Tesco's Business and Environment: Macro Factors and Impact Analysis

This report provides a detailed analysis of Tesco's business and its environment. It begins with an introduction to the organization, its sectors (public, private, and voluntary), and legal structures, followed by an overview of Tesco's products, services, vision, mission, and objectives. The report then explores the relationship between organizational functions and objectives, including a discussion of Tesco's organizational structure. A significant portion of the report is dedicated to examining the macro environment's influence on Tesco's operations, utilizing a PESTLE analysis to assess political, economic, social, technological, legal, and environmental factors. Finally, the report concludes with a SWOT analysis to determine Tesco's internal strengths and weaknesses in relation to external macro factors. References are included at the end.

BUSINESS AND BUSINESS
ENVIRONMENT
1

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1: EXPLAIN DIFFERENT TYPES AND PURPOSES OF ORGANISATIONS; PUBLIC,
PRIVATE AND VOLUNTARY SECTORS AND LEGAL STRUCTURES................................3
LO1: EXPLAIN THE SIZE AND SCOPE OF A RANGE OF DIFFERENT TYPES OF
ORGANIZATIONS.........................................................................................................................4
INTRODUCTION TO TESCO...................................................................................................4
PRODUCT ANS SERVICES OF TESCO..................................................................................4
VISION AND MISSION OF TESCO.........................................................................................5
OBJECTIVES OF TESCO..........................................................................................................5
LO2 EXPLAIN THE RELATIONSHIP BETWEEN DIFFERENT ORGANIZATIONAL
FUNCTIONS AND HOW THEY LINK TO ORGANIZATIONAL OBJECTIVES AND
STRUCTURE. ................................................................................................................................6
ORGANIZATION STRUCTURE OF TESCO...........................................................................6
LO3: DEMONSTRATE BOTH THE POSITIVE AND NEGATIVE INFLUENCE/IMPACT
THE MACRO ENVIRONMENT HAS ON BUSINESS OPERATIONS......................................7
PESTLE ANALYSIS OF TESCO...............................................................................................7
LO 4: DETERMINE THE INTERNAL STRENGTHS AND WEAKNESSES OF SPECIFIC
BUSINESSES AND EXPLAIN THEIR INTERRELATIONSHIP WITH EXTERNAL MACRO
FACTORS......................................................................................................................................10
SWOT ANLYSIS OF TESCO..................................................................................................10
CONCLUSION.............................................................................................................................11
REFRENCES.................................................................................................................................13
2

INTRODUCTION
Organization is termed to be a place where people work together to achieve a common
goal. The mangers perform different work related activities like planning, executing,
coordinating and supervising. Even organization needs to work in different types of cultures such
as political, economical, communal, legislative, and innovative to perform different activities.
P1 Explain different types and purposes of organizations; public, private and voluntary sectors
and legal structures
The organization palsy essential role in terms to determining the profitability of the
enterprise. There are number of sectors as are public, private and voluntary. It can be defined in
following manner as are-
1. Public sector- Public organizations are those enterprises which are governed by the
governmental bodies and their main purpose is to serve the community rather than
making profits. They are democratic in nature where decision is taken by an authorized
body and execution is carried out by other team of workers. Charity organizations are
organizations that are work independently without the governmental interference and
operate for cause of the common people. Cancer research organization is one of the
charitable organizations that operate in UK. For example- Atomic weapons establishment
is private firm and it is responsible for design, manufacture of the Atomic weapons. It is
firm that owned and operate by the government with purpose of provides services for
citizens.
2. Private sector- Private enterprises are those which are owned and operated by private
people in which follows the legal system of the country in which it is operating. It is
classified into sole traders, partnership and cooperative trading units.It is firm that
encompassing profit seeking firm that produce products and offer services, invest capital
and undertake business activities in terms to earn profit. This firms are ranges in size
from small business with owner. Under this, firm do not produce product themselves and
this likely to offer service with aim of making profits. For examples- The private firm as
T J Morris is united kingdom firm deal in products as home bargains stores. This is retail
sector produce goods and supply it. The main aim of this enterprise is to earn long term
benefits.
3. Voluntary organization- There are different types of trading units which operate in the
markets which are private, public, cooperatives, charity and NGOs.
3

Types- In this, there are different types of enterprise that can be used for providing benefits to the
society as are Unincorporated associations, Trust, Limited company, firm for social enterprise
enterprise etc.
Purpose- The purpose is to provide benefits to societies without aim of earning profitability.
For example- It is a non profit group and set up with an extensive collection of operation. The
main focus of this firm is over the alleviation of global poverty.
P2. Explaining the size and scope of a range of different types of organizations
Organization should have a common purpose of working which motivates them to work
hard. They have a clear set of vision, mission and objectives of the organization that they have to
achieve in the specific period of time. Tesco is one of the largest retail companies of UK. It has
expanded into different countries like china, India, hungry, Malaysia etc.
In organization the people are working together to achieve the common goal that
is set by the organization. Tesco is known to be one of the leading retail companies that are
functional in UK which is alos operating in different countries like China, India, Hungry .
The organization is committed to provide quality services to the customers for which the
manager is providing his best services to the customers who are direct customers in the store or
do digital shopping. They collect feedback from the customers and provide to the high
management who after considering the feedbacks formulate appropriate strategies which would
help the company to progress.
INTRODUCTION TO TESCO
Tesco was incorporated in the year 1919 as a public limited company which has its
headquarters in Welwyn Garden City at Hertfordshire, United Kingdom with about 100 branches
all around the world. The company has adopted the legal structure of the country where it is
operating and maintains transparency in its operations (Coe and Lee, 2013). The company is
suitably meeting the demands of the customers and is efficiently fulfilling its responsibilities
towards the social community. The company has opened a zero carbon supermarket which is
well efficient in providing services to the customers without emitting any pollutants in the
environment.
4

PRODUCT ANS SERVICES OF TESCO
Tesco is well known super market which deals in a number of products like general
groceries, electronic items, clothing for all male, female or children belong to all age groups,
toys etc. they also produce products under their own brand and provide home delivery facilities.
It also deals in the insurance sector covering automobiles, health, dental and travel insurances.
The company also deals in providing loans and mortgage services to the customers along with
that also provide services to the kids by introducing a saving account facility for kids. The
company is also involved into travel business along with insurance covered with it.
VISION AND MISSION OF TESCO
Tesco has set five main notions for is vision. First being a company which is known as
customer based company and grabs the opportunities that are present for the growth of the
company. Secondly the company lays stress on being innovative so have a competitive edge over
the others. Thirdly the company wants to establish itself as a trusted brand among the customers
and uses the help of global talent for this. Fourth, the company concentrates on developing
strong customer base that are loyal to the company and its products. Fifth providing quality
service and products to the customers for which the company is adopting innovative approaches.
The mission of the company is to provide bet quality product and services to the
customers at best possible prices through which the company would become more reliant and
close to the customers.
OBJECTIVES OF TESCO
The objectives of the company are mentioned below.
1. Increase sales are the main objective of the company Tesco which can be increased by
increasing the demand of the customers which is related to price constraints. Hence the
company is concentrating to increase demand by opening more stores, purchasing bulk
raw material and concentrating on increasing the sales of the currently operating ones.
5

2. Price reduction is next objective which is done by providing discounts and offers like but
2 and get 40 % of third product. This approach reduces the price of the product and
increases the demand of the product.
3. Introduction of health product is the next objectives as it is observed that the needs of the
customers are changing and they prefer to purchase those products that have more health
content. Tesco is providing organic meals which are healthy in nature to its customers in
the retail stores.
4. Next objective is develop a sound digital foothold through online retailing for which the
company is providing innovative offers to attract more customers.
5. Last objective is to contribute to society and generate more employment opportunities for
which the company is continuously expanding is operations into different regions.
P3. Explain the relationship between different organizational functions and
how they link to organizational objectives and structure.
Tesco follows a hierarchal work culture where the main control remains in the hands of
the top management (Son, Baek, Park and Kim, 2018). The company has set rules and working
environment where no confusion arises between the workers related to conduction of work. The
structure of the company is based on the topography features of the place where it is located.
ORGANIZATION STRUCTURE OF TESCO
The function of enterprise is dependent over the differed function as are human resource,
sales, marketing, research, development, production, operation, customer services. Marketing is
term that set the bridge of relationship with market in order to satisfy the needs and wants of the
customers.
 Marketing- function will be beneficial to the both suppliers as well customers. The
function of marketing helps the organization like Tesco to deliver the quality products to
the customers. This firm has created the competitive advantage and a created a
competitive business environment by adoption of effective pricing strategy.
6

 Human resource department- This department work as to making the laws and legislation
of the firm so they all function can be performed effectively. The main responsibility of
this department to manage the employee with help of providing benefits. The role of
human resource manager are as recruitment, administration, maintaining employment
laws and job design activities.
 Fiance- This department is relates with usage of organizational resources for managing
the different operation. In addition to it, to manage the cash flows in the enterprise need
to ensure that there are sufficient funds to meet.
 Customer service- The main aim of Tesco is to provide good and better customer
assistance. It is effective function to maintain the long term retention of buyers.
The working framework of Tesco Company is classified into different sections which are
well maintained in a hierarchal order. The top management is responsible to exercise control and
has the main decision making power. The middle and the lower management mostly do the
implementation work. A major shift in the operation of the company took place in the year 2014-
15. Mr. John Allan became the chairman, Mr. Dave chief executive officer, and Mr. Alan
Steward was appointed as chief financial officer. The company experienced the retirement of its
four essential top management executives who were replaced by new entrants. The company is
further classified into five heads compromising of audit team, corporate responsibility group,
nomination board, payment group and revelation team. However in the store a regional manager
supervises all the three sections that compromise of food, non food and personal usage items.
The food section is further divided into two sub heads, first compromising of fresh food items
and the other is of ambient food products. The non food section is also classified into two parts
one being clothing and the other being electrical items. However the personal product section is
maintained by personal staff members.
7

P4. Demonstrate both the positive and negative influence/impact the macro
environment has on business operations
PESTLE ANALYSIS OF TESCO
Tesco is one of the leading retail stores in UK which is functional in other 12 countries
also. The operations of the company is highly effected by political conditions prevailing in the
operational countries as the company is liable to follow all the guidelines and pay taxes, payment
to workers etc. as per the country norms and regulations.
Political Factors: The world economy is in unstable position because of which domestic
growth is preferred which can be done increasing employment at the domestic levels. Tesco is
employing a large number of working force which has made the company popular resulting
increase demand of products and incorporating diverse work cultures in to the operations of the
country. The political factors includes the various government actions in the concerned with
countries such as quota, tariff, government policy. In UK , there have been some distinct changes
which have effected the Tesco greatly. Due to the Brexit event UK has been exited from EU. So
this provided the negative impact on the Tesco's operations. Due to recession of 2008 the
corporate tax of Tesco has been reduced from 30 to 28 %.
Economic Factors: The economy of UK is getting better in term of the financial
condition. The gross domestic product is increasing. Better economic condition is better for the
The economic conditions of UK are improving because of which the country is
experiencing rise in gross domestic product which is providing better opportunities to Tesco to
operate and function as the purchasing power of customers gets increased and they spend more
on purchasing goods and products they require. If the economic conditions are not well the
spending power of the people also gets decreased which leads to sales of the company products.
The company has already pre determined set of targets of generation of profits and has not
counted the economic functions while making plans (Wood, Coe, and Wrigley, 2016).
Social Factors: The birth rate in the country is decreasing and the old age propensity is
increasing because of which the spending of the people is also increasing especially in the old
age section. This has shifted the purchasing perceptions of the people. Tesco is also adopting the
change into its operations and has incorporated digital feature into its operations which will
8

effectively meet the needs and demand of all the age groups especially the elderly who do not
prefer to go outside to purchase products and want everything at their home comfort. An increase
in the demand of online commodities is seen to maintain this upward flow Tesco makes sure
that it is supplying quality products to the customers so that the customers remain loyal to the
company. Tesco is continuously making changes as per the demands of the customers so that no
controversy arises which would negatively impact the image of the company. The company has
already experienced a horse meat scandal which had destroyed the image of the company. The
demand of the food item has decreased so such issues are necessary to be solved by the company
and take steps that such incidents do not occur again.
Technology Factor: Tesco uses competitive and cost effective technology which enables
the company to supply products in an organized manner to all its customers and different
branches. The technology used by Tesco is in accordance with its product which maintains that
the company is technically sound. The digital platform used by the company has also provided
better opportunities to the company. The advancement of the company towards digital platform
has increased the sales of the company and helped in generating more revenues.
The company is making efforts to make constant changes in improving its quality of
product and services so that the customers could be better served and their demands could be met
in a better way. For this online facility was given to the customers so that it will provide easy
option sot the customers to get the products. The technology used by Tesco is said to disruptive
in nature as the implementation of digital platform is considered to be disruptive as the company
was required to introduce the online concept suddenly to meet the demands of the customers
which is tough for the company.
Environmental Factors: The ecological setting are changing at a fast pace. The high
incidence of global warming has led to increase in the temperature because of which the Arctic
Circle is melting and the temperature around the world is increasing at an alarming rate. Citing
such situations Tesco has also made necessary changes so that maximum energy and resources
by the company could be utilized in a more better manner reducing the percentage of wastage
and even in the case of generation the waste must be harmful to create more pollution (Wood,
Coe, and Wrigley, 2016). People of all ages of Tesco are very much conscious about the impact
on the environment create by the business organization . They protesting for the evil activities
9

against environment which has created problem for the Tesco and ultimately the cost of
production increases.
Legal Factor: The Tesco follows all the rules and regulation that are laid by the governing
agencies around the world from where the company is operating. For this the Tesco has
effectively made improvements in the agriculture policies implemented by the company. The
farmers are given subsidies so that they could work more in an efficient manner. Many changes
are observed to be initiated in the finance sector. Tesco being dealing into finances also has made
changes in its financial services policies also. Changes have been incurred due to incidence of
Prudential Regulatory measures which is introducing new changes and directives in this sector.
To adhere to this Tesco is also making regular changes to have a stand in the competitive market.
P4. DETERMINE THE INTERNAL STRENGTHS AND WEAKNESSES OF
SPECIFIC BUSINESSES AND EXPLAIN THEIR
INTERRELATIONSHIP WITH EXTERNAL MACRO FACTORS
SWOT ANLYSIS OF TESCO
Tesco is operating in 12 countries for which it is necessary that it improves its strengths
and work on weakness. The SWOT analysis will effectively showcase the different attributes of
the company.
Strengths: Tesco is one of the leading companies in the retail segment which works with
a notion to provide quality products and services. The company makes huge investments so that
the customers are provided with best services for which it has initiated Tesco metro and digital
platform to provide comfort to the customers. Through this a wide range of customers is captured
who want to do shopping at the comfort zone of their homes. Moreover being a big company the
company invests in the purchase of the raw materials in bulk quantities because of which the cost
of the company gets decreased and the profit margins of the company get increased. Even upon
provision of best services and quality products the customers remain loyal to the company.
Weaknesses: Tesco is dealing a variety of products due to which its profit margins are
getting reduced as all the different businesses operated by the company are not functioning well.
The credit card business is at loss the smart phone business is at loss as the company does not
possess the experience and expertise in dealing the smart phone section. Along with the constant
10

change in the demands of the customers has made the company to invest huge amounts in
research and development which has increased the cost of the company. The introduction of
digital platform was also not easy and has further increased the unstable factor for the company.
Opportunities: Company can invest into new ventures to promote its products and
services. The smart phone section could be used to promote the company. Even there is a lot of
opportunity in expanding the business in the digital segment as the demand for online shopping
is increasing and more people are getting connected with the digital platform (Wood, Coe, and
Wrigley, 2016). The company can expand its roots to Australia as the governing bodies there
favor the retail model adopted by Tesco. Tesco could also opt for joint undertaking with the
locally operating companies of the nation. The local companies will efficiently guide Tesco to
learn about the new markets and deliver products and services accordingly. The company can
also opt for horizontal merging which will help the company to utilize the company’s assets to
the maximum which will ensure that there is less wastage which will reduce the cost and increase
the profit margin of the company. The resource allocation can be done in a more organized
manner as per the priority basis which will improve the quality of products and meet the
demands of the customers.
Threats: The Company is facing a number of threats as there are large numbers of other
competitors who are also dealing in the same segment which Tesco is doing. Wal-Mart is the
main rival of the company whose market share is continuously increasing which has created
threat for the company. The problem with the company is that the stores are located in far flung
areas due to which the commutations of people are not feasible. People do not want to take extra
efforts to travel to far places to groceries or anything of need. The in-house customers in the
Tesco stores have decreased considerably which has led to the decline in the sales of the products
offered by the company. The company needs to formularize strategies that could meet the
changing perceptions of people. It must be noted that the government directives are changing
constantly so the company also needs to change its policies as per the government regulations.
Labor is also a problem in the company. Cheap and quality labor is not available which is
increasing the cost of the company. Even the cost of raw materials is also increasing due to
which the profits of the company are getting impacted which is effecting the whole production
process and upsetting the demand and supply of the products and services. The economic
11

recession has also impacted the company adversely which has limited the spending of the
customers leading to decrease in the demands of products (Son, Baek, Park and Kim, 2018).
p6. Explaining how strengths and weaknesses interrelate with external macro factors of Tesco.
By making good products for the different types of customers the social factors get
effected. Tesco is having consumers behavior as a main theme of business strategy. One of the
strength of the Tesco i.e. have much more consciousness of the consumers about the healthy
food became an advantage for the Tesco. It makes a best quality product in its retail store and
thus customers due their health consciousness get attracts towards Tesco. By this the strength of
Tesco affects the social factors of environment. Today people are very much busy they have less
time with change in technologies Tesco has adopted online selling and purchasing for the ease of
customers. Tesco is very well updated themselves with the technologies and hence, the
technological factors are influencing this strength of Tesco.
Talking about the weakness of the Tesco , it is unable to increase its business due to low
economy and politics. The main culprit for the weaknesses in Tesco are economic and political
environment. The contraction strategy of business has influenced the rise of retail shop. They
can't take any advantages. On the next side , economic environment of different countries varies
from each other so economical factor influences the profitability of the Tesco. Therefore,
economic environment unable to provide any advantage to the Tesco.
CONCLUSION
Tesco is one of the pioneer retailing companies in UK functional under the leadership of
Mr. John Allan. Its vision is to serve the community with quality products and services at
economical prices. It is operating smoothly in different countries by adopting the policies of that
particular country (Coe and Lee, 2013). The PESTLE analysis concludes that economic and the
social factors are in good proportions to provide growth opportunities to the company. the
company is also involved into contributing towards the social well-being and has provide
subsidies to farmers. Technology is an important aspect for the company and uses it effectively
to bring about positive changes in the company. The SWOT analysis propagates that the
company’s brand is its biggest strength and inability to allocate and utilize resources is its
weakest features. The company has newly ventured into micro finance and lacks experience and
expertise in this segment. The company is also facing labor problems as the directives related to
labor has increased the cost of labor due to which profit of the company has decreased. The only
12