Business Environment Analysis Report: Tesco, HND Business

This report provides a comprehensive analysis of Tesco's business environment. It begins with an introduction to business environments and their influence on organizational decision-making, specifically using Tesco as a case study. The report covers various types and purposes of organizations, their size and scope, and the interrelationship between different organizational functions, such as human resources, marketing, finance, and production, and their links to organizational objectives and structure. A significant portion of the report focuses on macro-environmental factors using the PESTLE framework and internal and external analysis using SWOT analysis, demonstrating how these factors affect Tesco's operations and strategic decisions. The report concludes by discussing the relationship between internal and external evaluations and how strengths and weaknesses interrelate with external macro factors, providing a holistic view of Tesco's business environment and strategic positioning.

BUSINESS ENVIROMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Types and purposes of organisations ....................................................................................1
P2 Size and scope of different types of organisations.................................................................1
P3 Relationship between different organisational functions and their link to organisational
objectives and structure...............................................................................................................1
TASK 2............................................................................................................................................3
P4 Various macro-environmental factor that can make impact on business operation.............3
P5 Internal and external analysis of strength and weaknesses....................................................5
P6 Strengths and weaknesses interrelate with external macro factors.......................................7
Conclusion.......................................................................................................................................8
.........................................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
All the internal and external factors which has capacity to influence decision taken by an
organisation comes under business environment. Sometime the impact is positive but in other
cases they can derail the company from right track. Tesco is table leader in retail industry of
united kingdom. They are operating in more than 12 countries and offering variety of product.
This report will discuss about different types of organisation and their legal structure. Their size
and scope will also become part of this file. It will also include functions of an enterprise and
their link firm's objectives (Arasti and et.al., 2014). This assignment will focus on important
analysis like SWOT and PESTLE. At the end, it will talk about relation between internal &
external evaluation and strengths & weaknesses.
TASK 1
P1 Types and purposes of organisations
Covered in PPT.
P2 Size and scope of different types of organisations
Covered in PPT.
P3 Relationship between different organisational functions and their link to organisational
objectives and structure
In retain sector, a company has to perform various types of activities. Tesco also have
various department like Human resource, marketing, finance etc. They operate in a specific area
and do not interfere in activities of other department. Following are some division and their
relating with firm's goals and structure.
Human resource department – They wing is responsible for hiring right candidate at a
position so he/she can assist organisation in achieving their set objectives. Around 400000
people are working in cited company, HR team is responsible for solving all the issues relating to
employees.
Finance department – They are accountable for managing the funds which are present in
enterprise. They take significant decision like where to invest, what should be the source of loan
etc. They are responsible for dealing with all the activities relating to bank.
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Marketing department – This department play crucial role for expansion of organisation.
They bring business in company and also provide valuable feedbacks from customers, retails and
wholesalers (Boons and Lüdeke-Freund, 2013). They analyse market trend which help company
in forming of future polices.
Production department – They transform raw material into finished goods. They are
responsible for making important decision relating to designing of product and the material that
should be used in its creation.
Link between marketing and finance department
Marketing wing provide vital information about recent trends which is necessary for
finance division because they are responsible for taking crucial decisions relating to investment
and loans. Cited company want to expand their business in developing nations. They want to
capture 6.5% share in market before 2020. They can achieve this aim if they have proper
knowledge about the economy where they are trying to enter.
Link between human resource and production department
Tesco is working on improving quality of their organic products because their sale in
continuously rising. These goods can not be manufactured without employing skilled labours. If
HR and production teams make strong connection than they will they can recruit talented
workers according to the need of cited organisation (Cantwell, Dunning and Lundan, 2010).
Manufacturing wing should ask human resource division to hire workers who have greater
efficiency so because cited enterprise is aiming to increase their sale by 20% in upcoming two
years. They want to improve their set standards so they can retain on the top spot of retail
industry.
Link between production and marketing division
Taste and preference of customers changes in regular interval of time. If marketing teams
provide vital information and data about upcoming trend to manufacturing department than they
can introduce new product in less period of time which will give cited company some extra edge
over their competitors. Tesco is trying to enter in new economies like India and China,
marketing division should analyse these markets before opening any store because customer in
this reason are completely different from their domestic nation.
Link between human resource and marketing department
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Cited organisation want to expand their business in developing economies because
according to experts of industry Asian region will give maximum return in upcoming time. HR
department of Tesco need to hire talented workers in these nation so they can execute their
policies effectively (Carroll and Shabana, 2010). If they will not select skilled workers and
experienced people in top level management than they will not achieve desired success.
Their are some other departments which also have contributed in reaching set targets like IT
division. Technology play crucial role in success or failure on an organisation. Tesco is investing
huge amount in this area because they want to increase their online sale. This wing of the
organisation assist other department either directly or sometime indirectly.
TASK 2
P4 Various macro-environmental factor that can make impact on business operation
PESTLE is a strategic model that helps to identify the various external factors that exist
outside the organisation. It include political, economic, social, technological, legal and
environmental factors. These all factors affects the retail industry.
Political factor: Various political factors influences the working of Tesco. The regulatory
bodies of UK has imposed some kind of restrictions in term of taxes, trade and tariff barrier,
custom duties and legislation. Many retailing industry has provide the various employment
opportunities to large number of workers. This helps to increase their demand of commodities
and more customers are interested to purchased it. Government have put some restriction that
adverse affect this cited company profitability and success. Tesco chairman has generate some
rules and policies which helps company. This retailing industry has operated in all over the world
, so largely political affects this company.
Economic factors: Various economic factors also influences the performance of Tesco.
The major component that mainly affect the all retailing industry is their labour cost. This factor
made the development of economy (Cavalcante, Kesting and Ulhøi, 2011). Economic conditions
are arise in this sectors in term of inflationary condition, monetary and fiscal policies that affects
the company productivity. If the economic condition of country are good then it help to develop
the retail industry, which this cited organisation mainly works on. If the economy recession arise
then various people are unemployed , they have not any source to earn income so their
purchasing power decline , it affect this cited company profitability and demand. The two
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strategies are made by company is that diversification and internalisation, this both helps for
company get success in near future. Tesco mainly works on food segment because they
specialised I this sector.
Social factor: This factor largely affected the company profitability and goodwill. People
have change their taste and preferences according to their need and want. Today, world have
busy so they preferred ready foods , which this company has generated. People are so aware of
their health so this retail industry produce the organic commodities. Different culture have
different needs relate to grocery products (Chen, Chiang and Storey, 2012). They focus to
change their product quality according to taste of customers. More people have purchase goods
and commodities on the basis of their beliefs and desires. Different generation preferred the
different products for changing their tastes, so this cited organisation has focus to generate
commodities according to both generation needs. Tesco has suffered the horse meat scandal, this
adverse affect their goodwill and profitability.
Technology: This factor mainly helps for profitability of company. This cited
organisation has use the supply chain management system and logistics for accomplishing the
competitive advantage over the country. Technology advancement has play crucial role for
development of retailing industry. There are the various opportunities for this cited organisation.
They mainly focus for websites that prove their online shopping to large number of customers.
This cited company has worked for projects that are relate to Tesco infrastructure purpose, it
helps to accomplish goals and objectives. This cited company has largely expand their capital in
software technologies , it helps to get additional revenues. They use CCTV surveillances in their
retailing department that helps the employees to protect from offenders.
Legal factor: There are various legislation that affects the working and profitability of
Tesco. They produce various products and services that are distributed in wide geographical are.
Government has imposed restriction and legal legislation that the company has worked according
to them. They also provide the various scheme like Diwali offer and any other event happened,
this will attracted to large number of public. This cited organisation also deal with different
financial services like credit card, loans, this all are give huge benefits. If certain restriction are
imposed by government, that their reputation will decline, it largely affects the profitability of
organisation (Christopher and Holweg, 2011).
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Environmental factor: Tesco has produce those products which are eco friendly in nature.
They do not pollute the environment, so it does nota adverse affect the human health. They
mainly works to manufacture the logistic products that helps to reduce the recycling waste. This
cited organisation has target to reduce carbon footprint by 2020. This cited organisation has take
various measures and methods that help to protect the environment. They also planned for
decrease the greenhouse and emission gases . But organisation has made products that pollute the
atmosphere, it affects negative impact on this cited organisation. They also banned the plastics
bags that were harmful for human health and affects the earth organic components. Manger of
this cited organisation has adjusted their stores recodes for analysis of this environmental factors.
P5 Internal and external analysis of strength and weaknesses
Business environment is sum of the total of internal and external factors, which all are
directly impacts upon business firm and their working system. Internal factors includes strengths
and weaknesses of an particulate company. Along with this, external factors includes,
competition, consumer's taste, preferences and their requirements. Due to it is very essential to
properly and effectively analyse them with the help of smart and new techniques. In the context
of TESCO, it is an largest leading retail company in UK, which is dealing with all kind of home
products and goods with better quality at reasonable price (Haidar, 2012). For significantly
analyse and evaluate company's strengths, weaknesses, opportunities and threats then SWOT
analysis method can be used. It includes some major stages such as follows:
SWOT Analysis
Strengths
 TESCO is one of the largest supermarket chain in UK. This is already set an brand image
at national n international level due to provides better quality of products at reasonable
cost.
 It has strong brand name and financial power, with the help of them its easily attract high
number of customers towards company and their products.
 This organisation founded in 1919, it has more than 90 years history and experience of
market place.
 In the current time period, this company's stores are in 4811 countries at national and
international level.
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 Effectively commitment and investing fund in corporate social responsibility, which
helps in developing society and provides several services to them.
 Employers of this firm made strong bonds with suppliers, with the help of them
improving supply chain of products in market.
Weaknesses
 This organisation entering into several markets and sectors, so its not properly able to
concentrate of one market as an specialization.
 It carried of high transportation cost for transferring products to customers as per their
orders.
 TESCO has weak financial performance, due to financial condition of the company
directly impacts upon working system of organisation.
Opportunities
 This organisation have an opportunity to expand their business firm in other areas with
new and smart techniques.
 This company has an significant opportunity to develop online or internet shopping, with
the help of this, consumers will easily and effectively purchase any kind of products and
services as per their requirements and needs (Harrison, 2011).
 There has several opportunities in the private label marketplace, then company can
improve their products awareness as well as easily attract high number of customers.
 This organisation can invest fund in non food retail chain for increasing probability in
appropriate manner.
 It can be enhance effectiveness of the marketing strategy while using smart and
innovative methods and techniques in their working system.
Threats
 One of the major threat for this organisation is currency fluctuation, which is directly
impacts upon production and profit level of an particular company. But economic
condition is unstable in nature because its depends upon market condition and customer's
demand.
 In the external market place has regularly grow competition among all over retail
companies, which all are try to use smart techniques of attracting high number of
customers towards company and their products as well.
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 In the current time period, price of products and goods are increasing, which is directly
impact upon consumer's buying behaviour (Kian Chong, Shafaghi and Leing Tan, 2011).
 Government of the country enacted some rules and regulations, which all are has to be
followed by all retail companies in effective manner. In this situation face some
restrictions by TESCO in tier working environment.
 Rising cost of raw material due to production level of products affected in negative
manner.
P6 Strengths and weaknesses interrelate with external macro factors
Every organisation has some strength and weakness which have either direct or indirect
relation with the external factors. They also help them in ascertaining their correct position so
they can make future strategies according (Moutinho, 2011). SWOT analyse provide information
about strength, weakness, opportunities and threats that is present in front of cited organisation.
Strengths – Tesco is a leading company in retail sector. They are giving employees to
more than 450000 people. Countries in developing regions like Asia, Africa are facing severe
problem of unemployment. They are inviting enterprise like Tesco to invest money in their
countries so large number of jobs can be generated in less period of time. They also need money
for infrastructure development, these multi national corporations can help them in achieving this
task because government of these nation will earn huge amount in form of taxation from these
firms. Normally these states do not provide any subsidiary to a private organisation but in current
scenario some of them are ready to give land on subsidiaries rate. These important factors will
help cited company in reducing their cost of operation in upcoming time. Their revenue will also
increase because of market expansion (Klapper and Parker, 2011). Their goodwill is their
another strength, when a firm earn trust of public credibility of their products also increases. It
provide them great assistance at the time of launching of new product.
Tesco took an important an important decision that they will reduce their carbon mission
in upcoming time. They were also planning to increase sale of organic product which is healthier
than other items. These decision has direct relation with environmental factor and society. They
got lot of appreciation from public which played crucial role in enhancing their goodwill.
Weakness – Cited companies is facing severe financial trouble because they are facing
burden of huge debt. Political incidents like Brexit are generating more threats because now they
are facing a fear of uncertainty. According to experts of this issue, demand in UK market will go
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down in upcoming time. Tesco is highly depended of domestic market, their earn most of the
revenue from this part. Earlier they did not need to take much legal permission from other
European country because their home nation was part of this group but in forthcoming time they
have to follow many government formalities in order to expand their business in this region.
They made some commitment relation environmental issues like reducing in pollution etc. but
according to recent reports they are failing to achieve these targets (Lee, Olson and Trimi, 2012).
This incident earned them lot of bad promotion which made a negative impact on their overall
growth of business. They debt is their another weakness, they could not spend much money on
their employees because of weak financial positions. Workers of cited organisation went to strike
because they were unsatisfied with the facilities which Tesco was providing them in their stores.
Conclusion
From the above mentioned information, it can be concluded that every business
organisation are influenced various factors that exist in internal and external. In this report,
various kind of organisation and their purposed are mentioned, how they affect the business
environment. Structure and sizes are also concluded in this report. There are three type of
organisation that is public sector, privates sector and voluntary. These three are different from
their legal structures and their way of doing work. IN order to review the macro economic factor
that affects the external environment of company , company has adopted PESTLE analysis
concept to evaluate this element. To review the internal environment of any organisation, the
company has follow the SWOT analysis concept. the relation between these organisation are also
concluded in this assignment. basically the Environment play important role for accomplishing
the profitability of business. Various cultures and tradition are also influence their goodwill.
This factors helps for company to make certain policies and procedures. Business environment
play very essential role in success or failure of an organisation.
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