Business Environment Analysis: Tesco and Organizational Functions

This report provides an in-depth analysis of the business environment, focusing on different types of organizations and their legal structures, with a specific focus on Tesco. It examines the private, public, and voluntary sectors, highlighting their objectives and operational characteristics. The report delves into the size and scope of organizations like Tesco, NHS, and Oxfam, illustrating their market positions and operational scales. It also explores the interrelationship between various organizational functions, using Tesco as a case study, and detailing the connections between marketing, finance, operations, and human resources. Furthermore, the report includes a PESTLE analysis of Tesco, evaluating the political, economic, social, technological, legal, and environmental factors impacting its operations. A SWOT analysis is also conducted to assess Tesco's strengths, weaknesses, opportunities, and threats, and how these factors interact with the external environment. The report concludes by summarizing the key findings and their implications for Tesco's strategic management.

Business and the Business
Environment
1

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Types and purposes of organisations; public, private and voluntary sectors and legal
structures.................................................................................................................................3
P2 The size and scope of a range of different types of organisations....................................4
TASK 2............................................................................................................................................5
P3 Relationship between different organisational functions..................................................5
PROJECT part 2..............................................................................................................................6
TASK 3............................................................................................................................................6
P4 PESTLE analysis of TESCO.............................................................................................6
P5 SWOT analysis of Tesco...................................................................................................9
P6 Interrelation between strength and weaknesses with the external environment.............10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
REFERENCES..............................................................................................................................12
2

3

INTRODUCTION
Business and business environment is a combination of different factors that are present
in the external surroundings of the businesses. It is important that same are managed in a way
that the effect of such factors are minimum on the corporate operations (Bryman and Bell, 2015).
The following report will discuss the different types of organisations along with the details of
same as how they differentiate from one another. PESTLE and SWOT analysis will also be done
to analyse how one of these enterprise gets affected due to the various internal and external
factors of business.
TASK 1
P1 Types and purposes of organisations; public, private and voluntary sectors and legal
structures
Various type of organisations are there that operate in business environment with their own
purpose and legal structure. Private, public and voluntary are the three main type of enterprise
which carry out various business operations in order to achieve their set goals and objectives.
Different type of enterprises with their legal structure, objectives and purpose can be understood
by the following points:
 Private firms: These are the organisations that are operate and control by the individuals
with the purpose of generate profit. These type of firms cannot sale their shares in market
and they require to comply with all rules and regulations formed by government. TESCO,
a multinational groceries and merchandise retailer is an example of private organisation.
Limited company, partnership and sole proprietorship are mainly the three categories
under which private organisations can operate.
 Public company: Business firms that are operate and control by government and those
that are formed under the company law of nation is known as public company. This type
of firms have a separate legal entity from its business owners. These organisation do
various efforts to ensure development of society. NHS, that offer variety of health
services to million of people is come under the category of public company. Legal
structure of these organisations are form with three bodies known as central government,
state government and local government.
4

 Voluntary organisation: Business companies that carry out various business activities
with the aim of betterment of individuals living in society are the ones who known as
voluntary organisations. These types of firms are mainly control and operate by unpaid
trustees. Oxfam is an example of voluntary organisation that as company do various
efforts to remove poverty from the world.
P2 The size and scope of a range of different types of organisations
Different kind of business entities perform their commercial activities in business
environment with their own size and scope. Size and scope of different type of entities can be
understood by following points:
Size and scope of TESCO: This organisation is a multinational grocery as well as a large
retailer of merchandise in United Kingdom. On aspect of profitability TESCO is declared as the
third biggest retailer. Company has more than 6000 stores in more than 12 nations across Europe
and Asia and work with more than 476000 workers are presently work in its different stores.
Size and scope of NHS: This is a public organisation that offer wide variety of health
services to large number of individuals. Company offer its services its different areas of world
including England, Wales, Ireland and many more. Further, more than 690000 nurses work in
NHS. Mainly firm is involve in offer proper and effective medical services to the poor
individuals of society.
Size and scope of Oxfam: this organisation is a mix of more than 15 independent
charitable firms that run under the name of Oxfam that are involved in perform various activities
with the sole purpose of ensure development of society and people living in it. Mainly all efforts
of Oxfam are related with remove poverty from all over the world. Further, company offer
different kind of services such as disaster relief, and offer food services to poor people.
TASK 2
5

P3 Relationship between different organisational functions
(Figure 1: Organisation chart)
Tesco is a huge enterprise and is carrying out its daily operations using the organization
structure. Every department has their own function to perform which is also linked with the other
sections and together the overall objective of the firm is achieved. It is important that proper
communication is there among the various division as only than the full capacity utilisation of
resources can be made. The interrelation among them are discussed below in detail:
Marketing and finance department – The core function of the promotion department is
to promote the products and services of the brand in market so that overall sales can be
improved. It is a crucial function as through same the customers are made aware about the new
product launch by the brand. In order to do so many activities have to be performed which
requires excess of capital. Same is allotted by the finance department. Periodically budgets are
made for the various activities which are fixed through communication between the finance and
marketing director. Therefore, in this way it is clear that the work of marketing department
cannot be carried out without the assistance of finance team.
Finance and operations – Operation department is responsible for caring out the daily
activities of the business specifically core work of the brand that selling. It needs finance at every
step as to make the payments for the different operations that are performed. At the being of the
accounting year the limits are set by the finance team for the operations and it has to be ensured
that the same is maintained while performing the task. In case if due to some external change the
work is not done in the given limit then the leaders of the two sections communicate and
accordingly find the best possible solution.
6

Operation and Human resource department – The HR department of Tesco or any
other organisation is one of the most important section who ensure the availability of required
personnel on time and at the right position (Aterido, Hallward-Driemeier and Pagés, 2011).
Work force is hired as according to the job role needs and capabilities of an individual to
perform same. This way the operation department has great dependency on HR section to
maintain continuity in its daily work. It is because maximum personnel is demanded by this
section and hence the requirements are communicated on regular basis and it is ensured that the
deserving candidate is working on the right position.
HRM and marketing – These are the two crucial sections of Tesco and work in
coordination towards the attainment of companies prime goals. It is important that the vacant
seats in the firm are filled on time and for same advertising the vacancies in the most appropriate
manner is required so that maximum potential personnel can be attracted to apply for the job
post. In context of same the marketing department helps HR to find the right candidate by
advertising the job on most effective portals and hence it is clear through this that there is direct
connection between the two divisions.
The head of different spheres works on the same level and communicate directly. In order
to different decisions they have to communicate among themselves and then with the combine
consent a collectively a judgement is given. It becomes difficult in every case as this is a long
process and needs much patience. Sometimes overall quality of the results gets affected due to
the delay caused. Apart from this getting same solution by all the heads is not necessary as
everyone has their own perspective and reacts as per their own understanding level.
PROJECT part 2
TASK 3
P4 PESTLE analysis of TESCO
In an organisation there are different factors that has their indirect influence on the
operations of the firm. These are not in the control of the firm and management needs to make
alteration in own working as per these requirements. Tesco is affected by these elements in both
positive and negative manner. Discussion of same is as below:
Political factor/ Legal – It consist of those factors which are associated with the
government. As Tesco is operating in distinct part of the world it is widely affected by the
7

politics. Change in their policies towards the retail business has its influence on the operations
of Tesco. It is important to have balance in the decision that are taken by the government towards
such organisations in order to maintain the operations. As the present world is facing great
instability in its financial conditions the government of distinct nations take their decisions as per
the current situations.
Positive impact – As TESCO deal in consumer goods there is less fluctuations made by
government in context of the polices and this way stability in the working is maintained.
Negative impact – In case if there is overall change in the tax rates then it has its indirect
impact on Tesco also. They have to pay more to the government and hence the overall margins
for the shareholders is reduced. U.K. government in order to control the overall obesity rate in
people has made restrictions on the sale of some merchandise through imposing heavy duty on
them. It has a negative impact on the company’s overall sales and they have to work on bringing
more of those products which are healthy to use and are favoured by the government. Apart from
this while operating at global level it is crucial that the laws associated with the business in that
particular country are maintained while carrying out the business operations. This way it restricts
the scope of the company.
Economic factors – It is another element that is related to the economy of the country. It
affects much to the business and consist of factors like the employment rate, inflation, interest
rates consumer confidence etc. Tesco gives much attention to these factors as it has a direct
impact on the company’s overall output. The purchasing power of the buyers depends upon the
current economic status of the country and if it progressive then this is a favourable factor for the
firm and vice versa. When there is a positive change in the economy customers spending power
increases and they spend more on the daily and luxury products which brings an increment in the
sales.
Positive impact – When there is recession in the market there is less trend of going out
and eat and people prefer to have food at home only. It further boosts up the sales for the
groceries and hence it is a positive move for Tesco daily product although the sale of other
commodity may get affected to some extent.
Negative impact – There are number of stores that Tesco has in different locations. In
order to operate its various operations there is much need of labour and cost of same has major
effect on the overall business of Tesco. Excessive demand of labour increases their value and
8

getting work force at reduced price becomes difficult. This way company has to bear the
expenditure of appointing the human resource and make compromise with their profit margins.
Social factors – It is that section of the outside surroundings which is associated with the
trends and fashion and other aspects which society has. It keeps on fluctuation and hence needs
close monitoring by the organisation so that any change if required at any point of time can be
made and no potential opportunity is missed out. Due to continuous change in the retail sector
there are both favourable and unfavourable changes that take place and effects the business
accordingly.
Positive impact – in the present trends people prefer to do bulk shopping instead of
getting the products in instalments. Tesco stores are made on huge land areas and offers almost
all the variety o products to the customers. It is an important factor why this brand is favoured by
most of the people and this social trend further add ore opportunities to business for expansion.
By offering variety in the items long term customer relationship can be maintained and hence
growth is ensured. Apart from this now people are more concern for their health specially in UK
and this has used as a base for new product development by the Tesco brand. It focuses on
coming up with products that are fit for health and this way attracts a new customer base.
Negative impact – Customers now are more active and take their buying decision very
carefully. It is very important for them that whatever brand they are buying is delivering
whatever is claimed by the same and failure of doing so may reflect clearly on its future sales.
for example, in 2013 Tesco was found to be guilty for using the Horse-related puns in its
burgers. It affected much to the brand image and hence it lost most of its loyal customers at that
time. this way the media puts much pressure on Tesco to manage its operations as a small
mistake may spread in no time in the society and hence the overall business gets affected.
Technological factors – It is a trend which is related to the change in applications that
are used in Tesco. In order to compete and establish the competitive advantage this is crucial that
latest tools and technique are used by Tesco.
Positive impact – Whenever there is change in the present working technologies are
made it helps the management in doing work in more appropriate manner. it improves he
efficiency level and resources are therefore used to their full capacity.
Negative impact – A new technology comes with the requirement of training and
development of the work force as they have to be made familiar with the working and it is a time
9

and cost consuming process. Management has to bear this expenditure and there are chances that
the same working style again become outdated till the work force become comfortable with the
prior change. Apart from this installation of this new application may not necessary always
profitable and in case of its failure Tesco may have to bear heavy loss.
Environmental factor – All the concerns related to the surroundings fall under these
criteria. Companies has their duties towards the protection of environment and if it fails to do so
then government may take action against same depending upon the severity of the harm which
brand is making to the environment.
Positive impact – Customers these days are concern for their surroundings and supports
such brands which are fulfilling their duty towards the environment. Tesco is bringing control
over the carbon footprints and hence creating a good brand image in the eyes of customer which
reflects on its sales.
Negative impact – There are many products in the store which cannot be sold without
using plastic which is not an eco-friendly product. This way it contributes in polluting the
surroundings and hence criticised by the users.
P5 SWOT analysis of Tesco
In order to evaluate the key strength and weakness of the organisation along with the
associated threats and opportunities use of SWOT analysis is done. It is an effective measure
through which it can be identified that what segments company is doing good and what areas
need to be improved.
Strength – The major competency of Tesco lies in its brand image as it has received many
awards in retail industry for delivering excellent services to its customers. It is one of the most
popular retail store and is continuously in profit. It has the appropriate amount of reserves with it
along with the properties which are yet not fully developed. The formats of the stores are kept
attractive and comfortable for the clients which gives them good experience of shopping
Weaknesses – There are different stores of this brand and not are all doing equal business.
Some of its subsidiaries are prone to the external factors and are not performing as per the
requirement. Also it has much rivalry from the similar type of companies which force Tesco to
follow the competitive pricing policy and limits its total profit. Apart from this there is high
dependency on the market of UK and Europe only as it does not focus on expanding much to
other areas which further limits it overall capacity to do the business.
10

Opportunities – Tesco can expand its total business scale through joint ventures as there is
huge chance of making more profit through this. Apart from this it can also start its operations
online as through this the overall customers could be raised.
Threats – The prices of food product are continuously rising and it is a danger for Tesco
as it would be difficult to keep good margins for the brand. The other threat is of the labour
market prices in which keeps on fluctuating. Tesco has the threat from the labours as there are
chances that the prices impresses and hence overall cost of the company will further raise.
P6 Interrelation between strength and weaknesses with the external environment
On a broader level it is seen that the internal business is highly influenced by the political
social and other factors that were discussed in PESTLE analysis. It is because any change at this
level affects the competencies of the business too. For instance, the distribution system of Tesco
is effective but due to change in the technologies a new system of packaging is adopted by the
company. this would affect the present expertise as employees will have to learn the new
technique and they might not get the expertise in same. Apart from this also change in social
trend take place and people start demanding only those ingredients which are health friendly, this
would affect the core products popularity of Tesco and company may have to bear much of
inventory storage cost for long time is a there is not a balance demand in the market.
CONCLUSION
From the above report this has been summarised that there are different organisations
operating in the business world. Every enterprise has its own unique style of working which is
designed according to its objective. Thereafter it is found that how the core functions of firm are
related to one another and collectively work towards the attainment of organisations goals. given
study shows how Tesco is affected by its external and internal environment and needs to make
changes in its practices so that the competitive advantage is maintained. It is found that the
environment keeps on changing and management has to take measures according to it in order to
maintain its survival.
11

REFERENCES
Books and Journals
12