Business and Business Environment Report: Tesco, UK, Analysis

This report provides a comprehensive analysis of the business environment, focusing on the case of Tesco, a prominent UK-based multinational supermarket. It begins by defining and differentiating various organizational types, including public, private, and voluntary sectors, and explores their respective purposes. The report then examines the size and scope of organizations, categorizing them into micro, small-medium, and large enterprises. A key component involves analyzing the interrelation between different organizational functions and structures, such as divisional, network, and hierarchical structures, while also considering the complexities of transnational, international, and global organizational structures. Furthermore, the report delves into the impact of the macro environment on the retail sector, utilizing the PESTEL analysis to assess the political, economic, social, technological, environmental, and legal factors affecting businesses. The analysis includes both the positive and negative impacts of these factors, providing insights into how they influence the retail industry and specific companies like Tesco. The report concludes with an internal and external analysis of Tesco, identifying its strengths and weaknesses in relation to the macro environment.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Different types and purpose of organisation...............................................................................3
The size and scope of the organisation.......................................................................................4
Interrelation between different organisational function and structure........................................5
TASK 2............................................................................................................................................7
Negative and positive impact of macro environment.................................................................7
Internal and external analysis of Tesco.....................................................................................10
Strength and weakness interrelate with macro environment factors.........................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business is the most important factor which help to earn money by provide best products
and services to customers. Business environment is the sum of total collection of whole internal
and external factors which are changes to business. Those factors such as customers, employees,
demand and supply, management, clients, suppliers, social and market trends and economic
changes etc. the present study is based on the “Tesco” which is British multinational
supermarket. This established best and long supermarket chain at UK. The study lays emphasis
on the different types and purpose of various organisation like public, private and voluntary
sector. Report will explain size and scope of different range of organisation. This shows the
relationship between different organisation functions and its link with organisational structure
and objectives. Study will identify positive and negative impact of macro environment on
business and its operations by specific example. It will be conducted by internal and external
analysis of organisation in order to identify strength and weakness of company. It will also
explain by the strength and weakness of firm are interrelated with external macro environment.
TASK 1
Different types and purpose of organisation.
Public Sector Organization:
The public sector is normally com prised of companies which are operated by the
government and exist to give facilities. It is the portion of economy of both public services and
public organizations (Chang, 2016). Public services involves public products and governmental
facilities, such as public education, public transit along with health care. Public enterprises are
self financing commercial enterprises which are under public ownership that give different
private products and services for sales and normally operate on commercial basis. For example:
Tesco. It is the British multinational groceries and general merchandise in the UK. The purpose
of public sector organization is to provide the public goods and services to the public for
satisfying the needs and wants. Company has large products range such as supermarket,
hypermarket, convenience shop and superstore.
Private Sector Organization:
The private sector is the portion of economic system which is operate by single person
and firms instead of government normally as refers to organization for profitability. Thus, it

encompasses all for profits enterprises which are not operated by the government. There are
many kinds of private sector which includes sole ownership, small and medium sized, large
company and trade unions. For example: Arcadia Group. It is the British multinational retailing
organization in the UK. It operates high street clothing retailers Burton, Topshop, Topman and
out of town chain outfits. The group has more than 2500 retail stores in the UK. The purpose of
private sector organisation is to make profits by providing high quality goods and services to the
people. Company has huge products range such as clothing, accessories and shoes.
Voluntary Organization:
The voluntary organization is general term utilised to means to specific kinds of
companies. It is also referred to as non-profits companies, non-governmental companies, civil
society and charitable firms (Erasmus, Strydom and Rudansky-Kloppers, 2016). Voluntary
companies trying government funding or corporate support are specifically assailable to effect of
similarity of their donors. For example: Cancer Research UK. It is the cancer study and
awareness charity in the UK. It is the formed by merger of The Cancer Research Campaign and
the Imperial Cancer Research Fund. The purpose of organization is to decrease figure of deaths
from cancer. It is the world's biggest independent cancer research charity. Company needs to
focus on research actions into the prevention, diagnosis and treatment of the diseases. These
actions are carried out in educational institution and hospitals across the United Kingdom.
The size and scope of the organisation.
Micro Enterprises:
It is normally determined as small business applying nine people or fewer and having
balance sheet or turnover less than certain figure. In the UK, the categorised businesses of 1-9
workers as being micro-businesses. For example: Wiser. It is the micro business which operated
as recruitment company. Micro enterprise business on the above will be business with less than
10 workers. Some of voluntary firms involving in micro business because in this company few
people are volunteer for fulfilment of needs and wants of public. For example: Cancer Research
UK. Over 40000 people are regular volunteer (Hair Jr and et.al., 2015). Company is almost
wholly funded by the public.
Small-medium Size Enterprises:
Small enterprises are privately operated companies, sole ownership which have some
workers and less annual revenue than daily business or corporation. Small enterprises in many

nations involve facilities or retail function like grocery store, convenience stores, restaurants,
guest house etc. For example: Harvey Water Softener. It is one of UK water softener
manufacture by removing chemical elements in water supply. Some of the public organizations
are involved in the small medium businesses who are focused on the giving products and
services rather than making profits of business. For instance: Tesco. There are total number of
450000 employees working in the company.
Large Enterprises:
Large scale companies are controlled financial or business activities. Large companies
are highly focus on the innovation and new products development within the nations for making
profits and generating the revenue of business. For example: HSBC. It is the British
international banking and financial service holding firm. It was the 7th biggest bank in the
worldwide. Private sector organisations involve in the large organisation that are focused on the
marketing profits of the business (Hamilton and Webster, 2018). For instance: Arcadia Group.
There are total number of 22000 employees working in the organization.
Interrelation between different organisational function and structure.
Analysis the interrelation with the different organisational functions and structure. There
are different kinds of structure relating to the size and scope of company are as follows:
Divisional structure
The divisional organisational structure is the multi divisional structure. In this
organisation manager are divide roles and responsibility in each and every employees because
they want all peoples and employees have right job at right place. It is the main advantage of the
divisional structure is independent in the operational flow, this can be failure one company in
existing market. In this have proper function are followed for example: all the functional
department like HR, R&D and other are address their own work and concerns with general
manager (Hillary, 2017). For example: Arcadia group is follows the divisional organisational
structure which is effective and help to done work in effective manner.
Network organisational structure
The network organisational structure helps to visualize the both internal and external
relationship between the manager and top level management. This is the more flexible and than
other structure. This is based on social network and this realise a open communication with the

partners with both internal and external. For example: cancer research centre is follows network
organisational structure.
Hierarchical structure
The hierarchical structure is most popular and best organisational chart. In this,
employees are grouped with the each and every employees have one senior supervisor. They are
directly address them and concerns their problems with them. This considers few factor like
functions, geography and products. In functions area, employees are grouped as per the functions
which they are provide. Geography employees are based on regions and products in this
company are offers various products at marketplace. For example: Tesco is follows the
hierarchical organisational structure (Jenkins and Williamson, 2015).
Those are the organisational structure, now here is mentioned complexities of
transnational, international and global organisation structure are as follows:
Transnational organisational structure
This are more complex organisation by investing in foreign operations. This have
complexity is to interfere with efforts for achieve integration and coordinate at various levels.
This delaying in the decision making process and its result.
International organisational structure
International organisational structure are concerns with the importer and exporters and no
investment outside. This have complexity in their functions like department, team, system and
process.
Global organisational structure
This have invested and presents in many country in effective manner. This generally
make strategies for global presence. This have complexity which is strategies are not work in fast
manner and assumptions may wrong (Oriesek and Schwarz, 2016).
Those are the complexity of different organisational structure. Below is mentioned
functions of organisation are interrelate with mission and objectives of firm. Those are as
follows;
Marketing department
Marketing department is highly interrelate with the mission and objectives of
organisation because this team is highly support to the promotional activities of company.
Promotional activities like social media, TV, public relations and so on. With the help of this

customers are aware with products and services of company and highly attract towards the
company. This can help to achieve goals and objectives of firm.
Human resource management
Human resource team is also interrelate with the mission and objectives of firm because
they are hire eligible employees and candidates for the work. It is best and effective for the work
and its goals. Highly eligible employees are give hard contribution for achieve goals and
objectives.
Research and development department
Research and development team is highly interrelate with the mission and objectives of
firm. This department is research on the projects in an effective manner. They are analysis the
market and customers needs and wants then address with manager of company (Peng, 2018).
Then, manager are able to make effective strategy for the work or in order to achieve goals and
objective of company.
TASK 2
Negative and positive impact of macro environment
The retails sector is effective process of selling goods and services to customers with the
help of multiple suppliers and technologies. To analysis the negative and positive impact of the
macro environment on retail sector here, is select the PESTEL analysis. With the help of this,
industry is able to analyse those factors which are impact to business such as the political,
economic, technological, social, environmental and legal factors. Analysis of negative and
positive impact of retails sector are as follows:
Political factor
Political factor impact to business and whole retail industry. This consider government
rules and regulations by carrying various business activities. These political activities of country
are impact running business position. Revenue and profitability impact to whole industry. This
influence to economy, consumer buying behaviour and trade law which is international. Antitrust
issues and data law are affecting the industry because it breach is cause by the government
which is look at data stored and used (Quinlan and et.al., 2019). This can affect overall retail
sector and big retail company who provide their products online like Amazon and Wall-mart etc.

because they share all details about product online. By this other use this details, it can give
negative impact.
Economical factor
Economical factor impact on whole retail sector in negative and positive ways. This
factor in includes inflation rate, employment rate, interest rate. Those are impact to whole
environment. Situation of economy is directly affecting retail industry. For example: is company
is face the problems with their employees they want to fire and hire new employees (Thompson
and McLarney, 2017). In that economy condition is good then they can hire new employees for
the work This can affect by the changes in foreign exchange rate and buying behaviour of
customers. This lead sales and profit of retails are decreased.
Illustration 1: PESTEL analysis
(Source: PESTEL analysis of retail industry, 2017)

Social factor
Social factor is also give negative and positive impact on whole retail sector either
negative or positive. The current lifestyle trends create various changes in the shopping and
buying behaviour of customers. They want best, unique and current trends products at
marketplace. Most of the brands are use the social media identify buying trend. For example:
new trend is come in marketplace. In that customers are wants those at their shopping place. If
company not have those fashion trends the in impact in negative ways. Other hand, industry are
offers all those products the it give positive impact.
Technological factor
Technological factor impact to whole retail industry in negative and positive manner.
Retails sectors are various and different types of technology each and everyday. As the advanced
technology, stores, software, hardware and payment system or billing system (PESTEL analysis
of retail industry, 2017). For example: billing and payment system is best in this customer can
pay online and shopper make proper bill without delaying. This give positive impact on
company. other hand, it can give negative impact like online payment is safe but most of the
time network is not good and server is down the customers are not able to done proper payment.
Environmental factor
Most of retailer sells and offers food products to customers. The state environment is
affect the quality of product and its selection. For example: food like lettuce has E.coli, every
sore need to toss the lettuce. This very costly for the companies for use. Now the Wall-mart is
using blockchain technology. In this farmer or manufacturer input information of food at real
time.
Legal factor
Retail sector need to meet with the all legislations before open their stores. It includes
taxation laws, labour laws and others. The international laws come into plays an effective role at
organisation. For example: company has followed all the regulations and rules at the time
opening new stores then they are not face any issues in opening. By this, it can give positive
impact on the business and its growth (Teece, 2018). But, they are not following those
regulations then they face problems like registration, health and safety, property law and licences
laws.

Internal and external analysis of Tesco.
To analysis the internal and external analysis of Tesco, here is use SWOT and porter five
force model. With the help to SWOT analysis company is able to analysis the strength,
weakness, opportunities and threats which are as follows:
Strength Weakness
 Tesco is the biggest retail sector in the
UK, in the grocery market.
 This leads the high market share and it
is currently most popular supermarket.
 It has strength to use technology in
their operations, enhanced service and
generate cost efficiencies.
 This have various stores formats appeal
to local and culture needs.
 The company has weakness with their
competitive pressures which led price
war.
 Tesco failed their operations in Japan
and US.
 Weakness is this, decrease in operating
profits.
 Sales include the VAT.
Opportunity Threats
 Tesco has opportunity which is
strategic alliances with the other brands
(SWOT analysis of Tesco, 2017).
 Opportunity to go in the food market.
 Emerging market is very effective and
best opportunity for the business.
 The food prices are rise in the world.
 Threat from competition with other
high supermarket giants.
Those are strength, weakness, opportunities and threats of Tesco which has considers in
internal analysis of company. Other hand analysis the external factor of Tesco here is select
porters five force model are as follows:
Threats of new entrants
New entrants in the retail sector is bring innovation, give new direction to sector for done
things and out pressure on Tesco by the cost, price strategy, new value propositions to the
customers. Company manager, manage all the challenges in proper ways and directly compete

with their competitors. They can handle this by innovation in product and services, building
economic scale.
Bargaining power of suppliers
Power of suppliers are give impact on the Tesco because suppliers in dominant position
and decrease margins. The impact of higher supplier bargaining power is low the whole
productivity of Tesco. They can handle this by building strong and effective supply chain with
multiple suppliers.
Bargaining power of buyer
Bargaining power of buyer are highly impact to business and its growth because they
want best quality of product with low prices as possible (Razak and Vattikoti, 2018). Other hand,
they can face this problem by building large customers base and rapidly innovation.
Threat from substitute products
Tesco is face problem by the threats from substitute products because in the retail sector
have various products which are sells by each supermarket. By this customers are moving and
business is highly affected.
Competitive rivalry
Competitive rivalry are existing in the industry. Tesco have various players who are
affect the Tesco and it drive prices and decrease overall profitability of industry.
Strength and weakness interrelate with macro environment factors.
In order to analysis interrelationship between strength and weakness with the macro
environment factor are as follows:
Factors Opportunity Threat
Strength Tesco is already growing in
grocery market, but have
opportunity to move in the
food market using their brand
name and market position
(Singh, 2017).
Tesco is market leader and
high market share, Tesco has
high competitive advantage by
rising discount stores but, it
can be threat scale to counter
competition by prices cuts.
Weakness Declining sales, by focusing
the growing trend of cleaning,
Cause is loss of sales for the
Tesco is growth of discount

but by supplying more fresh
and organic food in order to
boost sales.
and stores, and alternative this
focus for open more
convenience stores of their
own.
Those are the interrelation between the strength and weakness with the macro
environment. With the help of this, company is able to make new strategies at marketplace for
better result of work. The company have strength to use technology in their operations, enhanced
service and generate cost efficiencies this is interrelate with macro environment factor which is
technological factor. Other hand, Tesco has weakness with their competitive pressures which led
price war. This interrelate with the social factor because lifestyle lead high price of products.
CONCLUSION
From the above study it had been concluded that the business and its environment has
important for the business to achieve goals and objectives of company. It had been concluded
that the profit, private and voluntary firm which has their own purpose and supply of goods and
services. According to the size and scope have four types of organisation such as micro, small,
medium and large, their market and profit share has different from each others. It had been
concluded that, with the help of PESTEL analysis company analysis factor has give impact on
the industry. Strength, weakness, opportunities and threats has influence to the decision making
power of company. With the help of those analysis company has able to make new strategies for
growth and improve profitability.

REFERENCES
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Online
PESTEL analysis of retail industry. 2017. [Online]. Available through:
<https://pestleanalysis.com/pestel-analysis-of-retail-industry/>

SWOT analysis of Tesco. 2017. [Online]. Available through: <https://bstrategyhub.com/tesco-
swot-analysis-2019swot-analysis-of-tesco/>