Business Environment Factors Influencing TESCO Plc Operations

This essay provides a comprehensive analysis of TESCO's business environment, examining various internal and external factors influencing its operations. The introduction establishes the importance of business environment analysis and introduces TESCO as the case study. The main body delves in...Read More

Essay

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Business environment is explained as the collection of different internal and external
factor which directly influences on the operating situation of a company. It is necessary because
it helps to prepare plans and policies which directly helps organisation to accomplish there goals
within specific time period. The chosen organisation for this respective assignment is TESCO
which is British retail sector industry. It is one of the multinational company which is performing
their business activity in different part of the world. Topics which are going to be covered within
this respective file is SWOT, PESTLE, stakeholder analysis and Porters five forces.
MAIN BODY
SWOT analysis is explained as the business model which helps to collect all of the
necessary information about company internally. SWOT stands for Strength, Weakness,
Opportunity and Threats which plays crucial role for the betterment of an organisation. In context
of TESCO Plc, SWOT analysis will help them to uplift their standard by focusing on the internal
factors of the company through which goals can be easily accomplished. When it comes to the
strength of a TESCO, they are the leading market share which is almost 27% which shows that
they are capable of dealing the situations in best possible manner. While discussing about
weaknesses of a company, they are having lots of issues related to financial errors because the
works on the basis of high debts and credit card liability (SWOT analysis of TESCO, 2019).
When it comes to opportunity, TESCO have the opportunity to expand their online shopping in
which they can start so give home delivery to their customers which can easily attract new
customers towards the company. In the end TESCO have the threats from the retail sector giant
known as WalMart as they have already acquired ASDA and it can create issues for company if
they cannot come up with some of the different plans and ideas.
Evaluating internal factor is very helpful for business organisation like TESCO because
it will give them the idea that what are their weak area where improvement is required. Also,
company will get the chance to focus more on opportunities so that it can give them the
additional benefits for accomplishing the goals (Moroni Arruda and Araujo, 2015). Evaluation
will be beneficial for TESCO as they will know that what are the main area which are creating
problem for them in achieving their targets. In short, SWOT will give advantage to company that
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how they needed to perform and what are main issues which are creating problem within their
success.
PESTLE Analysis is explained as the tool which helps business organisation to identify
those external factors which directly affect the working policies of a company. It is necessary for
any of the company because it gives idea that how company is needed to prepare there plans and
policies so that targets can be accomplished easily. PESTLE Stands for Political, Economic,
Social, Technological, Legal and Environment factor. In context of TESCO, PESTLE analysis
will give them the idea that how they can compete within the market in best possible manner. In
Political Factor, business organisation like TESCO is required to prepare their plans and policies
according to the tax rates, act of legislation (Cepel et. al., 2018). Due to the frequent changes in
rate of interest and laws and regulations company has to bear losses as they need to adopt
changes according to the requirements. While talking about Economic factor, it determines
about the economic performance which have the direct impact on future an organisation. In
context of TESCO, changes in inflation rates will directly affect on the price of products which
is being sold by them. Some of the factors which will affect the most within economic factor is
inflation rates, foreign exchange rates , economic growth patterns and many more. In case of
Social factor, it says that needs and wants of customers changes according to the trends, life
styles, education etc. Talking about TESCO, they are needed to understand that people are
becoming more concern towards their health and because of that they are required to understand
that products should be beneficial for them. Secondly, they are needed to focus more on beliefs
and attitudes of people to enhance overall sale of a company.
Discussing about Technological Factor, TESCO is required to understand that world is
evolving in a great speed where people demands changes according to the new technologies and
this case company have the option to introduce online shopping facilities where they delivers the
product of customers to there home. Legal factors are one of the main source for conducting
business because it tells that what are the decision which can be taken by company for the future
growth (Saleem, 2015). This factor has the negative impact for company because they are needed
to change their plans and policies which consumes unnecessary cost for organisation. At last,
Environment factor which creates huge pressure for the company like TESCO because they are
needed to understand that they will not do any of those activity which harm the environment in
any of the situation. For the purpose of environment factor, TESCO have planned to reduce
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carbon footprints by 50 % in upcoming years (PESTLE Analysis for Tesco discusses its Business
Environment, 2014).
Analysing about the external factor TESCO, PESTLE helps them to find that what
should be their decision for competing within the market. In case of Political factor, UK market is
stable which makes condition favourable for them to conduct business activities. Talking about
Economic factor, the foreign exchange rates are changing day by day due to which company is
struggling to maintain their profit ratio so in this case they are needed to understand that they
should focus on purchasing raw material and products from their own country so that profit can
be maintained (Jaakkola and et. al., 2016). As every day technologies are changing and more and
more people are investing there time in social media and if company want to sustain within the
market then they are needed to bring on new technologies for future growth. They had the option
to invest their time in developing the online market as it will enhance their business in short
period of time. In short, PESTLE is beneficial for organisation like TESCO as they will get the
idea that what they should do and what should not be done by them.
Stakeholder Analysis is defined as the process of identifying the people who are
connected within the company so that they can be grouped according to the level of their
participation within the company. It is help for business organisation like TESCO Plc because
they can easily determine that which shareholder is important for them for the purpose of
completing any of the task within specific time period. In this stakeholder are categorised into
four different group. Starts with High power, highly interested people in which only those
stakeholders are involved who is capable of giving there best efforts for the purpose of attaining
the success for company (Stakeholder Analysis, 2018). In case of TESCO, their manger and
directors are the one who will manage each of the work closely which will help them to
accomplish the targets. In high power, less interested people, stakeholder holds higher capacity
of power within company but they do not keep their interest for longer period time. This role can
be easily performed by the customers of the company in which they just want to keep themselves
satisfied although they have high range of power within the organisation. While talking about
third one Low power, highly interested people where suppliers of the company will take part.
Suppliers of the company are those person who less power within the company but they are
extreme interested in the company because their sale is directly dependent upon them. In Low
power, less interested people, the staff of TESCO will take part because they are the one who
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have least power in the company due to which they don't show there efforts in work as much as
required for achieving the targets.
Ansoff Matrix can be explained as the marketing tool which gives framework to senior
managers and marketers for the process of future growth of a company. It is helpful for company
because it gives idea that how it can enhance the business at greater level. It is classified into four
different section named as Market Penetration, Market Development, Product Development and
Diversification. In case of Market Penetration, business organisation try to achieve there target
with the help of existing product (Erasmus and et, al., 2016). They sell there product in the
market where they are already dealing. Major focus in this for any of the company is that they try
to adopt different style of market for future growth. Market Development explains that business
want to expand their business activity in different area where they have never been before with
the help of existing product. In case of Product Development, business organisation develops
the idea that they can introduce new product within the existing market for the purpose of
enhancing the sale of a company. In case of Diversification, company try to take the higher
amount of risk by developing new product and introducing it into the new market. There are
some of the cases where company is able of achieve their targets but in some of the cases even
they have to suffer as well. After looking at all of the situation, it can be understood it will be
better for organisation like TESCO to take the help of Market Development in which company
will enter into new market with existing product for future growth.
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CONCLUSION
From the above file it can be concluded that business environment is crucial for any of the
business organisation because it gives idea that which types of condition are favourable for
company in attaining the goals. SWOT and PESTLE analysis helps organisation to find that what
are those external and internal factors which can create issues in future period of time for
company. With the helps of stakeholder analysis, company will have the option that they can find
who can be the key member for attaining the goals of an organisation.
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REFERENCES
Books & Journals
Cepel, M. and et. al., 2018. Business environment quality index in the SME segment. Journal of
Competitiveness. 10(2). p.21.
Erasmus, B. et, al., 2016. Introduction to business management. Oxford University Press
Southern Africa.
Jaakkola, M. and et. al., 2016. Is more capability always beneficial for firm performance? Market
orientation, core business process capabilities and business environment. Journal of
Marketing Management. 32(13-14). pp.1359-1385.
Moroni, I., Arruda, A. and Araujo, K., 2015. The design and technological innovation: how to
understand the growth of startups companies in competitive business
environment. Procedia Manufacturing. 3. pp.2199-2204.
Saleem, S., 2015. BUSINESS ENVIRONMENT, 3/e. Pearson Education India.
Online
SWOT analysis of TESCO. 2019. [Online]. Available Through: <https://bstrategyhub.com/tesco-
swot-analysis-2019swot-analysis-of-tesco/>
PESTLE Analysis for Tesco discusses its Business Environment. 2014. [Online]. Available
Through: <https://pestleanalysis.com/pestle-analysis-tesco/>
Stakeholder Analysis. 2018. [Online]. Available Through:
<https://www.mindtools.com/pages/article/newPPM_07.htm>
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