Business and Business Environment: Detailed Tesco Report Analysis

This report provides a comprehensive analysis of the business environment, using Tesco as a case study. It begins with an introduction to the business environment and its impact on organizations, highlighting factors such as demand, technology, government policies, and economic changes. The report then explores different types, sizes, and scopes of organizations, including private, public, and voluntary enterprises, and classifies companies based on size (micro, small, medium, and large). It also delves into organizational structure and function, examining the structures of micro, small, medium-sized, and large businesses, and the interrelation between various functions such as marketing, sales, production, and finance. Furthermore, the report discusses macro and micro environmental factors affecting business operations, including internal and external analyses of the organization's strengths, weaknesses, and their interrelationships. The report concludes with a summary of findings and provides references to support its analysis.

Business and Business
environment

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
Different types, size and scope of organisation...........................................................................3
P2 Scope and Size of operation's.................................................................................................5
LO2..................................................................................................................................................6
P3 Organization structure and function.......................................................................................6
LO3..................................................................................................................................................7
P4 Macro environmental factors..................................................................................................7
LO4..................................................................................................................................................8
P5 Internal environment...............................................................................................................8
P6 External environment ...............................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment refer to those factor which affect to the company and keeps good
relation with client. It includes demand and supply of customers, new technology, change in
government policy, change in fashion, market trend, economic changes etc (Reçica and et.
al.,2019). These factor effect to the organization. Tesco is chosen for a case study organization; it
is the biggest grocery supermarket in UK. The report covers different type, purpose of
organization, Size and scope of company. Report also covers public, private and voluntary sector
of organization and relationship between various organization sector that how the link with other
company objectives. The Report considers positive and negative impact of macro and micro
upon business operations, internal and external analysis of organization in term of strength and
weakness and how they are interrelated with each other.
LO1
Different types, size and scope of organisation
Enterprise is established in order to provide products and services to earn profit and meet
customers demand but some run in order to just satisfy needs of customers. So it can be stated
that there are various organization on the basis of objectives, purpose, market share and profit
margin that operates in UK that provide various services and products in order to meet demand
of people (Glover and Kusterer, 2016). Types of organization that operates in UK are Private,
public and voluntary that offer large number of products and services for different purpose and
objectives that need to be achieved. Therefore, different types of organization that render various
products and services are as follows:
Private company: The owner of such company is an individual that perform various function
separately in order to earn large amount of profit by selling qualitative and standard products and
services to customer’s. Such company cannot apply its share on public stock exchange or issue
through initial public owners, but they have shareholders, directors of the company. Private
company start with limited capital and money but soon it grows into large organization by
continuous meeting needs and demand of customers. Such company at the end of company
name private LTD is written to identify that it is private company. Minimum paid up capital for
private company is 100000 and required 2 members to run and establish company. It can be
owned by sole proprietors or in partnerships with two or more member in order to run and
operate business's in the market (Dyllick and Muff, 2016). They are mainly established to earn

large amount of profit by meeting needs and preference of target customers in most effectively
manner. Such as ASDA is a private company that is owned by two partners such as Peter and
Fred Asquith operating its function in UK to offer qualitative product at reasonable rates in order
to meet demand of customer’s.
Public company: Such enterprise securities are owned by public as it raises its capital through
initial public offer thus its ownership is shared among shareholders such as board, management
and public. As public is invested money for operation's of business's in an effective manner so
that they get maximum return on invested capital. Non government organization are included in
it as they are not part of government it is established in order to provided benefit to people by
maximize their shareholders values (Lee and Shin, 2018). Therefore, company provide services
and products in order to satisfy needs of customer’s at the same time benefit to its member that
have invested money in company. Public company has minimum paid up capital is 500000 and
7 members are minimum to be required for establishment and operation of business's in UK.
Such company while making any decision has to counsel its director for effective
implementation of decision for growth and success of enterprise. For examples: Tesco is a plc
that operates its function in UK provide qualitative and standardise wide varieties of products
and services across nation in order to satisfy needs of people.
Voluntary enterprise: Such enterprise that are established with an objectives and purpose to
render social services for welfare of public so that they can improve their living standard and life
styles. It is owned by the member that have decided to work for welfare of society by providing
basic products. Or it can be stated as social enterprise that main objectives is to enhance
development of economic and living standard of people by supporting or providing products to
people. They have minimum capital and resources as they are established to provide benefit to
people and invest the profit earned for benefit of society only (Vidgen, Shaw and Grant, 2017).
Thus, interference of government is minimum in the functioning of social enterprise, and they
also not have to pay tax to government. For examples: Childcare Finalist is a social enterprise
that operates in UK that provide high quality services for better healthcare of children. Thus, it is
non-profit organization that is established to support health and safety of children by offering
customized products.

P2 Scope and Size of operation's
Organization have different size and scale of operation's within a particular industry so
companies can be categorised on basis of size and scope of business's. Such as Micro, small,
medium and large enterprise that work in UK in order to maximize its profitability and sale
volume. Therefore, classification of firms is as stated below:
Micro company: These firms are two small and have very small market share, profit margin that
are established with limited capital and resource in order to earn profit for fulling needs of
individual and its family. Such as small cafe or retail shop that is owned and operated by
individual and its family together for better living. Micro business's are growing at fast pace in
UK as most of the people are planning to start there business's independently with using their
personal saving to meet requirement of business's (Niaki and Nonino, 2018). Such as Proviz is a
micro business's that was started by two brothers with an idea to create difference in human life
by developing clothes for cyclist. Therefore, scale of operation's of such enterprise is limited
with 9 employees but soon they grow into large enterprise by bringing continuous innovative and
creative ideas to meet demand of people living in UK. It can be stated that Micro business have
limited resource and capital and closely connect with customers and employing 9 member or
family member only. Therefore establish with an objective to earn basis living of live by earn
minimum amount of profitability.
Small company: It included companies that have limited capital and resource that employees
less than 50 employees and owned by sole proprietors or in partnerships between two people.
There are play important roles in economy Jomy of UK by making most of the people self-
employed as it needs limited capital and resource to start business's. Such enterprise have more
profit and market share as compared to Micro enterprise but cater needs of limited segment only
due to limited resource. Such companies are also growing at rapid pace employees large number
of people but it had to face large amount of competition from large enterprise in order to sustain
and grow in the market. John shipping is small enterprise that is owned by single owner and
planning to grow and sustain in market by luffing needs and preference of customers and have
limited market share. It are large company as compared to micro having more than 50
employees and indefinite organisational structure owned and controlled by sole propertied to
earn minimum amount of profit.

Medium -sized enterprise: Such enterprise that employees more than 250 employees with firm
to achieve goals of company thus they earn sustainable amount of profit and cater needs of
various number of customer’s. SME mostly contributed in growth and development of company
as it accounts for 99% in market of UK . It also generates large amount of employment thus
helps in economic development and increasing living standard of people (Jana and Parekh
2017,). Checkout. com is a enterprise that handles payment of customer’s and is growing and
expanding its business's across nation. These are operated with main objective to grow and
expand so have sufficient amount of resource, capital and employees to bring innovative and
expand its business across country.
Large enterprise: Enterprise that have large amount of capital, resource, employees and market
share, profit margin and operating its business across nation come under such category. Such as
Tesco is a large enterprise with more than 68,00 stores and 450000 employees working together
for growth and expansion of business's across worldwide and its is one of leading company in
grocery retailer. It also has strong brand image that helps in attracting new as well existing
customers to make purchase of company products. It have largest market share, resource and
capital to operate and run its business across worldwide to earn large number of profit and
generally operate for long run. Therefore scope and size of business is large in case of large
enterprise that have operation in different countries.
LO2
P3 Organization structure and function
Difference organisation have different structure and function as per objectives and goals
and products and services in which companies deals in order to meet customers needs. But every
company has to perform basic function such as marketing, finance and production of product
and service in order to earn profit. Thus, interrelation between various function is required so
that company can achieve its predetermined goals.
Structure of organization on basis of size and scope
Micro and small business's have indefinite organisational structure as they have limited
number of worker that are performing various function within organisation. Whereas medium-
sized organisation have function organisational structure in which each function is performed by
specialized department (Liu and et.al., 2017). Large organization uses divisional organisational
structure in order to coordinate various operation's of company in different nation.

Complexities of organisation structure:
International companies is not able to supervise and monitor operation's of company in other
countries as they no presence in other countries. Therefore it use functional organisational
structure to coordinate work of different department for achievement of company goals. Global
company have office across nation but controlled by head offices thus uses same strategy in
different nation may not be effectively. Therefore various division are made by company from
coordinating work of different individual as each sub head formulate its strategies as per need
and demand of particular market condition.
On the other-hand Transnational companies have complex or Matrix organisational structure
and each office perform its on function so difficult to coordinate work of different office for
achievement of organisational goals. Matrix helps various division head to take their decision
after consulting with main head office thus organisational structure impact on function.
Function within organisation
Marketing and sales department: Role of marketing manager is to influence customer to buy
products and service of company as compared to other competitors products. Therefore, it helps
in increasing sales and profitability of firm. But it had to coordinate with other department such
as production in order to know about benefits of products and material while manufacturing to
inform customers (Rathor and Jadon, 2019). Marketing manager by identifying need of
customers inform R&D department to develop such products that is able to meet needs of recent
trends of customers.
Production department: It is responsible for converting raw material into finished good so the
end user that is customer can easily use product and services of company. It has to manufacture
product as per needs of customer’s so have to coordinate with marketing department to know
about various trends in industry. At the same time coordinate with finance to know about budget
and cost to be incurred while manufacturing products so company can maximize its profitability.
Finance department: It is another department that play main role by arranging sufficient fund
for business's that is required for operation's and various function to be performed within firm
(Rosa, Sassanelli and Terzi, 2019). Therefore, it has to coordinate with production department,
marketing and human resources manage to know about their basic requirement of funds for
performing various task within organization. On that basis of it will choose most appropriate
sources so that company can arrange funds at lower cost and increasing its productivity.

Thus, it can be concluded that coordination and cooperation of various function of
organization and definite organisational structures helps in meeting vision and mission of
company.
LO3
P4 Macro environmental factors
Macro factors of environment refers to various external factors that impact adversely on
functioning of company such as economic condition, demographic structure of people and in-
stable political condition (Leonidou and et.al., 2017). Thus, positive and negative impact of
macro environment factors on Tesco and ASDA can be analyses through Pestle analysis.
Pestle analysis
Political Factor: Instability of policies of government has impact on both ASDA and Tesco as
they operate in retail industry. As due to instability company is not able to plan strategies in
order to enhance their sales in the market. Whereas it is able to increase sales of products
because of free- liberalization policy of government.
Economical Factor: ASDA and Tesco both operates in UK that is facing recession which
resulted in high debt, decrease in investment and increases price of products and services. It has
positively impacted on ASDA as people are more prefer products of company as it offers
qualitative products at reasonable rates. Thus, it had resulted in decrease in sales and profitability
of Tesco in the market.
Social Factor: Demand of organic products has tremendously increased due to increase in
various health issue such as obesity thus forcing company to introduce organic products in order
to meet needs and demand of customers (Srakar and Verbič, 2018). Tesco and ASDA are able to
fulfil requirement of people by offering qualitative and organic food is able to increase sales. But
some of people think ASDA provide low quality product so impact negatively on company sales
and profitability.
Technological Factor: Most of the people in UK like online shopping thus it helps ASDA and
Tesco to reduce cost of marketing by offering their products on its websites. Therefore it results
in increases in sales and reduce cost of company.
Legal Factor: Tesco by not considering legal factors has to incurred huge loss and brand image
of company is adversely affected thus it had leads to decrease in sales of company. Whereas

ASDA by incorporating various laws is able to expand its business's and market share by
satisfying needs of customers.
Environmental Factor: It has increases sales and profitability of both ASDA and Tesco as
company by taking various measure for safety and protection of environment is able to get
maximum support from customer’s and government (Al-Homaidi and et.al., 2019). But it also
increases operating cost of companies and reduces their profit margin in the industry.
LO4
P5 Internal environment
The internal environment includes all those inside factor of organization which affect the
marketing components like physical assets, human, technological support, the management etc.
SWOT analysis of ASDA
Strength-
Company use low cost construction which attracts people for purchasing product at low-
cost price. Low cost decision strategy improves the profitability. Whichever organization
establish better relation with their dealers and customer and put good impact on promotion of
organization. Strong financial condition of ASDA makes the profit reserve which provides
capital for future if owner want to invest in the future. ASDA strength lies in price strategy of
company that helps in attracting large number of customers.
Weakness-
company uses those type of workers which are ready to work at low salary, and they
belong from agricultural background from that they loss talented employee behind salary (Reçica
and et. al.,2019). Even hired employees working condition cheap or workforce divert in other
organization. Employees are not highly qualified in which lack of education are increase.
Company has ineffective brand image as most of people think ASDA products as low quality.
Opportunities-
Organization sale their product through internet by opening many online retail store from
that they are increasing their sale because many people would like to spent time on internet. This
decision is the opportunity for company. Due to lower cost structure it is beneficial for
organisation to get government reduction in tax and save money. Company has opportunity to
use innovative technology to bring economic of scale and further reduce cost of products to
satisfy customer need.

Threat-
There is increase in competition with in industry downfall pressure come in price. It
reduces the revenue. Sometimes customer taste of product is change when it puts force on the
organization in that company need to change their production. Increase competition from large
companies such as TESCO, Marks and Spencer and Sainsbury.
Sainsbury swot analysis-
Strength
Sainsbury launch many distribution outlets in every state so that strong distribution network can
establish or product easily provide in the market. It uses low cost strategy which help in to
produce product at the low cost so that customer purchase on its budget. Company strength lies
in effective management of talent employees that helps in providing qualitative products and
services.
Weakness-
When they serve product in the market that time Sainsbury is not doing market research.
It uses old data from that they cannot take decision properly. They are hiring few worker then
actual demand, so they cannot handle work in good manner because they are already working in
physiological tension so it’s like to be fewer productive for the organization (Korcsmáros and
Šimova, 2018).
Opportunities-
The increment of population is also puts on good impact on the market when population
grow in society. Sainsbury's get more actual consumer it is advantageous for the company
because growing population will be increase the rate on return. Use of social media to market
products is opportunity for company to expand its business operation.
Threat-
One of the important threat is the substitute. If secondary option of any product will be
available in the market it is threat for the Sainsbury's such as consumption of the product will be
modification. Increase competition from two main discounts provide is one of the most threat for
company.
P6 External environment
External factors are not controllable by the organization. Customer, competition.
Economy, technology, political and social premise are the external factors of organization

include two type of environment macro and micro environment but organization only discuss
macro factor of external environment.
Purchasing ability of person depend on its salary, saving and income. When an
individual gets good income with their income sources, it gives much money against the product.
Weather government changes their policy then automatically come change in price. Either
government increase higher interest rate of investment then organization can more spread their
market. Organization aware from the rule of laws and legislation which are related to the
company, competitors of firms (Prajogo, 2016). These laws and legislation cover losses of firm.
Different market segment puts the impact upon the demographical sectors it makes easy
distribution of product where the people can easily achieve organisational products and services.
The brand value of organisation is also influenced by the political and economic changes.
For instance, during economic downfall or instability organisation can deliver low cost product
which are in great demand of customers. It will not only help Asda to enhance its profitability
but will also build strong brand value among community. The factors such as technology and
political instability also influences the competitive threats faced by organisations such as Asda.
For example, due to advancements in technology vast number of start-ups and services are
growing which deals in online retail services.
It imposes fierce rivalry among existing organisations. Similarly, the political instability creates
an environment of uncertainty and can also open up doors for the threats. The technological
factor can also be considered as effective way to grab the emerging opportunities for the
organisation. For example, there are various regions which does not have physical stores of
Asda. In such regions company can reach through online technology and digital platforms. This
approach will not only help company to achieve its growth objective but is also valuable in terms
of enhancing market share and customer segment (Hamilton and Webster, 2018). It can be
concluded that change in technology provide opportunity to both companies to expand their
business and satisfy their needs. Similarly technology change is related to customer preference
and strength of ASDA such as company by using innovative technology is able to reduce cost of
products and meet changing demand of customers. Economic condition is related to strength of
ASDA and Sainsbury such as firm by analysing less disposable income is able to use its strength
to deliver qualitative products at reasonable rates. At the same time Sainsbury is able to hire high

skilled and knowledgeable employees at reasonable cost due to high unemployment rates thus
have effective manage hire and retained talent employees.
CONCLUSION
It can be concluded from the above discussion that for the long term success it is essential
for business to identify its own strength and weakness along with internal capabilities. It has
been also analysed from the study that both internal and external factors contributed in the
growth of organisation . Thus company must analyse the interrelationship between these factors
and the role played by these factors in affecting business decisions. When organisation
accomplish its operational and other business functions in accordance to business environment
changes then it result in better productivity and growth.

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