Tesco Business Environment Analysis: Functions, Factors, and Impacts

This report provides a comprehensive analysis of Tesco's business environment, focusing on its organizational functions, macro-environmental factors, and a SWOT analysis. It explores the interrelationship between different organizational functions such as sales and marketing, finance, human resources, administration, production, and research and development, and how these functions contribute to the company's objectives. The report also examines the positive and negative impacts of macro-environmental factors, including political, economic, social, legal, technological, and environmental factors, on Tesco's operations. Furthermore, it presents an internal and external analysis of Tesco, utilizing a SWOT framework to identify its strengths, weaknesses, opportunities, and threats. The analysis considers the company's presence in the European market, market share, promotional activities, product range, and store locations. Overall, the report provides a detailed assessment of Tesco's business environment and its strategic positioning within the retail sector.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT...........................................................................................................................1
TASK 2............................................................................................................................................1
P3 Relationship between different organisation functions..........................................................1
P4 Macro environment and its negative and positive impact on business .................................4
P5 Internal and external analysis of specific organisations.......................................................6
P6 Interrelations of external macro factors with the strengths and weakness.............................7
Conclusion.......................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment is a place in which an enterprise execute its various operations or it
is a mix of all internal or external factors under which firm operates its commercial activities.
Various factors or elements sexist in the business environment largely affect the operation of an
organisation in both positive or negative way. It is and responsibility or important for every
business to identify all these factors and its effect on various activities of business. All this helps
in making better strategies or planning future activities effectively (Arasti, and et.al,. 2014).
Analysis of activities of competitors is also come under the study of business environment. It
helps business firm in decide its activities better than its rivals and at the same time assist in
making necessary changes. TESCO one of the multinational grocery retailer is taken under this
report for study. At present firm is operating in more than 12 countries across Europe and Asia.
Present report contain relevant information related with the purpose of various enterprises
including public, private and voluntary. Size and scope of different type of enterprises is also
detailed under this report (Boons, and Lüdeke-Freund, 2013). How different function of an
enterprise is linked with objectives of firm is also mentioned under this. Along with this impact
of macro factors on business operations and interrelationship with strengths and weakness of
firm is also detailed under this.
TASK 1
Covered in PPT.
TASK 2
P3 Relationship between different organisation functions
Tesco is a multinational company and doing their business in retail sector. Along with
this, they are providing their products as well as services across the world. They follow
hierarchical framework in their business. As per this structure, duties and obligations are
distributed amongst staff members of organisation (Cantwell, Dunning and Lundan 2010). High
level of authority more responsibilities as compare to lower level of people.
Some of essential targets of Tesco are mentioned as beneath:
 They need of expand their business, as it will assist them in their growth and
advancement.
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 It is must for employer of company to cater best quality items to their clients at a
affordable costs.
 If manager of firm wants to cater high returns to their stakeholders, then it is must for
them to enhance their revenues and along with this reputation at marketplace.
 Fundamental purpose of association is to reduce waste, thus they can protect
surroundings of UK in an effective manner (Carroll and Shabana, 2010).
Different sorts of organisational functions:
Aim of each and every sort of company is to cater items and services to individuals, thus
they can satisfy their demands appropriately. For above stated purpose, there are many division
in firm and every one has their own aim.
There are some type of it, which are mentioned as beneath:
 Sales and marketing
 Finance
 Human resource
 Administration
 Production
 Research and development
Sales and marketing: Manager has to conduct research, thus they can easily accomplish needs
and wants of their clients. They can create some strategies, such as promotional sales, pricing
and so on. Along with this, it is must for employer to improve their products, thus they can easily
improve their sales and productivity (Cavalcante, Kesting, and Ulhøi, 2011). They need proper
funds, so that they can lead an effective marketing of their merchandise as well as
administrations.
Finance: It is must for leader to keep up records in an appropriate way. If firm wants to raise
funds then they can take assistance of shares and loans. Generally, this unit is much related with
others as it assists to make budget for Tesco. Along with this, it is essential to maintain records
of expenses and incomes. Primary, responsibility of this division is to issue budget for every
department.
Human resource: It is must for manager of firm to mange human assets. They can give training
to them, as it will assist to improve their performance. Along with this, employer has to cater
them best working environment, therefore, they can accomplish their work within provided time
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span. Additionally, they have to provide them motivation and for this they can give them
rewards, commission and so on.
Administration: Essential purpose of this unit is to cater support to work of association. Along
with this, they have to manage each and every department in an effective manner. They do their
work as a link between senior management and employees. Additionally, they have to organise
meetings and give data which will assist in research (Chen Chiang and Storey, 2012).
Production: It is must for manager to provide necessary resources to this unit, thus they can
complete their work within provided time frame. They can utilize some methodologies, such as
job, flow, batch and so forth. Employer of Tesco can give training to their staff members, hence
they can reduce or decrease unnecessary cost. As a result, they can fulfil their work within
provided budget.
Research and development: It is done by every sort of company, so that they can easily know
demands of their buyers. Along with this, with assistance of this department they can improve
their exiting stocks and services. Behind growth and development of firm, this unit plays a
prominent role. If adequate fund is available to them, then they can do their work more better.
Illustration 1: Organisational chart
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P4 Macro environment and its negative and positive impact on business
Business environment is to complex and competitive which required a careful analysis in order
to meet its short and long term goals. There are two types of environment external and internal
which having large influenced on current and future business performance. Internal factors can
be involving employees. organization resour5ces, customer, supplier, government and the
community. These all elements can be controllable to the management, On the other hand,
external factors having negative and positive impact on business. These factors can be:
Political factors: It is essential for a business organization is to analyse government and political
situation which influenced the long term business decisions. It involves the government stability
and different policies. in the context of UK where government are stable which provide long
term consistency on the business operation (Christopher and Holweg, 2011). in the recent time
due to Brexit, it will create a serious issue on the future growth and development on business. on
the other hand, due to EU, it provides access for the Tesco PLC in the other countries without
any legal permission and they enjoyed its such business in an effective manner.
Economic factor: This is another significant factor which having a large impact on the business.
It involves GDP growth rate, interest rate, inflation rate, employment situation and other aspects
of economy. Each element having a positive and negative impact on business which must be
considered by the organization. for example, in the context of UK where the GDP rate is approx.
3.5 percent which is quite good as compare to other European countries. on the other hand, the
employment condition in the economy also not worst which provide an opportunity for the Tesco
is to increase their sales and profitability which is a common goal for every business entity.
Social factor: This is another significant factor which related with the demand of goods and
services. There are various elements such as population size, income level of consumer, culture,
taste and performance. These all factors can be increase and decrease the demand of goods and
services. In the case of UK, where people are belonging to multicultural society and having a
positive and negative impact on demand of goods. For example, the per capita income of the
country is approx. $35000 which is quite large as compare to other countries. It will help to
increase the sales and revenue of the cited firm (Haidar, 2012).
Legal factor: There are various laws and legislation having negative and positive impact on
business performance. It involves minimum labour act, safety and security act and other aspects
of legislation. These are:
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Minimum wage act 1998: This is one of the most significant laws where a business corporation
is responsible to pay the minimum pay to its staff. Employees are the valuable asset for a
business enterprise which must be considered by the cited firm. If such rate can be increase
which reduced the profit and increase cost of operation not good for the company.
Safety and security act: This is another act which related with the safety and security of the
company must be considered by the cited firm (Harrison, 2011). This is the responsibility of a
business owne3r is to provide a safe environment which helps to meet the sustainable objectives
in an effective manner. They also required that to provide training and development to its staff
over a period of time which reduced accidents rate and increase productivity and performance.
Technological factor: Innovation and technology plays a significant role in the success in every
business organization. It can provide the competitive advantage to the company in the market
over other firm. Tesco required that to use technology in their operation and meet its short and
long tern targets. For example, there are various social media tools such as Facebook, Instagram,
You Tube, Twitter which can be used by the company in order to promote their products and
services in a cost effective manner. On the other hand, they can also use information technology
where all store can be interlinked with each and share data and information. The advantage of
such communication system enhanced decision making approach.
Environmental factor: Today, the role of sustainable development is too significant which
helps to meet its short and long term objectives (Kian Chong, Shafaghi, and Leing, 2011). Apart
from that, customer also more aware towards the climate. Therefore, it is the responsibility of the
cited firm is to use those tools and techniques which having an adverse impact on environment.
For example, they also use eco-friendly packaging for their operation which increase customer
satisfaction level and attain its target in an effective manner.
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P5 Internal and external analysis of specific organisations
There are two types of business environment internal and external which having large impact on
its current and future performance. Internal analyses is too essential for a company must be
evaluated in an effective. These are customers, employees, suppliers, organisational resources,
government and community. There are various tools and techniques which can be used by Tesco
in order to examine the internal and external opportunities and threats.
SWOT analyses of Tesco
Strength The firm is having good presence in the European market such as UK,
Germany, France and other countries.
The market share of the company is quite good as compare to other
countries which provide contemplative advantage in the UK market.
They spending billions of dollar in the promotional activities which can
helps to meet its short and long tern targets in an effective manner.
The firm is having wide range of product which can includes electronic
items, furniture, financial services, fashionable clothing and so on.
They having large number of stores which increase the market depth and
located at the strategic location (Klapper and Parker, 2011).
Weaknesses The firm is limited presence in the other marker.
The competition level in the UK market is too competitive specially in the
retail sector which having adverse impact on market share and
profitability.
Opportunities There are various emerging market such as India and China which provide
a good opportunities for the growth and development in the near future.
The firm needs to diversify their business in to other areas which helps to
maintain its market position in an effective manner.
They also requir3ed to rebranding its product range and increase its
spending on promotional activities which helps to meet its short and long
term targets in an effective manner.
The top management also required to focused on e-business which helps
to meet their future needs in an effective manner.
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The enterprise also required to increase the use of social media tools such
as Facebook, Instagram, You Tube which helps to increase the awareness
of product and services.
Threats Increase economic crises at the global level which adverse impact their
future performance.
The labour and material cost are increase which having negative impact
on their cost of operation.
The online retail market is also growing which is not good for the
company.
On the other hand, there are various factors which related with the external environment such as
political, social, technological and legal factors. These all elements must be evaluated in an
manner which helps to minimise the potential risk on its business and achieve their long and
short term targets in an effective manner (Lee Olson and Trimi,2012).
P6 Interrelations of external macro factors with the strengths and weakness
Strengths and weakness of firms largely affect the overall success of an enterprise. While
in one hand strengths helps business firms in better achieve its end results on the other hand
weakness negative affect the success of an organisation. For better planning the future activities
it is very essential for every business firm to have knowledges about about its various strengths
and weakness (Arasti and et.al,. 2014). TESCO also have various strengths which make its
different form its rivals. All this affect the final quality of firm's product. Different strengths and
weakness of a firm get affected by various external factors or by factors exist outside the
environment. Interrelationship of various external factors with the strengths and weakness of
firm can be understood by the following:
Strengths: Strengths are that specific characteristics of a firm which make it different or
unique form its competitors. It is essential for managers of TESCO to have a detail knowledge
about the unique strengths of the firms so that goals and end result of the firm can be achieved in
an effective way. Knowledge of strengths assist manager in planning future activities of
business. Political environment and decision or regulations make by government affect the
activities of business in various ways (Boons and Lüdeke-Freund, 2013). For example TESCO at
present operate or execute its business activities on international level any change in the
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government of other country will negatively affects its operations. If government of country
make new rules and regulations related with the import or export that it will become difficult for
TESCO to operate smoothly in different countries.
Changes in the technology also comes under the macro factor of environment which also
affect the activities of business. Technology revolution or if another new technology introduce in
other country than it become TESCO for make products according to that technology. Social
factors includes the lifestyle or purchasing patterns of large number of customers any change in
the income level affect the buying behaviour of individual also affect the business activities
(Cantwell, Dunning, and Lundan, 2010). Economic factor one of the external element also affect
the activities of a business. For example fluctuations in the currency make it difficult for firms
for execute their operations in that country which affect overall sale of the firm.
For increasing the positive impact of various strengths and to capture a large market share
than rivals it is very necessary for the managers of TESCO do an analysis of various external
factors and their impact of the activities of business so that firm can execute its activities
effectively in an changing business environment.
Weakness: Weakness are lack of ability of a firm which negatively affect its operations
or business activities. Sometimes macro factors or change in external factors also affect the
business operations. For example modifications done by the government in rules and regulations
affect the commercial operation of an enterprise. For well executing all operations it is very
necessary or essential for the managers of TESCO for give consideration to various factors so
that firm can better decide its future activities.
Not every change in the external factors negatively affect the operation of a business
sometimes variation in different factors positively affect the activities increase the strengths of
firm and decrease the effect of firm's weakness (Carroll and Shabana, 2010). For example if
government of one country liberal the export import policies than it will become easy for
TESCO do operate in different countries and increase the amount of its sale.
Conclusion
As per the above mentioned report it has been concluded that business environment plays a
prominent role in the success for every business unit. The report discussed about the different
form of business and its size and scope. It involves private, public and non profit business
organization. The report also explained about the various functional organizational functions and
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its relation to organisational objectives. There are two types of environment macro and micro
also concluded in the current report. So that Tesco can meet its long term goals and o0bejctives
in an effective manner.
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