Business Environment Analysis: Tesco's Operations and Strategy

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 the interrelation between different organizational departments like marketing, human resources, finance, and production, highlighting their roles in achieving organizational objectives. It proceeds to analyze the macro-environmental factors affecting Tesco, utilizing STEEPLE analysis to assess social, technological, economic, environmental, political, legal, and ethical factors. Furthermore, the report conducts an internal analysis of Tesco, identifying its strengths and weaknesses through SWOT analysis. Finally, it explores the interrelation between macro-environmental factors and Tesco's strengths and weaknesses, concluding with a summary of the key findings and recommendations for Tesco's strategic management. The report emphasizes the importance of understanding both internal and external factors for effective business operations and strategic planning.

Business Environment

Contents
INTRODUCTION.................................................................................................................................3
TASK 1.................................................................................................................................................3
Covered in PPT.................................................................................................................................3
TASK 2.................................................................................................................................................3
P3: Interrelation between different organisational departments and their link to objectives..............3
TASK 3.................................................................................................................................................5
P4: Impact of macro-environmental factors.......................................................................................5
TASK 4.................................................................................................................................................7
P5: Internal analysis of organisation for identification of strength and weaknesses..........................7
TASK 5.................................................................................................................................................8
P6: Interrelation of macro-environmental factors with organisational strength and weaknesses.......8
CONCLUSION.....................................................................................................................................9
REFERENCES....................................................................................................................................11

INTRODUCTION
Business Environment refers to such an environment or conditions which are
uncertain in nature due to which an organisation may find difficulties in operating their
business operations in an effective and efficient manner. Such conditions consists of internal
and external factors which makes huge impact on the performance of an organisation thus
important for management to make an effective plans and policies to deal with it in an
appropriate manner. Tesco, a UK company which are engaged in offering quality and fresh
food products at reasonable prices in UK and across worldwide. There are large numbers of
organisation of different types who operates in different countries with some purposes which
are discussed under this report (Avramenko, 2012). Linkage of different departments with
organisational objectives are also explained under this report. The project also covers internal
and external environment which affects business operations either in negative or positive
manner.
TASK 1
Covered in PPT
TASK 2
P3: Interrelation between different organisational departments and their link to
objectives

Figure 1. Organisational structure
An organisation can sustain in competitive market world when they get maximum
contribution from various departments working in an organisation to achieve desired goals
and objectives. Therefore, it is essentially required to multinational organisation such as
Tesco to identify and analyse the contribution of their departments so that corrective steps
should be taken if any deviation found in their performance. It is also important to find out
their role in achieving organisational goals. Such departments includes marketing, human
resource, finance, operational etc. The management are held liable to identify their actual
strengths and weakness with a motive of improving them all (Bovee, Thrill and Raina, 2016).
Interrelation between functions of departments of Tesco:
Human resource department: Such departments have different roles and
responsibilities such as workforce planning, performance appraisal, determination of salary
etc. They are liable to enhance performance of employees by identifying their skills and
knowledge and accordingly provide them suitable training and development programs with a
motive of improving their capabilities of doing allotted task. Rewards, compensation etc. Are
such factors which need to be considered y such department in order to provide them
motivation to contribute more efforts in achieving desired goals and objectives of an
organisation.
Marketing department: This department play an important in influencing interest and
buying behaviour of customers towards company’s product though setting budgets for
adopting various marketing tools. Tesco offers good quality food products at an affordable
price in market thus it is important for company to inform about such quality, price etc. to
customers with a motive of attaining huge customer strength (Cavalcante, Kesting and Ulhoi,
2011).
Finance department: It is such a department which are liable to arrange funds for
company from different sources and allocating them to different departments on the basis of
their requirements. An organisation having sufficient amount of funds are enable to purchase

advanced and updated technology and equipments in their organisation with the purpose of
operating business functions in more profitable manner.
Production department: Such department play a crucial role in the sustainability of
an organisation. With the help of their support, the company can able to meet customer’s
needs and requirement. Tesco offering quality food products thus it is essentially required for
them to identify exact demand of products in market and accordingly inform production
departments to produce such demanded products on time in order to fulfil customer’s needs
and achieve competitive advantage (Hair, 2015).
Organisational structure
Structure of organisation is formed on the basis of requirements which are as follows:
Function based: It is formed on the basis of business functions which performs for
the betterment of an organisation. For example human resource, marketing, finance and
operations.
Geography based: Organisation structure is based on the locations in which they want
to operate. It is basically depend on the needs and demands of customers.
Product based: It is formed on the basis of diversified products provided by company.
For example Tesco offer different variety of food products such as vegetables, fruits etc.
Consumer based: Such structure is formed with the purpose of knowing the changes
required in existing products as per demanded by customers who help them in maximising
the customer’s level of satisfaction (Hamilton and Webster, 2015).
TASK 3
P4: Impact of macro-environmental factors
Business environment is complex in nature due to lots of uncertainties and such
uncertainties come due to internal and external factors. Tesco is a multinational company
which has operated in 12 countries thus they can very much affected by macro-
environmental factors such as political, economical, social, technological, legal and
environmental. The management are held liable to eliminate negative impact from such
factors through making an effective plans and strategies in order to give proper direction to
employees to work under such environment. For this, the management need to do STEEPLE
analysis in order to fids out the impact with a motive of overcoming such impact as quickly
as possible.
STEEPLE analysis:
Social factors: Such factors consist of behaviour and attitude of customers towards
products thus creates challenges for an organisation to maximise. For example,

 Due to wrong perception of people regarding low-priced products, Tesco may face
difficulties is improving their sales figure.
 Tesco may also take an advantage of producing demanded products which are more in
trend which help them in generating huge revenues.
Technological factors: It includes the technologies which are used in performing several
functions of business organisation. If the company uses outdated technology in production
process then it increases cost of products which affected their profitability as well. Thus, it is
important for management to focus on adopting advanced technology in order to produce
quality products without facing any wastage of raw materials during production process.
Through this, the company can able to provide quality products at affordable prices
(Karagiorgos, Drogalas and Giovanis, 2011).
Environmental factors: It is related with environment which may affect by the business
activities of an organisation. To protect environment, government has formulated some rules
and regulations which directs an organisation to operate without harming environment. It can
be possible only when an organisation uses an effective techniques and equipments in the
business functions.
Economic factors: It is related with economic condition of country which every
organisation need to analysed if they want to operate their business in different countries. As
Tesco offers quality food products to different countries thus it is important for them to
properly analyse the economy of country which help them in identifying the purchasing
power of customers. Therefore, every organisation focuses on expanding their business to
such country whose economy are good so that they get maximum customers for their
products and increase sales figure (Kolk, 2016).
Political factors: It is related with political stability of country. As Tesco operated in
many countries due to which they may find difficulties in selling their goods and services to
the customers due to taxation policy, import and export policy etc. Thus, the management
need to analyse such factors before deciding to provide their products in different countries.
Example:
 If the UK government increases tax rate on food products then it will be difficult for
Tesco to offer food product at an affordable and it also affects their profitability as
well.
 UK people are more conscious about maintaining their healthy lifestyle thus opening
new store in UK will help company in achieving huge profitability.
Legal factors: It is related with legal laws and legislation implemented by government for
organisations with a motive of giving direction and helps them in preventing from any illegal
activities. Thus, the management of Tesco are held liable to comply with such laws and
regulation in order to survive in competitive environment without indulging in any legal
actions (Nishitani and et. al., 2012). There is some act as well which were implemented by
government for the protection of employees such as Employees right act, health and safety

act etc. Therefore it is necessarily required for every organisation to follow such rules and
regulations in order to survive in competitive market world for longer duration.
Ethical factors: It is the factors which are related with ethical values and norms which
guide an organisation to perform business activities in more ethical way and do not indulge in
all illegal activities. Every organisation is ethically responsible to provide good quality
products to customers which help in enhancing their standard of living. It helps company to
gain trust and loyalty among customers.
TASK 4
P5: Internal analysis of organisation for identification of strength and weaknesses
It is important for every organisation to identify their actual strengths and weakness
so that they can work on improving their weaknesses and strength as well while performing
business activities. For this, the management of Tesco is required to conduct SWOT analysis
which helps them in knowing that in which field they are better than their rivals and in which
field they are weak.
SWOT Analysis
Strengths
 Tesco is third largest retailer in the world on the basis of their revenue thus attain
good financial position in market.
 Tesco has attained strong brand identity which is recognised by all the individuals
from all over the world.
 It has attained large number of stores in different countries through which they can
successfully attract large number of customers.
 The organisation adopted advanced and updated technology in their business
functions which help in enhancing efficiency level and able to provide quality food
products at affordable prices (Osterwalder and Pigneur, 2010).
Weaknesses
 There are large number of subsidiaries of TESCO which brings difficulties for them
in sustaining in market for longer duration.
 TESCO indulges in lots of controversies which decreases the image and goodwill of
company in market.
 Failure of stores in some countries restrict them to capture large market share,
Opportunities
 TESCO need to alliance with other companies order to expand their business in
different countries more successfully (Pikka, Iskanius and Page, 2011).

 Adopting effective marketing tools which help them in communicating with the
customers regarding the variety of products, quality and price they charged on their
products.
 They also need to avail their products through online which grab an attention of lot of
customers.
Threats
 Due to high competitors in market such as M&S which gives tough competition to
TESCO in sustaining in market for longer period of time.
 Economy and political instability may affect the existence of Tesco in some countries
and affects their profitability as well.
 Due to increasing in price of labour, the company’s profitability and business
operation are affected in adverse manner (Pulver, 2012).
TASK 5
P6: Interrelation of macro-environmental factors with organisational strength and
weaknesses
It is essentially required for an organisation to analyse the external factors as well
which affects their business operation wither in negative or positive manner. In order to deal
with such factors, it is important for company to know their strengths and weakness so that
they can able to know whether they are enough capable to work under such environment or
not. Therefore, the management of Tesco is responsible to conduct PEST analyses in order to
identify the impact on external factors and thereafter focusing on improving their strengths
and weaknesses.
Political: It is related with factors which may either restrict or motivate an organisation to
expand their business to different countries. It is important for the management to look out
such country where the government are stable which brings easy for an organisation to
operate business operations in more effective and efficient manner. For this, Tesco need to
make a spate legal team which help them in analysing all such factors.
 Strength: Tesco focuses on forming a legal team which tells them which country are
more suitable to expand its business after analysing taxation and rules implemented
by government of such countries. This will increases the chances of operating
business inn other countries in more successfully manner (Reinhard and Stavins,
2010).
 Weaknesses: Tesco has been operated in more than 12 countries which require
specific knowledge and understanding of different laws and regulation of such
countries. Thus, sometimes it becomes difficulty for management to focus on
understanding different laws and legislations which brings the existence of store into
danger.

Economical: Every organisation are looking to expand their business in such country
whose economy are increases as it directly make an impact on the purchasing power of
customers as well. Inflation and deflation are also such factors which affects company’s
profitability (What SWOT Analysis is in simple words, 2016)...
 Strengths: Tesco has already captured more than 24.8% in UK which is developed
country thus it will ensure in achieving growth and success for an organisation for
longer duration.
 Weaknesses: The profitability of Tesco may affect due to higher international
exchange rates in different countries (Shigang, 2010).
Social: It is related with behaviour, culture, attitude etc. of customers which may either
increase or decrease the sales figure of company. Thus, it is important for management to
identify all such factors and accordingly direct production department to produce such
products which are more in demand in market thus it helps in generating huge revenues.
 Strengths: Research and Department (R&D) team which are responsible to identify
the customer’s taste and preferences helps an organisation to produce same products
and build huge customer base. This will help in increasing profitability and
sustainability of an organisation.
 Weaknesses: There are different people having different culture in world due to
which their interests and behaviour relating to products are also different. Thus, it
becomes difficult to an organisation to maximise the interest and satisfaction level of
different society.
Technological: Such factors which are related with technology and equipment used in
performing different business functions of an organisation. The management need to focus on
adopting advanced and updated technology in order to bring efficiency in performance. For
example Implementation of an effective technology in production process help in reducing
cost of production and minimises the chances of facing lots of wastage due to which they can
provide products at an affordable prices (Business Environment, 2018)
 Strengths: Tesco is largest multinational retailer company generating huge revenues
every year. Thus, having adequate amount of funds helps them in adopting an
efficient technologies and equipments in their business functions through which they
can able to produce quality products for their customers.
 Weaknesses: Adoption of advanced technology required huge amount of funds due to
which the production cost are also rises.
CONCLUSION
It has been concluded from the above project report that any organisation that are able to deal
with the situations arises due to micro and macro environment increases the chances of
sustaining in market for longer period of time. The management play an important role in
analysing such factor through conducting PESTLE analysis. It is also important for an
organisation to know their actual strengths and weakness and for this SWOT analysis should

be done. The role of different departments in achieving desired goals and objectives of an
organisation are also required to be identified in order to provide them proper guidance and
direction whenever they are required.

REFERENCES
Books and Journals