Comprehensive Report: Tesco Business and Environment Analysis

This report provides a comprehensive analysis of Tesco's business environment. It begins by examining different types of organizations, including public, private, and voluntary sectors, and their legal structures. The report then explores the size and scope of various organizations, focusing on micro, small, medium, and large enterprises. A significant portion of the report is dedicated to analyzing the relationship between different organizational functions, such as operational management, finance, human resources, and marketing, and how these functions link to organizational objectives and structure. Furthermore, the report delves into the positive and negative impacts of the macro environment on business operations, utilizing PESTEL analysis to assess political, economic, social, technological, legal, and environmental factors. The analysis includes Tesco's strengths and weaknesses and their interrelation with external macro factors, providing a well-rounded view of the company's position within its business environment.

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1 ................................................................................................................................................1
P1 Different type and purposes of organisations public, private and voluntary sectors and
legal structures ...........................................................................................................................1
P2 Size and scope of a range of different types of organisation ................................................2
LO 2 ................................................................................................................................................3
P3 Relationship between different organisational function and link to organisational
objectives and structure. .............................................................................................................3
LO 3.................................................................................................................................................5
P4 The positive and negative impacts the macro environment has on business operation. .......5
LO 4 ................................................................................................................................................6
P5 Internal and external analysis in order to identify strength and weakness ...........................6
P6 Strengths and weaknesses and interrelation with external macro factors..............................7
CONCLUSION ...............................................................................................................................8
REFERENCES ...............................................................................................................................9

INTRODUCTION
Business and business environment is basically a combination of internal and external
factors that impact the company to the large extent. It include two factor such as internal factor
as well as external factor. External factor include political,economic,social, technological, legal
and environment factors which affect the business externally and on the other hand internal
factor such as suppliers,clients,employees and buyer impact the organisation. Present study is
based on business and business environment of Tesco which is British multinational supermarket
which groceries and merchandise retailer and also it is the leading supermarket and famous in
worldwide. Further the report cover the types of organisation and difference between profit,not
for profit and public sector organisation and their purposes. It will discuss the size and scope of
the enterprise and also their market share,profit share and growth. It will also analysis the micro
and macro factor in order to have the proper understanding of the organisation and lastly it will
include the interrelation of micro and macro factors.
LO 1
P1 Different type and purposes of organisations public, private and voluntary sectors and legal
structures
There are mainly three kinds of business organisation sectors that is public sector ,
private sector and voluntary sector. It is very important to understand or to have full and proper
knowledge of the terms and condition so to make or conduct in smooth and effective manner.
Different organisation have its characteristics , advantages and disadvantages.
Private Sector – Private sector organisation are the organisation which is run and operate
by the individual or by group of individual. As there is no intervention or interference by the
government. Most of the private sector is run for the motive of profit. Also it has restriction to
offer its share to public and also prohibits to transfer the shares to any one. In this sector there is
less legal formality and also there is no need to list itself on the stock exchange. For example
John Lewis Partnership.
The main purpose of the private sector is that profit generation and also it satisfy the
customer by providing high quality of product an services and also it distribute the profit among
the shareholders (Bromley and Meyer, 2017).
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Legal requirement of private sector – Private company must have minimum of 2 directors and
can have maximum 15 directors. It also has minimum 2 members and maximum up to 200
members. Also the it has restricted to transfer and offer its share to public. It is important to
include he word Private limited in their names. Also there is no need to prepare a report for
annual general meeting.
Public sector – it is the organisation in which there is high control and intervention of
government. Also it can offer its share to the public by the help of initial public offer and also
transfer its shares. It has many legal formality which are to be fulfil by the company and also it
has to list itself in stock exchange. It main purpose is to provide high quality of the products and
services and stratify the customers to the large extent. For example NHS.
Legal requirement of Public sector – it has minimum 3 directors and maximum no limit . And
also it is free to transfer and offer its share to public. And also it is mandatory to prepare the
annual report in the general meeting. Also it is important to list itself in the stock exchange. Also
it is less risky as compare to the private company.
Voluntarily Sector – It means a non- profit organisation which is owned and control by
the nominee and trustee. These are the organisation which doesn't run and control for the purpose
to generate the profit. As it run to develop and improve the society and also it spend the money
again to the society for its improvement. It main motive is to betterment of its members. For
example Cancer Research UK.
Legal requirement of Voluntarily sector – legal structure of the social sector depend upon
weather the company is privately owned or by the government. It is important to follow the legal
obligation of charities under the charities Acts and Company Acts (Bouckaert, Peters and
Verhoest, 2016).
P2 Size and scope of a range of different types of organisation
Micro enterprise - it is the enterprise with is operated at very small level and it employing
nine people or fewer. It has balance sheet or turnover less than a certain amount 2 million.
Microenterprise is generally a family business and its primary interest is to earn a living to
support their family. The objective of microenterprise is to improve the living condition of the
people and also to bring the backward areas forward and promote the regional development. It
has sustainable growth as to earn the living. And also the profit is share by the individual itself or
the few members which are hire by the micro enterprise. Also it helps to improve the natural
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resources of the country. And also they provide there goods and services to the limited areas and
not have wide coverage as they are work in extremely small level or scale. And its annual sales
below £2 million (Noe and et.al, 2017).
Small enterprise – Small business have small in nature as it has fewer than 50 employees
and its annual sales below £10 million. It contribute in Gross domestic product to the large
extent and helps to give employment opportunity to the people in the country as it consider as the
main source of employment. It also helps to improve the standard of living. Also it helps to
motivate people to run the organisation and become independent. As more than 97 % of
exporting companies are small business and also it consider as the main source of innovation as
well as it help to give training to the people which help them in their future. It also reduces the
gap between the rural and urban economies as by providing the employment opportunity to the
people (Luckman, 2016).
Medium enterprise – Medium enterprise are generally large in scale as compare to the
small enterprise which has fewer than 100 members and which has annual sales below £50
million. They are the enterprise that maintain revenue ,assets. Medium enterprise contribute 46%
of the private non farm Gross domestic product. And it also innovates their product and services
and also innovates and diversify the products.
Large enterprise – Large enterprise in which it affected by the short term changes. They
are large in nature and more complex in terms. Large enterprise need to control the cost and also
sustain their market position. Also the main purpose is the generate the profit as they are profit
oriented and also they have steady growth as they grow rapidly to the large extent. It has annual
turnover greater than 1.5 billion euros and also the balance sheet total of more that 2 billion
euros.
LO 2
P3 Relationship between different organisational function and link to organisational objectives
and structure.
Organisation functions is of different types such as functional ,divisional ,Matrix
structure and visualize etc. it helps the organisation to achieve the aims and objective of the
business I an effective manner. Organisational structure of the organisation are the functional
activity in which employees are working.
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Operational Management
Operational management are the management in which it has the responsibility to handle
the day to day activity. It interlinked with the other department and link the company with other.
Operational department take information finance department to fulfil the company basic needs. It
also connect with production department regarding the information about the product and
services (Hameed and et.al, 2017).
Finance Department
It is most important function in the organisation which handle cash flow. Balance sheet
and profit and loss of the company. Finance department is link with the human resource
department as HR department will hire eligible candidate for the department in order to work in
the effective way and also it is interrelated with the operational department in order to get the
information about the day to day expenses. So it is concluded that finance department is
interrelated with other department in order to accomplish the company aims and objective.
Human Resource Management
Human resource department gather information from other department in order to satisfy
the employees to the large extent. It interrelate with the marketing department as by the help of
marketing department new people attract towards the company and by that human resource
department will conduit its function such as recruitment , selection, motivation etc. it plays an
important role in the organisation as it provide expertise in managing new things in the
organisation.
Marketing Department
This is the another department which is responsible to promote the organisation in the
effective manner. For promoting the product it is link with the production department to provide
detail about the products and also it gives the production department the information about the
taste and preferences of the customers. it also interrelate with the finance department as for
promoting the products and services it is important to get the finance from the finance
department. So marketing department plays an important role in the organisation (Watts, 2018).
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LO 3
P4 The positive and negative impacts the macro environment has on business operation.
PESTEL analysis is a technique or tool which help the organisation to understand and
identify the external factors that are present in the environment. It also provide all the challenges
and difficulties that Tesco will face in the growth of the business. As there are many factor in the
environment which affect Tesco 's profitability and working to the large extent. The factors
which are affect the business are political, economic ,social, technological , legal and
environmental factors.
Political Factor – Political factor affect Tesco indirect way. It include all the policies and
procedures which are made by the government. As political factor impact the business in the
positive and negative manner. If there is political stability in the country then it will impact in the
positive way and also it increase the profitability of Tesco. And if the political condition are in
stable and there are many fluctuation then as result it impact in negative manner and it hinder
the working of Tesco (Sucháček, 2015).
Economic Factor – these factor are the main point of concern as it affect Tesco efficiency
and performances. As it influence the cost,demand ,prices and profit of the company. It include
income level, inflation rate , employment level and gross domestic product of the country. If
there is high level of unemployment in the country where Tesco is working then it will impact
the demand of the products and services hence directly impact the sales in the negative manner.
On the other hand if the income level of the people is high then there will be high demand of the
product and also impact in the positive manner.
Social Factor – it influence the organisation as consumer trends are changing very fast. It
include the taste,preferences, belief of the customer. As this factor impact the positive and
negative way. As obesity is the serious problem in the society so Tesco has to understand the
taste and preferences and if Tesco fails to meet the demand then it will impact in the negative
way. On the other hand customers feel more convenient in one stop shopping and also in fast
delivery so Tesco is successful in meeting demand of the customers and help to solve the issue
so it will affect the business in positive manner (Wimmer, 2015).
Technological Factor – As technology is changing day by day and it is very important to
innovates the product in order to gain competitive advantages. It impact in the positive and
negative manner as Tesco has invested in research and development as technological
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advancement benefit both the company as well customer . High level of services will help to
satisfy the customers as it will become more personalised and shopping more convenient. So it
will impact in the positive manner. But sometime technological advancement pressurize the
employees and they become very demotivate so it will impact in the negative way as it affect the
productivity of the organisation(LEYVA and et.al, 2018).
Environment Factor – As nowadays there are increase pressure on the company for
fulfilling the environment responsibility and act in the way that benefit the society. It Tesco fulfil
its corporate social responsibility and reuse or reduce the wastage then it will improve the brand
image of the company to the large extent and act as positive manner. On the other hand there is
fat tax which is directly affected the Tesco product ranges that affect in negative way.
Legal Factor – it directly impact the performance of the Tesco. It is important to have
proper knowledge of the laws. It impact in negative manner if the laws which are imposed by the
government impact the performance and reduces its productivity. On the other hand if it favour
Tesco then it will impact in the positive manner.
LO 4
P5 Internal and external analysis in order to identify strength and weakness
SWOT analysis is very useful technique which help to identify the company's strength,
weakness, opportunities and threat. Strength helps to make Tesco to make a unique identity and
also the opportunities will help the company for expansion also it help to analysis the threat of
the company. All the factors are explain below-
Strength - It describe the positive aspects of the company. As one of the biggest strength
of Tesco is it is the largest chain in UK and also it has strong brand name and financial power
which make difficult for the competitors to compete with Tesco. And also it has 4811 stores and
also it has strong commitment to corporate social responsibility which helps to attract many
customers and also improve the brand image of the Tesco. It also understand the taste and
preferences of the customers so it has loyal customer base. It also invest in research and
development to make innovative product and services and also better usage in technology and
distribution (Sarsby, 2016).
Weakness – it limit the growth and expansion of the Tesco. The biggest weakness is that
Tesco is entering into different number of market so it not able to focus on single market for
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specialization. Also it has lack of experience in insurance and phone market. The third weakness
is that it uses huge amount of fuel which is used in transportation vehicles which causes
pollution. Tesco has more dependence on UK market and also it by the pressure of technological
advancement it demotivate the employees to the large extent (Bohari, Hin and Fuad, N, 2017).
Opportunity – Opportunities helps Tesco in growth and expansion. There are several
opportunity for Tesco such as it online marketing which helps the organisation to increase the
sales of the business and also it will increase the profitability of the company. As online
marketing helps to give wide coverage and also it is opening many new stores which help to
attract many customers and it is very easily approachable. It has many joint venture that make
Tesco to build strong brand power and also it helps to work in the effective manner.
Threat – There are many threat which hinders the growth of the business. As one of the
biggest threat is that there is large number of competition and also Wal- Mart and Carrefour
gives a tough competition to Tesco. Secondly, the fluctuation of taxes may affect the financial
condition of Tesco. Innovation of competitor also threaten Tesco to the large extent.
P6 Strengths and weaknesses and interrelation with external macro factors
There are interrelation of strength and weakness with external macro factors as Tesco
biggest strength is it has high commitment towards the corporate social responsibility which
interrelate with environmental factor as by fulfilling the corporate social responsibility it helps to
attract many customers and also it helps to improve the image of the company and it directly
impact the sales of Tesco. Second strength is that it invest on research and development so to
make the product and services more innovative and improve and this strength is interrelate with
the technological factor as it helps to advance the technology and innovates the products and
services so as to gain competitive advantage. It understand the taste and preferences of the
customer and it is related with the social factor as it understand the preferences of the customers
(Gulnov, Nemtseva and Kratasyuk, 2016).
One of the biggest weakness of Tesco is it massive amount of fuel which is used in
transporting vehicles which causes pollution and that is overcome with the help of environment
factor by obeying the certain environment laws and fulfilling the corporate social responsibility
and also reusing the wastage. The other weakness is it has lack of experience in phone and
insurance markets so it can be overcome with the help of technological factor as by investing
more in research and development and also making innovative and improve products and
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services so to gain competitive advantages. Also the third weakness is that it is more dependent
on UK market so it can be overcome by the help of economic factor so Tesco has to operate in
other countries where there is political stability and also it improves the profitability (Pierzak,
2015).
CONCLUSION
The above study is base on business and business environment which is combination of
internal and external factors that affect the business to the large extent. As it influence the
profitability of the organisation. It has concluded the different type and purpose of the
organisation and also the purpose and supply of goods and services. And also it has stated the
difference between micro,small ,medium size and large enterprise and their market share,profit
share and growth. It also stated the organisation structure and its function. further it has analysis
the macro environmental factor by PESTEL analysis which affect the working of the
organisation. And also by SWOT analysis it will help to identify the micro factor which are
attach to the business.
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