Business and Business Environment Report - Business Studies

This report provides a comprehensive analysis of the business environment, focusing on the multinational retail giant, Tesco. It begins by defining the business environment and examining different organizational types, including public, private, and voluntary sectors, along with their legal structures, using Tesco as a private sector example. The report then explores the size and scope of various organizations, contrasting Tesco with other entities like the BBC and British Red Cross. It delves into the relationships between different organizational functions, such as marketing, human resource management, production, finance, sales, and IT, and their impact on organizational objectives and structure. The report also evaluates the positive and negative impacts of the macro environment on business operations, utilizing a PESTLE analysis to assess political, economic, social, technological, legal, and environmental factors affecting Tesco. Finally, it conducts an internal and external analysis to identify Tesco's strengths and weaknesses and examines how these interrelate with external macro factors, offering a holistic view of the company's position within its operating environment.

Business and the business
environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
P1 Different types and purposes of organisations; public, private and voluntary sectors and
legal structure...............................................................................................................................3
P2 Size and scope of a range of different types of organisations................................................4
L3 Relationship between different organisational functions and their link to organisational
objectives and structure...............................................................................................................6
P4 Positive and negative impacts macro environment have upon business operations..............8
P5 Internal and external analysis of the organisation in order to identify strengths and
weaknesses...................................................................................................................................9
P6 Strengths and weaknesses interrelate with external macro factors......................................11
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
Business environment means the surrounding of the business and also include both internal
and external factor which affects the business. Employees, government, customers, laws etc are
some of the e.g. which affects business decisions. Tesco is a multinational company based in
UK. It was founded in 1919 by James Cohen. It is the largest retailer worldwide. Apart from
grocery it has diversified its business into clothing, telecoms, financial services, home items,
furnitures etc. This report will discuss about types and purposes of public, private and voluntary
sectors with legal structures and also the size and scope of different types of organisations.
Further it will evaluate the relationship between different organisational functions and their link
to organisational objectives and structure. It will identify positive and negative impact macro
environment is having on business operations. This study will also conduct internal and external
analysis of organisations in order to identify strengths and weaknesses and how strengths and
weaknesses interrelate with external macro factors.
MAIN BODY
P1 Different types and purposes of organisations; public, private and voluntary sectors and legal
structure.
Private Sector company: The private sector company is owned and managed by private
individuals with the objective to earn profit. These companies are not controlled by the
government. Private sector plays important role in the development of the country. It gives job
opportunities to the citizens and also contribute in the national income. Private sector can
sometimes even do joint venture with public companies.
Private sector are those entities which are not controlled by the government. Private sector
include profit making companies and non-profit making companies which are not owned by the
government. It also means all the other sectors except public sector (Čepel and et.al., 2018).
E.g.- Tesco is the private company of UK. It is a multinational retail chain. Tesco’s business
includes clothing, furniture, telecoms, electronics, financial services etc. They also have
Clubcard facility to provide discounts and coupons to their customers. Their objective is to

provide low price products to the customers as compare to their competitors without
compromising on the quality. Company come up with innovative product to increase its market
share.
Public sector company: Public sector companies are those companies which are owned and
managed by the government of the country. They give jobs to their citizens and work for the
development of the country. They provide services which is benefit for the society and use the
resources in the best possible way. They work for their people, profit is never their main
objective (Gaganis, Pasiouras and Voulgari, 2019).
Private sector company is the company which is controlled by the government. The company in
which more than 50% shares are owned by the government or any agency under the government
power. Company in which all the undertakings remain with the government.
E.g.- BBC (British Broadcasting Corporation) is the UK based government company. It is a
news channel which broadcast current news. It is the biggest and famous new organisation
worldwide. It also provides online news facility. BBC is not under the influence of any political
party and telecast shows which is benefited for their viewers and listeners. Company works on
creativity and have best British writers. Their content is easy and reliable.
Voluntary sector company: Voluntary sector which is also called non-profit organisation whose
main purpose is to serve the society rather to earn profit. These companies are different from
public and private sectors. In voluntary sector they believe in charities and also include
cooperatives, community interest groups and small informal groups.
Voluntary organisation is an organisation which runs with the help of volunteers and which
provide services to individuals or groups. They also help disabled people.
E.g.: British red cross is the UK based voluntary company which do charity (Belás and et.al.,
2019). They help people in the time of crisis, not only in UK but worldwide. Company help
people without any benefit, discrimination, origin, religion, political interests etc. Their
volunteers and staff work with unity and humanity. Compassionate, inclusive, dynamic and
courage are the values of red cross. Company provide health and social care to the people by
providing medicines, helping them to hospitalised etc.
P2 Size and scope of a range of different types of organisations
TABLE I

Organisation Name Type of organisation Size by its revenue Size by its employees
Tesco Private sector
organisation
Tesco’s revenue in
2019-2020 is
estimated by 53
billion pounds.
It is established in
1919 by Jack Cohen
and having 464,505
employees worldwide.
BBC Public sector
organisation
BBC’s revenue in
2020 is estimated by
4.9 million British
pounds
It was started in 1920
by wireless
manufactures.
Company is having
22,401 employees.
British red cross Voluntary sector
organisation
Company’s revenue in
2019 was 244.9
million British
pounds.
This company was
started in 1870 by the
British national
society (Jevšenak,
2019). Company is
having 4000
employees.
TABLE II
Organisation Name Type of organisation Size Scope
Sainsbury Large scale
organisation
It was estimated that
in the year 2019,
company’s revenue
was 239 million
British pounds.
Number of employees
are 111,900.
It was founded in
1869 by John James
Sainsbury. They offer
different products.
Company bring
innovation with
competitive price.
Captify Medium scale
organisation
In the year 2011,
company showed
profit of 1 million
British pounds and
It is founded in 2011
by Adam Ludwin and
Dominic Joseph. It is
a data driven

increased profit by
300% last year.
Number of employees
are 65.
company which do
search intelligence
and media decisions.
Flight club darts Small scale
organisation
In the year 2017,
company’s estimated
revenue was 8.7
million British
pounds.
Company develop
unique and patented
technology and create
social experience
which is called social
darts.
L3 Relationship between different organisational functions and their link to organisational
objectives and structure.
Relationship between different organisation departments are-
Marketing and Human Resource Management: It is the work of HRM to make sure that
appropriate staffing is appointed by them, which help to achieve company’s objective and to
appoint the right person for the right job. Such employees should be appointed which can help in
research and development to develop new products, which can achieve targets given by the
company and employees who create ambitious sales teams. Man power is the blood for any
company, which can lead to the growth or failure of the company (Vlados and Chatzinikolaou,
2019). Effective employees are required in every department of the company for the smooth
functioning. Human Resource also work for employee welfare. HR team ensures that all the
vacancies are filled timely and right person should join the marketing team. HR also ensures that
proper training and development should be provided to every employee so that they can deal
with the current market situations. HR department also provide feedback for employee’s
performance by evaluating their performance and by target achieved by them.
Production and finance department: Both the departments are very important for the
organisation. Production ensures that company will not face out of stock for finished goods
because if there is no stock than company will not meet the demand and sales will not occur.
While finance ensures that company have capital to meet all the financial demands. Production
department require raw material, machinery etc and for this they require money which will be

given by finance department only (Contractor and et.al., 2020). If production of the goods will
not happen timely than company would not sell and hence sales fall down affecting company’s
position and also the finance department badly. These two departments should maintain balance
to achieve organisation goals (Elias and et.al., 2019).
Sales and IT department: Clear communication should be there between sales and IT
department. IT is very important department of the organisation. Advancement in the new
technology and the pressure of the digitize is forcing company to invest more money into IT and
development. Some company even have IT departments separate for every other departments.
For digital marketing IT plays a vital role such as developing websites and ecommerce, data
analysis, enhancing products, data development etc. Companies are taking advantage of current
market and actively working on digital marketing to attain the objective.
Organisation Structure:
Organisational structure includes basic activities which are perform by the company for the sake
of existence. These activities include roles and responsibilities and rules. It also tells about the
flow of information which is there in the company between different levels. In centralized
structure, information flow from top to bottom and in decentralized structure decisions are
distributed within levels of the organisation. Proper organisation structure will help company to
achieve goals of the organisation. All size of the company requires organisational structure. It
also sees that who is doing what to achieve organisation structure. If company do not have
proper organisational structure than may face some difficulty.
Types of organisational structure-
Functional Structure: This is the most common structure. Based on specialization divides the
workforce of the company. Mostly implemented by small and medium size business.
Divisional structure: This is mostly adopted by large companies. In this company follow
leadership team method which is based on products, projects etc.
Matrix structure: This is the least used structure. In this employee have to work with multiple
departments. E.g. employees working with both sales and customer service department (Dvorský
and et.al., 2017).
Flatarchy structure: It is a new structure and mostly used by start-ups. It flattens hierarchy,
company with good implementation speed should use this structure.

Tesco follow divisional organisational structure. In which work is given hierarchy wise and the
power is hold by top level people only. This structure creates no confusion but it is a bit
traditional method.
P4 Positive and negative impacts macro environment have upon business operations.
There are many impacts that macro environment has on business operations which can be
positive or negative impacts. Here Tesco is taken for explanation and using PESTLE for the
same.
Political factors- Political factors directly influence business operations. These factors help to
understand government rules and regulations. It also has an impact on import and export of the
company. These factors are very supportive for the company regarding import and export.
Political stability is very important for any organisation. Political environment consists some
policies which are tax and economic policy, employment laws, political stability, foreign trade
regulations etc. Political factors are favourable for Tesco. These factors also indicate that how
much government is interfering in the business. Government also expects from the big
companies like Tesco to create employment for the local people. Tesco creates a lot of
employment opportunities which as a result increases the demand for their products.
Economic factors- Economic factors also have a great impact on business and its operations.
These factors differ from country to country. It depends on economy and other factors like wage
rate, growth rate, inflation rate, lending rate etc. Global economic recession affects the world
economy and eventually the organisation also, these are trends which affects global market and
MNC’s at large extent. Tesco should be aware of each and every change in policies which can be
taxation rate or any of the rate which can affect the finance of the company. Negative factor will
affect the cost, profits and revenue of the company but if it is positive it will increase the market
share and productivity of the business. Although Tesco has its presence globally but it is very
much dependent on UK market. Diversification can help the company to achieve success.
Social factors- Social factors like change in customers trends, taste, preferences etc, these should
be considered by every organisation while evaluating market. Customers demand and
preferences are based on their culture and beliefs. Customers nowadays converting into health
conscious by concentrating about the health issues. Often healthy options are taken by the
customers. Tesco also fulfilling this market demand by focusing more on organic products.
Diversification in the effective manner should be done to achieve success in any market. Social

responsibility should be the priority of the organisation because society gives a lot to the
company so, company is also liable to pay back to the society.
Technological factor- These factors give kick to every business. Company should adopt
advanced technology so that they can survive for longer period. Advancement in the technology
opened opportunity gate for Tesco like online shopping, people are more active nowadays on
online platforms which in return increasing company’s revenue online and company also came
up with self-service checkouts which are very convenient for the customers and reduce the
labour cost (Mudany, Letting and Gituro, 2020). Energy efficiency projects are also considered
by the company for rapid growth. By adopting new technologies company reduce its cost and
save on time. Change in the technology plays vital role on every industry. Awareness about the
technology leads to the trending of E-commerce.
Legal factor- Legal factors also directly affects Tesco. Rules are regulations of the government
are also very necessary to follow for smooth functioning of the organisation. Customers also
relay on those companies who follow all the laid rules. Tesco operate globally so they have to
follow different laws of different countries. Company have to maintain the policies which are
given by the government like safety standards, consumer laws, labour laws etc.
Environmental factors- Company should not pollute the environment rather should take steps to
protect the environment. Safe environment is the right of everyone and is the duty of the
company to not pollute environment. Tesco make sure that they limit the wastage and also
recycled it timely. Environment is the gift of god so should be protected. Environment does not
only include climate, geographical location, weather etc but it is vast than this. Employees
should also get safe and hygienic environment to work, discrimination should not be there
everyone should be treated fairly. Pollution is done by generally big companies so should adopt
such methods which do not harm the environment and made it pollution free (Irsan and
Budiman, 2020).
P5 Internal and external analysis of the organisation in order to identify strengths and
weaknesses.
It is identified by doing SWOT analysis of Tesco
Strengths: Biggest strength of Tesco is the goodwill of the company. Company also got awards
for providing good customer service and on serving quality product in the market. Tesco has

retail chain and is also considered most profitable supermarket in the world. Company have good
market share and focus on factors which help the organisation to achieve its goal. Advancement
in technology also help the company a lot. Introducing club card facility which is very beneficial
for the customer because it provides discounts and coupon facilities. Company is having its
presence across the globe with the existence in more than 14 countries. Diversification also
added advantage in the success of the company. It has a wide range of clothing, home decor,
electronics, telecom, financial services etc.
Weaknesses: Some of the Tesco’s business are not doing great e.g. finance sector of Tesco badly
impacted by the credit crisis. Regular competitive pressure lead to price changes. Lack of market
research by the company in the retail sector in some countries leads to business failure. Due to
more cases of unemployment, purchasing power of the consumer affects which in turn affect the
sale of the company (Vlados and Chatzinikolaou, 2019). Company also faced accounting scandal
in 2017 because didn’t showed financial statements properly, misrepresentation of profit can be
seen. Low cost strategy which is adopted by the company to face its competitor leads to reduced
profit margins. The operating costs of some stores of Tesco in some countries are more which
results in loss and not showing expected growth.
Opportunities: Company came with certain strategies which attract customers in the target
market is the biggest opportunity. In some of the countries where company is not performing up
to the mark company can research properly and can do joint ventures with the local companies
which will help Tesco to understand that country. Tesco is providing online shopping facility so
company should focus more on that because nowadays e-commerce is on growth which will give
Tesco good sales and revenue. Company is having own website also so they should do
promotions and advertisements on that and on other social media platforms, which are very cost
effective. Company can also focus on different countries where Tesco is not their and should
emerge in new markets.
Threats: Credit crunches and recession will reduce the purchasing power of the customers by
decreasing market share and profitability of the company. In some countries competitors are also
giving threat to the company by giving products in less price and better quality than Tesco.
Those companies are more innovative and they know how to use technology effectively and
efficiently. Tesco’s pricing strategy are also under threat because wages given to the labours has
increased in some of the countries. Tesco’s raw material prices also gone up resulting in high

price finished goods which are not acceptable in the market (Alves, Ribeiro and Saravanan,
2020). Lack of proper management system is also a threat; some departments are not managed
properly so proper decisions are not taken hence fail strategy leads to decrease in profits.
P6 Strengths and weaknesses interrelate with external macro factors
It is explained by using TOWS matrix of Tesco
Strengths to Opportunities: Tesco is a multinational company and is established in the grocery
business, with good market share. So, company is having opportunity to move into organic
products, although company have some organic products but should come up with a range of
organic products in the market because nowadays people are very much concern about the health
so majority of people are moving towards healthy options so here comes an opportunity for
Tesco to increase their market share in such category also. Company should use its strength for
pricing policy and convert that into opportunity, they have good pricing policy where prices are
less as compare to their competitors without compromising on the quality. Company should
increase marketing and promotions over social media so that they can attract more customers.
Strengths to Threats: Tesco is having strong distribution network, which should be used by the
company to reach towards the targeted customers. Good distribution network is very essential, if
it is there than company can come up with innovation products without the fear that how it will
reach to the customers. By introducing innovative products company can even fight with the new
entrants in the market. Company can even purchase intellectual property rights by using its
financial position which will help the company to compete with their competitors. Company
should invest in their R&D department so that they can come up with the innovative items and
also with the cheaper alternatives to capture the market.
Weaknesses to Opportunities: Company should own more and more properties because banks are
also offering low interest rate loans which will help the company to become the owner of the
property rather than to rent the property, which will save the money also. Company should
provide proper training to their employees and should provide better incentive plans, timely
increment in the salaries and other benefits will help company to retain their employees because
if employees are satisfied than they will not leave the organisation and also motivated to give
their best. Company should work on declining sales by focusing on organic products and do
survey about the demand and do production according to that (Nandonde, 2019).

Weaknesses to Threats: Company should invest on their research and development so that they
can come up with new products and can increase its market share and can better compete with
their competitors. To retain workers better working environment should be provided to them,
they should feel that along with the organisational goals they are also achieving their personal
goals. As a result, worker will get motivated and will give their 100% and never leave the
organisation. Health insurance and timely promotions and appraisals are also the factors which
will influence worker’s performance. Tesco should try new markets also many developing
countries have emerging markets where company can take good market share and increase its
revenue.
CONCLUSION
From this report it can be concluded that business have a complex nature. Public, private and
voluntary sectors are analysed in terms of their size and scope. Due to advancement in the
technology, emerging social media platforms it is very easy to increase the reach of the business
in a cost-effective way although government policies and political and economic issues have
their own disadvantages. If the organisation wants long term survival than to consider social
responsibility as the duty of company is very important. Good working environment should be
provided by the companies in order to retain employees by motivating them or giving them
incentives. Internal and external environment factors are evaluated with the help of SWOT and
TOWS analysis through which company can easily understand their weaknesses and threats and
can work on that. Strengths and opportunities are also analysed so that in future company can
grow and increase their market share. Investment should be done on research and development
so that innovation can be achieved but it incurs huge costs so they are not possible by small
companies.

REFERENCES
Books and journals
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