknesses, opportunities and threats.
Strengths
 Tesco has strong brand value in the market.
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 It is known as one of the largest and profitable supermarket chain in UK.
 They have significant cash reserve and wide range of property in its business portfolio,
hence it provides strong financial position (Clarke and Xu, 2016).
 It is offering more personalised service experience to their customers. Their various store
outlets fulfiled the local needs.
 It has improvise the technology by introducing mobile payment system app called
PayQwid. It has facilitating the customers for making online payments and also
connected with the Club card of loyal customers through which they are getting
discounts.
Weaknesses
 Tesco plc subsidiaries are not operating well and they are more vulnerable to certain
macro environment factors like their Finance profits levels are negatively influenced at
the time of credit crisis and inflation.
 Consumers are not buying goods of the Tesco plc as their products have less disposable
income. They do not manged their inventory. Thus, they occured high cost of inventory.
 Tesco plc has charged fines due to false declaration of accounts in the year 2017 and has
done misrepresentation of profits to their shareholders.
Opportunities
 Tesco plc has introduced Jacks a new discounting store which has opportunity of growth.
 There is opportunity of joint venture in the regions where Tesco subsidiaries are under
performing. Local companies have profound knowledge of market which can helps the
Tesco to improve performance in that regions (Lee, 2017).
 They have opportunity to enhance online shopping experience.
 Company can expand its business in emerging countries like South Korea, Indonesia and
Turkey this helps to improvise the brand value of Tesco plc.
Threats
 The competition is high and intense in retail industries. Tesco plc has threat of
companies like Sainsbury's, Asda, Morrison's, Aldi, Lidl and The Cooperative.
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 Food prices are at the rise all over the world. This is influencing the customers behaviour
of Tesco as they have less disposable income.
 Economic recessions and credit situation is threaten the profitability and market share of
the company.
 Increased wages and Labour benefits all around the world add to Tesco cost basis.
Porter's five forces analysis of Tesco plc
It is the tool that analysis five competitive forces that shapes the industry. It is useful for
determine the corporate strategy.
Threats of New Entrants
New Entrants are bringing innovation and using lower lower pricing strategy they are
building pressure on Tesco plc. The company has managing these challenges through building
effective barriers to safeguard their competitive edge in the market (What is PESTLE Analysis? A
Tool for Business Analysis, 2019). The company can bring innovative products like recently they
had open Jacks a new discounting store it has working amazing in the market and helps retain
customers. The Company is building economies of scale so that it can lower the fixed price per
unit.
Bargaining Power of Buyers
Customers are demanding to buy products at minimum price. This is building pressure on
Tesco plc as their competitors like Sainsbury's, Asda, Morrison Aldi and Lidl are offering
products at premium price. The Customers can easily switch to other companies who are offering
products at less price (Virglerová, Dobeš and Vojtovič, 2016). The bargaining power of
customers are strong under this situation. The Company can limit this bargaining power by
introducing the new products, there tendency for discounting got decreased by new product
offerings.
Threats of Substitute products and Services
The substitutes of Tesco plc are small chains of convenience stores, organic shops and off
licences which are not a threat for Tesco plc due to they have high quality of products and
considerable price is also low. Thus, the threat of substitute products in food items is very less
whereas substitute for non food items like instance clothing is fairly high.
Bargaining Power of Suppliers
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The Suppliers have major focused towards food and grocery retailers and awful losing
their business suppliers in supermarket chain like Tesco plc. Thus, it strengthen positively for
lowering the prices from the contractors. It is concluded that bargaining power of suppliers is
fairly low in retail industry like Tesco.
Rivalry among Existing competitors
The Rivalry among the existing competitors is high in retail industry. The Tesco plc can
take competitive advantage by building sustainable differentiation, through introducing new
products (Jaakkola, Frösénand Parvinen, 2016). The Company can also collaborate with other
competitors like Sainsbury's, Aldi and Lidl to increase their market share and cutting off the
competition. The Company can go for mergers and acquisition to drive their business towards
success.
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CONCLUSION
It has been concluded from the above project report of business environment that the
Purpose of Tesco plc is to serve there shoppers a little better everyday and to fulfil and meet the
needs of the customers. It is summarise that the Tesco plc follows hierarchical organizational
structure and it is further divided into functional divisions in order to assure that work is
accomplished smoothly and efficiently. It is determine from the Pestle analysis of Tesco plc that
the macro environment factors influence the decision making of the business. There is negative
impact of Political instability and tax burden on the Tesco.
Through conducting Swot analysis it is analogized that the Company can expand its
business in emerging countries like South Korea, Indonesia and Turkey. By conducting Porter's
five forces analysis it is concluded that Threat of substitute product is fairly low whereas
Bargaining power of buyers is fairly high.
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REFERENCES
Books and Journal
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