Business Organisations and Environments: Tesco in the Austrian Market

This report provides a detailed analysis of Tesco's potential business expansion into Austria. It begins with background information on Tesco, including its organizational scope, legal structure, and financial performance. The report examines the Austrian business environment, utilizing tools such as PESTLE analysis and Porter's Five Forces to assess political, economic, social, technological, environmental, and legal factors, as well as competitive dynamics. It explores the bargaining power of buyers and suppliers, the threats of new entrants and substitutes, and the intensity of competitive rivalry within the Austrian retail market. The report concludes with recommendations for Tesco's strategic approach to entering and succeeding in the Austrian market, considering the various challenges and opportunities identified through the analysis. The report emphasizes the importance of understanding the local market conditions, consumer preferences, and competitive landscape to formulate an effective business strategy for Tesco's international venture.

Business Organisations
and Environments in a
Global Context

Table of Contents
INTRODUCTION...........................................................................................................................1
Background information ............................................................................................................1
Organisational scope, specialisation & size................................................................................1
Legal form or ownership structure .............................................................................................2
Financial performance & existing international operations........................................................2
Business environment.................................................................................................................3
Porter five forces model..............................................................................................................4
Analysation of the business scene ..............................................................................................6
RECOMMENDATION..................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES ...............................................................................................................................9

INTRODUCTION
Business organisation can be simply defined as an individual or collection of persons that
work together in order to acquire specific mutual organisational targets. The main intention of
doing this is to earn high amount of profits in return (Sheng, Zhou, and Li, 2011).
Entrepreneurs try to establish their commerces in some another nations so as to make their strong
presence and gain powerful customer base. The present report is designed in this context
whereby a famous firm named Tesco is going to set its business in a completely new country
known as Austria. It is a British company which is dealing in retail sector at international level. It
has been found that they are falling under third largest retailer across world on the ground of
profitability. Along with this, it also secured ninth position in terms of revenues. The main
reason of starting business activities in Austria is nothing but the golden opportunity of FDI
(Foreign direct investment). In order to carry out this action, it is important to examine the
situation of macro environmental factors of the similar place. This project is highlighting such
kinds of prospects in detail.
Background information
Tesco is a public limited enterprise whose headquarter is situated in Welwyn Garden
City, Hertfordshire, England, United Kingdom. They are having a large number of stores or
groceries in various nations of Europe & Asia. In addition to this, they are treated as a great
leader in the field of grocery marketplace especially in Hungary, Thailand and Ireland since they
comprise of nearly 28.5 % market sharing at these places. Tesco was set up by sir Jack Cohen in
the year of 1919 in the form of integration of market stalls. Afterwards, his commercial actions
had attained a continuous enlargement by 1939 as more than hundred outlets has opened across
all over nation.
Organisational scope, specialisation & size
This has been observed that currently in 2017, they are including above 6,553 retail
stores. In addition to this, Tesco are offering employment to numerous of people. They has
engaged approx. 476,000 plus employees in similar time frame. Hence, it can be stated that
scope of referred company is too good as they are serving with varieties of goods and services to
not only those people who are living in United Kingdom but to all other civilians who exists in
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another section of globe. Some of the key merchandises designed and delivered by them in are
discussed below :
 In its supermarket, they are giving wider varieties of domestic appliances such as kitchen
items, home appliances, crockery items and food items in an attractive way by organising
the similar commodities into aisles. Foodstuffs includes dairy commodities, meats, fresh
produces,
 In addition to this, different other services catered by them are cafes, banking, insurance
policies or fiscal services, petrol stations, mobile phones, photo processing, video rentals,
apothecary's or medical shops, and many more to their expected clients (Ball, Lizieri and
MacGregor, 2012).
Legal form or ownership structure
Tesco comprised of sole possession since it is being run as well as controlled by single
entity. In context to legal structure following data is supposed to be suitable :
 One of the main or key members which are playing certain role are John Allan who is
Non-Executive Chairman and Dave Lewis , Group Chief Executive Officer. All other
employers along with workers performing in Tesco are obligated to report to them as
every important decisions are taken by them only.
 It includes some internal and internal stakeholders such as customers, workers, banks,
investors, government, other communities or intermediaries affiliated with business, etc.
Financial performance & existing international operations
This has been identified after doing deep research that Tesco current fiscal presentation is
very impressive. They are having handsome turnover in the year of 2017 which is observed to be
£(54) million. In addition to this, Operative financial gain is determined as £1,280 million in
similar time frame. This is treated as a fruitful result of its global business as they are running or
owning more than 6,553 stores in all over world (Closs, Speier and Meacham, 2011). They are
mainly working in UAE, Japan, Korea, Poland, Dubai & many more territories. Hence, it can be
said that Tesco is having global presence and could also move to Austria as it is considered as
one of the best place for doing foreign direct investment. For doing the similar, they have to take
survey of identical country so as to find out current traditions, culture, preferences, living style,
taste and some other eminent aspects as this will help them in taking right judgement regarding
investment.
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Business environment
Business environment is nothing but a surrounding wherein each and every company
used to operate their commerce. It comprises of various macro and micro environmental factors.
Macro factors involve external components such as governmental policies, economical
situations, society and technological changes (Parast and Adams, 2012) . Apart from that, micro
constituents comprise of suppliers, corporation itself, entire customer base, intermediaries
associated with existing market location and many more. It has been recognised that all these
things used to give a lot of impact on the performance of corporation. As Tesco is going to
establish or extend its business from UK to Austria, they have to determine influences of above
describes factors prior to design any scheme regarding running organisation there since
complications might be occur in upcoming days. For understanding this, a special tool titled as
Pestle analysis can be used as it will assist in knowing about the existing condition of such
factors present at Austria.
Political factor : Tesco should understand the nature of government of Austria as they
have accountability to conduct their commercial enterprise in accordance with the higher
authorities of Austria. This nation is considered as federal republic and a midland territory which
is having around 8.47 million citizenry in Central Europe. It is the best place for starting new
commerce as governmental situation is observed as constant or stable in nature from a long time
period. Besides this, another important information regarding this is its ranking. According to the
World competitive Yearbook 2010, Austria has secured sixth position amongst 58 industrialized
nations. Therefore, it can be said that Tesco may easily start and conduct commercialised
activities herein.
Economical factor : This aspect is also important which is referring to economic
circumstances of Austria. This country is having good and developed economy. This is reason of
higher standard of life of citizens currently surviving here by . Thus, there is possibility of
building strong user base as Tesco may achieve success in attracting large number of customers
by delivering products and services in effective as well as effect manner.
Social factor : As the economic condition of Tesco is outstanding, people are focussing on
purchasing domestic products in bulk but are requesting for better quality at affordable prices.
Regarding this, referred organisation which is Tesco should manufacture products and services
as per the needs and demands of civilians living over there so as to feel them satisfy or content.
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Hence, society of Austria would play a lead role in earning higher amount of revenues, hence,
impacting optimistically on entire working of Tesco.
Technological factor : Austria comprised of developed technological prospects along
with creative man power. So, mentioned corporation could take advantage of this and can design
innovative merchandises and services in minimum time period. Additionally, less investment or
funding may be consumed when modern, updated , unique tools and techniques might be used
for manufacturing products.
Environmental factor : This has been found from an investigation that climatic
condition of this location is dynamic in nature. Sudden changes might be occurred in Austria on
regular basis. Therefore, Tesco has to take care of this and should adopt proper, safe and secure
strategy in order to cope with such environmental impacts. This can be negative since raw
materials or stocks could be destroyed due to occurrence of sudden disaster like earthquake,
drought, heavy rainfall, etc. (Akroush and et. al., 2011). But besides such adverse implications,
there is also some positive impact. For instance, the condition of electricity is better in Austria.
In addition to this, Austria has also received 2nd rank regarding showing concern of security of
energy supplies. Hence, company can effectively take use of various forms of energy for the
purpose of producing goods and services. But it is to be noted that consumption must be
optimum or sustainable in nature so that government of similar nation does not interrupt by
realising it unfair.
Legal factor : This component would impose adverse implications on the performance of
venture since governing bodies have formed strict rules and regulations in context to labour laws.
Without workforce, it is not possible even to start a single work. But, for achieving success in
Austria, Tesco is suggested to work according to the norms of that place. On the other hand,
another thing which should be considered by this organisation is existing tax level because such
rate is found to be good as they are offering standard taxation rates of approx. 25%. It is
recognised as a golden opportunity for Tesco since maximum money which is earned by selling
goods may be saved and would not get wasted in paying such taxations only.
Porter five forces model
The world is becoming completely modern because of fast rate of globalization. In this
context, rise of competition is happening, so before taking entry in Austria, Tesco should get
familiar about current degree of rivalries in order to establish a strong positioning in that market
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place. These aspects can be better understand by applying concept of porter five forces
framework which is described as follows :
Bargaining power of buyers : Since lots of other companies are already present in
Austria which are delivering similar merchandises or services as offered by Tesco, because of
this people living over there are having so many choices (Mendenhall and et. al., 2012). They
can move towards any venture as per their wish. Hence, it can be said that bargaining or
negotiating ability is quite high. Thus, company have to develop cheap products so as to draw
attention of more & more users towards them.
Threats of new entry : This is observed to be low in context to sector of foodstuffs or
retail because establishment of new organisation in this area would take vast sum of money
along with contemporary technologies. In practical terms, is not possible since no newer entrant
would afford such a high investment.
Competitive rivalries : In - spite of new entry, other enterprises such as Sainsbury's,
Asda, Aldi, etc. could be treated as potential rivals of Tesco since these firms are having good
brand image and are delivering identical merchandises to customers. Therefore, the level of
competition is higher in nature for mentioned organisation. For handing this, company should try
to design innovational products so that citizens would get easily attracted towards those services
which is being prepared by them.
Bargaining power of suppliers : In retail industry, specially for Austria, it has been
determined that there is quite lower negotiating behaviour of providers or suppliers as no one
want to broke its relation with high larger supermarket retailers. Hence, Tesco can enjoy less
pressure from the side of their possible suppliers who used to provide them raw constituents
interlinked with food stuffs.
Threats of substitute : Sainsbury's , Morrison’s, ASDA, etc. are some of the main
companies which could be treated as threats of substitutes for the Tesco when they will take
entry in Austria. These ventures are already producing as well as giving their trade good to
expected consumers at cheap rates. Therefore, if referred enterprise want to cope with this
situation, then have to attempt for the creation of less budgetary commodities. If those
corporations will provide similar merchandises or services at identical geographical regions,then
risks of subsidiaries may seems to be extremely high for Tesco.
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Analysation of the business scene
(Source : Strategic Management of TESCO supermarket, 2018)
According to above based graph, it can be easily determined that there are so many
shareholders of Tesco who have been belonging from food retailer industries in Europe. In the
year of 1999, the ratio was around 3.7. After that, it got increased in next year by 4.1 %.
Consecutively, this ratio keeps on enhancing afterwards in upcoming time periods that is on
2001, 2002 and so on. Hence, it could be stated that Tesco is presenting outstanding work and
this is treated as another key of their success.
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Illustration 1: Share of European food retailers' sales, 1993 - 2003

Illustration 2: Market sharing of Tesco Plc
(Source :- Market sharing of Tesco Plc, 2014)
As per the above information, it can be analysed that big tycoons have major impacts as
they captured market in more appropriate way. It is shown in the following figure as number of
companies acquired market share in the year of 2014. in this included M&S, Waitrose, ASDA,
Sainsbury's and Tesco plc etc. therefore, Tesco has become a leader of the marketplace with the
helps of sustaining of 29% share and M&S was lowest occupied company with 5.10% market
share. Subsequently, it has lifted fleetly by Sainsbury's with 16 per cent, Waitrose by 6.40
percent, Asda by 17.40 % and Morrison’s by 10.90 percent (Cavusgil and et. al., 2014). Hence,
it can be summarised that Tesco is leading whole marketplace by introducing best products and
services to their possible consumers. This credit is also goes for the entire man power who are
working and giving their best in context to attain mutual goals and ambitions.
RECOMMENDATION
After going through this report, Tesco is recommended few tricks so that they could run
their business effectively in Austria without facing much more complications :
 They ought to be tie up regional firms which are already present at similar nation.
Through this, Tesco could easily know about ways of carrying out trades and commerces
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in effectual style. After some time, they could break up this contract when they feel
themselves more strong.
 Workers of Tesco should follow each and every norms of Austrian government in order
to conduct their business operations in ethically correct modes.
 Tesco can design innovative merchandises in order to beat their competitors, for this they
could take assistance of contemporary applications.
CONCLUSION
From the above based report, it can be summarised that Austria is a good & suitable
place for starting new commercial chores as there are various advantages of doing the same. The
accessibility of electricity is impressive as herein approx. 24 hours electrical energy is being
supplied. Apart from this, taxation rates is found to be quite better , that is nearly 25 %. Porter
five forces has been explained in this assignment that would assist mentioned venture in knowing
about the circumstances associated with outer micro and macro factors such as suppliers,
customers, rivalries, new entrants, etc. Therefore, Tesco have to consider as well as examine
such kind of benefits and utilise the identical in expanding their business in Austria.
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REFERENCES
Books and Journals
Cavusgil, S. T. & et. al., (2014). International business. Pearson Australia.
Parast, M. M., & Adams, S. G. (2012). Corporate social responsibility, benchmarking, and
organizational performance in the petroleum industry: A quality management
perspective. International Journal of Production Economics. 139(2). 447-458.
Mendenhall, M. E. & et. al., (2012). Defining the “global” in global leadership. Journal of World
Business. 47(4). 493-503.
Marimon, F. & et. al., (2012). The worldwide diffusion of the global reporting initiative: what is
the point?. Journal of Cleaner Production. 33. 132-144.
Lasserre, P. (2017). Global strategic management. Palgrave.
Akroush, M. N. & et. al., (2011). Customer relationship management implementation: an
investigation of a scale's generalizability and its relationship with business performance
in a developing country context. International Journal of Commerce and Management.
21(2). 158-190.
Closs, D. J., Speier, C., & Meacham, N. (2011). Sustainability to support end-to-end value
chains: the role of supply chain management. Journal of the Academy of Marketing
Science. 39(1). 101-116.
Ball, M., Lizieri, C., & MacGregor, B. (2012). The economics of commercial property markets.
Routledge.
Sheng, S., Zhou, K. Z., & Li, J. J. (2011). The effects of business and political ties on firm
performance: Evidence from China. Journal of Marketing. 75(1). 1-15.
Online
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