Business Environment: Tesco's Structure, Macro Impact - Unit 1

This report provides a comprehensive analysis of Tesco's business environment, exploring different types of organizations (private, public, and voluntary) and their purposes. It examines the size and scope of various organizational types, elucidating the relationships between different organizational structures (flat, hierarchical, matrix) and their alignment with aims and objectives. The report further assesses the positive and negative impacts of the macro environment on Tesco, employing internal and external analyses to determine the company's strengths and weaknesses. Finally, it illustrates the interrelation between Tesco's internal strengths and weaknesses with external macro environment factors, providing a holistic understanding of the company's strategic position. Desklib provides access to similar solved assignments for students.

Business and Business Environment

Table of Contents
INTRODUCTION......................................................................................................................2
Different types of organizations.............................................................................................2
Size and scope of range of different types of organization....................................................3
Explaining the relationship between different organization structure and how they link with
aim and objectives..................................................................................................................5
Positive and negative impact of macro environment.............................................................8
Internal and external analysis of company.............................................................................9
Interrelation among the strength and weakness with the external factors...........................10
CONCLUSION........................................................................................................................11
REFERENCES.........................................................................................................................12

INTRODUCTION
Business environment is the sum of all internal and external factor i.e. employees,
customers and economic changes. In the same current study will shed alight on this and
provide an importance for the same. The chosen firm for this report is Tesco which is the top
retail firm in UK who provide range of different services and product to tehri customers. The
report will describe different types as well as purpose of organization based upon public,
private and voluntary. Study will present the size and scope of range of different types of
organization, then explain the relationship between different organization structure and how
they link with aim and objectives. In addition to this, report also provide positive and
negative impact of macro environment and conduct the internal analysis to determine
company’s strength and weakness. Lastly it will show how strength and weakness of
company interrelate to external macro environment factors.
Different types of organizations
Private organization
Private organization is the organization which is carried out by the entrepreneur in the
organization for the purpose of bring out good sort of the profit. Generally in this type of the
business organization used to offer product and services in the organization to the consumer
for the purpose of earning good sort of profit from the market. Funding of this type of
organization are generally done by the owner of the fund or on the basis of different loans or
share capital. There are many different type of the legal structure in which private
organization used to operate in the market, some of them are partnership, company,
corporation etc. Pvt. Ltd is the legality which is provided to all the organization who are
incorporated (Zhang, Welch and Miao, 2018).
Tesco is one of the private organization who used to operate in the local as well at the
global level to provide variety of the goods and services with the sole motive of earning good
sort of profit from the market.
Public organization
Public organization is another type of business form which is generally controlled and
managed by different government in the nation. Public organization generally used to carry
out the different operation in the organization to satisfy and help the different consumer of
the nation. Sole motive of this type of organization is to not earn good sort of profit from the

market, sole motive of the company is to provide good sort of help to the consumer on
different issue which is faced by them in the market. Funding of different public sector
organization is generally done by the different government fund or policy of different
government. Looking at the legal structure of Public organization it can be said that public
organization is recognized as a Public ltd. In the eye of the law (Booth, 2018).
NHS is one of the public organizations which generally used to operate in the market,
with the sole motive of improving health condition of UK citizen. It is one of the biggest
public sector organizations of the UK. NHS in the market generally used to provide different
medication in the market at low rate or free of the cost in the market. Main purpose of
organization is not to earn profit, is generally used to improve the health of different
consumer in the market.
Voluntary organization:
Voluntary organization at the same time is the organization in which group of the individual
generally used to enter into the agreement to overcome the variety of the issue which is
prevailing at the global level. Generally funding of these type of organization is done by the
contribution or donation by different organization throughout the Globe. Looking at the
legality all the voluntary firm are recognized as NGO (Hussain, Thurasamy and Malik,
2017).
Oxfam is one of the voluntary organizations who used to operate the global level for
the sole purpose of reducing the poverty at the global Level. These organization has been
formed by contribution or engagement of 19 charitable organization throughout the globe.
Size and scope of range of different types of organization
Basis of
comparison
Public organization Private organization Voluntary
organization
Purpose Public organisation are
made to satisfy the need
of customers. their aim
is not to earn profit
private organisations
main purpose is to earn
profit.
Voluntary
organisation main
purpose is to identify
the needs of
individual groups so

that they help To
provide best services
Size the size of public
organisation is wide
because its only
purpose is not to earn
profit, that is why
people did not want to
invest in this.
the size of private
organisation is so wide
as compared to public
organisation because it
helps to earn profit and
feed own families
(Brandsen and Honingh,
2016). It requires low
investment that is why
people are ready to
invest in this. Thus, it
has a huge size.
the size of voluntary
sectors is low
because It make a
great contribution to
helping the public
sector to save money
and deliver best
services. therefore
people are not ready
to invest in this
sector
Scope the scope of public
sector is huge because it
flow from strategies
and policies. As their
main aim is to serve for
people and help for
both social and
economic development
the scope of private
organisation is huge as
compared to public
organisation. it is so the
because it has higher
returns as compared to
public sector (Brunsson
and Olsen, 2018).
The scope for
voluntary sector is
little because it is a
newly developed
sector and people do
not have enough
knowledge. that is
why the scope is low
as compared to other
sectors.
Vision the vision of NHS is to
improve the health and
well- being and
people’s experience and
also provide service
improvement
innovation
The vision of Tesco is
to be the most highly
valued business by
providing best services
to their customers by
earn trust and loyalty
from them from them
The vision of Oxfam
is to become a world
without poverty and
a world where
everyone is valued
and treat equally as
well.
Mission The mission of Tesco is The mission of NHS is The mission of

to make better in order
to serve better for
customers. In which
company is provide the
best quality of products.
to provide quality of
care to every person in
every day through their
best medical facilities
Oxfam is to create
lasting solutions to
injustice of poverty,
as the company is a
part of global
movement for change
and that sis why, it
create a future which
is secure and free
from poverty
Growth The growth of public
sector is continuously
increase because it
employed high number
of employees year after
year
The growth of private
sector is increases in
higher rate as compared
to public because it
introduces in order to
generate higher rate of
return.
The growth of
voluntary is also high
because it contributes
more than billion
euro for the growth
of an economy of
UK.
Explaining the relationship between different organization structure and how they link with
aim and objectives
There is different organization structure which a company follows such that:
Flat structure: It refers to that structure with few and no level of management
between the management and staff level employees. Thus, if company follows this
organization structure then it supervises the employees less, but promote them to involve in
the decision making process.
Advantage: It provide easy communication because there are fewer level of approvals It has fewer management level, with each level of controlling (Tabory, 2019).
Disadvantage:

 It did not provide effective promotion opportunities and less time management
available to focus on decisions
Hierarchical structure: This structure is follows by Tesco which use different level
of authority and there is a vertical link of chain of command between supervisor and
subordinate level of an organization (Egeberg, Gornitzka and Trondal, 2016). This also assist
to establish the internal control and help in decision making process.
Figure 1: Organization structure of Tesco
Advantages: It helps to make coordination between employees and employers through effective
communication. Opportunities of promotion also motivate the employees to perform well and increase
business performance.
Disadvantages:
 It reduces internal innovation and also centralize the power structure.
 Sometimes, it creates the communication barriers.

Matrix structure: Another structure in which the reporting relationship are set as
grid, instead of traditional hierarchy. Thus, it can be stated that employees have a dual
reporting relationship and have to report to functional manager and product manager.
Advantages: The resources are used efficiently and also product and project are coordinated better
manner to each other (Yanase and Limpaphayom, 2017). Employees may contact to any people in order to solve their query.
Disadvantages: It increases the complexity in chain of command because employee have to report to
both functional and project manager.
Relationship between functional areas
Interrelationship between Human resource department to Marketing:
Marketing department of the company communicate the brand of a company to
customers and with an effective collaboration with HR and marketing, easily communicate
with the employees. Therefore, HR of Tesco recruit the best employees for the company in
order to build the brand image while marketing Department create and delivered the brand
messages to employees. Thus, there is a strong relationship between the HR department and
marketing department of the company.
Interrelationship between Marketing to finance department:
There is a strong Inter relationship between marketing and finance Department such
that due to increase competition, both department has to work closely in order to increase the
market share and improve the bottom line as well (Mathur and Nair, 2016). Therefore,
finance department of Tesco has to understand the function of marketing department so that it
help to mutual beneficial and profitable relationship as well. On the other side, marketing
department has to present the budget for the marketing to finance department and this in turn
help to show the close relationship between these departments.
Interrelationship between Marketing and research & development department:
Marketing department of Tesco involves putting the information which they get from
marketing research and with the help of research and development department, company

develop strategy in order to meet the define aim. Also, R&D involves the development and
testing new product which in turn help to create success, while on the other side, marketing
department of the company promote those new products in market. Thus, with the help of
effective interrelationship between these department, company easily meet the define aim and
objectives.
Interrelationship between Human resource department to Finance department:
There is a close interrelationship between the HR department and finance department,
though they are two distinct business, but finance department help to allocate the resources in
order to support the organization’s goal and maintaining the balance between cost and
revenue (Brandsen and Honingh, 2016). On the other hand, HR recruit employees and
motivate them in order to attain the define goal. Even HR department of the company advise
other department in order to make sure that there is no loopholes and conflict between the
department which may affect the brand image of the firm.
Positive and negative impact of macro environment
The macro environment also known as the external environment is the one which
includes the study of the factors which indirectly impacts the working and operations of the
company (Perera, 2017). This is majorly due to the fact that the company exist in the external
environment and it is very essential for the company to adapt to the changes taking place in
the external environment. Thus, for this tool of PESTLE analysis is used which is discussed
as follows-
Political factors- the major positive impact of this factor is that there is political
stability and no frequent changes taking place in the political structure of the company. Thus,
this not has much impact over the working of the company. But on the other side the negative
impact of this factor on Tesco is that the tax rate is high and because of this the company has
to pay high taxes. Thus, this increases the cost of the company and the company has to pay
more of the money in form of taxes.
Economic factor- this is also an important factor to be considered at time of doing the
macro analysis and this is because Tesco run and operates in the economy. Thus, the major
positive thing is that the purchasing power of the consumer is increasing and this can result in
increase in the sales of the company to a great extent. But on the other side the interest rates
are also high and this has a negative impact over the working of the company. This is majorly

pertaining to the fact that when the company borrows money from the banks and other
financial institution then the company has to pay high interest.
Social factor- this is also very important for company to analyses as if the consumer
and the society will not like this then the product of Tesco will not be successful. The positive
impact is that when the company takes into consideration all the social factor and the need
and demand of the consumer then the consumer like this and the product and service of Tesco
gets successful. On the other side the negative impact is that the consumer trends and
requirements keeps on changing very rapidly and for keeping a track of this the company
need to work very hard (Gheibi and et.al., 2018).
Technological factor- this factor includes the changes taking place within the
technology and it is very essential for the company to adapt to these changes. The major
positive impact of analysing this factor for Tesco is that they will come to know about the
latest technology going in the competitive working environment (Rastogi and Trivedi, 2016).
When the company will adapt to these technology then the company will get success and the
employees of the company will work with more efficiency and effectiveness. On the other
side the negative impact of this factor is that when the company adapt to these technology
then the company will have to incur high cost as the maintenance of the technology is high
and the company also have to provide training to the employees for the use of the
technology.
Legal factor- this is also very essential for the company to study the entire legal
requirement for the running and operating of the company. This is majorly because of the fact
that in this global business every country has their own specific rules and regulation which
are to be followed by the company. Thus, the positive impact of this on operations of
company is that when the company complies with all rules and regulations then the consumer
can have trust and faith on the company. But the negative impact is that the company has to
keep a large record as all the rules and regulation differs from country to country and it is
very confusing that which law belong to which country.
Environmental factor- in the modern and advance business world this is the most
important factor to be studied because the consumer has become more conscious relating to
the protection of environment. The positive impact of this is that working for the protection
of environment the goodwill of the company is increased. This result in increasing of the
profits and income for the company. But the negative thing relating to this factor is that the
company has to provide training to the employees that how and in what ways they need to
take care of the environment.

Internal and external analysis of company
With addition to the study of external environment it is also necessary for the
company to study the internal environment as well (Gupta, Gupta and Gupta, 2019). The
internal environment includes the strength and weakness which the company possess.
Strength- these are the good points which the company are good at and which yield
maximum profits for the company. The major strength of Tesco is as follows-
 The major strength is that company maintains a high brand equity which attracts more
of the consumer base and this increases the sales of company to a great extent.
 Another strength is that the company has approximately 6500 stores all over the globe
and this states that the company has high global presence (Gürel and Tat, 2017).
 Also, another major strength is the strong financial position which the company has
and also because of this the company invest high amount in the innovative marketing
and advertising strategies.
Weakness- these are the factors which decreases the productivity of the company to a great
extent. The major weakness of company is discussed below-
 The major weakness is that the company has faced many different controversies and
issues in the recent time which has decreased the goodwill and popularity of the
company to a great extent.
 Another major weakness is that the company has low market presence in the
emerging countries as the company mainly focus on marketing the product in the
developed companies.
These are the internal factors and the external factors which affect the working of company
are as follows-
Opportunity- these are the options which can help the company in growing and developing to
a great extent. The major opportunities are as follows-
 The major opportunity for the company is to expand the business in the developing
companies in order to expand the business to increase the profits for the company.
 Another major opportunity for the company is to invest in the different marketing
techniques particularly the social media marketing.
Threats- these are the external factors which restrict the company to grow and expand in the
competitive global business environment. The major threats for Tesco are as follow-
 The major threat is of high competition and this is because of the fact that the
company operates in the highly competitive and global business environment.

 Another major threat is of changing consumer demands and need and this is a threat
because when the company operates in market and the consumer trend changes then
the consumer will not like the product of company (Tirawatnapong and Fernando,
2019).
Interrelation among the strength and weakness with the external factors
It is very essential for the company to understand the relation between the internal as
well as the external business environment. This is majorly due to the fact that the company
operates in the environment wherein the profits of company depend on the ability of company
to operate in global environment (Dandage, Mantha and Rane, 2019).
The major opportunity of expanding the business will help Tesco in overcoming the
weakness of low market presence in the emerging countries. This is majorly because of the
fact that the when the opportunity from the external environment will be grabbed then this
will decrease the internal weakness.
On the other side the major threat of the company can be solved with help of the
major strength of the company that is the strong financial position. This is majorly because of
the fact that when the company has high finance then they can invest in good and innovative
marketing and advertising techniques and this help the company in facing the competition in
good and effective manner. Thus, the internal strength helps the company in facing the
external problem.
In the similar manner the opportunity of investing in the latest technology and the
digital marketing technology can also be attained with help of the strength of strong financial
position of the company. This is majorly pertaining to the fact that when the company invest
in the technology then huge cost is involved and for this the strength of high financial
position will be helpful as the company can use the money in the investment of the
technology within the business.
Hence, in the end is said that the study of both the internal and external factors is very
essential for the success of company. This is particularly because of the fact that the company
is provided with more clear and concise picture that what the company has to do in order to
make the company successful with help of study of internal and external environment
(Dargahi, Darrudi and Zalvand, 2019).