International Business Environment: Tesco's Strategies and Analysis

This report provides a comprehensive analysis of Tesco's international business environment. It begins with an introduction to international business and focuses on Tesco, a multinational retail organization. The report uses tools such as Porter's Five Forces and the Global Competitiveness Index to evaluate the external factors impacting Tesco's operations. It assesses the impact of globalization and international trade on national economies and explores various organizational structures used by businesses in global markets. The report also examines the risks involved in operating internationally, analyzes the micro and macro environments affecting international business organizations, and assesses the benefits and challenges of globalization for Tesco. Furthermore, the report investigates the implications of cultural and regulatory diversity, the importance of corporate social responsibility and sustainability, and the potential conflicts between corporate strategy and ethical responsibilities. The report concludes with an overview of management approaches to sustainability and provides relevant references to support its analysis.

International
Business
Environment

Table of Contents
Introduction:.....................................................................................................................................1
TASK1:............................................................................................................................................1
P1: evaluate the business techniques used to analyse the international business environment :
................................................................................................................................................1
P2: Assess the impact of globalisation and international trade on national economies.......2
M1: An exploration of the organisation structure of the business operating in global and
international markets..............................................................................................................3
D1: An evaluation of the risks involved in operating in the international environment......4
TASK 2:...........................................................................................................................................4
P3: analyses the micro-macro environment of international business organisation..............4
P4: Assess the benefits, opportunities and challenges of globalisation and international trade
of the organisation..................................................................................................................6
M2 An assessment of the extent to which working in international environment impacts on
the success of individual business organisation.....................................................................7
TASK 3:...........................................................................................................................................7
P5: Analyses the implications for the businesses of the cultural and regulatory diversity in
international markets..............................................................................................................8
P6: Importance’s of the corporate social responsibility and sustainability in supporting
business success:....................................................................................................................9
M3: Evaluate the potential conflict between the corporate strategy and ethical social and
sustainable responsibilities...................................................................................................10
D2: Compare and contract management approaches to sustainability in business origination.
..............................................................................................................................................10
Conclusion:....................................................................................................................................11
References:.....................................................................................................................................12

Introduction:
The international business environment is associated with different business movement
which are performed beyond the national borders. The international business is refers as a
organisation that purchase and sales the goods and services across the two or more national and
international boundaries. In the another words it can be stated that international business
environment is a commercial activities at the global markets . it includes the movement of good,
capital, employees and technology , importing and exporting activities , cross-borders
transactions in the intellectual property like patents, trademarks and copyright through the
licensing franchising and management contracts. The international business is a deal done by the
organisation at global levels to accomplish the objective by the way of export, import and foreign
direct investment. Under this report, the Tesco is a retail organisational operates its business
activities at the international levels and gain the profits margin by dealing groceries and general
merchandise items in all over the world. further there will be discussion on the impact of
globalisation and international trade on economic and affects of micro-macro environment on
the international business (Alcácer, Cantwell, and Piscitell0 2015)
TASK1:
P1: Evaluate the business techniques used to analyse the international business environment :
There are various different tools and techniques which helps in analysing the international
business environment and how these models helps in performing the activities in the most
effective and productivity manners . There are change in the economic policies of the different
countries which affects the business and liberalisation of international trade and capital which
helps in expanding the operational activities.
There are different ways some of them are PEST and PESTEL analysis, SWOT analysis,
Porter’s five forces model and Global competitiveness index which helps in understanding the
business at the international levels. In the context of Tesco, organisation uses different tools to
understand the international business so that they can expand their operational activities.
Porter’s five forces model: this tool uses five forces which helps in determining the
profitability of the business and shape the performances of the firm competitive strategy. It is a
framework which classifies and analysis the important forces that affects the intensity of
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competition in the international levels and its profitability levels in the business. These fives
forces are:
Thread of new entrants: this forces helps in determine whether it is easy or not to enter in
the particular industry and global market. If the industry is profitable there are few barriers to
enter which increase the rivalry in market place. The chance of recent entrants is low for the
reason that agencies have to make investments extensive economic assets to establish their
presence within the retail marketplace. A high level of market saturation is any other factor that
forestalls organizations from coming into this market section. The threat of new entrants is high
when:
 Low amount of capital is needed.
 Existing organisation can do little to hit back.
 There is less government regulation.
Bargaining power of suppliers: here strong bargaining power permits the seller of
goods to sell the product at high price and low quality to its customer. The bargaining power
of suppliers is as an alternative low in view that Tesco substances meals and non-meals
objects from extra than 1,000 providers all around the globe. Thus, Tesco can effortlessly
negotiate product costs, whilst choosing handiest those components that offer products of the
very best pleasant.
Bargaining power of customer: under this condition buyer demand low prices for the
goods and services with good quality of product when power is strong in market. The
bargaining electricity of customers is likewise noticeably excessive as the switching expenses
inside the retail industry are low. Hence, customers can without difficulty switch to every
other retailer if they are now not glad with Tesco’s product variety, customer support, or
pricing coverage. Nonetheless, Tesco serves more than eighty million customers on a weekly
foundation. This reality barely reduces customers’ bargaining energy.
Threats of substitutes: here the buyers find substitute product for the goods and services
from another completive company. The danger of substitution inside the retail enterprise is
medium. On the one hand, the fundamental substitutes of massive retail chains are small
convenience shops and organic stores that don't pose any severe hazard to Tesco’s monetary
sustainability. In addition, because of the economies of scale effect, Tesco can provide the
identical items at an inexpensive rate, making them extra attractive to clients. On the opposite
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hand, customers should purchase non-food product from different famous retailers inclusive
of Zara, H&M, or Gap.
Rivalry- The UK retail marketplace may be very aggressive on account that there are
various enterprise that operate on this phase. The main opponents compete over merchandise,
charges, and promotions, making the extent in their similarity quite excessive.
Tesco faces the extreme competition of his direct competition, inclusive of Asda,
Sainsbury’s, Waitrose and Morrison, who compete between yes at the price, products and
promotions of intermittent shape. Therefore, it's miles important to emphasise that Asda is one of
the main competition in this phase with an boom of quota of market of 16,6 % to 16,eight %
throughout the financial year 2010 / 09, whereas Sainsbury’s has validated an growth of 16,1 %
from 15,8 % and Morrisons to 11,6 % of 11,3 % across the equal duration (PESTEL and five
forces analysis of Tesco. 2021). The gradual increase of the marketplace means essentially that
those quotas of whenever essential marketplace of the opposition there was intensified the
competition of the marketplace, that's threatening the placement of leadership on the market of
Tesco. • In the rural zones, wherein the most nearby grocery store can be a positive distance, a
few primary purchasers are attracted with the aid of the retailers like Somerfield and Co-op.
Shops of tough bargain as Aldi and Lidl have taken ownership of the marketplace in instances of
recession. During 2008 there registered a growth of the promoting of greater than 25% . Global
competitiveness index also helps in analysing the international business environment by
evaluating the international standards and norms and evaluating the political and economic
stability of the respective country government and trade policy also affects the international
business to higher extends in the market (Buckley,, Doh, . and Benischke, 2017).
P2: Assess the impact of globalisation and international trade on national economies.
Globalization is refers to a process which is based on the international strategies aims to
expand the business operational on the international levels and was spontaneous by the
facilitation of the global communication due to use of advance technology , better socio-
economic factors, environmental developments. The globalization helps in achieving the
organisation in the most effective manners as good and services are easily transferable among the
different countries from time to time. The international trade refers to the process where
exchange of goods and services are carried out between the different countries to expand their
business at global levels. Here products are exchange from one country to another country as it
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helps in expanding the business at the international levels. With the references of the Tesco
company, this company servers different countries and tries to expand and grow their business
at international medium
The goal of globalization and international trades helps in the organisation to get the
superior competitive position in the different countries with low operating cost to gain larger
number of consumers which helps in increasing the national economic of various countries as it
provide a way to enhance the gross domestic product (GDP), Industrialization in different nation,
improving the Human development index (HDI). The international trade allows the countries to
expand their markets for good which lead to greater competition in the nation with competitive
prices which brings cheaper product and services home to the customer. .the globalisation and
international trades helps in allowing countries to be wealthy at the national economic as it use
labour, capital and technology in the most effective and productivity manners. There is free
trade and protectionism trade among the countries as free trade helps in trading freely at the
global scale with the effective demand and supply in the nation. Protectionism holds some
regulation of international trades which helps in proper working to the markets at national and
international levels and it can be in the form of tariffs, subsidies and quotas. (Faruquie, 2015)
M1: An exploration of the organisation structure of the business operating in global and
international markets.
Every international business organisation has its own organisation structure which helps in
effective operational activities. Some of them are discussed here,
Initial division structures: this type of structures is common in subsidiaries firms which
provide consultants and financial firms. Export firms involve the technologically product and
manufacturing unit. And on-site manufactures uses this structures to cut down the cost.
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International division structure: this is build to handle all international operations by the
division control and it is adopted by the firms which are still in the development stages of
international business operations.
Global product division: this divide includes the domestic divisions that are allowed to
take global responsibility for the product groups.
Advantages:
 Helps in managing the goods, technology, and customer diversity.
 Marketing, production, finance gets a coordinated approach on global basis.
Disadvantages:
 Duplication of facilities’ within the division
 Division manger neglects the long term goals
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Global area division: this structure is used for operations that are controlled on the
geographic areas rather than the product vice.
Advantages
 International and domestic operations remain at same levels.
 Reduce the cost per unit and prices competitively
Disadvantages:
 Difficult to align product in different geographically areas.
 New research and development efforts are ignored.
Global functional division: this structure is organised for the global operations based
on the function and then the product orientation.
Mixed matrix: it includes the cross-cutting structure and combines the international
product and areas and functions. (Georgics and Popescul, 2015.)
D1: An evaluation of the risks involved in operating in the international environment.
The major risk involved in international business environment is the foreign exchange
and political risks. Here, the foreign exchange risk refers to the risk of fluctuation in the currency
value which is related to the appreciation of the domestic currency relative to the foreign
currency. And political risk includes changes in the policies which can negatively affect the
business of the organisation such as trade barriers. This risk affects the international business of
the organisation at various places across the global market and affects the profits margin in the
international organisation performing various activities and expanding their operational
existences. Here foreign risk and political risk is assisted in expanding the business at the
international levels and holds the organisation to grow their business and operational task at the
international levels.
TASK 2:
P3: analyses the micro-macro environment of international business organisation.
Macro environment are the external factors which affects the operational activities’ of the
organisation and which also have impact on the performances at the international levels. These
factors can affects on the operational management which have directly or indirectly impact on
the profitability of the organisation. the Tesco organisation which operates in global levels gets
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affected by the Marco-environment factors which are exit in their work environment so PEST
analyse is done to understand the such factors:
Political factors: The Tesco Company operates in the 12 different countries and includes
the Asia and Europe which make the organisation to expose to various political factors and gets
affected in performing its operation. These political factors include tax rates, different legal laws
and legislation and unemployment rates and political instability of the countries in which it
operates. For example, the importing duty on the product can affect the Tesco Company as it
imports goods from outside the UK market like china and etc. (Georgics and Popescul, 2015.)
Economic factors: it includes interest rates, inflation rates and loan and financial rates
which can affect the activities of the organisation. Labour cost is important economic factors
which affect the supermarket as in 2018, the minimum wage rated is increased by 4.4% for
employees old then 25 years which shifts the cost for Tesco in pounds. The economic factors
includes the rates which can affects the performances of the organisation at the international
levels so that all the task can be performed in the most effected manners and objective of the
organisation can be achieved within the set time period.
Social factors: here, the customer background cultures and belief system and assumption
affect the business of the organisation at global levels. As market keeps on changing in the
international market which changes the taste and preferences of the customer , so Tesco has to
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change or modified its goods and services to match and align with customer demand good. These
factors affects the operational activities’ of the organisation as customer taste and preferences
keeps on changing from time to time so that all the task are to be assigned according to the needs
and wants of the customer from time to time
Technology factors: As advances technology is taking the place of obsolete techniques,
the Tesco organisation needs to adapt to advances technology which will bring the new
opportunities for the growth of the company at the international market. Due to change in
technology from time to time it is important for the organisation to adopt the advance technology
so that work can be completed in the most effective manners and in the most productivity ways.
The organisation is able to expand and grow their business at the international levels by making
the use of the technology in the most effective manners. So it is important for the organisation to
use the technology in the advances level so that task can be completed in the most profitable
manners and achieve their international objectives in the ways that the organisation wants to
achieve.
Ecological factors- Since 2015, Tesco has decreased its absolute carbon emissions by
26%, making it extra environmentally sustainable. In 2017, the business enterprise switched to
one hundred% renewable energy inside the UK. Tesco is making plans to ‘extrapolate’ this
exercise to all its stores all around the globe with the aid of 2030. Nevertheless, tightening
environmental guidelines and guidelines ought to have a terrible impact on Tesco’s aggressive
function inside the UK. Tesco has delivered the information of the hint of carbon in the milk
merchandise, you swallow and juice of orange, and his goal is to extend it to the elements of
bread and it'd now not feed in 2010. Tesco has presented his plan of inexperienced life to give
advices to the purchasers on the environmental questions, included the manner of decreasing the
waste of food and his hint of carbon within the education of the meal. The consumers to re-use
the luggage, the recycling of cellular phones and the canisters of aluminium and to prefer the
deliveries without bag are rewarded throughout inexperienced factors of Tesco card client
Legal factors- Although Tesco runs around 3,400 stores within the UK, it's been
progressively growing it’s on line grocery capability. This has been performed thru the gathering
and evaluation of facts regarding clients’ purchase behaviour, preferences, and wants. However,
mounting issue approximately private statistics usage has resulted inside the implementation of
the General Data Protection Regulation. This law notably limits Tesco’s ability to accumulate,
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store, and system its clients’ private information. In 2011, the usual charge of cost-delivered tax
(VAT) accelerated from 17.5% to 20%. Given that many of Tesco’s merchandise include this
tax, it has to boom the charge for its items to cover the value of VAT (Tesco Supermarket:
PESTLE, SWOT, Porter’s Five Forces and Value Chain. 2021). It has been anticipated that
maybe VAT ought to upward thrust to twenty% for the reason that Government has to finance a
huge price range deficit. This will affect the non-food sectors of Tesco, including clothing.
Drawing upon the Low Pay Commission Report, the 2008 and 2009 mixed up-scores have ended
in a boom within the minimal wage of 15.5%. This will result in a boom of running costs of
supermarkets.
Micro –environment factors are the internal reason which affects the business of the
organisation at the international market place. SWOT analysis is used to examine the internal
factors which affect the operational outcomes of the Tesco Company.
Strength of Tesco:
 Tesco has won the various numerous awards for its retail excellent services and
shopping experiences of the customer.
 It knows as largest and profitable retailer supermarket in the international market.
 The organisation has lot of cash reserves and range of property in global market.
 Tesco’s strategy aims to awareness on product affordability which guarantees that
purchaser receives the product to match their price range without compromising on the
quality. During 2009 the sales from online non-meals retail corporation Tesco Direct
have multiplied via over 50%.
 Tesco has a confirmed consumer retention strategy with the assist of its loyalty scheme
known as ‘Tesco Clubcard’. Drawing upon DunnHumby, the employer uses
information gathered from this loyalty scheme in its powerful CRM systems named
Crucible and Zodiac, and this information is then used for powerful direct advertising
and marketing and numerous different promotional strategies.
Weakness: (Hamilton, and Webster, 2018.)
 Tesco subsidiaries are not working proper in the international market such as Tesco
financial profits are adversely affected by the credit crisis.
 The competitive pressure at the global market has damage the price of the Tesco stores.
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 Due to the less disposable income of the customer they are not able to purchase more
goods and services (Ruël, and Wolters,, 2016).
 The key operations of the agency are focused in the UK retail sector, wherein it recorded
extra than seventy five% of its sales at some stage in the financial year 2009. This lack of
geographic diversification may be seen as a key weak spot for the firm as it is subjected
to systemic risks of the United Kingdom marketplace.
Opportunities:
 The organisation have a way to alliances the strategies with the another brands to offers
more goods
 There can be opportunity for the joint ventures in underperforming countries to improve
the outcomes.
 There is opportunity to expand in online shopping websites.
 The popularity of Tesco.Com is growing rapidly, accounting for over 1 million clients in
2010, which has furnished an possibility to the agency to draw new clients and reduce the
overall cost resulting in more earnings.
 It has been predicted that there can be a upward push from £125 billion in 2009 to £a
hundred forty five billion in 2014 within the meals retail market segment . This is
specifically due to the reality that even for the duration of instances of recession, food
retail is the toughest phase considering that having sufficient to consume is the concern.
Threats:
 Market shares gets affected by the economic recession and credit crunches
 Competition from the international market will keeps on increasing in long run.
 Labour cost in terms of increased wages by the government polices.
 The decline in earnings and the upward thrust in unemployment have affected the
discretionary buying behaviour of clients which has adversely impacted the
corporation’s income, in particular the non-food items.
 There has been fierce competition within the UK grocery market. Tesco although has
been leading this sector for 15 years, but is now faced with severe competition from its
competitors which can be gaining in marketplace percentage (Tesco Supermarket:
PESTLE, SWOT, Porter’s Five Forces and Value Chain. 2021). These consist of the rest
of the ‘big 4’ i.E., Asda, Sainsbury’s and Morrisons respectively.
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