Business Environment Analysis of Tesco: Macro and Micro Factors Impact

This report provides a comprehensive analysis of Tesco's business environment. It begins with an introduction to the business environment, defining both internal and external factors influencing a company's functions. The report then examines Tesco's organizational structure and functions, including Human Resource Management, Finance, Sales and Marketing, Customer Service, IT, and Distribution. A key focus is the interrelationship between these functions and how they contribute to Tesco's objectives. The report includes a PESTLE analysis to evaluate the positive and negative impacts of macro-environmental factors on Tesco's business, encompassing political, economic, social, technological, legal, and environmental factors. Additionally, a SWOT analysis of Tesco is presented, along with an exploration of how its strengths and weaknesses interact with the macro-environmental factors. The report concludes with a summary of the key findings, offering a holistic view of Tesco's strategic positioning within its competitive landscape.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT...........................................................................................................................1
TASK 2............................................................................................................................................1
P3 Relationship between organisational Function and Objective...............................................1
TASK 3............................................................................................................................................3
P4 Positive and negative impact of macro environmental factors on business...........................3
TASK 4............................................................................................................................................6
P5 SWOT analysis of Tesco......................................................................................................6
P6 Interrelation between strength and weakness with macro factors ....................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business Environment consist all external as well as internal factors that influence functions of
enterprise such as clients, management, supplier, employees, business concept and demands.
Customers meeting with their expectation is an good example of Business Environment. Tesco is
a British MNC of grocery and general merchandising retailer in UK. Tesco has spread
worldwide with stores in 12 countries including Ireland, Europe, Asia and others. Tesco is the
world’s third largest retailing company and listed as 9th largest company in term of revenue. The
study reviews factors that affect environment include macro and micro environmental factors. In
this study, an overlook on all the factors which affect the business and how they help to meet
organisational objectives and structures are explained. Furthermore there is an study where it is
considered that business environment for an organisation is an essential part (Commander and
Svejnar, 2011).
TASK 1
Covered in PPT
TASK 2
P3 Relationship between organisational Function and Objective
Tesco is one of third largest British leading general merchandising and grocery retailer company
of U.K. Tesco has listed in top ten retailer organisation in the world measured by revenues.
Company serve high value-added products and low-cost products at cheaper price than its
competitors (Dahan and et. al, 2010).
Company offer the costumers best products in low prices and meeting requirements by
constantly innovating stores facility, product quality and their services. Tesco believe in
developing margins by investment in new technology, product improvement and efficient stores.
This organisation has reached on this position through managing its organisational functions
which fulfilling the requirements of organisation’s structure and satisfy objective of Tesco
giving it a new vision (Avramenko, 2012). These functions are mentioned below-
Human Resource Management-
Human Resource management department of Tesco handle organisation’s recruitment,
development and staffing process. HRM manages Tesco's hiring, retention, development,
1

training, staffing process and maintaining staff by positioning them on appropriate place. HRM
look over every activity of employer and give them target in order to get achieve objectives.
HRM also takes care of safety and health issues of employees, determine the staff policies,
employer-employee relation and staff development. HRM satisfies objective of great services to
consumers by maintaining staff and training them. If employees will be satisfied, company can
achieve goals easily (Fernando, 2011).
Finance-
Finance department of any organisation handles all issues relating to expenditures,
accounts and wages of company. Tesco have different department of finance which manages all
financial issues Of Tesco including allocation of budgets to various depatments, paying salaries
and wages, preparing accounts and managing resources. Tesco have been emerged as most
revenue earning company worldwide which has become possible with good management of
finance. Spending right amount on right places through right strategy has helped Tesco achieving
objectives of company.
Sales and Marketing-
Marketing and sales is most important technique to achieve any organisational goal.
Every company require perfect promotion, marketing strategy so as Tesco. Tesco is achieving its
goals and objective because of the innovative marketing strategy. Strategy of keeping the Prices
low is most successful strategy of Tesco. Other than this, a perfect market research, launching
product in suitable environment, and aiming kids, female and middle class is effective marketing
strategy and right use of P's of marketing mix such as promotion, pricing, production, place and
Product (Gebauer, Paiola and Edvardsson, 2010).
Customer Service-
Customers satisfaction is main target of every small and large enterprises. It comprise
Information providing, advising consumers, providing credit facilities, delivering food,
packaging goods and courteous behaviour. Tesco is popular for providing best services to
customer. Dealing with clients with technical difficulties. Tesco has Hygiene stores, fresh
products which they offer at various stores. They adopt new technologies for faster process,
better cash counter and better staffing facility at their stores.
IT (Information Technology)-
2

Information technology department covers management of 'Network'. IT manages
queries, allocate user access, set-up Network services, repair routines and allot a help-desk in an
organisation. Uses of internet has increases in order to get goods and services and other queries.
Use of IT in Tesco has emerged from last decade. Tesco is changing older technologies
and adopting new innovative technologies for the better and pace system. It include Chip and Pin
system, EPOS (electronic point of sales) A set of scales, printer and brand new technology of
sales such as E-commerce and E-business systems in its stores. Technical department has
provided ease to consumers as well as the employees. It has led to the success of Tesco in
achieving company’s goals and objective (Commander and Svejnar, 2011). Now, the sales of its
products has emerged in a drastic amount which led organisation to gain huge profit margin.
Distribution and administration segment-
Fair Distribution of product and services using various channels such as wholesaler,
retailer and customers using efficient mode determines final price of the product. Tesco is
dealing with better resources and distribution techniques that could be noticed easily. Prices of
the products are affordable. Other is, availability of products and services all-time so consumers
find less inconvenience in getting product from stores.
Tesco stores are made with superior infrastructure, good space, with high security. Their stores
are very clean and there is specific system placement of products so that customers can find
products as per their need in easy manner. The administration of IT and product services is also
quite satisfactory. Overall both these makes consumers return to the same product over and over
again. These elements have made Tesco to reach its objective in the span of time and made it
largest retailer in U.K (Halbert and Ingulli, 2011).
TASK 3
P4 Positive and negative impact of macro environmental factors on business
Tesco is the company that offers their services in retail grocery sector. There are many factors
that are required to consider by them so that their business sector can not be affected by future
crises. These factors are related to external environment and it is important for cited company to
manage all the elements so that their business can not be affected by it in negative manner.
PESTLE analysis of helpful tool that helps to identify macro environmental factors. This analysis
3

is effective to discover positive and negative elements of such factors (Hamilton and Webster,
2015).
Political-
These factors are based on political situation. This is important for Tesco to manage such
elements effectively so that it can not affect the organisation. Such factors have vast impact over
operation of business. These aspect arise due to change in political norms and condition. There
are speedy variation in political factors that create negative impact over the performance of
organisation. Government has impact over Tesco. When new changes arise due to change in
political party then new policies and plans are implemented by them and it is required for the
organisation to manage such factors effectively so that it can't affect company in adverse manner.
Political factor includes tax rates, acts of legislation (Aterido, Hallward-Driemeier and Pagés,
2011). Positive Impact: Sometime, political changes are in favour of organisation. When new
policies are formulated then it has positive impact over the operation of company. Tesco
is one of the effective company that adopt recent changes in effective manner.
 Negative Impact: This has negative impact as when new government came in force then
it changes exciting policies and plan and it is required to adopt by company. There are
some difficulties created when there is variation in exiting plans.
Economic factor-
These are the economic factors that has adverse impact over the performance of company. Rise
in inflation rate has impact over the prices of product and services of the organisation and it
results in change in purchasing power of buyer. This may also have impact over demand and
supply ratio of company. Economic factor includes inflation rate, interest rate, foreign exchange
rate, economic growth patterns. When there is change in these factors then it affects the business.
It is not necessary that it will always have negative impact sometime it has positive impact as
well.
 Positive Impact: Reduction in interest rate has positive impact and this situation is
beneficial for the company because it reduces cost and expenditure of the organisation.
 Negative Impact: Sometime, Company introduces new product in market with high
price but after that its demand in market gets reduce and it affects business in negative
manner (Avramenko, 2012).
4

Social Factor-
These are the factors that are arise due to changes in social norms. It is required for business to
consider such aspects in their operation so that it can't affect operation of organisation in
negative manner. It includes cultural trends, demographic, population analytics etc. this is
important for the organisation to fulfil cultural norms so that it can not affect business in negative
manner.
Positive Impact: When there is high trend of cultural aspect then it provides positivity to
organisation.
Negative Impact: When new trends are in force then it is required for the company to consider
such in their operation so that it can't affect their business in negative manner (Klapper and Love,
2010).
Technological factor
It arises due to change in technological factors. This is important for the organisation to consider
these factors so that they can operate their business in more effective manner. Tesco tries to
consider upgraded technological factors in their operation so that they can operate more
effectively in competitive environment. When there is new technology in market then it is
required for the company to adopt it so that it can't affect operation of the company. It provides
assistance to organisation to operate more effectively in competitive era.
 Positive Impact
Technological factors have positive impact over the operation as business can operate more
effectively in competitive market and can secure best position among competitors. It provides
assistance to achieve goals and target of business.
 Negative Impact
When there is not technology came in force in market, this is important for the company to adopt
such in their operation so that they can operate more effectively. Due to change in technology, it
is required for organisation to hire new and skilled personnels who can operate such
technological software (Mahmood and Hanafi, 2013).
Legal factors-
It has sometime negative image over the business. It includes enforcement of new laws and
regulations. There are certain laws that are required to comply by the organisation so that they
can effectively work. Many laws and regulations are enforced that are imposed on the business
5

and it is required for the company to follow. It has impact over the goodwill of the organisation
(Oh, 2010).
 Positive Impact:
Sometime, new laws are enforced that makes the operation of the business easy. This is essential
for the company to make focus on new regulations so that it can not affect the operation of
business.
 Negative Impact:
New laws create negative impact over the business. It creates burden on the company and it is
required for the organisation to comply with it so that it can't have negative impact over the
business.
Environmental factors-
These are the factors that arise due to change in environment. It is not limited to climate,
geographical location, global changes in climate, environmental offsets. It is required for the
business to comply with such changes in effective manner so that it can't affect future operation
of organisation.
 Positive impact:
When new change came in force then it is easy for the company to adopt such factor and it
provides assistance to the operation of business (Reinhardt and Stavins, 2010).
 Negative impact:
Changes are not always in favour of the company and to adopt such changes, it is required for
business to make focus so that they can operate more effectively.
TASK 4
P5 SWOT analysis of Tesco
SWOT Analysis is important factor to identify Internal and external factors. It is required for the
organisation to manage such forces in effective way so that they can operate more effectively.
This has impact over decision making and planning process of organisation.
Strength (Internal)
 Tesco has won an award for excellent performance in retail sector, customer services and
in shopping experience (Siewiorek and et. al, 2012).
6

 This company has been considered as one of the largest and profitable supermarket in
world.
 It has vast cash reserve and large property which is yet undeveloped that provide strong
financial condition to their business.
 Its brand value with global recognition is one of the strongest part of Tesco.
 They stand effectively in market in term of quality, selection and service.
 Stores of Tesco appeal to local and cultural needs that provides more effective services to
customers as comparison to other competitor of market.
 Effective use of improved technology in their operation provides assistance to them to
operate more effectively in competitive era (Teece, 2010).
Weaknesses (Internal)
 Some of the subsidiaries of Tesco are not operating well and they are failed to provides
effective services to users. They are unable to identify the needs and wants of different
people.
 Failure to adopt market changes in more effective manner is one of the weakness of
Tesco.
 To enter into number of market created inability to focus on single market for
specialization.
 Lack of experience in phone and insurance sector is one of the negative factor of this
organisation.
 High Transport expenses (Ullah and Lai, 2011).
 Mush amount is used in transportation that creates pollution as well as increasing
expenditure in the hand of company.
 Excessive dependency on UK market.
Opportunities (External)
 Joint venture or strategic alliance with market competitor helps to enhance their market
sector.
 To open new stores in various location.
 Online way for selling and marketing of their product and services.
 Rebranding through digital media marketing.
 To enter into emerging market by acquiring small chain of business.
7

 Focus on private label growth.
(Source: SWOT analysis, 2017)
Threats (External)
 Rising in price of raw material create adverse impact over the business.
 Increase in number of competitor in market.
 Rapid changes in market and technological factors.
 Variation in the demand and taste of the users.
 Maintenance of low cost operation and low price in recession.
 Takeover of ASDA by Wal-Mart (Siewiorek and et. al, 2012).
 Vast fluctuation in tax rate may have impact over financial condition of business.
 Government regulations and policies.
P6 Interrelation between strength and weakness with macro factors
It is important for the business to make focus on the factors that have impact over its
operation. Micro and Macro environmental factors are the essential part of this. Internal factors
8
Illustration 1: SWOT Analysis

are SWOT i.e. strength, weaknesses, opportunities and threats and external factors are PESTLE
i.e. Political, economical, social, technological, environmental and legal factors.
When political factor arise in the business then it can be managed through Strength of the
company. It is required for cited company to make focus on its weakness so that its operation can
not be affected by macro environmental factors. It is required for Tesco to make focus on both
the factors so that it can not create future problem. Opportunities have impact over the factors of
business where it is required for business to consider so that they can achieve future growth
(Mahmood and Hanafi, 2013).
Due to technological factors, new opportunities are created for the company that can be
considered by this company in their operation. When there is variation in political culture and
legal norms then it has impact over the business and sometime it is beneficial for the organisation
to consider it so that they can eliminate weaknesses of the company. PESTLE factors have vast
impact over the strength of the company and they are interrelated to the SWOT factors.
Due to changes in legal norms, economic factor and political factors, it is possible that it
has impact over strength of the company and it is required for business to consider those changes
in effective manner so that it can not affect future operation of organisation. When there is
change in interest rate of the company then it enhances strength of the company and helps to
secure competitive advantage in market. Technological factor provides strength to the company
and make the operation of the company easy so that they can effectively work and achieve their
target in better way.
CONCLUSION
As per above study it can be concluded that business environment is one of the effective
factor that is required to consider by business. There are some internal and external factors that
have impact over the operation of organisation. Tesco is the company that is offering their
services in grocery sector. There are various that are required to consider by business so that it
can not affect its operation. PESTLE is effective way to identify macro factors that may affect
the business. It is required for cited company to identify their strength and weakness so that they
can manage their affairs in effective manner. This is important for Tesco to use new upgraded
technology in effective manner so that they can operate their business in better way. There are
different organisations that are in current time as private, public, voluntary sector organisation. It
is required for this business to make focus on their activity so that they can effectively work.
9