Business Environment Analysis: Tesco, KFC, and Oxfam Report

This report provides a detailed analysis of the business environment, focusing on different types of organizations (private, public, and voluntary sectors) and their purposes. It explores the size, scope, and legal structures of these organizations, using examples like Tesco, KFC, and Oxfam. The report examines the relationships between various organizational functions, including human resources, research and development, production, and finance, highlighting their interdependencies in achieving business objectives. Furthermore, it utilizes SWOT and PESTLE analyses to assess the internal and external factors impacting these organizations. The report also explains how strengths and weaknesses relate to external macro factors, offering a comprehensive understanding of the business environment and its influence on organizational performance. The report concludes by summarizing the key findings and providing references to support the analysis.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
Presenting different types and purpose of organization........................................................1
Explain the size and scope of range of different types of organization.................................2
Presenting the relationship between different organizational functions.................................4
Presenting the positive and negative impact of macro environment using PESTLE............7
Presenting SWOT analysis of TESCO and KFC................................................................10
Explaining how the strength and weaknesses interrelate with external macro factor.........13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Business environment is the total sum of external as well as internal factors that directly
affect the overall performance of business. The report main aim is to understand different
business environment factor that affect the business in negative as well as positive way. The
chosen firm for this report is TESCO which is one of the top and leading retail firm in UK who
provide all the products at reasonable rates. The present study explain different types and
purpose of organization such as private, public and voluntary sectors with their size, scope and
legal structure. Further, it also explains the relationship between different organizational
functions and how it links to organisational objectives and structure. By using SWOT and
PESTLE analyses, report helps to understand its internal and external business environment.
Further it also explains how the strength and weaknesses are interrelated with external factors.
Presenting different types and purpose of organization
In UK, there are different types of organization and their purpose are as follows:
Private organization: This type of sector is basically run by private individuals, whose
main purpose is to earn profit and this is not controlled by state. Moreover, the business in the
private sector also drive down the prices for their goods and services while competing for their
consumer's money (Jayne, 2019).
For example: KFC is American fast food restaurant who operates its unit in more than
123 countries as it have around 20000 locations at global level. The quoted firm provides
Chicken, salads, desserts, shakes etc at reasonable rates.
 Vision: To provide the best quality of products with excellent customer focused.
 Mission: To sell the good quality of products in friendly environment with the best
customer service that deliver sustainable growth in every year.
 Legal Structure: This sector is run by the Board of Directors and further they are headed
by the Chairman. The company's name must be ended with Limited and have Certificate
of Incorporation which allows the business to trade as a Private Limited.
Public Organization: This are those companies who are controlled by the government
and its main aim is to serve for the welfare of the people rather then generating high amount of
profit. Moreover, these are self- financing commercial enterprise that comes under the public
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ownership and provide the services which usually operates on a commercial basis (Torfing,
2019).
For example, Burberry which is one of the leading firm in UK who provide accessories
and clothes to their customers.
 Vision: To provide the best products to their customers to sustain its image in market.
 Mission: By providing the best quality of products, it increases loyal customers towards
them.
 Legal Structure: It is run by the Board of Directors and it can easily sell the shares on
the stock of Exchange in order to raise more finance. Further it also may change the
Memorandum and Articles of Association and then re-submit it to Registrar of
Companies as well.
Voluntary Organization: These organizations basically serve for the welfare of the
society and basically they did not earn for maximizing the profit. Apart from this, the sector main
purpose is to benefit and enrich the society with no government intervention. This sector also
helps to create social wealth rather than material wealth (Tomczak and Buck, 2019).
For example, Oxfam which is one of the charitable organization that focus on alleviation
of global poverty. It is the major non- profit group that have an extensive collection of
operations.
 Vision: To make the world without poverty and want a world without discriminations.
 Mission: Its mission is to serve for the welfare of the people to assist them directly when
local capacity is insufficient.
 Legal Structure: In voluntary sector, the legal structure is an unincorporated association,
a trust and a company limited. Their legal structure is different from others because they
are work for the society.
Explain the size and scope of range of different types of organization
Basis of
comparison
Public sector Private sector Voluntary sector
Objectives The sector main aim is to
serve for the welfare of the
people and provide best
The main purpose of the
private sector is to earn
profit and always producing
The voluntary sector
main purpose is to
enrich the society and
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services to their customers
with reasonable rates (Sohi
and Matthews, 2019).
the best variety of products
in order to meet their
customers demands.
work for the
betterment of their
country.
Size & scope The size of public sector is
large such that they share
some amount of profit for
the growth of its economy
as they are no dividends
paid in public sector. It has
a large scope.
The size of the private
sector is also large but small
as compared to public
sector and they did not
share a lot of amounts for
the growth of economy. The
scope in private sector is
wide as compared to others.
Though the size of
voluntary sector is so
small such that it main
aim is to serve for the
welfare of the country
or society (Aydiner
and et.al., 2019). The
scope of voluntary
sector is so small as
compared to other
sector.
Legal
structure
It is run by the Board of
Directors and it can easily
sell the shares on the stock
of Exchange in order to
raise more finance. Further
it also may change the
Memorandum and Articles
of Association and then re-
submit it to Registrar of
Companies as well
(Anandarajan and Harrison,
2019).
This sector is run by the
Board of Directors and
further they are headed by
the Chairman. The
company's name must be
ended with Limited and
have Certificate of
Incorporation which allows
the business to trade as a
Private Limited.
In voluntary sector, the
legal structure is an
unincorporated
association, a trust and
a company limited.
Their legal structure is
different from others
because they are work
for the society.
Number of
directors
In public sector, there are 2
shareholders and only two
board of directors.
The firm may have
maximum fifteen Board of
Directors and minimum 2
board of directors.
There is no
composition for the
voluntary sector.
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Example TESCO is the largest
retailing company who
provides the best quality of
products to their customers.
Currently there are 8
stakeholders.
KFC is one of the most
leading private fast food
restaurant and it also posses
all the detail which are
required in order to run a
business at further level of
success.
Oxfam which is a
charitable trust whose
main aim is to remove
poverty and provide
some necessities to
their public.
Presenting the relationship between different organizational functions
There are many organizational structure which are followed by different organization and
some of them are as follows:
Hierarchical structure: this structure is followed by TESCO such that in which it
follows the layout of pyramid. In this structure, the employees recognized their defined levels of
roles and responsibilities. Even the employees of the TESCO also gain some opportunities for
promotions in order to motivate the employees to raise their working performance
(Organizational structure, 2019). By using this organizational structure into the working force,
then it will be helpful for the firm because they become loyal to their departments and helps to
achieve the defined aims as well.
Flat Structure: KFC follows the flat structure under which there is no level of
management between the staff and manager. They also supervise the employees lees but promote
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Illustration 1: Flat structure of KFC
(Source: Flat structure, 2018)

them in order to increases their involvement in the decision making process as well. Further,
using this, structure into the workplace will help to remove the excess layer of management and
also improves the coordination and speed of communication between their employees (Ansoff
And et.al., 2019).
Divisional Structure: Oxfam follows divisional organizational structure such that in this,
It allows much more autonomy among the groups in an organization. This also offers a great
flexibility and allow each department to operates as its own company so that they all work
together in order to achieve the defined goals as well.
Relationship with different organizational functions:
All the three firms have some organization functions as well such that their
interrelationship is quite necessary in order to achieve the defined objectives of the firm. These
functions are as follows:
Human Resource department: The main function of this department is to recruit the
best candidate for their company and they also monitor about the smooth functioning of the
business. Further, HR department also handles issues and compensation problem and also make
sure that the employee relation are maintained. They are also responsible for all the legal term
such that they ensure whether the quoted firms are adhering all the rules or not.
Research and Development Department: In TESCO, KFC and Oxfam, the R&D
department basically research for new product and also make updates in their existing products
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Illustration 2: Divisional Structure
(Source: Divisional Structure, 2018)

as well. Apart from this, this also checks the quality of the offered products and assist company
by innovating new product to stay in this competitive world (Fonseca, Anunciação and Penalver,
2019). Moreover, the research and development department also helps or provide directions to
the overall system in order to raise the profit of the firm in better way.
Production department: In TESCO, the production department basically identifies the
inputs such that as the business identifies the quantity of goods which should be produces and
production department provide support in order to meet out the targets and produces the desired
output as well. Further it also makes sure about the product quality such that this department
should perform rigorous test in order to make sure that the quality is meeting out with effective
way. It also includes the production control in which the manager of the firm should make sure
that needs are met or not.
Finance department: This department monitor the overall net profit ear by the company
in a particular year and then assign the budget to all the department for performing the functions.
This department also involves to present the financial reporting and control the functions that
takes place to produce the financial statement for a particular period.
Interrelationship: These all functions are interrelated with each other such that when the
research and development department develop the strategy for developing the new products into
a market, then it connects with the production department in order to produces the same. Further,
marketing and sales department develop new marketing strategy in order to let people know
about the new product (Lemons, 2019). Apart from this, the finance department analyse that the
net profit generated during a particular period after introducing the new product into market. In
this way all the department are interlinked with each other in order to attain the defined goals of
the firm. Through their effective interrelationship, the entire department of the firm will helps the
business to reach at further level of success.
The structure of the company directly impact upon the company's performance as well as
outcomes such that as the company follows flat structure that it helps to increases the employee
involvement in the decision making process so that it will helps to generate more ideas for the
welfare of the company. On the other side, if firm follows divisional structure, then it allows
much more autonomy among the groups in an organization so that each department of the firm
free to take their own decision but it somehow may affect the business in negative way as well.
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Research and development department and finance department of the company also help
the business to achieve the objectives such that when R&D research and analyse the needs of the
customers then company produces the same to satisfy the need and at that time, finance
department of the company analyse the exact revenue which the firm earn in through that
product and also show the profitability ratio. In this way it provide positive output for the
company's welfare.
Presenting the positive and negative impact of macro environment using PESTLE
In order to determine the positive and negative impact of macro environment, PESTLE
analysis is helpful because it determines those external factors that affect the overall performance
of their business. The PESTLE analysis of TESCO is as follows that shows the positive and
negative impact upon a business.
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Political Factor: As TESCO operates at global level therefore, there are lot of factor that
influence the business in both positive and negative way. Such that the political factor includes
tax rates, acts of legislation and the stability of the country in which it operates.
Positive impact: The factor creates positive impact only when there is a political stability
in a country. That is why, TESCO also provide employment opportunities that helps to increase
the demand of their products and due to diversify workforce, quoted firm also provides the best
output and able to meet out the demands of their customers (Dumbura and Medeni, 2019).
Negative impact: The factor also creates negative impact upon the business such that
import duty on goods also affect the TESCO due to it imports its inventory from outside UK i.e.
China and East Asia. Therefore, if the government suddenly raises the tax rates, then it affects
the financial performance of the business.
Economical factor: Fluctuation in the economy of the country also affect the business in
both positive and negative way.
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Illustration 3: PESTLE analysis
(Source: PESTLE analysis, 2018)

Positive impact: The economic factors also creates positive impact upon the company
such that when there is any economy fluctuation, then TESCO opted differentiation strategy so
that it will help to attract wide range of customers towards it (Fozer and et.al., 2017). This
strategy is the main reason for the success of company and thus, it affects the brand reputation in
positive way.
Negative impact: As the economy of the country fluctuate in 2008, at that time overall
cost and prices are also increases and at that time the firm has to keep focus on the cost of the
offered products because it directly affects the brand position. On the other side, recession,
changes in foreign currency also affect the company financial position in negative way.
Moreover, in 2016, the impact of Brexit also creates negative impact such the company's product
cost is higher which affect the purchasing power of customers.
Social Factors: Sudden change in the trend of their customers over the time also affect
the business of TESCO in both positive and negative way such that:
Positive impact: If the firm easily identifies the demand of their customers and produces
the same into the firm then it helps to create the positive impact upon the business. Apart from
this, the firm has to keep innovating new ideas that helps to attract wide range of customers
towards them. So that it directly helps to increase the financial position and sustain its brand
image in market as well.
Negative impact: Social factor also creates negative impact upon the company's
performance. For example, As TESCO deals in food product and now people are quite conscious
related to their health and for them, obesity is one of the major issues and due to this reason, firm
did not offer the same products. Apart from this, in order to cope up this situation, TESCO
should consider the changing behaviour and demands for their organic foods (Aithal, 2017).
Technological Factors: This factor affect the business in both positive and in negative
way such that from last many years, TESCO faces many issues because of poor customers
experience and at that time bring or adopting new or advance technique into the working force
will helps to regain the customers trust.
Positive impact: Using advance technology into working area creates positive impact
upon company performance. For example, By adopting new system i.e. RFID technology that
helps to increase in store experience for their customers in which it automatically counts stock
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