Business Environment Analysis Report: Tesco Case Study

This report provides a comprehensive analysis of Tesco's business environment. It begins with an introduction to the concept of the business environment and its impact on organizations. The report then delves into Tesco's organizational structure, outlining the relationships between different functional areas such as sales and marketing, finance, human resources, and production. It further examines the positive and negative impacts of the macro environment on Tesco, utilizing PESTLE analysis to assess political, economic, social, technological, legal, and environmental factors. The report also includes an internal and external analysis of Tesco using SWOT analysis, identifying the company's strengths, weaknesses, opportunities, and threats. Finally, it explores the interrelation between Tesco's strengths and weaknesses with the external macro factors. The report uses information from the provided text to analyze the business environment of Tesco.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT...........................................................................................................................1
TASK 2............................................................................................................................................1
P3 Relationship between different organisation functions..........................................................1
TASK 3............................................................................................................................................3
P4 Positive and negative impacts of macro environment on business........................................3
TASK 4............................................................................................................................................4
P5 Internal and external analysis of TESCO...............................................................................4
CONCLUSION ..............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business surrounding can affected through intrinsic and along with this extrinsic
elements. These can influence organisation directly as well as indirectly. There are many
components which can be under control but some are not, such as inflation, tax rate and so on.
These can provide impact on manufacturing of association in wide range. It will consists clients,
regulatory body, culture and so forth (Business and the environment, 2017). Hence, it is must for
each and every sort of firm to determine elements which are associated with environment, as a
result they will improve their goodwill at marketplace. Along with this, they will easily enhance
their profits and take benefits from their rivals. Tesco is a retail chain which is situated in UK
and providing their services worldwide. Fundamental aim of this report is to determine various
kind of organisation and in addition their legal structure. If an enterprise wants to identify their
surroundings then they can lead SWOT as well as PESTLE investigation. They can also
formulate some policies which will assist them to pull numerous clients towards them, as a result
they will increase their market share and compete their competitors in market.
TASK 1
Covered in PPT
TASK 2
P3 Relationship between different organisation functions
Tesco is a grocery store which is established in UK and giving their items as well as
services across the world. They are following hierarchical framework in their organisation. As
per this structure, every staff members are aware about their duties as well as responsibilities.
Higher level management has maximum obligations as comparison to low level of
administration.
There are many objectives which are related with Tesco are mentioned as beneath:
 They want to enhance their business, as it will assist them in their success as well as
improvement.
 Employer of association needs to give best quality of items to their clients at affordable
values.
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 If there is enhancement in their incomes, then they will cater maximum returns to their
stakeholders.
 They provide variety of items to people under a roof, this will assist them to attract
numerous clients towards their goods and services (Macro environmental forces, 2017).
 They have to secure surrounding, and for this they can decrease wastage.
There are many sorts of functions which are connected with association are described as below:
 Sales and Marketing: If manager of organisation wants to know demands of their clients
then they have to do research. For above stated purpose they can create some strategies,
like pricing, promotional, sales and so on. Along with this, it is must for them to enhance
their market share and for this, they can improve their current goods, as a result they can
easily improve their sales. If company has an adequate fund, then they will do marketing
more impressively.
 Finance: It is must for firm to keep up entire records in an effective and efficient way. If
they want to hike fund then they can issue shares and along with this take loan for some
bank or institution. Fundamentally, this division is connected with others, as it assists to
formulate budget for entire company. Additionally, they have to create records about
their incomes as well as expenditures. There necessary aim is to issue budget for every
division which must be followed by them adequately.
 Human resource: Fundamental purpose of this division is arrange human assets in firm.
If manager wants to improve performance of their employees then they have to provide
training to them. For their retention, employer has to give them better working
surroundings. Along with this, to inspire their staff members, superior has to provide
them some additional rewards.
 Production: In each and every kind of company to produce items, they need appropriate
resources. They can utilize some approaches also, like batch, job and so forth. If
employer wants to decrease unwanted cost from their procedure, then they have to
provide training to their labours. As a result, they will do their work within adequate
period of time.
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TASK 3
P4 Positive and negative impacts of macro environment on business
TESCO is operating their business at international level and is the second largest retailer
in UK. There are various factors which influenced its business operation in negative or positive
manner like micro or macro elements (Self and Wu, 2012).
Macro factors can be referred to those components which can not be controlled by
company like political, legal etc. So for analysing this, TESCO can take help of PESTLE
analysis by which it can know about its positive or negative impact on business that are given
below- Political- This element may affect TESCO in direct or indirect way that includes tax
rates, tariff barriers, stability of country etc. which can influence the company in negative
manner. If economy of nation is not stable then in this situation, government encourages
businessmen to create more employment opportunity for citizen. In this TESCO plays an
important role because it provides more job to people which affects it positively because
it increases its products' demand. It may also affect negatively like if tax rates will be
increased then it will reduce its profit margin because no one will purchase unnecessary
products. Economic- It is very influential factor for TESCO that affects their cost demand, profit
making etc. It includes inflation, interest rates, prices of goods etc. It has also positive as
well as negative impact on international business like if there will be high wage rate then
it will increase the overall cost of production for TESCO which will not be good for
TESCO because it will enhance the cost of products that will reduce the number of
customers. Its positive impact will be that employees will become more committed
towards company because of earning more income. Social- It includes changing taste and preferences of consumers. Now a days, people are
becoming more health conscious so they don not want to eat fast food and prefer to cook
food at home (.Thun and Hoenig, 2011). It has positive impact on the sale of company
because if consumers will not eat food from outside then they have to purchase raw
material for cooking food at home at retail grocery store. So it will enhance its sales and
revenue.
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 Technological- It is most influential factor which directly impacts supply chain and
process of grocery. If TESCO will adopt latest technology like online sales then it will
increase its sales or revenue that is a positive aspect but if it will give loyalty reward
through internet then consumers may switch to other brand. Legal- There are various laws which have to follow by TESCO and may effects its
activities positively and negatively. Like if there will be any change in regulations then
firm also has to change their policies which will take lots of time of it. But if it will
comply all regulations then it will become favourite of government.
 Environmental- If it will take proper take care of environment while providing products
or services to consumers like by reducing packaging etc. then it will increase its brand
image in the market but it may be costly for the company.
TASK 4
P5 Internal and external analysis of TESCO
Before taking an important decision, it is very important that TESCO should conduct
internal and external analysis by which it will be able to make effective and successful strategy.
If cited firm wants to analyse its internal environment then it can help of SWOT analysis by
which it will be able to identify its strengths, weaknesses and availability of opportunities by
which it can expand their business (Welford, 2013). Once after completion of this analysis,
TESCO will be able to carry out its operation effectively and smoothly because with the support
of this, firm will be able to take important decision. Internal analysis includes various elements
like vision or mission of the company, strategic objectives etc. SWOT analysis of TESCO is as
follows-
Strengths
 It is operating their business at global
level, mainly is presented across
Europe, South and North America.
 It is the largest retailer in United
Kingdom by having 27.9% market
share.
 It has various format strategy like
Weaknesses
 Recently a controversies occurred
which affect its public image or
reputation negatively.
 Weak existence in other countries.
 Its financial resources are affected by
bad debts, household insurance claims
and arrears in credit cards.
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hypermarkets, supermarkets, hard
discount stores and convenience stores.
 It is well reputed in the market as well
as has good brand image in the society. It uses latest technology like online
sales channel with high level of
efficiency.
 Its some branches are not operating
well.
 Because of increasing competition in
the market, price war has stared which
are reducing the profit of the company.
Opportunities
 It can increase its brand image in the
market by using innovative digital
media advertising and promotions.
 It can also acquire small chains for
entering into new emerging market.
 It should expand their business in non-
food sales.
 For getting attention of large customers,
it can do strategic alliance with other
brands.
 In that country where it is not able to
generate desired result then in this case
it can also do joint venture with local
firms that will help in improving
performance of the company. It can also avail opportunities by
growing online shopping as well as by
offering home delivery services to
clients.
Threats
 In United Kingdom, there are
numerous competitors which may
create hindrance in carry out business
activities of TESCO.
 Continuously increasing prices of raw
material which affects profit margin of
the firm.
 When economy of country is going
down then in this situation, it has to
keep low prices.
 Because of economy recession, there is
threat of loosing market share and
profitability through out the globe.
 It has also labour threats because of
having increasing value of wages.
 Government rules and regulation are
also creating more pressure on TESCO.
P6 How strengths and weaknesses interrelate with external macro factors
For getting success in the market, TESCO should analyse internal and external
environment with the help of SWOT and PESTLE analysis that will aid in identifying internal
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and external factors which may impact business environment. Both analysis are very important
for a company because it creates value for cited firm and aids in determining small or large scale
environment. As it provides support in attaining targets and goals of enterprise within stipulated
period of time (Wood and Dow, 2011).
Internal and external environment both are connected with each other as their obligation
regarding company. If there will be any change in company then it will affect operational
division of TESCO because of having complex nature.
It will be right to say that there are various factors by which organisation's capability got
affected like political, economical, legal etc. These elements are related with internal
environment of the company in the following manner that are described below- Political- It is the most influential factor which affects business activities in positive or in
negative manner. It includes tax rates, tariff barriers and governmental policies which
have to followed by TESCO otherwise it will create disturbance in carry out operation
and then firm will not be able to gain desired result within stipulated period of time. By
not complying rules and regulation of government, organisation's capability will be
influenced. Economical- It also contains various elements like inflation rates, GDP etc. which affects
business capabilities or strengths. Suppose if there will be inflation then it will reduce
buying behaviour of consumers that will influenced production efficiency of the
company. Technological factor- In today global environment, it is very necessary for the company
to adopt latest technology for attaining competitive advantages over its rivals. If TESCO
will not use updated equipments then it will influence the overall efficiency of the firm as
well as no one will be attracted towards it. Because at present era, everyone wants
innovative products or services which can satisfy their needs or wants that can be
possible only by using latest technology (Yiee and Baskin, 2011).
 Social and cultural forces- In today changing environment, consumers' taste and
preferences also changes continuously that affects business strategy and planning.
Because company have to to design their planning accordingly. Every consumers want to
take goods or services as per their culture so firm should offer their products or services
as per their culture otherwise it will not be able to reach to its decided destination with in
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stipulated period of time. While offering their merchandise, TESCO should also take care
of environment because if it will do so then it will create positive brand image in the
market and then more people will be attracted towards it that will maximize its sales or
revenue (Cui and et.al., 2011).
So after discussing all factors, it can be said that internal environment of the company, is
got affected by external factors in positive or negative manner. So for achieving positive result,
TESCO should consider them otherwise they will not be able to obtain specified result or
outcome within stipulated period of time. Above discussed factors may influence business
activities in positive or negative manner that totally depend on the situation of economy or
consumers taste and preferences.
CONCLUSION
From the above report it has been said that there are various kind of companies which
operate their business for different purpose as private firm carry out their activities for generating
more profit or revenue. In an organisation, there have to perform various types of functions like
human resource, production, finance etc. which helps in reaching to its decided destination
within stipulated period of time. Before taking an important decision, every enterprise should
evaluate its internal as well as external environment so that it can identify that factors which may
affect the progress of company. It can be identified with the help of SWOT [for internal] and
PESTLE analysis [external].
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REFERENCES
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