Report: Business Environment Analysis for Tesco's Belgium Expansion

This report provides a detailed analysis of Tesco's potential expansion into the Belgian market. It begins with background information on Tesco, a British multinational grocery store, and its current international operations. The core of the report focuses on a business environment analysis, utilizing both PESTLE and Porter's Five Forces models to assess the external factors influencing Tesco's success. The PESTLE analysis examines political, economic, social, technological, legal, and environmental factors specific to Belgium, highlighting aspects such as government stability, economic growth, consumer preferences, technological advancements, and environmental regulations. The Porter's Five Forces model evaluates competitive rivalry, the threat of substitution, and the threat of new entry within the Belgian retail market. The report concludes with an overall assessment of the business scenario, offering insights into Tesco's strengths, weaknesses, and potential opportunities within the Belgian market. This assignment is available on Desklib, a platform that provides AI-based study tools and resources for students.

BUSINESS
ORGANISATION AND
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
BACKGROUND INFORMATION................................................................................................1
BACKGROUND INFORMATION ON BUSINESS ENVIRONMENT.......................................2
ANALYSIS OF BUSINESS SCENARIO.......................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business environment includes internal and external environmental factors which affect
the performances of organisation. This is way through which business can be updated with
what's new are prevailing in market. There are two factors which are micro and macro that
constitutes business environment. This report will analyse the environment of Belgium with
reference to Tesco which desires to expand its business in the country. This company is dealing
with online groceries, banking and mobile phones. This entity is planning to expand its business
in Belgium which has lot of chances of getting success. This entity can do well in this nation
because people of this country are fond of food. So supermarket works best in these situations
and probability of getting return are more.
BACKGROUND INFORMATION
Tesco was founded in 1919 which is a British multinational grocery store. This is third
largest store in UK. Number of employees working under this entity till 2017 are 476000.
Operating income earned by entity is ₤1280 million in 2017. Area which served by this entity is
United Kingdom, Ireland, India, Malaysia, Thailand, Czech Republic and Hungary. This entity is
dealing with grocery store, clothing and mobile phones. This cited entity has expanded its
business in 1994, 1987 in Japan and Czech Republic (Ahuja, 2017). Cited entity has diversified
its market by purchasing of stores in different nations like Japan at two networks in 2003. In
2002 this has purchased 13 HIT supermarkets in Poland. It has lot of subsidiaries like Booker
group, Tesco bank, Telecom, Tesco tech support etc. Tesco comes under renowned retail stores
which serves lots of customers. Current international operations which Tesco is performing are
expansion of its business within UK to 11 nations in worldwide. This entity is operating with lots
of nation and is working successfully. In 2005 this store was selling its services to Taiwan,
Carrefour and purchased Carrefour stores in Czech Republic and Slovakia. Tesco is a big brand
which is selling its products in diverse nations. Market share of Tesco is 30.25 % in 2012 and
increased with time as well. Corporate Social responsibility of Tesco includes remunerative and
paying of pre profit taxes to charity organisations. It has contributed 1.87% in 2006. This is more
from other competitors which is prevailing in market. Financial of Tesco by selling its products
are £55,917 till 2017 (Baxley and et.al., 2016). The cited entity is selling products with lot more
advertisement slogan which is “Every little helps". This attracts more customers which helps in
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maximising its sales of entity. It is helping entity in selling its products to more customers.
Background Information on business environment.
BACKGROUND INFORMATION ON BUSINESS ENVIRONMENT
For determining Business environment of Tesco, Pestle and Porter’s five forces Model is
used which help in analysing its external factors which facilitates in reviewing its activity
position and its competitors prevailing in market. This tool is used for launching of new product
in market. Factors included under this are Political. Legal, technological, environmental and
many more. These points are described below:
Political Factor - factor which impact on government policies on economy of country.
This factor includes tax policies, trade tariffs, fiscal policies. All these policies effect on working
criteria of business. Like change in trade policies which impact on operations of Tesco. Cited
entity is working in UK and it is well established which reduces any negative impact on
business. For example, government has launched or introduced new policies and tax which can
impact on costing of business (Brandon-Jones and et.al.,2016). This can cause loss to cited entity
as well. It is affecting business environment in significant way. Government of Belgium in quite
stable which help Tesco in doing its business in successful way. This will increase sustainable
position of entity.
Economical Factor - This factor refers to analysing of economic performance of
business in industry. It consists of inflation rate, saving rate, foreign exchange rates, economic
growth patterns. For example, there is rise in inflation rates due to which prices of cited entity
are high which makes it difficult in selling its products to consumers. This will affect in
profitability position of business. Impact of this factor are long term because change in tax
policies lasts long for years on entity. This affects the purchasing power of Tesco which
ultimately impact on their market position (Chiarini and Vagnoni, 2015). Economic stability is
quite good in market which help in reviewing its position in market and its profitability. Tesco is
doing its business without taking stress of regular changes in tax and tariffs. total foreign direct
investment in Belgium is increased to 3119 EUR Million in first quarter of 2018. From 2018 -
2008 investment in Belgium in averaged to 4651.54 EUR Million and it was comparatively
higher than 2016.
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Illustration 1: Foreign Direct Investment of Belgium
(Source: Belgium Foreign Direct Investment, 2018)
Social Factor - It refers to cultural aspect, values, beliefs, habits of customers which
impacts on entity operations. Factor includes demographics, work ethic lifestyle of person,
attitude, gender. These factor helps in building image in front of society. Before launching of
product, review of market is necessary which helps in meeting demands of people. Tesco is
selling its goods in diverse countries and before launching any of products, market research is
done which helps the chances of survival of product. This will build image in front of customers
as well as community of cited entity. People of Belgium has interest in junk food which helps
entity in analysing and meeting demand of the firm. It is helping entity in getting support of local
people which is very beneficial for making image better.
Technological Factor- it refers to change in technology which impact on business
operations and this helps entity in selling its products to consumers. This factor includes
innovation in technology which helps in selling of products in an attractive way. With use of the
latest application on business help entity in doing work easier way and get updated with
technology and its features. This factor can gain competitive advantage over other firms
(Ferguso and et.al., 2017). Tesco is using the latest technology which help in selling its products
in market and finishing of work before time. Belgium is using advanced technology which
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makes it count in developed countries. With help of innovation in technology entity can grow
and help in reaching new heights of success. Government of Belgium has consistently
contributing in the research and development. The government conteributed 2.49% of GDP
towards research and development in 2016. Below is the graph that shows increasing pattern in
R&D contribution by government.
Legal Factor - this factor refers to changes in laws which effect on business operations.
It includes changes in laws like consumer law, employment law, safety and standards. Changes
in these law affects in whole working of entity. Any of the rules and regulations changed by
government like alterations made by entity in labour law and for this entity needs to be updated
which reduces changes in working criteria. Tesco is doing its business in UK which are very
strict in context to its rules. Rules of UK are very strict as compared to other countries. Laws of
Belgium are very strict which helps in running of business smoothly. It is helping entity in
running cited entity ethically (Jacobs, Chase and Lummus, 2014). In this law of Dispute
resolution is very strict which helps entity to run business run smoothly. In this provided entity
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Illustration 2: Gross domestic spending on the research and development
(Source: OECD Data, 2018)

must keep a disciplined manner of operations which helps company in doing work ethically. It is
one way by which entity is making good image in front of society.
Environmental Factor - this refers to impact of business on environment. Many of
business are using CSR activities while doing its business. Tesco is following all rules and
regulation which are prevailing in nation in which it is working. This makes a good image in
front of society which increases customer base of cited entity. It is helping entity in reaching to
new heights of success. UK is following Environmental law 1990. This helps cited entity in
performing its business ethically. Belgium is very strict for emitting of carbons by industries
which are deteriorating environment. In Belgium business waste is organised in regional level.
For purpose of hazardous waste certain amenities are provided for dumping this type of
remaining (Gillen, Jacquillat and Odoni, 2016). Waste agency of Wallonia is appointed for
recycling of left-overs and its disposition. In public, waste agency of Flanders is there for
management of waste and soil clean up. For nuclear waste some agency is appointed to prevent
dangerous radiation.
ANALYSIS OF BUSINESS SCENARIO
Porter’s Five Forces Model
This was introduced by Michael E Porter in 1979 which help in reviewing its strengths
and weakness of firm. This helps in improving weak points of entity and help in making of
product attractive. This helps in minimisation of mistakes which are done earlier by entity.
Competitive rivalry- this factor tells that there are lot of competitors in market which are
becoming threat for entity. Many of rivals are selling its products which are of similar from other
firms. If other firms are selling its products in low prices to consumers which effects on sales of
goods and profitability position of business. Industry which has lot of contenders in market
makes position weak. This will affect brand image of cited entity. Tesco has lot of competitors
in market which makes its position lower in market. Competition will become intense when there
is low customer loyalty and products are of similar nature (Fisichelli and et.al.,2016). There are
many rivals of Tesco which are Sainsbury's, Morrison's, Asda, Waitrose, Cooperative, Aldi, Lidl
etc. These are of retail stores like Tesco but market share of cited entity is more than comparison
to other ones. In other features which are prevailing in this entity is strong position in market
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which help in making entity to reach new heights of success with offering goods at low prices so
that all range of consumers can buy products. It will increase its customer base and popularity of
product.
Threat of substitution- substitution means similarity of product which are sold by
contenders of entity. If there are lot of substitutes available in market and prices of any of
product are high, then consumer will shift to other substitutes which is of low cost. This will
weaken power of entity and its image in front of society. This will reduce sales and profitability
position of entity. For example Tesco has lot of competitors like Aldi,Morrisons and Sainsbury
which are selling similar products in market which is biggest threat. (Ferguson and et.al., 2017).
Tesco’s products have lot of substitutes available in market but brand value of entity and its price
minimises that error. For example, Tesco’s products which has lot of substitutes like bio washing
powder of Tesco has lots of similar goods in market which are Arial, Tide that gives tough fight
to other entities. In this entity is needed to set prices which is low and comes under all income
level groups. If prices of Arial increases, then it will directly affect to its contenders like Bio
washing powder. It will increase sales and revenue of cited entity.
Threat of new entry- in any of industry there are lot of new entry which can cause
threat to existing companies which are present in market. If any new firm enter in market in that
case established entity has no menace for this but companies which are not well established in
marketplace they have to fear about new entry in market. It will weaken position of entity in
market due to existing firm which are already present there. There are lot of industries which
restricts new entry in market like gold selling entities which set high prices and restrict new one
from entering in marketplace. In this entity has threat of new entry. There are lot of entities
which has number of rivals for example small scale store are increasing its customer base which
is the biggest threat for Tesco (Wu, 2016). This weaken its position in market due to emerge of
lot of small stores which are giving high competition to cited entity and it will affect customer
base of entity. It will directly impact on sales and profit.
Buyer power- In this customer has lot of power which can lead entity towards success or
fall its productivity. Customer has ability to make prices down with its power from this only
industry can identify that how necessary are buyers in market. Consumers are only one which
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earn money to entity. They can increase profitability position of entity and brand image as well.
If cost of one product is high in that case consumer will switch to another alternative which cost
low to them or which is in their range. Goodwill of those organisations will eventually increase if
they are able to satisfy their customers. Customers satisfaction is essential and in order to sustain
in the market, management must focus on satisfying their customer. In this customer has power
which influences its profitability position of entity and if they are not satisfied then they will stop
purchasing product from that particular store. Prices of product are set by entity so that all
consumer can buy products. This will maximise its profitability position of company and
survival chances of entity as well as product which can help in reaching to new heights of
success (RRouvari and et.al., 2016). Tesco is serving its clients in the best way which help in
increasing its customer base. It is already meeting its customer demands that's why this entity is
doing well in market.
Supplier power- in this supplier is one who provides entity with raw materials for making
of product. Prices are increased by them in that case it can charge more to entity that's why it is
necessary to maintain long term relationship with supplier. If entity has not done such thing in
that case organisation has to find new supplier in middle of the year. New supplier can charge
more from entity which can increase its cost. This will ultimately affect to shortage of raw
material. Dependency on one supplier is quite risky because in any case if supplier is not able to
supply their goods to entity due to any reason then working of entity will get affected. So for
reducing this type of risk company has chosen more than two suppliers (Omansky and Kanner,
Autodesk Inc, 2014). Tesco has already maintained good relationship with suppliers which helps
entity in reaching to new heights of success. This is all done for avoiding of risk from shortage of
raw material.
CONCLUSION
Business environment consists of micro and macro factors which is influence entity to
operating in market place. Business organisation refers to entity under which workers are
working in order to accomplish common goals. From this report this has been concluded that
background information of Tesco which is dealing with mobile phones, clothing and food
section. Cited entity is expanding its business in Belgium and interest of people there is in junk
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food so organisation can open one section of fast food for increasing its sales. It also studied
background information on business environment of Tesco. Under the observation which are
based on factors of Pestle Analysis it is planning to expand its business in Belgium. This will
determine all factors which help in making entity to launch new product.
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Omansky, A. H. and Kanner, J. L., Autodesk Inc, 2014.Systems and methods for construction
field management and operations with building information modeling. U.S. Patent
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Rouvari, O and et.al., 2016. Cluster analysis of Finnish car retail and service business operations
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Management Conference, EurOMA 2016, Trondheim, Norway.
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Wu, D., 2016. Risk management and operations research: a review and introduction to the special
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Belgium Foreign direct investment. 2018. [Online]Available
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