TESCO's Business Environment: Internal and External Analysis Report

This report provides a comprehensive analysis of TESCO's business environment, focusing on its organizational structure, internal functions, and external macro factors. The report begins with an introduction to the business environment, emphasizing the impact of various internal and external fact...Read More

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Covered in PPT.......................................................................................................................3
TASK 2............................................................................................................................................3
P3: Explain the relationship between different organisational functions and how they link to
organisational objectives and structure..................................................................................3
TASK 3............................................................................................................................................5
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples...........................................................................5
TASK 4............................................................................................................................................8
P5: Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses.......................................................................................................8
P6: Explain how strengths and weaknesses interrelate with external macro factors.............9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment is all about various organisations who are combined along with
number of factors in order to have the potential for making an impact on the level of
performance in both positive and negative aspect. There are various kind of organisation who
mainly deals with the number of sectors and thus conduct the operations in better and effective
manner (Hilton and Platt, 2013). There are mainly two types of sectors which is mainly present
within the process of of business environment and those one can be internal and external.
Company chosen for this report is TESCO who has been dealing within retail sector since 1919.
There are number of things which will be discussed within report like purpose, size, scope along
with the legal structure of number of companies which will be described. Along with this, there
is the inter-connection among all the functions of organisation which is directly linked with the
objectives of business. Besides this, there are various kind of positive and negative impact on the
macro environment which is being discussed within this report.
TASK 1
Covered in PPT
TASK 2
P3: Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.
There are many of the companies who conduct their process with different kind of
motives along with environment which also differs. Thus, it is highly essential for the company
to make the structure in better and effective manner in order to attain the objectives along with
vision. TESCO is a public limited company and thus have more then 70000 employees.
Mentioned company is one of the largest company who is dealing across the globe in retail sector
with various kind of products (Organisational Structure. 2018). Thus, high funds are needed for
manufacturing and producing those goods and thus conduct the operations in efficient way.

Illustration 1: Structure of Company
(Source: Structure of Company, 2016)
It has been observed for the TESCO that they have flat structure of organisation. Level of
management for this kind of company needs to be certain and high which is not present due to
which there are hurdles to communicate with the top level management. By this kind of
structure, TESCO can provide motivation to the employees in order to take the participation
within the decision making process and thus new designs which are being made can be
implemented along with policies of company (Welford, 2013). There are thousands of employees
who are working within this company and they are needed to take the decisions on regular basis.
There are number of functions which are being performed within TESCO and those are
like HRM, Research and development, finance, accounting, sales, purchases and many more.
Functions of the company are being performed in better and effective manner and thus due to
that they are able to attain top level position within market. Certain aims and objectives of the
company is being attained if the functions of organisational structure is being combined.
So, the interrelationship of organisational structure to other functions which are being
followed in TESCO and those are described below:
 Marketing Department: This kind of sector is one of the most essential one which is
mainly performed by the TESCO. Essential assistance is being provided with the
process of marketing in products and services for fulfilling the needs of customers. By
help of this, certain competitive advantage will be gained by the company within
marketplace (Wetherly, 2014). It is highly essential for the TESCO to have effective
team of marketing as this will be able to help out in attaining high position in the
marketplace.

 Human Resource Department: Crucial role is being played by this kind of sector
within the company a they have the responsibility of giving workforce to company and
manage their needs. This department is linked with other departments as well at the
TESCO and thus performing its role of bringing out cooperation and coordination
among the team members.
 Production and Operations: This can be stated as one of the functions which is being
performed at the initial stages along with reason of consideration for each and every
company which is highly linked with the structure of company (Moutinho, 2011). In
this, TESCO will be producing the goods which will later on sold within the stores.
Production of being done as per the needs and demands of the customers.
 Accounting and Finance: This kind of function is highly linked with the monetary
transactions which are being conducted within the company. Funds are being allotted
to each and every sector in order to complete the tasks and objectives in better manner.
This mainly includes the assets creation, market survey and many more. Thus,
department is mainly present due to which company will be able to perform.
 Research and development: By the help of this kind of department, TESCO company
will be able to produce the goods and services according to the needs and wants of the
customers. In this company, as it is retailer chain, variety of products and services are
being provided in order to conduct the proper and effective research as they will be
able to know regarding the trends which are going within the market so that goods can
be produced accordingly (Halbert and Ingulli, 2011).
TASK 3
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples
There are various kind of factors along with elements which are being present within the
economy and thus they have the major impact on the various kind of activities which are being
performed by the company. There is no control over the various kind of factors specially they are
external in nature. All of them do have the positive and negative impact on the operations which
are being conducted within the process of company (Sena Ferreira and et. al., 2012). Number of
rules and regulations which are being formulated are also being affected which are mainly

performed by the management of the staff members. There are various kind of policies which are
being made by TESCO and this can help in conducting the activities in effective and ease
manner. This will in turn allow the company to gain the competitive advantage. Impact of the
external factors are being done which are mainly present within the economy and thus due to that
process can get hampered. So it is highly essential for the management to utilise the PESTEL
mode which in turn will allow the company to determine the positive and negative impact which
has affect on the economy. Below described is the PESTEL analysis which is being described
below: Political factor: In this kind of factor, there are various kind of policies which are being
formulated by the Govt. in order to make company avail all kind of benefits (Kelly and
Scott, 2012). Thus, there are high chances that the Govt. can come up with new kind of
laws and policies for producing the goods and services by which TESCO operations can
get affected. This in turn can will make the impact on the goods and services for the
customers so if there is any kind of modification within the laws, then it will have the
impact on productivity as well.
Positive effects: There are many kind of activities which are being performed which has the
positive impact on the TESCO by the political factors like free trade policy which can reduce
sourcing cost. Brexit has also made impact on process.
Negative effects:if the tax rate has been revised then the TESCO will have to increase the prices
as well because everything will have higher prices which in turn can increase the products cost
along with the sales which can also get affected. Economical factor: These can be stated as factor which is highly related to the inflation
and growth rate of certain company. There are factors which mainly differs in each and
every country and thus TESCO can make sure that the factors which they are operating in
many of the countries (Yoon, 2012). There will be an impact on the sales and purchase
graph if there is any kind of economical slowdown or up-gradation within an economy.
Positive effects: If there is any kind of inflation within the economy then the flow of fund will be
there in better way and thus people will have more purchasing power which in turn can provide
benefits to them.

Negative effects: Negative impact which can be made modifications within the economical
factors min the form of conflict which mainly happens with small kind of retailers over rise of
product by impact of currency impact on Brexit. Social Factor: There are various kind of resources which are being taken from the
environment so it is highly essential to give back more to nature (Teece, 2012). This is
one of the CSR responsibilities of the companies and this kind of factor plays crucial role
in deciding up the activities which needs to be performed by TESCO in society.
Positive effects: Getting connect with the people along with reaching out to the customers is the
foremost benefit which is being availed by company and thus gain loyalty of customers.
Negative effects: There is the negative impact which can be done on company and that is chain
of products which is being introduced by the company. This in turn can create the negative
impact on social trend. Technological Factor: There are various kind of technologies which are being
introduced and implemented by company within their process and operations. By this,
TESCO will be able to perform the tasks in better and effective manner.
Positive effects: Introducing the technological advancements within the company will help them
to attain the objectives within certain period of time.
Negative effects: High amount of fund is being needed for applying those technologies within
process. Legal Factor: There are various kind of laws which are mainly formulated by Govt. and
thus it is needed to be followed by every kind of company.
Positive effects: TESCO can ensure that all the activities are being conducted in legal manner
and thus they will have the clear line to operate its business.
Negative effects:Own policies of the company will be hindered by the many of laws created by
Govt. Environmental Factor:There are various kind of factors which are mainly related to the
environment and thus have the strong effect on the activities of companies (López-
Gamero, Molina-Azorín and Claver-Cortés, 2011).
Positive effects: There is the positive impact of the TESCO as it will reduce the impact of Red-
Tapism which will be reduced in better and effective manner.

Negative effects:TESCO has to decline all work related to the paper and thus start using internet
work so that effectiveness can be bought.
TASK 4
P5: Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses
It is highly for the company to make effective and better decisions so that management
can determine the strength and weaknesses in which they mainly can mainly decide the what is
better for company (Avramenko, 2012). This will be conducted by the TESCO as well and thus
they will mainly conduct the SWOT analysis which in turn will identify and measure strength,
weakness, opportunities and threats. It is described below:
 Strength: There are various kind of strength which this company has as they are
operating successfully within market. This kind of strength is highly recognised within
this market as there will high number of customers which are mainly attracted regarding
it. This company has the strong brand value which have the potential of bringing out the
customers for the store and thus they will be satisfied in effective manner (Li and et. al.,
2011). There are variety of the products which are mainly offered by them and thus sell
them across the globe within UK.
 Weaknesses: There are various kind of limitations which are being attached with
TESCO company. One of the most effective one is considering trend which mainly
changes at rapid speed. This kind of company have the sector for all kind of segments
which like clothing, food for the old age people only. This kind of management has
mainly failed in attracting new kind of customers so that sales of the stores can be
uplifted. In case of technologies, updation is not being given due to which they have to
hire more amount of workers .
 Opportunities: Since this kind of company is one of the top retailing company within
the market and still they have about 700 stores across the globe so they can put
increment within the global existence. This was being estimated by TESCO company
that they will have the 21 million customers per week and thus by entering within
segments as they will be able generate more amount of revenue. They can even have the
goods of various kind of markets for various kind of customers.

 Threats: There is high level of competition within the market and this is the main threat
which every company faces as there are many rapid modifications which are being done
within economy (Hämäläinen, Näyhä and Pesonen, 2011). All kind of competitors are
very strong in nature along with being technologically advanced before shifting to
another kind of brand. So it is highly essential to have new techniques for maintaining
the base of customer within market.
P6: Explain how strengths and weaknesses interrelate with external macro factors
They are the factors of SWOT analysis which can interrelate with PEST analysis which is
described below:
Political Factors: This sort of factor can have enormous effect on the conduct of the
organization from the outer variables. There are different tenets, arrangements and controls
which are being defined by Govt. for each organization
Economical Factors: This can be expressed as compelling and main consideration
which should be considered in suitable way. This can straightforwardly or by implication
reinforce or debilitate the situation of the organization inside the commercial centre. Frail
economy of country which will influence the pocket of clients and in this manner the buying
power too (Cheng, Yip and Yeung, 2012).
Social Factors: Both of the shopper and representative for the most part identifies with
the outside world. Thus, it is exceptionally basic for the organization to improve the level of
fulfilment for them two (Vaiman, Sigurjonsson and Davidsson, 2011). Modifications inside the
mentality of individuals in regards to merchandise and enterprises can make powerful position
inside commercial centre.
Technological Factors: Normal developments can be executed for items and
administrations of organization. Other than this, market will be examined with respect to what
precisely the contenders are using while at the same time figuring up the arrangement which can
be benefited.
There are some of the factors which has direct impact on both strengths and weaknesses
of TESCO.
Strengths Weaknesses

 Have more then 600 stores in UK with
thousands of workers.
 Integrated with food supply and
manufacturing unit.
 Strong relation with the suppliers and
dealers.
 Presence of limited geographic.
 Home and Leisure along with music
and video which are not so much
attractive concept of company.
Opportunities Threats
 Business expansion in more countries.
 Introducing in retail sector in non food
products.
 Taxation rate and other legislations
made by regulatory bodies.
 Increasing competitors at marketplace.
CONCLUSION
From the above report, it can be concluded that the environment for the business is not
stable in nature. Thus it is very essential for an company for various tools and techniques in
which objectives are mainly attained in positive and effective manner.

REFERENCES
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development. Routledge.
Wetherly, P., 2014. The business environment: themes and issues in a globalizing world. Oxford
University Press.
Moutinho, L. ed., 2011. Strategic management in tourism. Cabi.
Halbert, T. and Ingulli, E., 2011. Law and ethics in the business environment. Cengage Learning.
Sena Ferreira, P. and et. al., 2012. Framework for performance measurement and management in
a collaborative business environment. International Journal of Productivity and
Performance Management. 61(6). pp.672-690.
Kelly, S. and Scott, D., 2012. Relationship benefits: Conceptualization and measurement in a
business-to-business environment. International Small Business Journal. 30(3). pp.310-
339.
Yoon, J., 2012. Detecting weak signals for long-term business opportunities using text mining of
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Teece, D. J., 2012. Dynamic capabilities: Routines versus entrepreneurial action. Journal of
management studies. 49(8). pp.1395-1401.
López-Gamero, M. D., Molina-Azorín, J. F. and Claver-Cortés, E., 2011. Environmental
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Avramenko, A., 2012. Enhancing students' employability through business simulation.
Education+ Training. 54(5). pp.355-367.
Li, Q. and et. al., 2011. Towards the business–information technology alignment in cloud
computing environment: anapproach based on collaboration points and agents.
International Journal of Computer Integrated Manufacturing. 24(11). pp.1038-1057.
Hämäläinen, S., Näyhä, A. and Pesonen, H.L., 2011. Forest biorefineries–A business opportunity
for the Finnish forest cluster. Journal of Cleaner Production. 19(16). pp.1884-1891.
Cheng, T. C. E., Yip, F. K. and Yeung, A. C. L., 2012. Supply risk management via guanxi in
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Production Economics. 139(1). pp.3-13.
Vaiman, V., Sigurjonsson, T. O. and Davidsson, P. A., 2011. Weak business culture as an
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Online:
Organisational Structure. 2018. [Online]. Available through:
<https://www.tutorialspoint.com/management_principles/management_principles_orga
nizational_structure.htm>.