Tesco's Business Environment Analysis: Structure, Factors, and Impact

This report provides a comprehensive analysis of Tesco, a multinational retail company. It begins with an introduction to Tesco, outlining its mission, vision, and flat organizational structure. The report then explores different types of organizations (private, public, and social) and their purposes, followed by a comparison of micro, small, and medium enterprises (SMEs). The analysis delves into Tesco's size and scope, examining its operations and objectives. It further investigates the interrelation between various organizational functions like marketing, HR, finance, and production. The report also assesses the positive and negative impacts of the macro environment (political and economic factors) on Tesco's business operations. An analysis of internal and external factors is conducted, leading to the application of a TOWS matrix to understand the relationship between strengths, weaknesses, opportunities, and threats. The report concludes with a summary of findings and references.

Buisness and business
environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
P1 different types of organisation and its purpose......................................................................1
P2 explain in the size and the scope of the different types of organization...............................2
P3 explain about the relationship in different organizational function with different objectives
and structure. ..............................................................................................................................4
P4 Explain the positive and negative impact of the macro environment on the business
operation......................................................................................................................................5
P5 to explain the internal and external factors analysis in the terms of specific organisation...8
P6 Relationship between strength weakness and external factors of business as per TOWS
matrix........................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Tesco is a British multinational company and merchandize retailer. Headquarters of
Tesco is established in Welwyn garden city, England and UK. it has covered large area in global
marketing. Through global marketing it operates in many countries like china, Poland , Malaysia,
Thailand and Poland etc. the main aim of Tesco is to increase profit and provides goods or
services in reasonable price to consumers and mission to take competitive advantage in
supermarkets through prices. Vision of Tesco to expand their subsidiaries through their sales and
profit. Tesco follows flat structure. Flat organizational structure leads no levels of management
and staff employees, this type of hierarchy promoting their employees involvement in decision-
making process. It assists to improve the coordination and communication between employees.
It promotes employees for level of responsibilities in the organization. Through this structure
Tesco increase productivity of company and employees.
P1 different types of organisation and its purpose
Private, public, social are several types of organization that works in different direction and
for different purposes:
 Private companies: This is the organization that has government intervention and board
of director takes all the necessary decision by considering views of shareholders of
business unit. These companies can easily list its shares into stock exchange and sell
shares in the market. This is the major income source for public companies. These
companies work for best interest of shareholders and their purpose is to satisfy
stakeholder and meet their requirements successfully. Ownership and control always
remain in the hand of government. It is essential for such firms to publish their annual
reports annually. BBC is the example of public company in UK.
 Public companies: This is another type of organization that works privately and there is
no control of government, all the necessary decision are taken by owner as considering
the legal guidance. These types of firms are unable to sell their shares in market, and they
are limited by liability that means owner will have to repay all the liability if company
fails to get profit and meet the stakeholder needs. Purpose of private business is to raise
capital, expand business and gain competitive advantage. John Lewis is the firm that
works as private organization in United Kingdom.
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 Social companies: this is another type of organization that works to serve the people in
the country and improve their well-being. These companies have no specific legal
structure as all the volunteers come together and work together to serve the nation. Trust
is the social firms that gets funds from trustees. There are no special legal boundaries.
Red cross the working as social company, its agenda is to improve well-being of people
in the country. It provides blood and other health facilities to citizens.
Difference between micro, small medium enterprises (SMEs)
Micro business: These are the businesses with only 0 to 9 employees and there are approximately
5 million micro businesses in UK these types of businesses accounts 33 percent of employment
as well as 19% of turnover.
Small enterprises: These are the enterprises with 10 to 49 employees working in the company,
there are more than 5,000 small enterprises in UK with turnover of 515 billion pounds.
Medium enterprise: These are the enterprises with employees between 50 and 249 and there are
more than 30 medium enterprises in UK with a turnover of 477 billions pounds.
So, SMEs are the enterprises with employees ranging between 0 and 250, there are
approximately 4887 SMEs in UK with a turnover of 1,647 billion pounds.
P2 explain in the size and the scope of the different types of organization
particulars British broadcasting
corporation.
Tesco Welcome trust
size It is the public service
organization having the
recognition of world oldest
broadcasting service
organization. The company
is working with more than
25000 employees along
with 35000 employees who
are working under the part-
time, flexible and the fixed
contract staff members.
The company is one of
the British multi-national
companies under the
groceries and general
merchandize. The
company have the
diversified area of the
such as the books
retailing, clothing,
electronic along with the
inclusion of financial
services and internet
It is one of the
research society which
is having the legacies
from the
pharmaceutical
magnate to have the
provenance of fund to
improve the health of
human and animals.
The company has been
renowned as the
worked 4th wealthiest
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The company have the
broadcasting in worldwide
with 28 languages which is
comprehensive to TV, radio
and the online services.
services. The company is
having up to 450000
employees in different
subsidiaries. The company
is operating in more the
13 counties having all
about the 4000 store al
over the world.
charitable foundation.
scope The company is lying mush
more on the scale of
broadcasting as it plays an
important role in the
economy both as the
employee and goods
exporter. The company also
acts a standard better in
enhancing the term of audio
visual sector in enhancing
the terms of quality
diversity and innovation.
The company has been the
extension to market
having the offering of
product and service as to
have the maintenance f
world largest retailer with
wide market in Europe
and Asia.
The scope of the firm
is all about having the
proper research
analysis such as the
meta research as
working
collaboratively with the
scientific community to
have the development
and support in open
source computational
software while having
perpetration ans the
structuring
phenotypical data.
Objectives The objective of the
company is to have the
maintenance of the mass
apparel along with pursuing
the accessibility of new
platforms along with pace
in new consumption
The company is
accelerating the aim of
making the shopping
experience cheaper for
average household
facility. The company is
having the objectives of
The company is
working with the
objectives in have the
improvement and
introduction of new
strategy with main
aims of having
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behaviours. The company
also moves in objectives to
have reflection of
differentiations, regions and
their community.
introducing more of
healthy products along
with the wide range of the
supply by creating the
value of for customer and
earning the lifetime value.
creation, strengthening
research capability by
using the efficiency of
knowledge. The
company is trying to
have the innovative
projects in the creative
industries.
Product and
services
The company is termed as
the commercial arm having
the providence other
broadcasting services
which have the inclusion of
new, national and
international speeches. They
use about the many of
digital services that is
software platform,
podcasting along with
internet, satellite and
platforms.
The company has been
diversifies in the different
areas of the books
retailing, clothing,
electronic along with the
inclusion of financial
services and internet
services. The company
has been identifies as the
global super market.
The company is having
the service in
biomedical science,
technology
transferability along
with public
engagement and the
medical humanities.
The company also have
the supportive research
into the ethical
dilemmas for the
development and the
delivery of health care.
Legal
structure
The company is the
statutory corporation,
independent with the direct
government interventions.
The company is also having
the oldest legal independent
radio channels.
The legal structure of
Tesco is the corporate
governance as the people
in this sector have the
dealing with shareholders
is making the assurance of
achieving the strategies to
be achieved by the
The company is the
independent, global
charitable structure
foundation which has
been regulated by the
charity commission
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shareholders.
P3 explain about the relationship in different organizational function with different objectives
and structure.
Interrelation marketing and HR department:
Human resource management(HRM) plays vital role in marketing department. Demand of
marketer. HR department organizes recruitment process of employees and conducts interview
and selection process of candidates. HR department provides training of employees across
organization. Thus, HRM department ensures marketers to provide appropriate skills and staffing
level in Tesco. For example R&D department where new employees recruitment, selection and
training process are accomplished by HRM department, so employees become eligible to giving
new product ideas to marketer. Thus HRM creates an wishful and capable sales team for
marketing
Interrelation between finance and marketing department:
finance department also an essential element for marketing. Here marketing department centring
on selling opportunities and enhance market share, sales in comparison to competitors,
advertising and publicity. of Tesco. Marketer always wishes to spend more if marketer is getting
profitable opportunity while finance department focuses on financial aspects like cash flow,
cover costs, profit, feasibility of projects, sales growth and financial performance end of the year.
Finance department allocate budget for marketing department. They ensure marketing
department to allot budget for promotion and distribution. In allot budget marketer have to
manage promotion an distribution of product. Thus, Finance department allot budget for whole
department so-that overspend cost comes in control. Thus both department in Tesco work
together and helps company to achieving goals.
Interrelation between production and marketing department:
Production department plays a important role in marketing. Both department needs to work
closely so that product development and sales target both outcomes with profit. marketer main
goals to takes competitive advantage and increase sale value and generate profitable
opportunities in market. While production department main goal to develop product in good
quality so that consumers meet health and safety recruitment. R&D department main purpose to
satisfy current and future customers through production of product according to their needs.
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Marketing department aware production department about demand of product where they gives
deadline to production department to stretch the capabilities of production department in Tesco.
Marketer generates volume of orders through marketing and tries to delivery product ASAP to
customer. Thus marketer and production department leads profitability and creates positive
image in global market.
P4 Explain the positive and negative impact of the macro environment on the business operation.
Macro environment factors are defined as the uncontrollable or external business variables which
affects decision making in business operations to a great extent. These factors have great impact
upon business strategies and performance of organisation. These factors includes cultural
preferences and taste, government regulations as well as competitive environment for the
organisation.
Political:
The political environment has great control over the business activities. These factors
involves government agencies, laws, pressure groups and regulations. Thus while executing any
business decision it is important for the organisation to taken this factor into consideration. For
instance if Tesco plans to enter into a new foreign market then it must be aware about political
environment of the target country. The knowledge will help organisation to take better decisions
regarding product safety, pricing, legal regulations related to firms and environment laws
(Lyulyov and Palienko, 2018). The failure to gain this knowledge can serve as one of the prime
reason for failure of organisation. The ideologies and political beliefs of the ruling parties can
interfere the business operations and thus prior entering into any market organisation must have
complete knowledge regarding it so that failure risks can be minimised. On the other hand the
well understanding and incorporation of political factors brings stability and increased
profitability in business.
Economic:
There is close relationship between business performance and economy because all the
business inputs or resources used in production and distribution depends upon economy. The
stability in economy also benefits organisation as there will be easy availability of raw materials
and supply networks. In addition to this in improved economy customers also have higher
purchasing power which can increase the success possibility of business (Alomari and Azzam,
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2017). Contrary to this it becomes challenging for organisation to operate in unstable
environment because in such situations customers will try to minimise their expenditure on
products. Economic factors also affect wages and pricing issues which are critical. For instance
in economic crisis it can be difficult for Tesco to raise its prices because in such situation
irrespective of excellent product quality customers will tend to avoid expensive purchasing.
Social:
The social aspects and cultural values affect functioning as well as probability of success
of organisation. These attributes affects the organisational culture and approaches to perform
operational activities. For example the time shift, work flexibility, tradition vary from one culture
to another (Akhtar, 2017). The organisation is required to consider these elements into their
practices so that strong cultural influences does not affect the productivity and goal achievement
process. Contrary to this if organisation will integrate cultural aspects in their functions such as
marketing or human resource then its employees will work with improved productivity and more
satisfactory and quality services will be provided to the consumers.
Technology:
With the advanced technology factors business organisations are able to enhance their
scope, service accessibility and quality. For example Tesco uses digital technology to interact
with its customers and to provide them quick services. However these factors also have certain
negative impact upon functions. This can be illustrated by the examples such as use of digital
technology and monitoring systems within business (Garcia and Hinayon, 2018). These
technologies are beneficial for increasing productivity but they adds extra burden in terms of
implementation and maintenance cost. The failure to do so can results in privacy concerns and
cyber threats which is significant concerns for most of the technology based organisations. If
Tesco does not provide attention to these issues then network threats or privacy concerns can
affect their customers loyalty and competitive advantage.
Environmental:
Ecological or environmental factors also influences business decisions. These are
associated with the natural resources and environmental changes. Natural resources provides raw
material for the business thus if Tesco does not find suitability in terms of raw material and other
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natural sources then it may affect its decision related to business continuity. Similarly with
globalisation and increasing development trends of sustainable practices. Sustainability is not
important from cost reduction and efficiency perspective but is also important from the brand
perspective. The issue has been becoming one of the influential factor in the strategic
management. For example if Tesco operates in an environment with shortage of natural
resources or region suffering from natural disasters then it will definitely increase the production
cost for company.
Legal:
Legal factors governs the ways in which organisation is expected to perform and execute
its functional activities. The laws, legislations and government regulations are mandatory for the
company to achieve customer trust and supportive environment (Kirithiga, Thiyagarajan and
Naresh, 2019). For instance if Tesco does not follow employment legislation then it may face
legal conflicts resulting in financial penalties as well as damage to its brand value. The legal
considerations are also beneficial to ensure that organisation provides its services in an ethical
manner so that its services does not cause harm to interest of its employees or customers
P5 to explain the internal and external factors analysis in the terms of specific organstion.
Tesco Porter five forces
Threats of new entrants
The new entrants in the field of retail market will always brings opportunity to new
innovation in the market . If there would be new entrants in field of retail as a competitor of the
TESCO the company will get an opportunity to make innovations to its products and its
strategies and will enhance the quality of product and customer service. New entrants will surely
force TESCO to take initiative actions to lower down its costs and providing their customers
with valuable services.
Bargaining power of suppliers
As mostly all firms are bye its raw material from the different suppliers in the market.
Where supplier in the dominant position that can reduce the margin of an Tesco that can earn in
the market. Costumer service sector of an powerful suppliers that can use the negotiating power
that to extract the greater rates from an company in the retail field. Where the overall impact that
greater the supplier an bargaining power that can lower profitability of an retail. Such threats can
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be overcome by the company(Reuer, 2019). Through building an effective chain with an
multiple suppliers. And also by using the different material it experiment with an product design
as if the price of raw material raise in one material firm may use the other material that reduce
the bargaining power of the suppliers. The drawback of Increasing bargaining power of supplier
will will surely allow supplier to dominate us and they will increase their margins. They will try
to extract more profit from TESCO. And the benefit out of theses can be derived that TESCO
will have opportunity to shift from one buyer to another and can enjoy higher profit margins.
Bargaining power of buyers
As buyers are always demanding they always try to make pressure on the retailers to cut
down the prices and entertain them with offers and discounts. Theb positive impact of increased
bargaining power of the buyer is that Tesco can work on providing discount and offers to these
dominating customer base and can build a big customer base as an advantage.On the other hand
if Tesco is not able to fulfil the customers demand the customer will shift to another alternative
and hence can be harmful for the brand image of TESCO.(Phadermrod, Crowder and Wills,
2019).
Threats substitute of services and products
When new products provides and fulfils the same needs of the customer in an unique way
in such case the company profitability suffers. The threats substitute an service that greater if
offer an value proposition that differently unique from current offering of Tesco. Tesco by
becoming an service oriented instead of product oriented and also try to understand the value
needs of the buyer instead desire of the customer purchasing. The positive benefit of substitute
goods and services to the TESCO is that they have an opportunity to innovate or upgrade their
products and van be different again from others.on the other hand negative impact of substitute
on TESCO is that the loyal customers can also be shifted to another option.
Rivalry of the existing Competitors
As competitors among an existing players of an company that can drive down the price &
reduce the overall industrial profitability. Such competition take an overall long period
profitability of company. It overcome such Rivalry among competitors by making an scale that
compare better than the competitors and mixing with competitors to raise market size instead of
competing of small market(Abdel-Basset, Mohamed and Smarandache, 2018). Competition
bring advantages, so existence of rivalry in the market will give a sense of competition to the
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TESCO and it will motivate company to fight with the competitor and gives a chance to improve
its operations more better for a long term growth in the market. On the other hand it may impact
negatively as customer fluctuation towards TESCO.
VALUE CHAIN ANALYSIS
It is a analytical framework which is helping in proper identifying the major business activities
which used to create vale and the level of competitive advantage into the business. There are
basically primary activities and the supporting activities which turn to have value chain analysis.
Primary activities have the consistency of having the Inbound logistics, operations, Outbound
logistics, Marketing and sales and Services. Then in the supporting activities there are firm
infrastructure, human resources, technology development and procurement.
Inbound Logistics:-The inbound logistics of the TESCO is complex. It includes many of the
product categories to number of its stores. Economies of scale is the reason of brand image and
success of the TESCO. Company regularly invests in its logistics so as to exploit economies of
scale.
Operations:- It can be divided as Retail , Manufacturing and Banking.
Outbound logistics:- Cost effective and flexibility are the reason behind the value addition of the
company. The supermarket offers several Home delivery option to the customers for the online
purchase made from TESCO direct.
Marketing and Sales:- Its relys upon the great range of the products and competitive prices. The
marketing message of the brand is that Every little Help.
Service:- Due to cost leadershi competition TESCO is not able to provide vest services to its
customers.
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