Business and the Business Environment Report - Unit 1

This report examines the business environment through the lens of Tesco, a multinational grocery retailer. It begins by defining the business environment and the various types of organizations, including public, private, and voluntary sectors, and then analyzes their size and scope. The report then delves into the relationships between different organizational functions such as marketing, finance, human resources, and operations. It further identifies the positive and negative impacts of the macro environment on business operations, utilizing PESTLE analysis to explore political, economic, social, technological, legal, and environmental factors. Finally, the report conducts internal and external analyses to identify Tesco's strengths and weaknesses, and explains the interrelation of these internal factors with the external environment. The report provides a comprehensive overview of Tesco's operations within the broader context of the business environment.

Business and the
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1. Explaining different types and purposes of organisations.....................................................1
P2. Size and scope of range of different types of organisations..................................................2
LO 2.................................................................................................................................................5
P3. Relationships between different organisational functions.....................................................5
LO 3.................................................................................................................................................6
P4. Identifying positive and negative impacts the macro environment has upon business
operations.....................................................................................................................................6
LO 4.................................................................................................................................................8
P5. Conducting internal and external analysis in order to identify strengths and weakness.......8
P6. Explaining interrelation of strengths and weakness with external factors..........................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment is that term which is being defined as sum or group of all kind of
factors including internal and also external along with employees, customers requirements and
also their expectations, supply and demand, trends, etc (An, Meier, Bøllingtoft and Andersen,
2019). In other words, it is the total of all the individuals, other forces that are outside business
control but particular enterprise still depends upon them and this overall affect the performance
and also sustainability of particular business. In this report, Tesco has been taken into
consideration. It is British multinational groceries that are headquartered in Welwyn Garden city,
Hertfordshire, United Kingdom.
In the following report, different types of organisations will be discussed including their
size and scope and their relationship with different organisational functions. Further, the
advantages and disadvantages of external factors that impacts operations of business to a large
extent will be illustrated in detail. In addition to this, internal and external analysis will be done
in order to identify strengths and weakness of a particular organisation.
LO 1
P1. Explaining different types and purposes of organisations.
Organisation is termed as that group of people who basically works together and also act
in such way in order to form or establish something. In other words, it is also referred to as that
system that leads to arrangement and order or any kind of structure that classifies things (Cepel,
Stasiukynas, Kotaskova and Dvorsky, 2018). Thus, different types and purpose of organisations
has been discussed as per below context-
 Public sector- Public sector organisation is the part of that economy which is basically
composed with both public services and also public enterprises. This sector generally
includes public goods and governmental services. This governmental services involves
military law enforcement, infrastructure, water supply, and also those organisation that
are working for government itself. In addition to this, it is being defined as that segment
of the economy which is in the control of the Government of that particular country
 Private sector- Private sector is termed as that part of the economic system of a country
that is basically operated by individuals and also by companies rather than that of
government agencies. Mainly this sector is operated in order to generate maximum
amount of profit in the market. It generally consist of all private owners that tends in
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order to make up maximum share of the economy in a particular market. For eg. John
Lewis partnership is one of the leading private sector organisations in United Kingdom.
 Sole proprietorship- Sole Proprietorship means one itself is the owner of
the business and manages the enterprise on their own. Further they are the
one who takes decision and implements it accordingly. In addition to this,
the he is the one who enjoys the profits and also suffers the loss. The
finance that comes into business is nothing but their own savings for
future use (Sugden, 2018).
 Voluntary sector- This sector in the organisation basically enters into particular
agreement as volunteers in order to form a body so that they can fulfil the goal or
objectives that are being targeted by them. The main aim of this type of organisation is to
find out the needs and requirements of an individual’s, groups or communities and further
implement some projects that would help them in meeting those needs easily and
successfully.
P2. Size and scope of range of different types of organisations.
Size of an organisation means the structural property which is at the interface between
internal structures and also the environment. Further, scope is defined as that process and
resources that is basically required in order to complete project in such way that they can
produce product easily and smoothly (Demircioglu and Audretsch, 2017). Thus, the size, scope
of range of different types of organisation is being discussed as per below context-
Bases of
differentiation
Public sector
(National Health
Services NHS)
Private sector
(Tesco)
Voluntary sector
(Rotary
International)
Overview It is the public funded
healthcare system in
the United Kingdom
having four other
systems. Along with
NHS England, NHS
Scotland, NHS Wales
health and social care
The private sector is
the part of a country's
economic system that
is run by individuals
and companies, rather
than the government.
It is one of the leading
British multinational
It is the duty of social
activity undertaken
by organizations that
are non-governmental
non-profit organizatio
n. It is an international
service organisation
whose basic purpose
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in Northern Ireland is
also involved were
established together as
major social reforms.
groceries and general
merchandise retailer
and has its
headquarters in
England, United
Kingdom.
is to bring all
professional leaders
together in order to
provide peace among
the world. It is
basically
headquartered in
United States.
Size There are around
106,500 doctors in
NHS. Further, 30,000
nurses and visitors
and along with this
21,139 are managers
and around 10000 are
senior managers
The number of stores
has been raised to
7000 from about 3500
between the year 2008
to 2019. This means
they are increasing
year by year and
earning huge volume
of profit.
It is the most global
network having 1.2
million neighbours,
friends, leaders and
also the problem
solvers those who try
to see world in a way
where the people
basically unite and
takes various actions
in order to create
some kind of lasting
change across globe
and community. In
addition to this,
Rotary International
has 595 employees
and further is ranked
the First out of the 10
competitors in the
whole world.
Scope The main scope and
purpose of National
The scope of Tesco
basically relates to
The main aim and
scope of this services
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Health service is to
provide healthcare to
the people. Whereas,
maximum of the
services is provided
free as it is voluntary
type of organisation.
that extent of market
where they can easily
sell their products and
services in high
volume that too easily
and smoothly. It is the
largest retailer in IK
and has their market
in Europe and Asia
and is planning to
expand their business
in United States.
is to bring all people
including professional
leaders and various
business together so
that they can provide
everyone with
humanitarian service
that will further lead
in advancing the
goodwill and peace
around the whole
world.
Vision The main vision is to
develop a positive
partnership among
patients and clients
that would together
lead in providing high
quality of health
services to the people.
The vision of Tesco is
to become the most
highly valued
business by the
customers that they
serve their goods and
services to, the
communities in which
they actually operate
their business, their
colleagues who are
loyal to the brand and
also the shareholders.
(Priporas,
Kamenidou, Nguyen
and Shams, 2019).
The vision statement
of the Rotary
international is see the
whole world in unity
and taking such action
that would create one
of the lasting change.
Legal structure they cannot directly
interfere in the
The one and basic
legal structure of the
Voluntary sector is
basically the most
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decisions that is being
made related to the
health and care
services. Therefore,
there are Clinical
Commissioning
groups who are
deeply responsible in
terms of
commissioning
healthcare of the
domestic area where
they operate.
cited brand is the
Corporate governance
where the people deal
with the shareholders.
Thus, it is being done
in order to find out the
achievement of the
stated brand in terms
of strategies that
would further lead
them in achieving
long term success and
company may
therefore reach the
boost.
independent body
which means that they
cannot directly
interfere in the
decisions that is being
made. There are three
parts including clubs,
Rotary International
and Rotary
Foundation which
altogether work in the
communities in
providing with a
particular change.
LO 2
P3. Relationships between different organisational functions.
The functions of organisation are termed as the core process or set of various activities
that is carried out within various department of a particular brand (Eling and Schaper, 2017). The
main and common functions along with their relationships is being discussed as per below
context-
 Marketing function- Marketing is one of the basic function and most integral part of the
enterprise. This function basically helps in developing the strongest relationship between
the brand and customers as Tesco provides that true and clear information about the
products and services that is being offered to them through marketing function. This
further leads them in providing and creating the brand image by using various tools and
methods that is involved in marketing in an effective manner.
 Finance function- The main aim and scope of this function in the particular organisation
is to assess the actual needs and requirements of finance and accordingly try to find out
the suitable resources that will be needed in order to raise them. This is therefore that part
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of an organisation which leads in managing the money and also tries to produce out the
financial statement of the particular brand.
 Human Resource function- They are the one who handles number of important functions
of a particular business. They are important in terms of labour law compliance, record
keeping, training and development of employees, compensation and many more. In
addition to this, they also lead in administrating various programs that are related to the
benefits of the workers of Tesco (Policy, 2016). Further, they are also responsible for the
compensation and various other rewards in order to motivate their employees for the
future work. They also focus on recruitment process in order to hire the best employees
with maximum and specialised skills which will further help in increasing the
productivity of Tesco.
 Operations- This is also the most significant function as it helps in bringing out the
smooth and the most efficient service in such way that would further meet the needs and
expectations of the customers accordingly. It is that function of business that is
responsible in managing the process in terms of creating the producing goods and
services of Tesco in an adequate manner so that they can attract huge volume of
customers towards the brand.
LO 3
P4. Identifying positive and negative impacts the macro environment has upon business
operations.
The positive and negative impact of macro environment upon business operations has
been discussed with the help of PESTLE analysis as per below context-
PESTLE
Pestle analysis is that framework that leads in analysing the key environmental factors
that affects the business to a large extent (Erasmus, Strydom and Rudansky-Kloppers, 2016).
This is further used in the scanning of an environment in order to conduct strategic analysis or
else doing any kind of market research. The factors that are involved is discussed below-
 Political factor- Tesco operates its business worldwide, so political factors affects the
performance and operation of Tesco to a large extent. This basically includes tax rates,
legislation act and the stability of a particular country in which it carries out its
operations. There is a huge financial instability in a particular country for which retailers
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are forced to provide jobs to the domestic or local population. Moreover, Tesco plays
their role in creating various opportunities in terms of employment that later on leads in
increasing the demand for goods and services provided by a particular brand (Perera,
2017).
 Economic factor- As per this factor, Tesco must be able to accept any kind of changes in
policies, taxation process or any other thing that might affect the accessibility of finance.
Further, company is growing their brand in the international market but still it is
significant to mention that they are quite dependent on the market share of United
Kingdom which is around 30%. In addition to this, the main aim of the brand is to focus
on the increased cost of borrowing as it would increase the price and decrease the profit
which would further affect the brand reputation and cost leadership strategy that is
adopted by them.
 Social factor- There are number of social changes and it has been analysed that trends
indicates that customers in a particular country had moved themselves towards bulk
shopping along with one stop shopping experience. Therefore, there is a huge increase in
the non food items that is being offered for sale. As there is a tough schedule of people
that makes the trend change overtime, so it is important for the brand to meet the
requirements of customers by offering them flexible good return policy. Thus, Tesco has
to therefore understand their needs and accordingly provide them with goods and services
to overcome various issues that would be faced by them due to changing taste and
preferences.
7Figure 1: PESTLE Analysis
(Source: Scanning the Environment: PESTEL Analysis, 2016)

 Technological factor- It has been analysed that Technological advancement have brought
multiple opportunities in order to manage and build customer trust and increase the
loyalty customer base. These advancements includes the development and introduction of
online shopping with the facility of free delivery. Other than this, they are also provided
with self service checkout points that lead in reducing the cost of labour and people easily
gets connected to the brand. In addition to this, some amount of the capital have also been
invested into projects that are related to energy efficiency projects in order to fulfil long
term objective which further leads in reducing the carbon footprint. Moreover, PayQwid
application is also being provided to customers where they can pay online on this
payment system without any kind of interference.
 Legal factor- The legal factors that include government policies and legislations also
directly impact the performance of Tesco. It has faced huge legal action in terms of
accounting fraud as they mislead their investors and later on agreed in order to pay
around 12 million for settling up this action and to save the brand image in the market
they are operating in. Further, it has been analysed that the cited organisation must try to
conduct its operation in accordance with Food Retailing Commission which is one of trhe
strict code of practice (Hamilton and Webster, 2018).
 Environmental factor- The main aim and purpose of Tesco recently is just to reduce its
carbon footprint by 50% in the year 2020 even if they have high pressure level in terms
of addressing the issues created by the environment and also have to adopt number of
operations that would lead the cited brand in achieving huge profitability and long term
success. In addition to this, it has also been illustrated that Tesco is being reducing waste
that is generated in their stores with the help of increasing social conscience in the
customers.
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LO 4
P5. Conducting internal and external analysis in order to identify strengths and weakness.
The internal and external analysis of Tesco would be done with the help of SWOT
analysis that would be discussed as per below context-
Strengths
 It is one of the largest and the most profitable supermarket in the whole world which is
being tried to emulated by number of competitors.
 It has improved use of technology throughout the operations that they are carrying out
that further creates greater cost efficiencies and also enhanced service experiences.
 The cited brand has won various awards for its excellence, service that they provide to
customers and also due to shopping experience that they share overall.
Weakness
 There is high level of price wars due to competitive pressure that they face in terms of
eroded profit margins on which Tesco has to focus instead of focusing on other ways that
leads in gaining competitive advantage.
 The finance level of the cited firm is impacted highly during the credit crisis that they
face recently (Mellor, 2018).
Opportunities
 There are number of opportunities in private label market.
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Figure 2: SWOT Analysis
(Source: SWOT Analysis, 2019)

 High level of opportunity in terms of growing online shopping for Tesco.
 They can provide good variety of western goods which is basically demanded by these
areas in high manner.
Threats
 There is high level of labour threats that too in terms of increased wages and benefits
around the world which would further pressure on Tesco in terms of their pricing
strategy.
 The cost basis is also impacted due to greater pressures of stakeholders which are
generally related to environment and social responsibility.
P6. Explaining interrelation of strengths and weakness with external factors.
Strengths and weakness are internal factors that are related to the external factors that
involves opportunities and threats (Mugurel-Alin, 2019). Therefore, the major strength of Tesco
is that they have high and updated technology and also provides good service to the customers
which would lead them in attracting huge customers towards the brand through which they can
also expand their business overseas which is the best opportunity they can ever get in order to
achieve huge brand image in international market.
The main weakness of this brand is that they are facing high level of competition which
affects the growth of the brand in the market to a large extent. This is the major threat that would
affect them in growing and diversifying their business as and when needed in order to achieve
high profitability and long term success.
CONCLUSION
From the above report, it has been analysed that Tesco is one of the leading supermarket
in the world with high level of market share. Further, it has been analysed that there are different
types of organisations and also their ways in order to operate in smooth and easy way so that
they can provide good services to their customers and further achieve long term success. In
addition to this, it has also been illustrated that there are number of strengths and opportunities
for Tesco in order to expand their business overseas.
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REFERENCES
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Eling, M. and Schaper, P., 2017. Under pressure: how the business environment affects
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Erasmus, B., Strydom, J. W. and Rudansky-Kloppers, S. eds., 2016. Introduction to business
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Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
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Mellor, H. W., 2018. The role of voluntary organisations in social welfare. Routledge.
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Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Policy, P., 2016. What is pestle analysis.
Priporas, C. V., Kamenidou, I. E., Nguyen, N. and Shams, R., 2019. The impact of the macro-
environment on consumer scepticism towards cause-related marketing. International
Marketing Review.
Sugden, R., 2018. Voluntary organisations and the welfare state. In Privatisation and the welfare
state (pp. 70-89). Routledge.
Online
Scanning the Environment: PESTEL Analysis. 2016. [Online] Available through:
<https://www.business-to-you.com/scanning-the-environment-pestel-analysis/>
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SWOT Analysis. 2019. [Online] Available through:
<https://teachingresources.co.za/product/swot-analysis-learners-worksheet-teachers-guide-
and-video-tutorial/>
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