Business Environment Analysis: TESCO, McDonald's, and Company Types

This report provides a comprehensive analysis of the business environment, focusing on three different types of companies: public, public limited, and private, with specific examples of TESCO and McDonald's. It delves into the background, size, scope, and objectives of these organizations, examining their legal and organizational structures, including hierarchical and divisional structures, and identifying key stakeholders such as suppliers, investors, employees, customers, and the government. The report explores the interrelationships between various organizational functions, such as marketing, finance, and human resources, and how these functions contribute to the overall objectives of the businesses. Furthermore, it employs PESTLE and SWOT analyses to assess the external and internal environments, identifying strengths, weaknesses, opportunities, and threats. The analysis highlights the complexities of managing large business structures and the importance of effective coordination between different departments to achieve business success.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
ACTIVITY 1....................................................................................................................................1
Three different types of companies........................................................................................1
Organizations background, size, scope and objectives..........................................................2
Interrelationships between the functions of TESCO............................................................12
ACTIVITY 2..................................................................................................................................13
PESTLE Analysis.................................................................................................................13
Internal and external analysis...............................................................................................15
SWOT Analysis ...................................................................................................................16
Strength.................................................................................................................................16
Weaknesses...........................................................................................................................16
Opportunities........................................................................................................................16
Threats..................................................................................................................................17
CONCLUSION .............................................................................................................................17
REFERENCES .............................................................................................................................18

INTRODUCTION
Business environment is an inherent part of efficient and effective management of the
company. It is the set of institutional conditions, economic, political and legal that is
uncontrollable and impact on firm functions and activities effectively (Kolk, 2016). Internal and
external two types of factors affect organization business environment and influence upon their
productivity and profitability.
The present study will discuss about three different types of companies including their
background, facilities, size, purpose and scope of the firm. It will also explain about their vision,
mission, objective of business, legal structure and more about its stakeholders. Moreover, this
report will justify about their various functions and activities of business and also their
relationship with organizational objectives and structure. Furthermore, this study clarifies
external environment impact on business by using PESTEL. Through SWOT analysis this study
identifies the strengths and weakness of the organization.
ACTIVITY 1
Three different types of companies
Public organization
Public sector is usually governed or owned by the governments and publicly controlled or
funded by agencies, organizations and other institutes that deliver public programs, services and
goods for example, London and continental railways.
Public Limited organizations-
Public limited firm is a corporation whose possession is spread among general public in
many shares of stock which are escaped traded on exchange stock or in over counter markets.
McDonald' is the best example of public limited company.
Private companies-
Private organizations are the part of countries economy system that run their business
individually rather than through government. The purpose of this sector is to make money or
profit by supply good quality products or services to customers (Kuipers and et.al., 2014). Their
intention is making profit that build its reputation in market better than its competitors. This
sector includes many companies who run business for increasing profitability and productivity
for example, TESCO. All these things are not operated or owned by the government.
Voluntary organizations-
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Voluntary sector refers to the companies who run their business through charities,
organize health and social care events etc. for example Save the children is one of the voluntary
organization that primary focus on creating health environment and provide better treatment to
people for better life style. They perform their role and functions in many places for their
members through the network of much health care institutions. They provide social care service
to poor, neglected, needy and old aged peoples. Voluntary union is a union of individuals who
enter on the bases of agreement usually as volunteers to form an organization that need to
accomplish their purpose.
Organizations background, size, scope and objectives
TESCO (Private organization)-
TESCO is a British multinational grocery and general merchandise retailer company
having headquarter in Welwyn Garden City, England. They have diversified into areas such as
clothing, retailing of books, electronic, toys, furniture, petrol, internet and telecoms services.
TESCO superstore, extra, express, metro etc. has been included in the portfolio of company.
They provide online groceries and banking services to the customers which make them happy
and satisfied. Company believe in producing nutritious and healthy food within reducing fat,
sugar and salt.
Size and scope of TESCO
TESCO have Gregory shops in seven countries across Europe and Asia where they have
28.04 % market share. They expand their business at global level with operating 11 other
countries in the world. Company give their best service and products in low cost to attract people
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or social group more than the others. In UK firm operates home shopping facility through their
own websites that is very beneficial for their business. By entering into local partners and joint
ventures they expand their business internationally which is one of their best strategy.
Thus, to run the entire business functions and activities smoothly they need effective
workforce who help them through their performances. In the company number of employees
(476,000+) are working with them and support TESCO for increasing profits. It is private limited
enterprise that run its business liability and privately including members of their organization.
Their mission is to achieve target market and goals of business by applying many techniques and
tactics. The main aim is to provide better electronic, clothing and groceries products to the
customers. To become leading retailer in supermarket and give good quality goods at low cost is
one of their business objectives. Through expanding business they garb the best opportunities
and expand their services across the world.
Organizational and legal structure
TESCO follows hierarchical organizational structure, in which obligation and positions
are divided into many parts to assure that work will be accomplish smoothly and efficiently. At
the top business pyramid have many authorities and responsibilities (Van der Voet, 2014). In the
organization 10 members are consists as board of directors that take place on board during
financial year. Their organizational structure reflect level of many stores which operates by many
individuals such as managers. All stores have operated by managers how give their performance
for increasing profits and business growth. Regional, store, food and non-food trading manager
manage the whole functions and activities of their store effectively.
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TESCO is a private company and run their business separately with legal identity. Their
legal structure is based on private limited organization which are owned by many shareholders.
By following the rules and regulations of government organization run business effectively
without any barrier in trading process.
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Illustration 1: TESCO Organizational Structure
(Source: TESCO organizational structure, 2018)

Suppliers, investors, employees, customers and government are the stakeholders of
TESCO. Consumers is the most important part of business because they help to grow the level
profit margin more. The focus of clients is satisfaction they need good quality products and
service that make them happy and satisfied. Employees also has been included in the level of
stakeholders they give their effective work performance in the organization that directly Impact
on their growth and success. Investors are the person who invest their money in TESCO
company for increasing their business profitability and productivity. They invest shares in order
to grow money and get better income during retirement. Through these efforts of all business
stakeholders company grow more and more than the others.
Complexities between different business structure
TESCO have huge business structure in which it is very difficult to manage or operate. It
creates many problems in the firm that influence on business growth and success (Jaques, 2017).
In that structure many individuals or members are involved that have different style of work
which develop complexities among all of them.
Interrelationship of different organizational functions-
Marketing function is quite different form the other functions of TESCO. They promote
or advertise products and services in the economy for attracting people towards business.
Marketing department make plans and strategies for promoting and distributing goods to
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Illustration 2: Stakeholders analysis
(Source: Stakeholders analysis, 2017)

customers that increase their profit margin. On the other side finance department have different
structure and activity. Finance is related with making financial plans or taking decision on the
bases of organization financial budgets including that of marketing department.
Human resource department of TESCO handles a number of different functions within
the company. This section is responsible for selection and hiring employees and training staff.
On other hands operation management concerned about services and products of company and
labor who performance under them. They only concentrate on maximize firm profit and develop
their growth and success. Thus, if the organization need more employees for run their business
they take help of HR department who hire new candidates for them.
McDonald’s (Public Limited organization)-
McDonald’s corporation is an American organization, where is has its worldwide
identity. Firm is regarded as worlds the biggest chain of fast food restaurants, that is highly
acknowledged for hamburgers. Company stared their journey in 1954 that was establishes by
Ray Kroc. It was founded in 1940 as operated by Richard and Maurice McDonald, in San
Bernardino, California, US. They turned their organization into a franchise with Golden Arches
logo.
Size and scope of McDonald’s-
They are operating in more than 120 countries through its 35500 outlets across the world.
They serve their services approximately 71 million customers daily that raise their revenue and
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increase profit more than the another. McDonald’s is best known for its french fries and
cheeseburgers, they also include chicken goods, break fast items, milk shakes, soft drinks in their
menu. It gives all the tasty food items to customers just to make them satisfied with buying all
these things. Firm is the world's second largest public limited employer with 1.9 million workers.
They operate 36,899 restaurants global, employing more than 376,000 people. They are currently
owned total 5,670 company and 31,231 franchised locations. They operate business in many
countries such as Russia and China. McDrive, McCafe, Create your taste and other are the types
of their business. Through this process McDonald’s will increase more profit that build their
reputation in market and also raise their positions.
Organization vision is to provide children in unexpected communities the necessary
education that enables them to be a part of productive workforce of the country. Their mission is
to provide better services and quality products to customers and vision relates with their need
that they want to be more popular in business public limited market by expanding their food
chain in many countries. They are committed with the people and believe in their values which
they consistently apply in their production function. They achieve their goals and business
objectives by producing good quality food items and deliver to consumers on time.
Legal and organizational structure-
McDonald’s organizational structure was reformed to improve the firm handling of their
international operations effectively. Their structure defines the system through which company
components coordinate to achieve business objectives. It adeptness managing markets based on
performance levels. They evolved many other restaurants in their business chain to increase more
profit. They roll out new services and products to maintain their position and performance in
satisfying clients. McDonald's have followed divisional organizational structure in which each
division has been done for handle particular operational area. The aim of this structure is to
support organizational and autonomy flexibility. It follows many characteristics that arranged
according to global hierarchy, function based group and performance based divisions.
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This structure helps for control and monitoring all the functions and global operations
activities. Performance based division support organization enabling them to implement plans
and strategies that is based on their market performance. Thus, because of the feature of their
structure organization was less flexible.
McDonald is a public limited organization in which they are accountable to general
public. It was funded directly by the public and tend to provide their services and products for
customers. Company owners, investors and customers are the stakeholders of firm who support
8
Illustration 3: McDonald Organizational structure
(Source: McDonald’s Organizational Structure, 2018)

them in making business more successful and powerful in marketplace. Owner make plans and
strategies and take their right decision for firm. It will impact on entire functions and activities of
company that directly effect on their growth and financial budgets. To raise the position in
market against to competitors they need to give their best performance by making tasty and
healthy food products that attract customers towards their services.
Complexities between business structures
McDonald's has divisional organizational structure in which they face many issues to
handles. Mangers give their directions to other in the organization smoothly but some times it
was difficult because of having many people in workplace who also give their command to
employees that create complexion between both of them.
Relationship between organization functions
Marketing department of McDonald's make plans and promote their products and service
in market for attracting customers. On the other hand finance department manage the entire
functions of firm like producing products. Both departments have connected on the bases of their
needs. Thus, for promoting and advertise goods marketing section take their decisions on the
based of organization financial budgets.
Human resource department hire workers for managing each operation of organization
effectively. Operation management take their help for run business smoothly, they both have
strong connection which help organization to achieve their goals and objectives.
Save the children (Voluntary Organization)-
Save the children is a non-government and international organization that promotes
children's rights, helps support them in developing countries and provide relief. It was built in
UK in 1919 in order to develop and amend lives of people or children's through better health
care, education, economic opportunities as well as provide exigency aid in natural war, disasters
and other problems.
Size and scope of Save the children-
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In UK there are 29 national Save the children company's run their Alliance and spread
worldwide network of nonprofit firms support local partners and they give their service to more
than 120 countries across the world. Furthermore, this company has been involved in another
initiative through partners such as Bernard Arnault Africa Relief. They promote policy changes
in way to increase more rights for old and young people especially by enforcing the UN
Declaration of rights of the child (Hilton, 2015). Since 1919, they make changes in the lives of
children by providing them better services and products because every child deserves healthy
and safe start. Save the children was an international umbrella company, with 30 national firms
serving over than 120 countries. They want to create strong voice for children's where more than
one person has programmes by desegregation country operations. Firm workforce is made up of
around 25,000 employees working in many country's of which just over 17,000 are employed by
SCI with across 8,000 staff employed by 30 members of Save the children. They have
approximately 13,000 volunteers in UK, who are play their vital role behind their work.
Organization have 112 specialist members who provide their services in emergency
humanitarian capacity and technical helps to overseas programmes (Yoshida and et.al., 2014).
Company structure and legal structure-
Thus, all the members of alliance are conjugate by global Save the children Alliance or
group bylaws that includes code of conduct and child protection protocol. The entire process set
a standard for common beliefs, values and principles. They want to expand and improve their
presence in many countries of strategic importance. In the organization have different levels and
each member of this level is the important part of the association. Each of them lead on activities
within their home area and perform with donors to develop or improve programmes abroad,
which are delivered and coordinated by central structure of the foundation via groups on the
ground in every country.
Their vision is to make a healthy world in which each and every child have right to
survival, development and protection and participation. Organization mission is to inspire people
for helping other who need support for making their lives better. This will help to achieve their
goal and objective of business.
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Board of trustees include in the first stage in which they take all the decisions and
command entire process of firm with the purpose of saving the lives of children's or other
people's. Filed officers take responsibilities of others who work under them and make strong
team in which they support them in the whole program.
They need to follow set of government rules in their practice and functions which depend
on legal structure that they adopted. Save the children is a trust which form their legal structure
in which trusts are basically set up to manage their property and money for clearly defined its
purpose. They build formal relationship between many parties such as, trustees who become
minimal owners of the organization property, donors of property or money and beneficiaries who
will be beneficial for the firm. It set up cheaply and quickly and they are essentially non-
democratic company because there are generally had no membership structure.
Complexities between business structures
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Illustration 4: Organizational structure
(Source: Save the children, 2018)

Save the children give their services in many countries for that they need effective
workforce. In this program each and every officer give their good performance but having many
field officers at ground create issues or complexion in their directions. Communication issues is
one of the problem that directly impact on business performance and growth.
Relationship between organizational functions
Organization run their business by operating many operations and they manage their
functions with the help of strong workforce. Operation management and HR department both are
connected through their work which make firm stronger than the others.
Marketing section make their strategies on the bases of budget that manage by the finance
department. This department permit marketing section to make their plans for advertising of
promote services.
Interrelationships between the functions of TESCO
Finance department and sales department
Finance department work for organization by making their plans, organizing, accounting,
auditing and controlling their firm finances. They also basically produce financial statements of
TESCO. The most important function of this section is to acquire funds for organization and
manage it effectively that is one their essential responsibility. Sales department connect with
finance sections because they are responsible for making sales and retaining customers by
offering them good service which is possible on the bases of funds.
They both work together that is very beneficial for the TESCO business through their
efforts they help to achieve objectives and goals of firm. Sales department grow business by
providing better and affordable services that directly help finance department. Through their help
they generate more profit and raise the financial budgets that is one of the biggest advantage of
their relationship. Communication gap between both departments does not match their thoughts
and make barriers in their functions.
Human resource relationship with Operation management
Operation management focus for making good products and services and concerned with
change materials in possible way to maximize profit of TESCO. Human resource department is
responsible for selecting or hiring workers in the organization, through their work they help
operation management section for running business effectively. Both have been separate fields,
but they work together with the aim of achieving goals. There bond and connection is very
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beneficial for business they make organization stronger and successful in marketplace. Effective
workforce helps to improve effectiveness, develop productivity and increase business profit than
the another. Employees use their skills and knowledge for completing the given tasks that make
the advantages for firm.
But if the HR department do not hire qualified and skilled candidates in workplace, it
directly influences on operation management functions and activities effectively. Staff behavior
and culture make barriers during changes in company. Without communication the entire process
cannot be done that is one of the biggest issue.
ACTIVITY 2
PESTLE Analysis
PESTLE analyse is one of the best tool that are using by marketers to monitor and
identify external and internal factors that impact on their business growth. It is a strategic
technique which help to understand market decline or growth, business position in market and
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Illustration 5: Organizational chart
(Source: The official boards. 2017)

direction and potential for accomplished operations. It effects on marketing and connection that
of organization which they worked hard to improve and develop business. Political, social,
technology, economic and other factors affect business as well as its growth that directly
influence on profit margins. Changes in these factors impact the entire function and activities of
organization in which they need to make some modification in it.
 Political factors: TESCO is a retail company that operates their business worldwide, at
this stage political factors greatly impact on its performance. By following the rules and
regulations of government they run business smoothly that effect on business positively,
but sudden changes in trading and taxation policy influence upon TESCO growth and
success. According to the Sánchez (2016), this factors also impact on decision making
function of firm management. Negative influence- Changes in policies pressure over the
operations' management and other functions they need to make some modification in
their structures or strategies regarding the taxation policy that is difficult to do. Positive
point- But these changes improve its business reputation much better or positive in way
that drives firm in new way towards success.
 Economic factors: Economic factor are mainly concern for TESCO, as they are most
likely to demand, leverage costs and prices or profits. Cost of labor is one of the most
economic factor that greatly affect the revenues of their business. By raising their cost
organization make strong team that help in the entire process of business, but is also
impact on their financial budgets that get decrease according to labor demands which is
one of the most negative influence. Positive impact- So for that management take their
rights decision or create plans that resolve the problems and reduce the effect of that
factor.
 Social factors: Changes in customers need impact on TESCO productivity and
profitability very much. These change affect business on both sides such as if these
modifications get done clients attract more towards them, but these changes need efforts
and strategies that influence upon entire function of the firm. Negative impact- As
saying by Castaño (2015), it also effects decision making of management, they have to
change whole process of manufacturing goods in which it consumes long time. Positive
impact- but conduct more research about people preferences and organization produce
goods and services according to preferences of customer's or regarding its expectation.
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 Technology factors: TESCO need to adapt all the latest technology in their business that
help to run it smoothly and effectively. But this process directly impacts on their funds
which is the most negative part. Organization operation management and other
departments take their decision and apply the useful technologies in workplace that
increase profitability. Positive impact- By implementing new technologies in business
TESCO lead over the current marketplace. Negative impact- Thus, to use new
technologies organization need to invest money that is much expensive than current
technology.
 Legal factors: Government policies and legislation's have directly impact on TESCO
performance. For, example, FRC suggests an enforceable code of practice that should be
set up banning many of current practices like demanding payments from suppliers. This
will impact on organization service or deliver process. Thus, to implement all the pricing
polices they offer consumers better price reducing on fuel purchases base on amount
spent on groceries goods at stores. Positive effect- Organization follows different policies
and now after change the need to make new policies for run business effectively that
influence positively in firm. Negative effect- Changes in pricing policy impact negatively
on organization business that highly affect profit margin.
 Environmental factors: TESCO need to produce Eco-friendly packaging that create
health and safe environment. According to Chen (2014), heavy rainfall affect their
trading process that directly influence on their profit margin. Production department
manufacture goods according to the changes in environment that help firm in trading
products in another place. Negative impact -Climate changes impact on organization
business negatively that affect its market share and business revenue. Positive impact-
Through these changes company produce organic products which is less harmful for
people. It will raise their profitability and productivity more than the others.
Internal and external analysis
Employees effective performance strengthen TESCO business more than the others. They
take this thing as advantage for beating competitors in marketplace (Metcalfe and et.al., 2015).
Workers are the base of strong team of firm through their efforts competitor identify the strength
of organization.
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Competitors apply different technique and using various methods for developing
business, but on some points TESCO do not follow these things because they have low financial
budgets that reflect their weakness.
TESCO offer their best services and better products to customers within affordable prices
that attract more people towards them. Through this process they beat competitors in
marketplace that is one of the biggest advantage for firm. Adopting new policies in business
organization develop their business more and more.
SWOT Analysis
SWOT analyze is a frame work using for evaluating organizations competitive positions
by identify its strengths, opportunities weakness and threats. It helps to know the capability of
company and measure what they can do or cannot do and its potential ability. Is very useful tool
and techniques for understanding weaknesses of firm. SWOT analysis is conduct to know about
TESCO strength, opportunity that they garb for increasing more profit.
Strength
TESCO has won many awards for their customer service and all over online shopping
experience that build its reputation in market (Tse and et.al., 2016). They improved the use of
technologies throughout their operations. This will impact on operation management decision
making function, for developing business more and strengthen their power they make new
strategies.
Weaknesses
TESCO subsidiaries are not operating well and they are more vulnerable to certain
external factors. For example, their financial level was untoward impacted during recent credit
problems that impact decision making function of organization. Production department need to
produce better products and services that attract customers more and more.
Opportunities
By producing new products and service for clients TESCO garb the attention of them as
well as others that bring them more successful (Schaefer and Blanke, 2014). Thus, for
developing or raising the position of organization management department create new plans and
promote service through adverting goods in market.
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Threats
Rising business competitors in marketplace is one of the biggest threat for TESCO, that
impact on decision making process of firm (Wesseler, 2014). Marketing department follow their
marketing strategies since for so long but this factor impact on their function. Thus, for that they
need to make new marketing strategies or plans better than the others that help in growth of
business.
CONCLUSION
In this report has been concluded that business environment impact organizations on both
sides positively and negatively. There are different type of organisation like voluntary which is
non-profit company which promote different rights of individual like Save the Child. All the
different type of organisation have to follow various type of legal structure on the bases of their
work. By conducting SWOT analyze organization get know about their strengthen and weakness
that they reduce and garb its best opportunities in market. PESTLE analyses give appropriate
information about organization capability and factors that affect its business. It impacts
organization business positively and negatively both sides that directly influence on its financial
budgets and other operating functions.
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