Business Environment Analysis of Tesco: HND Business Module Report

This report provides a comprehensive analysis of Tesco's business environment, examining various aspects of its operations. The introduction defines the business environment and highlights the relevance of Tesco as a global retailer. Task 1 explores different types of organizations, including public, private, and voluntary sectors, and their respective purposes. Task 2 offers an overview of Tesco's background, legal structure, stakeholders, vision, mission, goals, and objectives. Task 3 delves into the functions of Tesco and their alignment with organizational objectives, emphasizing design, production, finance, and human resources. Task 4 conducts a PESTLE analysis to assess the impact of macro factors on Tesco, while Task 5 undertakes internal and external analyses using SWOT analysis. The report concludes with a summary of findings and references.

Business And Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
P 1 Analysing the purpose of different types of organisation...............................................1
P 2 Brief introduction about TESCO organisation , including its legal structure and
information about its stakeholders .........................................................................................3
TASK 2............................................................................................................................................6
P 3 Explaining the Function of Tesco organisation and describing the way they are linked to
organisational Objectives.......................................................................................................6
TASK 3............................................................................................................................................8
P 4 Conducting PESTLE analysis in order to identify the impact of various macro factors on
TESco organisation................................................................................................................8
TASK 4............................................................................................................................................9
P 5 Conducting Internal and external analysis for TESCO in order to analyse the strength and
weaknesses and explaining the way they have influence on decision making process.........9
P6 Strengths and weaknesses of the external macro on organisation..................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment consist of two terms business which refers to various activities
performed by human such as production, manufacturing, purchase of goods and services, selling
of products in order to generate income. Whereas environment refers to the conditions
surroundings business. Business environment also refers top as the set of various situations.
Environment consist of aggregation of both internal and external factors that have direct or
indirect influence on business activities. These internal and external can have impact on each
other and they can together influence business decisions. Business environment also refers top as
the set of various conditions such as political, environmental, technological, economic situations.
The internal environment involves 5 M's like management, material, machinery, money and
man. On the other hand external environment include political ,social, cultural factors,
technological and environmental factors.
In this TESCO is being selected as in order to analysis its business environment. Tesco
organisation is being selected in order to highlight the positiver as well as negative affect of
these factors on company organisation environment. Tesco is being chosen for this study as it is
operating its core business activities in Global environment. TEsco Plc is a British multinational
Grocery and general merchandise retailer.
The study will have focus on explaining the concept of business environment. The report
aims at describing the influence of various internal and external factors on business. The Swot
and pestle analysis techniques will be included in this project in order to make Tesco aware
about various facts.
TASK 1
P 1 Analysing the purpose of different types of organisation
Organisation consists of group of people working together to achieves common purpose.
The objective of organisation is to combine a group of people under the same roof and
encouraging them to work collectively for achieving objectives. There are many types of
organisation and each organisation has been established for serving different purpose. These
organisations are mainly divided into various categorise on the basis of their purpose such bas
private, public, and voluntary sectors organisations.
Public sector organisation- these firms are owned and controlled by government authorities.
The purpose of these organisations is to provide various basic services to public. The revenue is
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generated by these enterprises in form of taxes from public and this income generated by these
form are being utilised for development of public sectors. The main objective of these
enterprises is to provide benefits to community. The voluntary sector public sector enterprises
does not seeks for generating profits. Sometimes partnership deals takes place between private
and public sector organisation. This partnership is created to provide joint services to
community. Examples of public sector enterprises includes schools, electricity, Gas and oil
services, Fuel, healthcare services etc. Public services organisation through outsourcing process
encourages private sector to deliver services to its citizens. The public sectors purchase products
to provide various beneficial services to public such as defence, road building, transportation
services etc.
Private sectors organisations-These enterprises are owned and mange d by private individual
or group in order to generate profits. Government generally do no have any kind of interference
in such types of organisations. But sometimes these organisations do partnership with Public
sectors in order to deliver joint services to people. The main purpose of this type of organisation
includes generating revenue, profit , increase market share, growth and expansion of core
business activities. These sectors include small top large organisations running business. The
example of private sectors' organisation include-
Sole proprietors-Sole proprietor organisation also refers to unincorporated business organisation
with single owner who are liable for conducting various business activities and are responsible
for paying various taxes. In this type of enterprises the purpose of entrepreneur is to generate
profit by providing specialised services to customers. Example of this organisation includes
plumber, carpenter, doctor etc.
Partnership organisations-Refers to the business organisation which is owned , managed and
controlled by two or more partners. The main purpose of partnership organisation is to enhance
profitability and growth of business. The example of partnership organisation is John and lewis
company and some of accountancy and auditing firm that consists of more than 20 partners.
Voluntary organisations-Voluntary organisations consists of group of people who enter into a
voluntary agreement to accomplish common purpose. Voluntary organisation consists of those
people who have willingness to work for social benefit.Some examples of voluntary organisation
are trade associations, professional groups and environmental associations , teachers union etc.
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These organisations may be incorporated or unincorporated. This types of enterprises includes
all types of groups small local resident group to large legal registered associations.
Charitable organisation-This type of organisation is also known as non profit organisations.
The purpose of this type of enterprise is to provide social welfare. This type of enterprises are
generally depended on the donations. These organisations can be established , managed and
controlled public ally or privately. Some charitable firm may have focus on providing specific
services such as religious, educational, other services related to other public interest. These
activities performed by them are philanthropic in nature. The liability of paying taxes depend on
the region nor country in which these sectors are operating.(Yu, A., Lumpkin, Sorenson and
Brigham,2012)
P 2 Brief introduction about TESCO organisation , including its legal structure and information
about its stakeholders
Tesco is a British multinational grocery and general merchandise retailer which has its
headquarter in England, UK. TESco is ranked as third largest retailer in the word on the basis of
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Illustration 1: different types of business organisations
Source:Business organisation 2012

profit earned by the company. On the basis of revenues it has been listed as ninth largest retailer
in the world. The company has its outlets in 12 countries across Asia and Europe. The enterprise
is serving as leader in UK grocery market. The organisation has high growth and high market
share in UK.
Company background
Tesco was founded by Jack Cohen In 1919 as a group market stalls. The name tesco was
Propounded in 1924, after that it was purchased by Cohen from T.E Stockwell. Then these
initials was being combined by Cohen with the first two letters of his surnames. The first Tesco
Outlet was established in 1929.The Tecsco has started expanding its core business activities by
1939 and the company had established over approximately 100 stores across the country. Tesco
has adopted the diversification strategy has diversified its product line geographically in
1990.The organisation has decided to offer product such as electronic, clothing, toys, petrol,
software etc.
In 1990 the enterprise has decided to reposition its self. It has moved from high volume,
low cost retailer to one which appeal across many social groups.The company has planned to
conduct this activity by offering varieties of product range. This strategy has worked and it has
supported tesco in growing its outlets chain from 500 stores to 2500 outlets.
Size and Scope of organisation
During 1950 and 1960s TESCO grew originally by adopting acquisition strategy. This
strategy has allowed firm to establish more than 800 stores. The organisation is operating around
2318 stores and it consists of 326000 employees working with enterprise. Tesco is operating its
business in England, UK, Scotland, Ireland etc.
Products and services
Tesco is wholly owned subsidiary offering a complete range of online services, clothing,
financial services, Food products. Tesco sells approximately 40000 food products in its super
market. The organisation own labels are working at three levels these are value, finest and
normal. The enterprise own brand accounts for estimated 50 percent of sales.
Stakeholder of TESCO
Stakeholders
There are two types of stakeholders internal and external stakeholders. Internal
stakeholders In Tesco are directly associated with its business activities, The internal
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Stakeholder include employees, mangers, board of directors,etc. On the other hand external
stakeholders are those who are indirectly associated with business operations. The external
stakeholders of Tesco are investors, suppliers, customers, government etc.
Vision, Mission, goal, objectives of company
Vision- Tesco current vision describes their performance. The vision of Tesco is to develop high
valued image of company in mind of customers. Vision statement also includes creating value by
using harmony and commitment.
Mission-Mission statement of Tesco includes giving utmost value to stakeholders , developing
harmony among employees
Objectives-The objective of Tesco is to seeks for sustainable profits. The objectives of Tesco
also includes conserving energy and saving money, delivering energy , meeting consumers
expectation.
Goals- Tesco goals is to provide better services and good quality of products to its customers.
Legal structure
Tesco has flat hierarchical structure which has six levels between check out and chief
executive. Strategic business unit is being chosen by Tesco in order to increase the degree of
competitiveness within market of particular market. Flexibility is being provided by this
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Illustration 2: Tesco organisational structure
Source: May Mang Organisational organisational chart 2015

structure to TESco and given opportunity to expand its core business activities. It has also
provided an opportunity to organisation to operate successfully in global market.(Moutinho, L.
ed., 2011)
TASK 2
P 3 Explaining the Function of Tesco organisation and describing the way they are linked to
organisational Objectives
This company is the third biggest retailer in the world. This provides all the grocery and
food items in the world. The products and the services of the Tesco is very efficient and
effective. The quality of the product in the firm is managed by the production department. The
functions of the organization is affect the overall performance of the company. It considers the
problems of the customer and solve as soon as possible for customer satisfaction and improve
the performance of the firm. It influencing the managers and the leaders for produce new
products and services for the client and also gives enhanced the row materials for the firm. The
firm leaders of the each department provide the guidance for staffs to solve the problems and
take appropriate decision for the entity (Bøllingtoft, 2012).
1.) Design and production: The function of the production department is to produce good
quality for the client. To produce a product many factors affect to this department as follows:
Labour is the physical effort of the workers and can take a different type of forms including
fling, data processing and decision making in any kind of situation.
Capital is the tools and equipment for producing a good quality product. Tesco has good quality
machines and row materials for employees.
Materials are needed to the firm means entity required row materials for produce a new product
for the client for example for restaurant will need the facts to making the food that they serve to
their customer.
2.) Finance: The function of financial department is to manage the budget of the firm to
achieve the desired objective. In the Tesco there is well managed budgeting planing for
the firm. For wages, salary, machine cost, tax for the employee as well as for the firm is
well managed. The financial department of the TESCo organisation will keep electronic
records of money received and paid out by the organisation. This information will then
be used to produce various financial statements for tax purposes and to follow with legal
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requirements. Finance division will need to take into account statutory deductions such
as tax, and employee contributions such as pension or loan repayments.
3.) Human resource: This is the main function of the any type of organization. It is responsible
for recruitment, selection, training to the employees. In this firm this part is very efficient for the
workers to give advantages to the entity. For example in the UK employer will need to maintain
accurate personal record of the client based on the legalisation.(Onetti, Zucchella, Jones and
McDougall-Covin, 2012) Their function also include encouraging staff to enhance their potential
and increase their contribution in order to achieve objective for Tesco. Human resource
department are inter linked with all other departments. They facilitate coordination between
different department which helps organisation to work effectively.
4.) Sales and marketing: The function of this department in the Tesco firm is, for marketing
and sell the product the promotion is the main and efficient strategy for the marketing. This
department is responsible for mail shots, presentation of sales etc. Marketing department are
interrelated with sales department. Sales department provide sales related data to marketing
personnel which assist him in analysing the performance of the company.
5.) Research and development: The goal of this department is to improve the product quality,
enhance the product, improve process etc. This administrative division will provide enterprise an
opportunity to reduce its various cost, enhance quality of its products and services, increasing
predictability and to gain competitive advantage.(Klapper and Parker, 2011).
Functions link to the organizational objective and structure:
All the departments of the Tesco firm are responsible to achieve the desired goal of the
firm. Each department has different roles in firm to improve the performance of the firm. By
managing these functions, it will help to increase accountability, develop leaders, increase
efficiency etc. If budget, sales, marketing of the product in the industry is not well managed by
the manager and the leader then it affects the performance of the organization as well as the
objective. To improve the performance and the efficiency of the product need to apply some
marketing strategy and follow the marketing plan for the business. To get the objective must
Follow the pricing strategy like skimming, price leadership etc. that will help us to achieve the
goal. Produce the new style of product, new idea of the product for the client to get the objective
and must follow the plan of action to sell the items in the industry. (Zairi, 2012)Apply the
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marketing plan for selling the product to the client that will help to achieve the goal (Boons and
Lüdeke-Freund, , 2013).
TASK 3
P 4 Conducting PESTLE analysis in order to identify the impact of various macro factors on
TESco organisation
The main purpose is for PESTLE analysis is to know what is the actual performance and
micro environment of the organization in the industry.
Political: The main political factor includes tax, government policies, legal acts etc. these all are
the factors affect the company performance. Due to ongoing financial instability in the world,
many governments motivates retailers to create a job for domestic population. Increment in the
tax for the firm is the negative impact for the firm. Such kind of changes and modification by the
government is effect firm performance and also the sales revenue that is generated by the Tesco.
Positive impact is like update the strategies and plan of marketing depends on the updated
policies.
Economic: The enhancement in the economic condition of firm it can be taken as positive sign
because the industry of supermarket is the main industry that is operated by the Tesco. The
decrement in the growth of economic is the negative impact for the organization. So depends on
the current situation and the economical factor the company performance will measure. If the
rate of economic growth is higher was estimated and the rate of gross domestic product was
estimated 2.7% higher than the pre-crises paek.
Social: from the past record it has been clearly seen that there is increment in reate of birth
expectancy. This kind of situation leads to have change in choice and preferences of people at
various level. For example the online service by Tesco is enhancing day by day in order to cope
up with there is need to have modification approach to firm.
Technology: this term refer bringing modification product so that customer can be satisfied..
This firm develops the unit system by producing the new style of the product and enhanced
quality in the product. Firm needs to be more attentive to the technologies because updating with
the innovation and techniques this will be the good opportunities to firm. For instance new
mobile technologies help us to better the services and the productivity of the product. The
distribution services will also enhance because customer can select the product by their
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preferences. This is the positive impact for the firm to enhance the product for the client by
updating with the new techniques.(Trkman, P., 2010. ).
Environmental: The firm environment is the internal and the external both environment affect
the company performance. The main purpose of organization is to maintain the product quality
and give the efficient and effective services. Tesco is wrapped up for the intake of energy and
utilizing of green house gases. This is positive impact for the firm by apply the new and efficient
environment. If firm is not following the updated environment that is good for the firm that will
be and disadvantage for the organization.
Legal: Various kind of laws are affecting the company because this firm has wide varities of
products and work. For example as for agricultural items the UK government is re producing the
common policy of agricultural for the particular item. The firm is also engaged in financial
services or items like credit cards, loans etc. for each of the financial services there is a lot of
financial policies and rules for the items. Entity needs to be follow the lows and acts for the
growth of the company. The positive sign is followed the policies and rules that is invented by
the committee for each organization. By following the legal updated policies for the firm that
will help us to improved the performance of the organization.(Cantwell Dunning, and Lundan, S
2010.).
TASK 4
P 5 Conducting Internal and external analysis for TESCO in order to analyse the strength and
weaknesses and explaining the way they have influence on decision making process
The Large Environment relates to activities of wide ranging social as well as-cultural,
economic, governmental and judicial and unit that affect the TESCO administration and its
operational situation.(MWillard) The large environment is also called the outer situation. It
presents warning and possibility that are usually hard to grab. Types of macro factors of the
environment which affects the organisation are expained below.
Economical Factors: The economical forces have crucial impact on the prosperity of TESCO
administration. These unit impact the conditions of purchasing and selling in the marketplace.
The importing of necessary input signal of production contributes a major danger to the TESCO
organization . In the identical way, during time of arthritic economic development carried by
various factors such as rising prices, overflowing interest rates, and flooding taxes single as well
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as businesses man had difficulty. This is more than dangerous in the case of rising enterprises.
(Holcombe and Ipate, 2012).
·Governmental and Judicial Power: They are equal to the cultural situation. This is due to
laws are just passed leading ethnic al pressures and difficulty. There are places where, sacred
text controlling the large environment on different issues like pecuniary policies, proportion of
highly-developed discharge into the air, welfare at work, remuneration and cost control.
Lawmaking on financial and pecuniary policies might promote pleasing tax comfort and fiscal
assistance for TESCO business enterprise. The situation is that considering the cause of
modification in political climate, legislations change at the whims and desire of political and
government leaders.
·Technical Forces: Technical factors could be considered as the most prevalent in the business
surroundings.. It cites to the utilization of cognition base which is provided science. The message
and communication technology has done modification in business operations. The TESCO
company that utilize cognition is changing rapidly and are extremely undefended. Corporate
managers must adapt or set to these modifications, in order to endure and flourish in this
agonistic and thought-provoking business surrondings.
·Social Factors: They have to deal with the attitudes and beliefs of the TESCO organisation, at
higher level of degree. A manager in the TESCO organisation faces major threats. It requires
undertaking intentional and designed market segmentation strategy. This has resulted into to
predominant nervousness or agitation in the TESCO company. Modification in social as well as
cultural factors have great influence on TESCO organisation. And these elements have great
impact on its internal relations with employees, the circumstances of modification in attitude to
work alteration in political awareness, and cultural standards, among different employees. This is
very important factor that influence the culture and environment of the TESCO organisation.
(Carroll, and Shabana, 2010).
P6 Strengths and weaknesses of the external macro on organisation.
Macro environment is relates to the general environment which also affecting the growth
of TESCO business enterprises. It is inclusive of those outside forces which cannot not be in
control of firm but has a powerful effect on growth and productivity of business enterprise.
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