Tesco's Business Environment: Types, Functions, and Analysis Report

This report provides a comprehensive analysis of Tesco, a leading UK-based retailer. It begins by classifying Tesco's organizational type, purpose, and legal structure, contrasting it with other organizations like the NHS and Red Cross. The report then explores the size and scope of Tesco's operations, highlighting its vision, mission, objectives, and key performance indicators. Furthermore, it examines the interrelationships between various organizational functions, including sales, marketing, finance, and human resources, illustrating how these departments work together. The core of the report involves a PESTLE analysis to assess the macro-environmental factors impacting Tesco, such as political, economic, social, technological, legal, and environmental influences. It concludes with an internal and external analysis using SWOT, identifying Tesco's strengths, weaknesses, opportunities, and threats, and explaining the interplay between external factors and internal capabilities. The report aims to provide insights into Tesco's business strategy and its adaptation to the dynamic business environment.

Business and Business
Environment

Introduction......................................................................................................................................3
LO1..................................................................................................................................................3
P1. Explaining several types and the purposes of an organizations along with their legal
structure .......................................................................................................................................3
P2. Describing size and the scope of different range of an enterprise ........................................4
LO2..................................................................................................................................................6
P3. Describing relationship between different types of organizational functions ......................6
LO3..................................................................................................................................................6
P4. Determining negative & the positive effect of macro environmental factor on firm............6
LO4. ................................................................................................................................................8
P5. Conducting an internal or external analysis for identifying the weaknesses and strengths ..8
P6. Explaining interrelationship of external factor with that of strengths and weaknesses.........9
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

Introduction
Business environment refers to the sum of an internal and an external analysis that affects
an entity from several ways whether it is in positive or negative manner. An overall growth of
the business depends of both of these factors. The present report is based on Tesco, a leading
retailer and a supermarket chain in UK dealing in grocery products. Furthermore, the report
depicts type and purpose of different types of companies and the relationship between various
functions of organization. The study also presents an external and internal analysis by way of
Pestle and SWOT in order to assess the factors that impacts organization behavior.
LO1.
P1. Explaining several types and the purposes of an organizations along with their legal structure
TESCO
Company type- It operates as private organization in UK and also in other countries across the
world.
Purpose- The main purpose of this organization is to gain more and more profit, market share
and revenues by way of facilitating products and the services to customers in interest of their
shareholders and the owners distributed in dividend form.
Legal structure- In accordance to company law UK, private company are usually been owned
by the group of an investors or the small family owned business. In such organization
shareholders are not seems as legally liable for a business assets and debts. It is regarded as spate
legal entity which means that owners and company are distinct identity (DeConinck, Moss and
Deconinck, 2018). Such companies are not listed within the share market and must uses an
abbreviation relating to Ltd at an end of the name.
NHS
Company type- This firm functions its business as public organization within the UK around the
globe.
Purpose- The primary objective of this type of an entity is to make welfare of the people with a
motive to contribute towards society or community (Kasemsap, 2018). Along with this the firm
relies on their respective stakeholder’s contribution in terms of capital.
Legal structure- As per UK Company, it is the company that sold the proportion of their own
shares to general public by way of IPO in order to raise funds and its name ends with Plc. It is
the corporation that is operated and owned by government from the use of public funds.

Red Cross
Company type- This Corporation acts as the voluntary organization which does not make profits
and work for welfare of the people within entire UK and in other countries as well.
Purpose- The main motive of such corporation is to helps people and contributes to the
community as a whole without being paid for facilitating services. There major purpose is to
protect and safeguard the people suffering from any kind disease and is need of blood.
Legal structure- Voluntary organizations are considered as the group of the people, enterprises
that are linked together for contributing to society. It is usually operated by an individual who
does not get any payment in exchange of the services provided by them. The basic and main
feature of such firm is that it does not need any legal form and is solely dependent on their
capital contributions by stakeholders (Alsaad, Mohamad and Ismail, 2017). They can make
themselves register as the volunteers in reaching towards their objectives and goals.
P2. Describing size and the scope of different range of an enterprise
Basis TESCO NHS Red Cross
Vision To provide a better
life of the people by
offering several
products at minimal
prices so that people
could afford for
buying.
Vision is to enable
people in living
healthier and more of
independent lives by
way of higher quality
care to all the people
in community.
Building a strong
network of the
volunteers, partners
and the donors for
always helping people
at times of the need.
Mission The mission statement
of this company is
seen as providing
wide range of the
grocery and
supermarket goods at
affordable prices to
the people.
Company’s mission is
to facilitate services
and the care to
families who are in
need of it across the
globe.
It is the company that
aspires for turning the
compassion into the
action so that all the
people are prevented
from being affected
by the disaster around
the country and world.

Objectives Offering different
types of the products
under different items
of the good design
and the function with
excellent durability
and the quality at the
suitable and lower
prices so that large
people could be
attracted for buying it.
The main objective of
NHS is to help in
keeping the people
healthy and in
reducing health
inequalities (Likoko
and Kini, 2017). NHS
would respect
confidentiality of an
individual patient and
in facilitating open
access to information
about the services,
performance and the
treatment.
The foremost
objective of Red
Cross is to
safeguarding people
from suffering any
kind of disease and
availing blood in
times of emergency.
Size It is stated as the large
size private
organization that
grocery products and
is seen as largest
chain of supermarket
within UK along with
providing home
services goods.
It is largest publicly
funded organization
of United Kingdom.
Each and every
service provides
comprehensive range
of the health care
services, for people in
UK.
It is an international
humanitarian
company with approx
97 million of the
volunteers, staff and
members at a global
level that was been
founded in protecting
health and the human
life for ensuring
respect to all the
human beings and in
preventing human
sufferings.
Scope The scope of the
company is seen as
wide as it has a largest
distribution network
having presence at
433 locations with
large number of the
employees (Aithal,
2016). It has revenue
of around Euro 41.3
billion with number of
employees around
211000 in the year
2019.
Scope of this entity is
very wide with greater
number of employees
665000.
It is the type of firm
that is having a wider
scope with approx 17
million volunteers in
Switzerland and large
number of volunteers
around the world.

LO2.
P3. Describing relationship between different types of organizational functions
Functions of different organization is interrelated with one another that involves sales,
marketing, human resources, operations, research & development, management and IT
department. Selling department is counted as structure of the relationship with marketplace for
satisfying customers. It is the process that seems as advantageous for both supplier & the
consumers. Marketing enables an corporation like TESCO for presenting information with
regards to customer specification and demand for the purpose of developing new types of
products that would support in developing quality life of the customers (Yang and Gabrielsson,
2017). It has been seen that TESCO make for competitive environment in the business through
with effective pricing strategy. An organization developed a distribution system that allows the
customers a convenient way for accessing service and the product. High demand of TESCO
furniture allows company for expanding and growing its profit and operations from UK market.
It has also been noticed that communicating the messages of an entity assist in improving social
behavior in the positive way.
Finance function relates with spending or a use of an organization resources for the
different type of operation. It facilitates a valued report on the financial state & the position
relating to a plan. Company allocated funds to several parts of an organization in a line with the
budget & in measuring use of the business resources over the performance budget. For the
purpose of managing cash flows, an organization needs to ensure that adequate funds are
available for meeting the business requirements. Financial performance of each and every
department reviewed and monitored by an internal auditors (Saleem, 2017). Finance of larger
organization was been involved in an investing of the surplus funds. It has been analyzed that
company has also created treasury fund in looking after a business of an organization. Thus, an
entity gets a better returns and in reducing risk from an investment.
LO3.
P4. Determining negative & the positive effect of macro environmental factor on firm
Pestle analysis is the model that helps in scanning external environment component that
includes political, economic, social, legal, and technological and environmental factors. It is the
tool that enables in assessing socioeconomic factors that is the macroeconomic influences under
which an entity run. It is the helpful factor that enables in an entire development & the growth of
the company whereas learning with that from the previous mistakes & the future potential.
Political factor- It is the leading factor that includes the issues that are to handled on such
as taxation policies, trade restrictions, rules & the regulation etc. It acts as the major factor for
the firm to be dealt as it may affects going concern or smooth functioning of an organization.
Political stability is counted as essential for a working of an entity (Prajogo, 2016). For example-

Due to constant financial imbalance within the world, government encouraged retailers in
creating jobs for national people. As Tesco had played an essential part in respect of creating an
employment possibility, it in turn increases demand for their products and diversifies their
workforce.
Economical factor- It means the factor that relates to change in currency exchange,
disposable income etc. It mainly depends upon lending rates, inflation rate and wages rate of the
specific country and economy. There are several trends that impact worldwide market that affect
MNC’s on the major part such as world-wide economical recession that in turn affected a major
part of the global economies. Therefore, company must be aware of any of the modification in
policies like taxation or the other factors that can impact an approachability of the finance. It has
seen that, business of retail sector organization is reflected as thriving internationally but the
company is still dependent on market share in UK around 30%. For instance- Tesco adopted two
main strategies that include diversification and internationalization over the years for gaining
success. Moreover, because of the decrease in level of expendable and household income
resulted, Tesco has opted for shifting it’s emphasize towards advertising its own value brands
rather of luxurious items.
Social factor- With evolving lifestyle, trends and preferences of the customer changes as
in UK people have been moving towards volume shopping rather than single time shopping.
Thus, Tesco encourages sale of items in terms of non-food because the kind of products and the
services that are denuded by the consumers is mainly influenced by their attitudes and beliefs
that in turn is induced by the social conditioning (Pestle analysis of Tesco, 2017). As the
customers now a day’s becoming more aware about health issues because of their approach
regarding changing food consistently, Tesco seeks for adjust to such changes by way of obliging
demand for an organic goods.
Technological factor- Technical advances bought up several new opportunities for the
organization. The 2 of well-defined ones involves introduction and the development of an digital
shopping along with availing facilities relating to home delivery. The company has crested
individual service check out points for the suitability and comfort of the customers that in turn
declined labor costs. Moreover, company invested large amount in the projects that are energy
efficient in order to achieve long run objectives for reducing carbon footprint.
Legal factor- Legislation & the policies of government directly has an effect on the
firm's performance. For instance- In the year 2004, FRC suggested the code of conduct that must
be established which banned many of the present practices like ever-changing prices without the
demand payments and notice from the suppliers. In order facilitate such policies, Tesco
facilitated customer price reduction on a fuel that they buy, as per the amount spend on grocery
stores. Moreover, there are various promotional offers where the prices resulted as lower.

Environmental factor- With an increase pressure on firms for resolving environmental
issues and in adapting sustainable ways of conducting an operation that benefits directly to the
society, firm is deemed as clearly affianced in reducing carbon footprint just by 50% till 2020.
Also the company is looking for minimizing waste produce within their stores by way of
increasing the social conscience in the customers.
LO4.
P5. Conducting an internal or external analysis for identifying the weaknesses and strengths
SWOT analysis
Strengths- company is found as the largest grocery store or retail merchant and a no. one
supermarket chain in UK. It is having high level of revenue & sales in comparison to the other
chain of supermarket in a Great Britain. It contains a larger market share as among the four
biggest supermarkets, company dominates grocery retail supermarket of the Great Britain with
around 27% of market share. Recently, organization had become as most leading supermarket in
an Ireland. The company is diversified on a geographical basis and has a well known presence
with approx 6800 outlets in the 14 countries (Gorla, Chiravuri and Chinta, 2017). Apart from the
North America and Europe, it is having highest share in the Asian markets. The number of the
stores of Tesco is seen as growing as from 3751 outlets in the year 2008, now company operates
around 6956 retail grocery stores globally. Revenue of company is rising almost each year due to
an addition of the newer stores in its respective operational chain. Tesco launched several forms
of the stores as its diversified division of the stores involves Tesco Metro, Tesco Express, Tesco
superstores etc. Diversification strategy of Tesco has proven as quite successful for an enterprise.
It comprises of the clothing range, mobile businesses, home ware goods, music downloads,
telecom services around the world. Because of good commercial performance, an entity had
achieved for several awards. These involves British favorite supermarket, Grocers label food etc.
Moreover, Tesco make use of technology in a best and optimum way for enhancing a purchasing
experience of their customers. The firm introduced a barcode system for counting products on
automatic basis. An entity has advanced facility in e-commerce and mobile payment mode
through app. In addition to this, with simplified model, reduced incurring cost & effective
policies framed regarding waste realted management policies created an efficient and reliable
system of supply chain. An enterprise bears profitable relationship along with the suppliers.
Weaknesses- The corporation resulted with the unsuccessful operations in Japan and US
in the year 2012 in terms of its export operations that forced the company in closing down its
stores. The firm was been charged with the fines and penalties due to false declaration & the
misrepresentation of the profits in 2017. In the year 2018, price of share of Tesco falls higher
than 9% because of reduction in the operating profits. It proved as worst experience or
performance for a company due to Brexit Referendum. Because of high debts & credit card
facility, business profits of Tesco are affected profoundly (SWOT analysis of Tesco, 2018).

Although Tesco is counted as a cost leader within market of UK, its respective low-costing
strategy could result to very less amount of the profits. Some of its stores are not been
performing very well in the certain countries and as in 2018, firm switched up club-card scheme
without any prior notice to the customers, it had faced a large backlash with that from customer
side.
Opportunity- Recently, Tesco introduced Jacks, new type of discount stores that showed
a significant growth. Company is having opportunity for growing its business and with success
competing as the economical competitor with Lidl & Aldi. It could seek for developing strategic
partnerships with the reputed organizations that offers an excellent kind of opportunity for Tesco.
It enables Tesco in offering more and more products for attracting larger customers. There exist a
great opportunity for creating a venture in regions where stores of Tesco are underperforming.
Local companies could facilitate a profound knowledge of the market that could help in
improving a performance in such type of regions (Lim, 2017). Tesco could avail an opportunity
by upgrading or growing its business of online shopping and home delivery services. Though the
company is having its stores in many of the developing countries, however, expanding its
operations in emerging countries like South Korea, Indonesia and Turkey could seen as a gainful
opportunity for an enterprise.
Threats- Tesco faced a huge threat from Media at the time when it had launched its
Christmas ad in the year 2017. Due to Brexit, trade deals and the cost related matters posed a
huge threat for a Tesco. With rising performance and the growth, market position of the Tesco
could be threatened. With rising performance and the growth of its competitors, an overall
market share of the company is highly affected (Nilsson and Robinson, 2018). Government rules,
legal laws, credit crunches, economic upheavals and tax matters could impact an operational
performance and the efficiency of the Tesco stores in the critical regions.
P6. Explaining interrelationship of external factor with that of strengths and weaknesses
Pestle and SWOT analysis are seen as closely related techniques to the business as the
pestle is used for making external analysis and SWOT for both internal and an external analysis.
By reviewing factors through employing Pestle helps in assessing core competencies in terms of
strength and internal deficiencies against competitors with respect to weaknesses. Strengths and
the weaknesses are directly linked with the external influences in some of the cases where
organization might be impacted by that of outside factors (Cepel and et.al., 2018). An entity is
not been able in determining several factors which affects decision making of management in a
direct or an indirect manner. Therefore, such macro factors could be assessed with helps of
external factor analysis. Proper analysis of strengths and weaknesses provides a different type of
achievement to business and both inter-relates with each other and this might increase risk of an
external factor in the firm.

CONCLUSION
By summing up the above report, it has represented that current trend of the market and
several ways in determining internal and external influences is necessary for the firm to achieve
success in the market. It help the business in knowing its strengths and weaknesses so that it
could adopt and develop strategies accordingly which in turn helps in attaining goals effectively
and efficiently.

REFERENCES
Books and journals
Aithal, P. S., 2016. Study on ABCD analysis technique for business models, business strategies,
operating concepts & business systems. International Journal in Management and Social
Science. 4(1).
Alsaad, A., Mohamad, R. and Ismail, N. A., 2017. The moderating role of trust in business to
business electronic commerce (B2B EC) adoption. Computers in Human Behavior. 68. pp.157-
169.
Cepel, M., and et.al., 2018. Business environment quality index in the SME segment. Journal of
Competitiveness. 10(2). p.21.
DeConinck, J. B., Moss, H. K. and Deconinck, M. B., 2018. The relationship between servant
leadership, perceived organizational support, performance, and turnover among business to
business salespeople. Global Journal of Management and Marketing. 2(1). pp.38-53.
Gorla, N., Chiravuri, A. and Chinta, R., 2017. Business-to-business e-commerce adoption: An
empirical investigation of business factors. Information Systems Frontiers. 19(3). pp.645-667.
Kasemsap, K., 2018. Mastering business process management and business intelligence in global
business. In Global Business Expansion: Concepts, Methodologies, Tools, and Applications (pp.
76-96). IGI Global.
Likoko, E. and Kini, J., 2017. Inclusive business—a business approach to development. Current
opinion in environmental sustainability. 24. pp.84-88.
Lim, W. M., 2017. Online group buying: Some insights from the business-to-business
perspective. Industrial Marketing Management. 65. pp.182-193.
Nilsson, A. and Robinson, D.T., 2018. What is the Business of Business?. Innovation policy and
the economy. 18(1). pp.79-106.
Prajogo, D. I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International journal of production Economics. 171. pp.241-
249.
Saleem, M. A., 2017. The impact of socio-economic factors on small business
success. Geografia-Malaysian Journal of society and space. 8(1).

Yang, M. and Gabrielsson, P., 2017. Entrepreneurial marketing of international high-tech
business-to-business new ventures: A decision-making process perspective. Industrial Marketing
Management. 64. pp.147-160.
Online
Pestle analysis of Tesco. 2017. [Online]. Available through :< https://pestleanalysis.com/pestle-
analysis-tesco/>
SWOT analysis of Tesco. 2018. [Online]. Available through :< https://bstrategyhub.com/tesco-
swot-analysis-2019swot-analysis-of-tesco/>