Business and the Business Environment Report: Tesco's Analysis

This report analyzes Tesco's business environment, focusing on its organizational structure, functions, and the impact of the macroenvironment. The report begins by categorizing organizations into private, public, and voluntary sectors, using Tesco, the NHS, and OXFAM as examples, respectively, and outlining their purposes, objectives, and legal structures. It then examines the size and scope of each organization. The core of the report explores the relationships between various organizational functions within Tesco, such as finance, marketing, R&D, HR, and operations, and how these functions contribute to the company's objectives. The report also identifies and discusses the positive and negative impacts of the macroenvironment on Tesco's operations, supported by specific examples. Finally, the report concludes by summarizing the key findings and insights from the analysis. The report highlights the interconnectedness of internal functions and external factors in shaping a business's performance and competitive advantage.

Business and The
Business Environment

Contents
INTRODUCTION.....................................................................................................................................3
LO 1............................................................................................................................................................3
P1 Different types and purposes of organizations; public, private and voluntary sectors and legal
structures.................................................................................................................................................3
P2 Explain the size and scope of arrange of different types organizations...............................................5
LO 2............................................................................................................................................................6
P3 Explain the relationship between different organizational functions and how they link to
organizational objectives and structure....................................................................................................6
LO 3............................................................................................................................................................7
P4 Identify the positive and negative impacts the macroenvironment has upon business operations,
supported by specific examples...............................................................................................................7
LO 4............................................................................................................................................................9
P5 Conduct internal and external analysis of specific organizations in order to identify strengths and
weaknesses..............................................................................................................................................9
P6 Explain how strengths and weaknesses interrelate with external macro factors.................................9
CONCLUSION........................................................................................................................................10
REFERENCES........................................................................................................................................11

INTRODUCTION
Business environment can be defined as the collection of various internal as well as external
factors that can the overall performance of an organization. These factors can include employees,
customers and their needs, innovation and technology, demand as well as supply (Charter, 2017). It is
important for any business to be aware of the changes that occur in its business environment as this can
help in developing effective strategies and gaining a competitive advantage against competitors.
Organization chosen for this report is Tesco, which is a British multinational retailer of groceries as well
as general merchandise. The company was founded by Jack Cohen and is headquartered in Welwyn
Garden City, United Kingdom. The report includes an explanation of different types of organizations,
their size as well as scope. Apart from this, there is also an explanation about the relationship between
different organizational functions and how do they link to the objectives and structure of the organization.
The report also identifies positive and negative impacts that macro environment can have upon the
business operations along with specific examples.
LO 1
P1 Different types and purposes of organizations; public, private and voluntary sectors and legal
structures
Organizations can be grouped into three categories based on their level of operations, namely
private, public and voluntary organizations. The three types of organizations are explained below along
with their purpose as well as legal structures.
Private Organization: TESCO
Background of the company – A private organization can be referred to any organization that is
not operated by a public body and the main aim of a private organization is to generate profits. Tesco is
one of the leading private organizations based in the United Kingdom (Crane and et.al., 2019). The
company was founded by Jack Cohen and is a private retail company that operates across different
geographic locations across the world. Tesco sells a wide variety of products ranging from groceries to
general merchandise.
Purpose – Tesco is a retail company that offers a wide range of products to its customers at
affordable rates. The core purpose of the business is to be one stop for the customers by assisting them to
enjoy a better quality of life. Besides this, the company also aims to attain the loyalty as well as trust of its
customers so as to sustain in the market for a longer period of time. Customers today want high quality

products at low prices. Therefore, it is important for the company to offer products keeping in mind the
preferences and needs of the customers.
Objective – The main objective of Tesco is to offer the customers with the best quality of
products in order to gain their loyalty and trust. The products will fulfil the needs and preferences of the
customers.
Legal Structure – The legal structure of Tesco is a flat hierarchical structure and the company
has chosen this structure so as to increase its overall competitiveness in the market areas of its operation
(Davies and Rašković, 2017). This way, the company ahs been able to ensure high performance.
Stakeholders – An organization can have various stakeholders who possess different levels of
interest as well as power in its activities. The different stakeholders of the respective company include
customers, board of directors, employees, managers etc.
Products and Services – Tesco sells products in across different product lines like grocery
products, clothing, furniture, electronics and non-food products.
Public Organization: NHS
Background of the company – A public organization is the one which is owned by the
government but it also outsources some of its services to private companies. The National Health Service
or NHS is a public organization operating in the United Kingdom. The company was established in the
year 1948 and offers services across different geographical regions of the UK.
Purpose – The main purpose of the National Health Service or NHS is to provide appropriate
health care services to the different communities in the nation, so that they are able to live their life
effectively. All of the healthcare services are provided at affordable rates.
Objective – The primary objective of the National Health Service is to offer the best possible
healthcare services to the people at affordable rates.
Legal Structure – The NHS has a highly legal structure and this is because it operates at an
international level (De Vries and et.al., 2017). Therefore, it is important for it to adopt the various policies
and procedures that are set by the government. It is important for the company to adopt and implement
the same in order to ensure informed decision making.
Stakeholders – The different stakeholders of National Health Service include people are related
with the healthcare system either directly or indirectly. Customers, healthcare professionals and the
government are some of the stakeholders of NHS.

Products and Services – The products and services offered by the company are affordable so
that people belonging to different communities can avail the same and life their lives the way they want.
Voluntary Organization: OXFAM
Background of the company – Voluntary organizations are those organizations wherein an
individual or a group of individuals who come together voluntarily in order to attain a common goal
(Gabryelczyk and Roztocki, 2018). OXFAM is a voluntary organization that is formed by the 20
independent charitable organizations. The main focus of the company is on reducing poverty globally.
OXFAM is a non-profit organization that started its operations in the year 1942.
Purpose – The main purpose of the company is to identify poor areas and develop effective
solutions for them so that people belonging to poor communities are able to live their life in an effective
manner. the company also ensures that people are treated in a fair and equal manner.
Objective – The main objective of the respective company is to develop programs and services in
order to reduce or eliminate poverty at a global level.
Legal Structure – OXFAM has operations across different geographical locations with the main
aim of reducing poverty. The legal structure of the company includes trustees, donors, members of the
community, associates etc.
Stakeholders – The main stakeholders of the respective company, OXFAM include the
government, beneficiaries, volunteers etc.
Products and Services – The company offers various products in order to ensure that people
across different communities live their lives happily and in the way that they want.
P2 Explain the size and scope of arrange of different types organizations
Private Organization: TESCO
Size – The size of the company is large as there are more than 460,000 employees working for it.
Tesco has various subsidiaries across different locations that attract a large number of customers
(Grayson and Hodges, 2017). This has helped the company in expanding its business operations and
increasing overall profitability.
Scope - The scope of the company is to extend its operations across different locations so that it
can sell its products to the customers easily. Being of the largest retailers in the United Kingdom, the
company has the scope of growing its business. This will be beneficial for it as the overall share as well as
profit of the company will improve.

Public Organization: NHS
Size – The National Health Service or NHS is one of the largest public organizations in the nation
offering services to a large number of customers. It offers healthcare services all across the United
Kingdom.
Scope – The scope for NHS is to serve as many people possible in the United Kingdom as well as
England. The company deals with nearly 1 million people every 36 hours in a day. The services offered
include screening and emergency treatments. The company can also plan on expanding its business in the
United States to serve the needs of a greater number of people.
Voluntary Organization: OXFAM
Size – OXFAM does not have a very large size but it is still committed to reducing the level of
poverty in the country (Hansell and Rafi, 2018). This is done in the form of providing relief from a
disaster, policy research as well as advocacy. The company aims at reducing or eliminating poverty from
the world in the coming years.
Scope – The company has the scope of expanding its business across different geographical
locations and try its best to offer services to the different parts of the community. OXFAM can partner up
with another organization in order to reduce poverty from the country. Besides this, it can also raise
voices for local people in order to influence decisions that can have an influence on them.
LO 2
P3 Explain the relationship between different organizational functions and how they link to organizational
objectives and structure
There are various functions within an organization that work collectively towards helping the
company in achieving its goals as well as objectives. Common organizational functions include
marketing, information technology, human resources, finance and operations (What Are Organizational
Functions?, 2020). TESCO has various departments that work in sync with each other to help it in
enhancing its overall business performance and gain a competitive advantage against competitors.
Different functions have different roles as well as responsibilities and contribute to the overall success of
the company. The relationship between the different organizational functions of Tesco are explained
below-
Finance and Marketing Department – Both finance as well as marketing departments are
important for the effective functioning of the company. This is because an organization cannot function
effectively without any capital which is mainly controlled by the Finance department. The department

works in close association with the marketing department. For example, it provides funds that are
required by the marketing department in order to carry out various activities such as branding, advertising
and promotions in order to attract a greater number of customers. The main role of the marketing
department is to generate awareness among people.
Marketing and R&D Department – Another important function within the organization is the
Research and Development department that is responsible for coming up with different product
innovation ideas that are beneficial for the company (Marom and Lussier, 2018). The marketing manager
passes on the information about the latest trends in the market to the R&D manager. This allows the
department to develop products that are based on the needs as well as requirements of the customers.
Both marketing as well as research and development departments must work together in order to help the
organization in achieving its goals as well as objectives in an effective manner.
Human Resources and Operations Department – Operations and human resources are two
other important organizational functions of Tesco. Both these departments are interrelated with each other
and assist the organization in hiring experienced and qualified individuals. The operations department
informs the human resources department of any vacant job positions. The human resources department
then conducts the recruitment and selection process to hire the right candidates for the right job.
Therefore, all of the above-mentioned organizational functions work together in helping the
company in achieving its goals and objectives. As a result, there is a growth in the company’s operations
as well as the profitability is maximized.
LO 3
P4 Identify the positive and negative impacts the macroenvironment has upon business operations,
supported by specific examples
Macro environment comprises of all the factors that are external to the company and cannot be
controlled. These factors can have an impact on the overall functions of the company as well as its
profitability (Ratten, Dana and Ramadani, 2017). The different factors include social factors, economic
factors, interest rates, advancements in technology, government policies etc. The different
macroenvironmental factors along with their positive and negative impacts are explained below –
Political Factors – The United Kingdom is a politically stable country with a government that is
proactive.in order to expand its business operations, the company has to develop strategies that are in
sync with the different political factors.

 Positive Impact: Being a politically stable country, the United Kingdom offers various
opportunities for businesses to conduct their business operations effectively.
 Negative Impact: Brexit has caused uncertainties that can affect the operations of the respective
company in a negative manner.
Economic Factors – Due to Brexit, the inflation rate in the UK has increased significantly due to
which the company had to change its decisions and strategies.
 Positive Impact: The buying behavior of the customers depends upon the working conditions as
well as employability levels of the country (Ren and Jackson, 2020). Therefore, if the economic
situation of the UK is improved, the buying power will also increase.
 Negative Impact: On the other hand, a decrease in the employability or economic condition of the
country will lead to the employees as well as performance of the company getting affected.
Social Factors – There are different social factors that the respective company should take into
consideration such as age, gender, income levels of the customers.
 Positive Impact: If the company will develop products based on the needs of the customers, it
will gain their loyalty and trust. As a result, overall profitability will increase.
 Negative Impact: The need as well as demands of the customers keep on changing due to which
Tesco has to revise its strategies as well as decisions.
Technological Factors – Tesco has adopted new technology in order to check the effectiveness
as well as quality of its overall manufacturing process.
 Positive Impact: Implementing latest technology has enabled the company to conduct its
business processes in an effective manner.
 Negative Impact: Negative impacts of the same include a reduction in the manual labor due to
which the unemployment rate will increase (Rocha, Fernandes Narcizo and Gianotti, 2019).
Environmental Factors – Tesco has adopted various strategies in order to support the various
environmental concerns.
 Positive Impact: By adopting right legislations, the respective company will be able to enhance
its goodwill in the market.
 Negative Impact: Failing to adapt its business activities to the various environmental concerns
can lead to the company losing on its customers along with an increased cost of production.

Legal Factors – The government of the United Kingdom has set various legislations that all
organizations operating within the country are expected to follow.
 Positive Impact: By adopting the appropriate legislation, the company will be able to generate
job satisfaction among its employees.
 Negative Impact: Also, since the company operates across different locations, it is quite difficult
for it to adapt itself to new legislations.
LO 4
P5 Conduct internal and external analysis of specific organizations in order to identify strengths and
weaknesses
A SWOT analysis can be used in order to conduct internal as well as external analysis of the
respective organization, Tesco. It is a strategic technique that can help the company in identifying its
strengths as well as weaknesses along with various potential opportunities as well as threats (Sanaei and
Sobhani, 2018). The SWOT analysis of Tesco is as follows –
Strengths – One of the major strengths of Tesco is that it offers a wide range of products to the
customers and that too at affordable rates. Besides this, the company has a strong presence across the
United Kingdom due to which it is able to attract a greater number of customers.
Weaknesses – As compared to other competitors, the company still lacks behind in efficient
decision making. Also, the company has been facing issues with its finances recently. Tesco has shown a
poor operational performance in some specific areas.
Opportunities – The company has the opportunity of expanding the business of its affordable
store, Jack. It can also expand its business operations by partnering up with different business
organizations as well as across various online platforms. By introducing more innovative and unique
products, the company will be able to attract a greater number of customers.
Threats – Tesco has been facing intense competition which is affecting its overall performance in
the market. Apart from this, the company has also been facing threats because of the uncertainties caused
by Brexit (Tchamyou, 2017). Continuous changes in the government policies and procedures is also
affecting the overall performance as well as position of the company in the market.
P6 Explain how strengths and weaknesses interrelate with external macro factors
External factors of a company refer to those that can affect the business operations of a firm and
cannot be controlled. Therefore, it is important for the managers of a company to formulate strategies that
can help in enhancing the overall performance. This also helps in running the business smoothly and thus,

sustain in the market for a longer period of time. From the above analysis, it can be stated that both
strengths as well as weaknesses of the company interrelate with external macro factors.
Political Factors - The political environment of the United Kingdom is stable due to which the
company will be able to perform its business operations effectively (Zhang and Wen, 2017). But due to
changes in the political factors, the cost of import as well as export will increase.
Economic Factors - Apart from this, Tesco manufactures and sells various products which
means that the economic stability of the country is high. Whereas, if there will be inflation, the company
will not be able to run its business operations effectively.
Social Factors – These factors include age, gender, socio-economic status etc. and can help the
company in satisfying the needs of the customers (Zhao, Pan and Chen, 2018). But changes in demand
can have a negative impact on business operations.
Technological Factors – Technology can help in conducting the business effectively but there
are chances that the company may lose its skilled employees.
Environmental Factors – People are increasingly becoming conscious about the environment
which will help the company in building a sustainable business. High quality packaging can involve high
costs.
Legal Factors – By adopting the right legislation, Tesco will be able to conduct its business
operations effectively. But it is not possible to adhere to each and every legal procedure or rule.
CONCLUSION
From the above report, it can be concluded that business environment can have a significant
impact on the business operations of a company. Therefore, it is important for an organization to take
account of various changes that can take place in the same. There are different types of organizations such
as private, public and voluntary organizations. Each of these have different size, scope as well as roles
and responsibilities. Also, there are different functions within an organization such as finance, operations,
marketing and human resources. Each of these work in coordination with each other to help the company
in achieving its goals as well as objectives in an effective manner. Lastly, a SWOT analysis can help in
analyzing the strengths as well as weaknesses of the company in an appropriate manner.

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