Business Environment: Analysis of Tesco and Organisational Structure

This report provides a comprehensive analysis of the business environment, exploring various organizational types, including public (NHS), private (Tesco PLC), and voluntary (Oxfam) organizations. It examines their purposes, scopes, legal structures, and stakeholders. The report delves into the interrelationship between organizational functions such as administration, finance, marketing, sales, production, and research & development, and their link with organizational structure, specifically focusing on Tesco's hierarchical structure. It also includes an analysis of the advantages and disadvantages of these interrelationships. Furthermore, the report applies PESTLE and SWOT analyses to assess the impact of macro and micro environmental factors on business operations, with a particular emphasis on Tesco. The report concludes by summarizing the key findings and implications of the analysis.

BUSINESS & BUSINESS
ENVIRONMENT
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Table of Contents
INTRODUCTION ..........................................................................................................................2
TASK 1............................................................................................................................................3
P1 Different types and purpose of organisation...............................................................................3
TASK 2............................................................................................................................................7
P3 Organisational functions and their link with structure and with business objectives.......7
TASK 3..........................................................................................................................................10
P4 Positive and negative impact of macro environmental factors on business operations. .10
P5 Internal and external analysis of Tesco....................................................................................12
P6 Interrelation of strengths and weakness with external macro factors.............................14
CONCLUSION .............................................................................................................................16
REFERENCES..............................................................................................................................17
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INTRODUCTION
Business environment means surrounding which considers macro factors (like PESTLE
analysis) and micro factors (like SWOT analysis) that influences the organisation and its
business operational cycle (Saleem, 2015). This report provides brief details about the various
types of organisation like public, private and voluntary and how the firm works to achieve its
business goals, purpose and objectives. TESCO PLC is a private multinational retailer which
deals in wide range of products and services which are cloths, electronics, furniture, telecom &
internet services, household goods & petrol station etc. National Health services (NHS) is a
public organisation which provides health care services like dentistry, primary care. Oxfam is a
voluntary association working toward poverty alleviation at global level. The report also outline
interrelationship between functions and structure of business organisation. It considers PESTLE
& SWOT analysis for determining the influences of macro and micro factors affecting the
company.
TASK 1
P1 Different types and purpose of organisation.
The three main types of organisation are as follows:
PUBLIC ORGANISATION
A public organisation consists of agencies, enterprises, entities controlled and funded by
public sector, government either central or state organising public programs, goods and services
to customer at large (Miskiewicz, 2017).
The National Health Service (NHS) is one of the public organisations which is a
national healthcare system funded by public sector, government and is overseen & headed by the
Department of Health and Social Care which provides health care services (most services free) to
all legal English residents. NHS provides free health care services like emergency treatment,
infectious disease treatment.
The regulatory body is Care Quality Commission. Stakeholders of NHS include
commissioners, customers, contributors, channels, commentators, champions, competitors. The
purpose of NHS is to maintain clinical excellence and high-quality care of patient. Scope of firm
is to promote health and well-being and specialist care. Legal framework of NHS is based on
Secretary of State for Health and Social Care, General Medical Council, Nursing and Midwifery
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Council, General Dental Council and the Health and Care Professions Council & Department of
Health and Social care. The Care Quality Commission is a regulator for quality at NHS.
PRIVATE ORGANISATION-
An organisation run by any individual, entity, agency or corporation which is not control
by any public or government body, created with the objective of making profit.
TESCO PLC is a British multinational grocery and general merchandise retailer
established for earning profit. The majority of shares are acquired by public & TESCO shares its
profit with its shareholders on large basis which make TESCO a Public Limited Company. Tesco
excellence its services in retailing of books, clothing, electronics etc. It has expanded range of
products to household goods & petrol station.
Purpose of TESCO is to identify customer needs and be first to cater their needs.
However, scope of Tesco is to acquire large market share by coming up with innovating services
and products. Legal structure of firm is based on principles of Corporate Governance,
Environment friendly practices and Employment Legislations.
VOLUNTARY ORGANISATION-
A voluntary organisation is a group or association of individuals who comes together and
enter into an agreement voluntary to accomplish a specified purpose. Common example are trade
union, professional association etc.
OXFAM is a Charitable Institution emphasizing on motive of poverty alleviation at
global level. It is a major non - profit group with an extensive collection of operations. The aim
is to work together for greater impact on the international stage to reduce poverty and injustice.
Scope of Oxfam is to outline innovative, practical ways to improve living standard of
people. OXFAM stated goal is to make productive decisions like quality, living standard, rights
and justice for the people living under poverty line. Purpose of Oxfam is to help the poor people
by empowering them to create a safe and secure future (Miskiewicz, 2017). OXFAM is regulated
by Trust of Association & works on the principles of Gender equality, Anti-discrimination
policy, Safety policy &Corporate Governance policy.
P2 Size and Scope of different type of organisation.
PUBLIC ORGANISATION - National Health Services
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Background: National health care system was formed in 1948 which is publicly funded by
government and is overseen by the Department of Health and Social Care.
Products and services: Provide services related to primary care, dentistry, emergency treatment,
treatment for infectious disease and many free of cost medical services.
Size and scope: Scope is to meet everyone’s needs for free at point of delivery & will be based
on clinical need, not ability to pay. Size of NHS defines health care facility over 1 million
patients every 36 hours. Also, it provides employment to around 1.4 million people.
Vision: To provide better health, better care & better value.
Mission: To provide long term health care services to all irrespective of wealth.
Business objectives: Shape its services around the needs and preferences of individual patients,
their families and their careers. Work to reduce health inequalities & provide open access to
information about services, treatment and performance.
Organisational structure: NHS organisational structure includes Clinical Commissioning Group,
NHS foundation Trust, The department for Health.
Legal structure: Legal framework of NHS is based on Secretary of State for Health and Social
Care, Department of Health and Social care. The Care Quality Commission is a regulator for
quality at NHS.
Stakeholders: Includes commissioners, customers, contributors, channels, commentators,
champions, competitors.
PRIVATE ORGANISATION – TESCO PLC
 Background: TESCO was founded as Group of Market stalls in 1919 by Jack Cohen.
From T.E. Stockwell, Cohen purchased a shipment of Tea. By combining the initials of
first two letters of Cohen, TESCO came into existence.
 Products and services: Provide its services in retail books, cloths, electronics, furniture,
toys, petrol, software, financial services, telecoms, and internet services. Expanded its
products & services in household goods & petrol station.
 Size and Scope: Scope of TESCO is to become the largest retailer by expanding its
market to US market after Europe and Asia. TESCO provides employment to 4,76,000
employees. As per Gross Revenue and Revenue factor, TESCO is 3rd & 9th largest retailer
in the world respectively.
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 Vision: A growing business which is full of opportunities, modern, innovative ideas.
Also, to inspire, earn trust and loyalty from customers and society.
 Mission: It states about values by letting other people understand what kind of business
they are working for and also let customers know what they expect from us.
 Business objectives: To expand its market in US and become one of the largest retailers.
To treat everyone in manner like TESCO want to be treated & help everyone who shops
with TESCO to enjoy a better quality of life.
 Organisational structure: TESCO PLC is a British multinational grocery and other retailer
which follows a hierarchical structure consisting of functional and divisional units as it is
a multi-layer & large retail organisation.
 Legal structure: It focuses on principles of Corporate Governance and Employment
Legislations for the betterment of both employees and the organisation in achieving its
set defined goal.
 Stakeholders: These are Customers, suppliers, Employees, Legal community,
Shareholders, Government and Trade Union.
VOLUNTARY ORGANISATION - Oxfam
 Background: A confederation of 20 independent charitable organizations whose initial
concern was supply of food to relieve famine. After food and medicine, Oxfam provides
tools to people to become self-supporting and opens markets of international trade.
 Products and services: By conducting programs to overcome poverty and injustice for
which TESCO organised campaigns, training sessions, awareness programmes etc. The
Make Trade Fair campaign was organised by Oxfam emphasizing on elimination of trade
practices.
 Size and Scope: Scope is to outline innovative, practical ways to improve living standard
of people.
 Vision: A world without poverty and hunger.
 Mission: To reduce poverty and injustice on the international stage.
 Business objective: To help the poor people by empowering them to create a safe and
secure future.
 Organisational structure: Have a corporate-style, undemocratic internal structure and
addressing the symptoms rather than the causes of international poverty. Organisational
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structure of Oxfam follows a hierarchical structure consisting of many levels, of which
each level is controlled by one person.
 Legal structure: Legal Structure of Oxfam depends on Corporate Governance policy. It
emphasizes on Gender equality policy, Anti-discrimination policy, Safety policy. And
regulated by Trust of Association.
 Stakeholders: Are Shareholders, Suppliers, Partners, Government Agencies, Donors, and
Managers.
Micro enterprise- A micro-enterprise (or microenterprise) is generally defined as a small
business employing nine people or fewer, and having a balance sheet or turnover less than a
certain amount (e.g. €2 million or PhP 3 million).
Small enterprise- These are those type of organization where the company is engaged in
hiring less than 250 employees.
Large enterprise- In this type of enterprise, the employees recruited are more than 250.
TASK 2
P3 Organisational functions and their link with structure and with business objectives
Functions of TESCO PLC are:
 Administration – TESCO layout the outline which ensure the manner in which
employees work for smooth functioning and also ensures proper communication between
manager and employees so that goals can be achieved effectively.
 Finance -It is concerned with measuring the financial performance of TESCO to
ascertain whether the company is incurring loss or earning profits. Also, it helps in taking
financial decisions by making comparison between actual and predicted performance.
 Marketing, Sales & Production- Marketing focuses on conducting market surveys,
research with the help of questionnaire or feedback form, to know about customer's taste
and preferences.
 Sales function helps TESCO in launching its new products & services in the market by
making aware customer about it.
 Production function of TESCO makes sure that there is timely delivery of its products
and services to its customer.
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 Research and development: Function is to provide information about latest and updated
technology, which can be used for maximizing the profit margins and also helps in
customer satisfaction.
Organisational structure of TESCO
Figure 1: Organisational Structure of TESCO
(Sources: Organisation Structures, 2016)
TESCO has been following hierarchical organisational structure because of its large
retailing business & consists of Functional and Divisional structure. Being a large retailer,
TESCO has to follow Functional structure to keep a check on the functioning of its various
departments. Under divisional one, obligations are divided into many segments so that work can
be done smoothly, and goals can be achieved timely (Miskiewicz, 2017).
Interrelationships of organisational functions and their link with structure -
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 Human Resource Department helps the organisation in recruiting, selecting & provides
training sessions to employees of different department for achieving the business goal as
a whole. Technological advances implemented by Human Resource managers in the
company help in successful accomplishment of its goals.
 Finance Department is interlinked with divisional department like food, marketing,
regional, etc. for controlling, maintaining and planning their financial budget,
implementation of the available financial resources effectively so that organisational
goals can be achieved. With the help of Cash Flow, financial statements the company is
able to manage its funds and plans its expenditure for future.
 Marketing, Sales & Production Department support each other for smooth functioning of
TESCO. Marketing department focuses on market surveys, research, advertisement and
promotional features for making consumer aware about new products and services and
acknowledging company about latest and innovative technology for increasing the
productivity and reducing the cost of production thereby achieving its set targetted goal.
Advantages and disadvantages of interrelationships of organisational functions and their
link with structure
Advantages Disadvantages
 Expertise Knowledge
TESCO has expertise knowledge which has
specialization in its different department
which help the organisation in effective
achievement of business goals.
 Lack of Interpersonal relations
among employees
As different department are having their own
functional units and employees, who work with
the aim of achieving their own objectives, It
becomes difficult for every employee to
discuss or help employee of any other
department.
 Increases Knowledge base and
enhance skills factors
As all the departments are inter-related, it
enhances skills of employees of TESCO by
 Inter-relationship among department
leads to Competition
Competition increases among employees when
department are inter-related as a result it affects
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sharing of new and innovative idea, thoughts
and knowledge.
the organisational goals as every employee is
focusing on achieving their own targets despite
of company goal.
 Better Customer Care Service
As all departments are inter-related, any
complaints or customer related problem are
addressed timely & on priority basis. This
helps TESCO in fulfilment of its goal
because of customer loyalty and satisfaction.
 Lack of Coordination among
department
Sometimes work requires intervention or
discussion between two departments which
may affect the productivity of company
because of lack of coordination or inter
departmental disputes, conflicts.
 Ready to Change with time
Department of TESCO are always ready to
change themselves with the dynamic
environment factor, which improves the
quality of work and also helps in reducing the
cost of production.
 Employees resistance to change
Bringing in new technology and development
creates a fear of job loss among employees
which makes them to resist & thus productivity
of the organisation hampers.
TASK 3
P4 Positive and negative impact of macro environmental factors on business operations
For better understanding of macro environmental factors of TESCO, company focus on
PESTLE Analysis which is discussed below:
POLITICAL ENVIRONMENT
TESCO operates in 14 countries of the world. It captures huge market thus its
performance influences the local legislative and political conditions.
`Positive Aspect - “Employment laws” are followed by TESCO. One element of this law
is the government encourages organizations to provide employment for local candidates
so that they can get more benefit and in return they provide political support to TESCO to
avoid hurdles.
Apart from this, Negative Aspect is that TESCO faces many problems during import
from countries like China and East Asia due to changes in tax rate. Increase in Tax rate affects
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total expenditure of TESCO. Price of final products of TESCO is thus very expensive
because of increase in total expenditure during import.
ECONOMICAL ENVIRONMENT
These factors are beyond the organisation's control, but it affects working of an
organisation. Like Products demand, price and profits of an organization depends on factors like
inflation rates, interest and local unemployment levels.
Positive Aspect – Decrease in unemployment rate will increase spending power of
consumer and resultant TESCO has an opportunity to increase the supply of ready-made meals
and packed foods.
On the other hand, Negative Aspect is increase in labour cost. TESCO's provide wages approx.
4.5 billion in 2016 and it is increasing every year by 1%(Chen, 2018). This increases the total
expenditure of the company.
SOCIO CULTURAL ENVIRONMENT
This factor covers the change in taste, preferences and culture of people.
Negative Aspect – Clothing and Food Products that are manufactured by TESCO are
majorly concentrated for middle and lower class of people. But, 75% of people resides in UK
belong to high class and thus the company is not able to achieve the minimum sales target.
Positive Aspect - As the age increases people get conscious about their health. So
TESCO grab the opportunity of consciousness and start manufacture healthy and organic food
and supply them to the market and also make available to retail outlets for wider adaptability of
the product and to achieve sales target.
TECHNICAL ENVIRONMENT
Adapt to technologies is important for every organisation.
Positive Aspect - TESCO uses advanced technologies to gain satisfaction of customers.
Like, use of Credit and Debit card, EFTS's and self-checkout machines in TESCO saves time of
customers while purchasing.
Apart from this it has a Negative side too, that company need to provide proper training and
development programmes for the employees regarding technological changes. This
increases the total expenditure of TESCO.
LEGAL ENVIRONMENT
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Performance of TESCO is directly affected by Legislations and Laws the company
follows by operating in different countries.
Negative Aspect – TESCO need to follow all the rules and regulations that laid by government.
Like, in 2004 Food Retailing Commission (FRC) Introduced a Code of Practice. In this,
change in price without notice and demand of payment form suppliers is banned. Thus, by this
restriction decision making process gets slow and it affects functioning of TESCO.
Positive Aspect - Some countries offer discount in taxation and shipping services to
TESCO because the company contributes to GDP of operating country, which is
beneficial for the company in exporting and distributing of products to retail stores.
ENVIRONMENTAL ANALYSIS
Positive Aspect - TESCO takes the social responsibility while development of products.
For example, less wastage while manufacture products, efficient use of resources and less
environmental damage which helps the business entity in managing interest of stakeholders.
On the other hand, frequent changes in climate are Negative for firm because of heavy rainfall or
flood, company is not able to ship their products. Delay in delivery of goods leads to shortage in
supply of products and loss of customers as they shift to other brands to satisfy their need.
TASK 4
P5 Internal and external analysis of Tesco
STRENGTHSThird largest grocery retailer in the world – TESCO is now Third largest company in the
world of retail after Walmart and Carrefour.Largest supermarket chain in UK – TESCO is having the largest supermarket chain in UK.
This gave the company brand image and special status among customers.Customer Satisfaction – TESCO structures its stores so well that it satisfies cultural and local
needs of consumers. They also offer personalised service experience which attracts a huge
number of customers. Customer needs are met and services they experience are excellent thus
the company gain happy and satisfied customers.Diversified products – There are numerous retail stores of TESCO in various countries which
operates by franchise. TESCO provides a huge range of diversified product line Like mobile
phones, Food items, groceries, clothing etc. Because of the diversified product range, TESCO
earns profit as well as popularity (Sarsby,2016).
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