Unit 1: Business & the Business Environment - TESCO Report Analysis

This report provides a comprehensive analysis of the business environment, focusing on the distinctions between profit-making, non-profit, and non-governmental organizations. It examines the roles and interrelationships of various organizational functions, using TESCO as a case study. The report delves into the positive and negative impacts of the macro environment on business operations, including a PESTLE analysis of TESCO. It explores the interrelation of strengths and weaknesses with external factors, and also covers topics like franchising, joint ventures, and licensing. The analysis includes an examination of organizational structures, competitive analysis, and stakeholder expectations, offering a detailed understanding of business operations and strategic considerations within the context of the UK supermarket chain TESCO.

Unit 1: Business & the Business
Environment
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Difference between Profit, Non-Profit and non government organization............................3
Role of different organizational function and interrelationship between different organization
function...................................................................................................................................6
TASK 2............................................................................................................................................8
Positive and negative impacts of macro environment on operations of business..................8
External and internal analysis of TESCO.............................................................................10
Interrelation of strengths and weaknesses with external factors..........................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14
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INTRODUCTION
Business environment is one of the most essential aspects of any venture. The forces
which constitute this concept are their competitors, consumers, investors, development of digital
technologies, media, economic conditions and multiple other companies working externally. The
current assignment will be based on TESCO, which falls under category of leading supermarket
chains in the United Kingdom. This study will explain varied forms and purposes of companies
and will define scope & size of firms. Furthermore, the present report will justify relationship
between different function of company and their link to structure and objectives of firm. This
study will describe negative and positive impact on macro factors on venture operations and will
clarify external and internal analysis. Moreover, this assignment will explain strengths, &
weakness interrelation with external macro components.
TASK 1
Difference between Profit, Non-Profit and non government organization.
Profit making organization is the type of the organization who generally used to operate
with the sole motive of making profit from the market. All the Private sector organization are
known as a profit making organization (Wang and et.al., 2016). They generally look to serve the
consumer by the way of the companies offering but in return of same they desire good return
from the consumer end as well. Tesco is one of the example of profit making firm.
Non Profit making organization also regarded as non-business entity is the type of the
organization who also used to offer the product to the consumer but with the motive of satisfying
their need. Rather than making profit out of the same, All the public sector firm are example of
the same. NHS is regarded as biggest non-profit-making organization of the UK in the current
scenario.
Non government organization, Non government organization is the type of the
organization which used to work autonomous of any government. NGO's are also called civil
societies, are organized on national, International and community level to serve the society with
the solution of the problem which are faced by them in current scenario. Amnesty
International UK is one of the example of NGO operating in the UK.
Micro, Small and Medium Size organization and its legal structure
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Basis Micro Small Medium
Number of Employee Micro organization is
the organization who
generally has less than
10 employees working
for them.
There are 11-50
employees who
generally used to work
in the small sized
organization.
In Medium Sized
organization there are
51-250 employees
who generally used to
work at a given point
of time.
Turnover and
Capital Structure
Turnover of Micro
sector organization is
no more than
£632,000
There is no such
restriction in this type
of business
organization
There is no such
restriction in this type
of business
organization
Legal Structure Sole trader is the type
of legal structure
generally suited with
these type of
organization.
Partnership and Sole
trader is the type of
legal structure
generally suited with
this type of
organization (Sharfi and
Rosenblum, 2016).
In the case of Medium
sector organization all
the different type of
legal structure are
found.
Difference Between Large Medium and Small organization
Small Medium Large
Goals Goal of Small sector
organization is to
survive in the market
in front of big
competitor
Medium sector
organization generally
looks to innovate new
things to attract
customer and grow in
size
Large organization
generally looks at
maintaining their
position in the
organization
Market Share Market share is very Market share is not Having good amount
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low in the market as
compare to Medium
and Large sector firm
that high when
compare to large
sector firm
of market share in the
market.
Profit Share Profit share is high as
marketing and
operation expenditure
is not that high of
small sector firm.
Profit share of medium
sector organization is
not that good as they
generally low down
profit share to be
competitive.
Large sector
organization is having
good sort of profit
share in the market as
they used to get large
production advantage.
Growth There are variety of
the growth opportunity
which is in front of
Small sector
organization.
There are variety of
the growth opportunity
which is in front of
medium-sized sector
organization.
Large sector
organization generally
convert less growth
opportunity as one
change in operation
used to bring vast
changes at overall
performance of
business.
Global Growth and developments of transnational, international and global organization
Looking at the Growth opportunity which is presented in front of all the different type of
organization, it has been identified that Public sector organization are one type of organization
who generally used to operate domestically. Whereas Private sector organization used to operate
domestically as well as internationally as well.
Looking at the comparison on the basis of size of the organization, it has been seen that
Medium sized organization are the one who used to involve them in some international
transaction (Sharfi and Rosenblum, 2016). Small and micro sized firm generally do not involve them
in international business.
Differences between franchising, joint ventures and licensing.
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Franchising Joint Venture Licensing
Franchising refers to the
agreement which has been taken
place between the Franchiser
and franchisee where ownership
of the business will be in the
hand of franchisee till the date of
ending of term.
It is the type of the
business in which two
business comes
together and decides to
work together in the
coming future.
Licensing refers to the agreement
which has been taken place between
the licensor and licensee where
licensee has right to acquire good of
licensor
Industrial structure and Competitive Analysis
Looking at the competition analysis of different type of organization, it has been
identified that Small sized and medium-sized organization are the two type of the organization
who used to see good amount of the competition in the market as compare to Large sized
organization. Reason behind the same is that there are good number of organization who used to
operate in small and medium sector as compare to large sector.
At the same time Profit making firm or private sector organization is the organization
who used to see good amount of competition in the market as compare to the non-profit-making
organization or voluntary organization.
Stakeholder expectation meet
All the organization, irrespective of the size and scope of the business generally used to
take the variety of the different decision in a way that it used to help them in achieving
stakeholder need in the better way. All the stakeholder generally has different type of need,
Hence, all the organization generally try to understand need of all the stakeholder and take
different decision to satisfy same.
Role of different organizational function and interrelationship between different organization
function.
Various function and interrelationship between the same
Marketing and Manufacture function: Marketing department of Tesco generally used
to provide the information about the different trend which are prevailing in the market. Also,
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provide the information about the need of the customer in the market. On the basis of the same
Manufacturing department used to produce the product which can help them in satisfying the
need of the different customer in the better way (Dong and et.al., 2020). At the same time
manufacturing department of company used to provide the information about feature of the
product, on the basis of same marketing department used to promote the product of company in
the market.
Human resource and operation function: Human resource function of the organization
looks at managing the human resource of the organization in a way that it used to help the
organization in carrying out different operation of business effectively (Emtsev and et.al., 2016). At
the same time operational department of Tesco make sure that there is good sort of clarity in the
organization, these help HR department in maintaining good working environment in the
organization.
Procurement and Sales function: Sales department of the organization generally used to
help the procurement department in getting knowledge about the source through which they can
procure different product in the organization. In return of the same Procurement function of
Tesco help sales department in deciding the price at which the product of the company will be
offered to different customer in the market.
Finance and all department: Finance function of the organization used to help all the
organization in understanding the different resources which is available in front of them. Finance
function of the organization used to allot the budget for all the department and all the department
are directed to work according to the allotted budget.
Organizational Structure
There are variety of the different type of organizational structure which is also adopted by
variety of the different organization. Some organizational structure on the basis of size and scope
of the organization is as follows:
 Medium Sized organization: In Medium Sized organization, Bureaucratic structure is
the common type of the structure which is generally found (Poza-Rey, Gómez-Robles and
Arsuaga, 2019). Under this type of the structure all the individual are clear about the role
which they have to play in the organization and the way they will be carrying out that
role. Bureaucratic structure is the normative structure.
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 Large Sized organization: Under this type of organization, Matrix organization structure
is the type of the structure which is very common. Under Matrix structure there are more
than one line of manager and all of them in the end used to report to the authority who
used to supervise different activity of the organization.
 Micro Sized organization: In Micro sized organization there is no specific
organizational structure is followed, reason behind the same might be because there are
very few numbers of the employee who used to work in micro sized organization. Hence,
maintaining a organizational structure is tough task (Opaev, 2016).
TASK 2
Positive and negative impacts of macro environment on operations of business
PESTLE analysis is a strategic framework used to examine key factors influencing a
company from outside (Vallati and Grassi, 2019). Here, this model is utilized in context of
TESCO.
Political factor-
Change in trade policy put negative impact on transportation operation of TESCO, as it
affect exiting trading procedure of company and impact profitability. As firm operates across
different nations, it needs to keep a focus on changing political situations, in all countries it
manage business operations. Due to this element, organization needs to pay extra charges on
each action related to trade, which is not suitable for its better growth more than competitors. EU
regulations is one of the political factor that put negative impact on ASDA business growth, as it
lead to increase rate of taxes, due to which company needs to pay extra.
Economic factor-
Long term global economic power shift away from developed advanced economies to
continue over time to 2050, as emerging market nations continue to boost their share of whole
world gross domestic profit in long run despite current mixed performance in some of these
economies (Ducruet and et.al., 2018). This factor put positive impact on TESCO growth as
company enter into new market where competition level is not too much at the beginning, but
later it increase more, which give them chance to build their strong brand image. Unemployment
rate is one of the social factors that also impact ASDA recruitment operations, but in positive
manner.
Social factor-
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Changes in buyer’s needs and preferences always put negative impact on production and
marketing operations of TESCO. For example, when consumers take decision to follow trends
like healthy diet and purchase grocery items accordingly, it negatively affect marketing and
inventory operation of company, due to which management feel high pressure to make further
changes that is relevant for business (Yenipazarli, 2019). Social changes such as celebrity
following impacting inventory and production operation of ASDA negatively, as it drive
management to consider this factor and identify which celeb has been followed by consumers
and what they wear. It is really very essential to do because it allows manager to change
activities in each operation accordingly.
Technology factor-
Digital revolution is the best examples of this factor that positively influence production
operation as well as marketing of TESCO and ASDA both. Arrival of digital technologies can
led to reviewing entire production system and even manner goods are designed, especially for
target market (Geschwill and Nieswandt, 2020). With advanced and latest technologies company
can manufacture and manage products in systematic manner, which in return increase profits
margins and achieve set aims of its business. Furthermore, it can be said that advanced
technologies related to cyberspace security would strength management to secure key
information and documents related to workers, customers and business.
Environmental factor-
Environment sustainability is one of the environmental elements that positively influence
operations of TESCO and ASDA. It drives both of them towards conducting sustainable
practices, which help to gain attention of new buyers toward purchase and boost operational
efficiency even better. For example, when TESCO reduce their carbon foot print they can build
positive brand image in market where millions of buyer seek to connect with those types of
companies. Moreover, by using paper bags instead of plastics for packaging products, ASDA can
reach at higher position, where people consider them as sustainable business company.
Legal factor-
Changes in Equality Act 2010 and regulations of government relate to workers put
negative impact on TESCO Human resource management operations. Due to this factor,
manager and HRM feels pressure to review their employees growth and development plans, in
which everything needs to be done without making any type of differences. In context of ASDA,
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laws related to wages impact existing policies and practices of company in positive manner,
because organization is pays minimum wage to all its workers, which motivate employees to
work with this brand for longer period of time.
External and internal analysis of TESCO
SWOT analysis-
Strength-
Skilled and talented applicants is one of the TESCO strengths, which makes them able to
gain competitive advantages and achieve strategic aims and objectives in effective manner (Alam
and Raut-Roy, 2019). With this strength company can get all benefits and reach at global level,
which is quite beneficial in term of maximizing sales.
Weakness-
Lack of planning relate to sustainable practices is weakness of TESCO that puts negative
impact on brand image and operational success in the future. In order to overcome this weak
point, company should consider beneficial options and ways, which they can use and gain
benefits.
Opportunity-
Technology advancement is one of the biggest opportunities for TESCO, which manager
can get in order to increase their marketing operation efficiency that turns into increasing
customer base. With this chance company can reach at international level and boost productivity
more than its competitors, operates in same sector.
Threat-
Competitive rivalry between existing players within retail industry is the big threat in
regard to TESCO, which put negative impact on current management practices and strategic
planning process. It drives company towards taking right and considering ways that are
beneficial and appropriate for growth of firm.
PESTLE analysis-
Political factor-
Change in Trade regulation impact TESCO trading process negatively as it brings varied
challenges in front of management. This factor force firm follow policies and rules according to
change, which make them capable to trade effectively. By recognizing modification in trade
regulation, company can deliver their products all over the world.
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Economic factor-
Emerging economies are quite beneficial and helpful for TESCO as it gives greater
chance to firm in context of expanding their business and selling products at entire world with
strong consumer’s base. When people are able to earn more than last few years or month, they
can take decision to purchase anything without thinking too much.
Social factor-
Life style change move customers to take decision towards buying those products that are
beneficial for health and allow them to live healthy life for longer period of time. This factor put
positive impact on TESCO sales because they have skilled workers who are able to consider
changes in needs of buyers and arrange everything accordingly.
Technology factor-
Development of digital marketing platforms permits TESCO to create innovative content
which they can use to promote its business, products and services all over the universe. This
factor provide effective and useful benefits to company.
Environmental factor-
Government and consumers concern relate to environment safety drive firm towards
reducing carbon foot print, as it put positive impact on its business. When company consider this
factor they can sustain for longer.
Legal factor-
Changes in local and national government policies directly impact operations of TESCO.
It needs to follow international and local market laws, to continue with smooth management
operations.
Interrelation of strengths and weaknesses with external factors
Strength and weakness of TESCO is related with political, social, economic, technology
and other external macro factors (Mallak and et.al., 2018). This interrelation provides several
benefits to firm in term of increasing their productivity, profitability and sales even better than
competitors. For example, skilled workforce is one of the key strengths of organization, through
which company can use advanced technologies and promote goods and services of brand in
market place effectively and efficiently. Furthermore, it can be said that weakness of company is
relate to environmental factor. Firm due to consumer and government concerns in context of
environmental safety, focus to make effective plan and tactics such as take part in CSR.
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CONCLUSION
From above analysis, it has been concluded that non profit, non government and profit
companies are operating their businesses and manage operational functions positively. Micro,
medium and small size firms are performing their roles according to objectives, purposes and
aims, which is quite beneficial for all of them in term of increasing sales and profitability.
Furthermore, it has been summarized that by working together all functions of TESCO drives
management towards gaining competitive edges and reaching at global level. It has been
identified that after considering impact of external and internal environment analysis,
organizations would consider right suggestions and take decision to overcome negative impact
upon business operations.
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REFERENCES
Books and Journals
Alam, S. and Raut-Roy, U., 2019. Evaluating the Effectiveness of Reward Strategy at Tesco:
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structures but different functions. Journal of Experimental Botany.
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interdependencies between global shipping flows and urban development (1890–
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Geschwill, R. and Nieswandt, M., 2020. Creative Destruction—The Digital Revolution and Its
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Poza-Rey, E. M., Gómez-Robles, A. and Arsuaga, J. L., 2019. Brain size and organization in the
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Sharfi, K. and Rosenblum, S., 2016. Executive functions, time organization and quality of life
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Vallati, M. and Grassi, A., 2019, July. AI to Facilitate Legal Analysis in the PESTLE Context.
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Yenipazarli, A., 2019. Incentives for environmental research and development: Consumer
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Online
PESTLE analysis. 2020. [Online]. Available Through: <
https://www.cipd.co.uk/knowledge/strategy/organisational-development/pestle-analysis-
factsheet>.
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