Analysis of Tesco's Business Environment and its Impact on Operations

This report provides a comprehensive analysis of Tesco's business environment, exploring both the positive and negative impacts of various external factors on its operations. It utilizes the PESTEL framework to examine political, economic, social, technological, environmental, and legal influences. The report also conducts a SWOT analysis to identify Tesco's internal strengths and weaknesses, as well as external opportunities and threats. Furthermore, it examines the interrelationship between these internal and external factors, illustrating how strengths can facilitate growth and how weaknesses can be exacerbated by unfavorable macro factors. The analysis includes a critical evaluation of the impacts, highlighting Tesco's strong product portfolio and the challenges posed by its online presence and political controversies. The conclusion emphasizes the significance of understanding the dynamic nature of the business environment for Tesco's strategic decision-making and sustainable growth.

BUSINESS AND BUSINESS
ENVIRONMENT

INTRODUCTION
The presentation will provide a broader vision about positive and negative impacts of
business environment which affects business operations with reference to Tesco. Also, there will
be focus on strengths and weaknesses of business and the way its interrelationship put impact on
the external macro factors of Tesco.

P4. Positive and negative impact of external business
environment on business operations
Business environment includes a large variety
of operations which are classified as micro and macro
factors. Macro business environment includes multiple
factors which affect the business in both negative and
positive aspects. Such factors are economic,
technological, etc. Impact of such factors are as
follows:

CONT....
PESTEL- It refers to external environmental factors which are widely spread. Organisation is highly impacted
due to change in any of the macro factors. There are different factors included which are described as below:
• Political
• Economic
• Social
• Technological
• Environmental
• Legal

CONT....
• Political: These factors directly affect the decision-making of Tesco and these concerns are
related with the changing governmental policies. Altered taxes and policies of business may
affect the business environment.
• Economic factors: These factors determine financial position of company in order to improve
the economic position of industry. This may include rise and fall of inflation rates in country due
to which prices of the products in operational management are impacted.

CONT....
• Social: These factors affect social aspects of business in which customer satisfaction will be
given with a great priority. Production and manufacturing of goods and services are based on the
demands of customers. Consumption of the goods is directly connected to the perception and
tastes of people.
• Technological: Advancement of technology affects operational efficiency as adopting advanced
techniques in Tesco can help in running operations effectively. Technology is the major factor
which helps in performing tasks efficiently and effectively. Accordingly, this can be referred as
the automation, research and development which possesses technological awareness among
employees of Tesco.

CONT....
• Legal factors: Legislation changes affect the business environment which includes changed laws
and policies of country such as consumer laws, safety standards, labor laws, etc. Tesco can be
positively affected by applying standard laws in company which improves the quality of products
and thus, maximizes sales of organization.
• Environmental: It is related to change in environment protection laws and CSR activities. This
enforces Tesco to modify their policies and affect their operations.

P5. Internal and external analysis in order to identify
strengths and weaknesses
• Every organisation possesses some strengths and weakness that enabled them to gain competitive advantage
in industry. Thus, it is important to find out weakness so that it can be overcome. Along with this,
opportunities and threats are identified which helps in expansion by removing obstacles. The swot of Tesco
is as follows :

CONT....
Strengths
• Tesco operates at global level and provides variety of
products and services to people. it is having a very strong
product portfolio. this attract large number of people to
buy it.
• another strength is wide customer base that includes oil
and gas companies, brokers, contractors, etc. thus, it
enables Tesco not to be dependent on just one sector.
Weaknesses
• Tesco has been involved in many business cases. this has
created a great impact on their brand image and value.
due to this Tesco has to pay large amount in legal
matters.
• the company majorly generates revenue from north
America. this has made them dependent on economy of
us and neighbouring countries. so, any downfall in it
affects Tesco sales and profits.

CONT....
Opportunities
• Tesco can expand their operation in developing countries like India. They can develop a large
customer base. By providing variety of products and services company can generate more sale
and profits.
Threats
• There is a high risk in rise in prices of oil and gas. This can affect Tesco operations. So, any
change in this industry will directly affect Tesco profits.
• Any change in political and economic global conditions can impact Tesco operations. The use of
sustainable resources can enforce Tesco to change their operations.

P6. The way strengths and weaknesses interrelate with
external macro factors
• Organization macro and micro factors are related to each other. This is because company operate in macro
environment. So, if there is any change in factors then it will affect internal environment.
• This can be stated with the fact that strengths allow Tesco to grow and expand their operations in different
countries. It can be possible if all macro factors are in favor of company.
• Sometimes, it becomes difficult for firm to overcome weakness. This may be due to ineffective change in
political or social factors.

CONT..
• Similarly, opportunities are developed when there is change in technological factor. It enables
Tesco to develop new products and expanding in developing countries. In addition, threat can be
from change in legal or economic factor.
• For instance – If there is any change in taste and preference of society it will create an
opportunity for Tesco to develop new products. Through this, they will be able to fulfil their
needs and earn more profits.