Business Environment Report: Comparing Tesco and Nike (BMA4000)

This report provides a comparative analysis of the business environments of Tesco and Nike. It begins with an introduction outlining the purpose, ownership, size, scope, and sector of both companies, followed by a justification for their selection. The core of the report involves a PESTLE analysis of the external environment influencing both businesses, examining political, economic, social, technological, legal, and environmental factors. The report then delves into the organizational structures of Tesco (tall structure) and Nike (matrix structure), highlighting their key features. Strategic planning is discussed, including the leadership styles of the CEOs and the change management approaches employed by each company. The report concludes with a comparison of the strategies implemented by both companies to address external environmental factors, such as economic conditions and technological advancements, and summarizes key findings. References to academic journals and online sources are provided to support the analysis.

Business
environment

Table of Contents
INTRODUCTION......................................................................................................................3
EXTERNAL ENVIRONMENT................................................................................................4
ORGANIZATIONAL STRUCTURE........................................................................................6
STRATEGIC PLANNING........................................................................................................7
COMPARISON AND CONCLUSION.....................................................................................8
REFERENCES...........................................................................................................................9

INTRODUCTION
Business environment refers to those external forces that affect the functioning of a
business. The presents study is based upon two contrasting business I.e.e Tesco and Nike,
deals a retail industry and offer clothes as a common product.
SWOT analysis
Particulars Tesco Nike
Strength  One of the biggest grocery
retailer in UK
 Largest market share
 Diversifies stores and
Europe's largest private
sector.
 Used latest advance
technologies
 Strong brand awareness
in outer market
 Huge customer base due
to high quality product
 Iconic relationship with
others
Weakness  Failed to operate in US and
Japan
 Charged with fines due to
false accounting scandal
 Poor operational
performance in few market
 Poor labour condition in
foreign countries.
 Faces issue regarding
debts
 Lack of diversification
Opportunities  Expand a business in
emerging market
 Rise in meat alternatives
(focus upon organic
products)
 Focus upon innovative
products
 Invest in advance
technology

 Invest in AI and machine
learning
Threats  UK-EU regulations
 Strong competition.
 Change in customer
behaviour
 Faces increased
competitive pressure
 Faces patent disputes
 Economic uncertainty.
Purpose and ownership: The main purpose of Tesco is to offer high quality of
products and to become a leader in retail industry and it is a public limited company.
Whereas Nike is public firm since 1980 and the main purpose of the firm is to bring
inspiration and innovation to every athlete within a world.
Size and scope: the size of Nike is increases year by year in terms of number of
employees and financial performance because of offering wide range of products. Also,
company offering products with low cost and that is why, it stay ahead in competition.
Whereas Tesco has the largest private sector in UK with more than 3 lac employees and 2500
stores/ This reflect that company have a good size and scope at global world.
Products and service offered: Nike offer all clothing products of men, women and
children whereas Tesco deal at clothing, furniture, groceries and insurance.
The reason behind choosing these two firms over other is such that it deal at global
level and have a strong brand image. Along with this, there is a huge data available at Internet
that also helps to examine the external environment and comparing the performance with
each other. That is why, among all it can be stated that company's current situation will help
to identify which of these will be highly preferred by others.
EXTERNAL ENVIRONMENT
In order to determine the external environment of the industry, it is suggested to use
Pestle analysis which is as mentioned below:
Political: The revenue and profitability of retail industry is affected by government policies
and each country abide with their own political regulations. Such that due to change in the
taxation rates, both Tesco and Nike are affected due to increase in the offered price (Gaganis,

Pasiouras and Voulgari, 2019). Also, these companies are operated in different countries and
that is why, it is essential to abide such policies.
Economic: Having a stronger economy allows consumer to buy products they want and due
to stable economy companies are run in effective manner. Also, due to pandemic, entire retail
industry affected the most and this in turn decrease the buying behavior of customers which
directly creates negative impact upon the financial performance. Therefore, unstable
economy of UK, retail firm react accordingly that helps to meet the defined aim.
Social: This factor deals with the changing behavior of the customers and as per the market
change, retailers have to offered products online. Similarly, both Tesco and Nike offer
product online in order to enhance the customer base (Veselovsky and et.al., 2017). On the
other side, companies also set target advertisement to customers that helps to encourage
customer visit the place. Also, they offer product at discounted rate in order to increase the
sales as well.
Technological: Retail industry uses variety of technology every day in order to stay ahead in
competition, such that they adopt new systems, software and hardware that helps to reach
wide range of audience. Further, they both are investing upon Artificial intelligence to
streamline their operations and enhanced the overall performance. Therefore, complying with
such factor helps to improve business functions.
Legal: It is necessary to meet the legislative conditions for retail industry which includes
abiding by taxation laws, labor laws etc. Complying with such laws also assists companies to
smooth its business operations and attract new employees towards it. Along with this, it is
also necessary for the company to have a strong knowledge about consumer rights that assists
to run supermarkets effectually. In the context of both companies, they also ensured to adhere
with all the essential laws in order to improve the brand image.
Environment: This factor directly deal with environment of UK and that is why, companies
operating under retail industry should make sure that they comply with Sustainability Act so
that environment of UK does not pollute (Hrechyshkina and Samakhavets, 2019). In addition
to this, Tesco is the first company who banned to use plastic bags because it causes pollution
whereas, Nike also took initiatives in order to design waste management in order to protect
environment from harmful gases.

ORGANIZATIONAL STRUCTURE
Figure 1: Organizational structure of Tesco
Tesco follows tall organization structure in which all the roles and responsibilities are shared
with each other members. There are many layers defined under this organization structure
and all is based upon function as opposed to location. In this type of structure, majority of
power is held by company owner and all employees knows their roles and responsibilities.
Also, through such structure management perform task in order to run in smooth manner
where every individual has their own place with a task completion motive (Lee, 2017).
Therefore, it can be stated that through such structure, teams can be formed where all
member knows their roles so that they are able to meet the vision and mission of a firm.

As per the organization chart of Nike, it is identified that company opted matrix
organizational structure where there is more than one line of reporting managers. Through
such structure, company have to pay less to their other manager because employees are
generally accountable to more than one boss. Though company is also recruiting different
managers for top-level in order to meet the defined aim, and they can directly communicate
with their employees to let them understand about their roles. In this, organization structure
company provides flexibility in order to resolve issues without having to source to new
resource (Hamilton and Webster, 2018). Therefore, it also fosters to better communication
that helps to increase the collaboration between team members that also assists to grow them
professionally.
STRATEGIC PLANNING
As per the Huczynski and Buchanan (2016) in chapter 18, the leadership style opted
by Tesco CEO is democratic in which employees are involved while making decision for the
welfare of a firm. On the other side, CEO of Nike is also used democratic leadership style
and sometime they also use autocratic style as per the situation (Rupidara and Darby, 2017).
This in turn reflect that both leaders are focused upon their goals and also makes decision for
the welfare of a firm.
In accordance with the chapter 19 i.e. change where both company uses different
approach to manage the change in company. Such that in Tesco, company always uses Kurt
Lewin in which they make direct contact with employees in order to let them understand

about the change so that they will adjust within new environment. On the other side, Nike
uses Kottler 8 stages of change management model that helps to lead change and also
increase every individual ability to change and improve their chances of success.
According to Chapter 20: Decision making which helps company to implement the
best action so that it will assist to meet the defined aim and take a business towards further
level of success. Similarly, in the context of Nike is based upon the facts in which they ensure
that all employees get benefited from the decision and it helps to increase the overall
performance as well (Orugun and Aduku, 2017). On the other side, for Tesco, leader uses
system theory and applied all the principles that helps to mange entire work. Along with this,
company also involve all the employees within decision-making process so that they also
shared their views in order to get right decision.
COMPARISON AND CONCLUSION
By summing up above report it has been concluded that both companies have
developed different strategies in order to cope up with external environment factors. Such
that Tesco start offering products at discounted rate in order to cope up with economic
situation, whereas Nike implement upon advance technology that assists to stay ahead in the
competition. Also, the organizational performance of both companies is strong, as they both
uses democratic leadership style that helps to make decision for the welfare of a firm.
Overall, it is identified that they use different models and technique in order to make changes
or decision.

REFERENCES
Books and Journals
Gaganis, C., Pasiouras, F. and Voulgari, F., 2019. Culture, business environment and SMEs'
profitability: Evidence from European Countries. Economic Modelling, 78, pp.275-
292.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford
University Press.
Hrechyshkina, O. and Samakhavets, M., 2019. Foreign trade of the Republic of Belarus in
the international business environment. Bulletin of Geography. Socio-economic
Series, 44(44), pp.47-55.
Lee, I. ed., 2017. The Internet of Things in the Modern Business Environment. IGI Global.
Orugun, J. J. and Aduku, D. J., 2017. Intellectual capital and organizational performance in a
competitive business environment: A review. Asian Research Journal of Arts &
Social Sciences, pp.1-9.
Rupidara, N. S. and Darby, R., 2017. Institutional influences on HRM in the Asian business
environment: the case of Indonesia. Journal of Asia Business Studies.
Veselovsky, M. Y. and et.al., 2017. Business environment in Russia and its stimulating
influence on innovation activity of domestic companies. Journal of Applied
Economic Sciences, 12(7).
Online
SWOT analysis of Nike. 2020. [Online]. Available through: <https://bstrategyhub.com/swot-
analysis-of-nike-nike-swot-analysis/>.
Decision-making of Nike. 2020. [Online]. Available through:
<https://elenyasblog.wordpress.com/2016/10/11/decision-making-at-nike/>.