Analyzing the UK Business Environment: A Case Study of Tesco PLC

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BUSINESS AND BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION............................................................................................................................. 2
SECTION 1...................................................................................................................................... 3
DIFFERENT TYPES OF BUSINESSES THAT EXIST IN THE UK.........................................................3
THE PURPOSES OF PUBLIC, PRIVATE AND VOLUNTARY SECTORS ORGANISATIONS IN THE UK. 4
LEGAL STRUCTURES OF DIFFERENT TYPES OF BUSINESSES THAT EXIST IN THE UK...................6
THE SIZE AND SCOPE OF A RANGE OF DIFFERENT TYPES OF ORGANISATIONS THAT EXIST IN
THE UK....................................................................................................................................... 8
SECTION 2.................................................................................................................................... 10
THE RELATIONSHIP BETWEEN DIFFERENT ORGANISATIONAL FUNCTIONS AND HOW THEY
LINK TO ORGANISATIONAL OBJECTIVES AND STRUCTURE......................................................10
SECTION 3.................................................................................................................................... 12
THE POSITIVE AND NEGATIVE IMPACTS THE MACRO ENVIRONMENT HAD UPON TESCO’S
BUSINESS OPERATIONS............................................................................................................12
SECTION 4.................................................................................................................................... 15
AN INTERNAL AND AN EXTERNAL ANALYSIS OF TESCO IN ORDER TO IDENTIFY STRENGTHS
AND WEAKNESSES................................................................................................................... 15
HOW STRENGTHS AND WEAKNESSES INTERRELATE WITH EXTERNAL MACRO FACTORS........17
CONCLUSION............................................................................................................................... 18
REFERENCES.................................................................................................................................19
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INTRODUCTION
The purpose of this study is to determine the factors and state outside of the business which
directly and indirectly impacts. The factors which business depends upon aren’t standstill and
the most important factor is the environment that plays a crucial role in influencing a business.
A suitable organization helps in coordination, making proper use of human resource and clear
communication. This report also helps in understanding how the strengths, weakness,
opportunity and threats are concerned with decision making. Analysing the organization helps
in understanding the size, scope and structure. In addition to it, the element of a different
environment has been analysed with the help of SWOT and PESTLE analysis tools (Cadle et al.,
2014).
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SECTION 1
DIFFERENT TYPES OF BUSINESSES THAT EXIST IN THE UK
The variation between the different types of an organization has powerful consequences for
the legal status of the company, specifically with regards to ownership. The three major types
of organizations are private (profit) organization, public organization and voluntary (non-profit)
organization.
Private Organization: The point of convergence of this organization is maximizing profits for
own self. Virgin Atlantic Airways Limited was formerly known as Ritter Public Limited Company
is a private organization in the UK, which provides commercial airline services and other
hospitality services (Gompers et al., 2015). Furthermore, since this organization makes a profit
for their own, the government impose massive taxes on them.
Public Organization: It is a form of organisation which is possessed and traded publically with a
minimum of 7 members. It restricts the transferability of shares but the company can invite the
public for the subscription of shares and debentures (Administrator, 2016). Tesco public limited
company is a great example for the public organization as it is owned by thousands of people. It
is the biggest retailer in Britain by global sales and domestic market share (Tesco, 2019)
Voluntary Organization: Voluntary organizations seek to supply society’s needs. It intends to
serve a community or public and is dedicated to being present for a social cause. This form of
organization is trusts, public hospitals, club etc. The source of income is through donations
mainly. Voluntary organizations are exempted from paying sales tax and property taxes but
they pay employee taxes just like any other private organization (Webb, 2019). The National
Trust for Places of Historic Interest or Natural Beauty is an independent charity organization in
the UK. An organization that works to preserve and protect historic places and spaces—for
everyone is known as National Trust.
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THE PURPOSES OF PUBLIC, PRIVATE AND VOLUNTARY SECTORS
ORGANISATIONS IN THE UK.
The business includes of those economic activities directed mostly towards earning profits and
acquiring wealth through production and sale of goods and services on a regular basis.
However, the purpose of every organization is different as they operate on different aspects
such as personal profit, public profit, charity, etc.
PUBLIC LIMITED ORGANIZATION:
The main objective of a Public Limited Organization is to be able to maximise shareholder value
by generating as much profit as possible (London, 2019). Tesco is a public limited company and
it is one of the largest retailers in the UK which sells shares to the common people. Tesco's
main motive is to generate value for customers to gain their lifelong loyalty. Its other purposes
comprise of providing goods and services to the populace at a cheap and affordable rate and
upstage challenger to remain the market leader (Clark, 2019).
PRIVATE LIMITED ORGANIZATION:
The private company is owned and controlled by individuals and companies. The basic purpose
of a privately owned company is to earn a maximum amount of profit (Borden and Yunis, 2018).
Virgin Atlantic is a private company and its chief purpose is to attain a large amount of profit
and achieve high revenues. Apart from earning the profit, it has a long term goal which aims to
provide a smooth journey and enjoyable experience from the time of booking tickets to landing
on the destination (Pantazi, 2014).
VOLUNTARY ORGANIZATION:
The basic and chief purpose of this organization is to enrich and benefit society, often without
profit as a motive. They contribute to elevating the lives of citizens and the progress of the
nation (Mohita, 2019). A National Trust is an organization who works as a voluntary
organization and is dedicated to preserving the cultural heritage. It looks after forests,
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coastline, islands, fens, beaches, natural reserves, etc.to shelter and rehabilitates. It owns over
350 heritage properties where they conserve natural beauty.
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LEGAL STRUCTURES OF DIFFERENT TYPES OF BUSINESSES THAT EXIST IN THE UK
It is observed that every organization adapts certain legal structure in order to make the work
effortless and less complex. The structure is directly linked with the organization and exhibits
the legal status of an organization or a company. Legal Organizational Structures differ from
country to country and business to business.
TESCO PLC:
Tesco is a British multinational grocery store which has shops in seven countries across Asia and
Europe. It is a public limited company which is an incorporated business, run by the Board of
Directors on the account of shareholders. In order to ensure efficient and effective work, an
organizational structure has been followed by them. The structure contains a chain of
command which works from the top of the organization to the bottom of the organization. All
the critical decisions are passed down through subsidiary levels of management (Dudovskiy,
2016). The position and obligation are divided into many parts to certify if the work is done
effortlessly. In addition to this, the layers of management have been reduced so that the
management must be done in a flexible manner.
VIRGIN ATLANTIC:
The Virgin Atlantic is one of the largest organizations in the world. The founder of the Virgin
group, Richard Branson, has helped this organization to attain huge success. The employees of
the Virgin group are highly valued and respected. The virgin group follows a hierarchical
organizational legal structure and encourage the employees to get involved in the business,
make an effort to connect with others, collaborate and behave respectfully. It is a form of
organization where people or employees are grouped based on their area of specialization
(Miles, 2015). The organization is a blend of people from different cultures thus making
innovation is their key to the positive result. Their perfect choice of organizational structure
helps the Virgin Atlantic Airways to enhance their performance.
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NATIONAL TRUST:
National Trust is an organization which is formed for a social cause rather than a profit purpose.
It is devoted to protecting the cultural heritage of a specific region. They strive hard to manage
their events efficiently and make clarity between the employees about the allotted jobs to
them. The personal staffs of the national trust look after the properties and wider events. The
governance volunteers provide service to a range of groups intended to support our staff and
the Trust’s activities. Moreover, the organization is a foundation which does not depend on the
government for the funding but on membership fees and donations from members.
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THE SIZE AND SCOPE OF A RANGE OF DIFFERENT TYPES OF ORGANISATIONS
THAT EXIST IN THE UK
The performance of an organization begins with an understanding of its structure. Size and
scope of the organization connect with the goal of business. Without having a good
organizational structure it is not possible to reach the target which has been set.
The goal or objective of any organization is set on the basis of its size. If the size of the
organization is huge and can put a great amount of capital, then they set a big target as their
objective. In addition to it, the organization set its objectives by keeping the scope of the
organization (Tokta, 2019). The scope of any organisation is attained by the help of its
employees and effective operations. According to the product and service, an organization
analyse their size and structure and then eventually the objective.
An organization can be micro, small, medium or large. The distinguishing factors between these
types of businesses are the number of employees, the number of owners and/or shareholders,
their market share.
MICRO ORGANIZATION:
The Willoughby book club is a micro organisation and is the UK's leading book subscription
provider, selling books to thousands of people covering 30 countries all over the world. It was
launched in 2012 with a growing team which has 10 permanent members. In order to spread,
the organization has partnered up with 20 stockists all over the world and major high street
retailers (yip, 2016). The founder of the organization has gained 180% revenue in the last three
years.
SMALL ORGANIZATION:
Wiser is a creative and recruitment company and was established in the year 2014. It is a small
organisation which provides an ambition to the youthful people and also surroundings where
creative meets recruitment to build and modify employer brands. The full service of talent
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acquisition is provided, from employer branding and website builds to recruitment. The
organization encompasses some partners such as Just Eat, Worldpay, Sky Betting and Gaming,
and Expedia (Goss, 2015). The organisation involves staff of 50 employees, in which 52% is the
male employee and 48% are the female employee, with an average earning of more than
€35000.
MEDIUM ORGANIZATION:
Captify is a medium sized organisation, launched in 2011. It is a data exhibiting company,
specialised in search intelligence and media decisions. The organisation has successfully
achieved over €1 million as profit in its first year of operation and currently has raised $15
million as an investment. The gross revenue of Captify has been increased by 300%, which has a
market share of 0.5%. It has approximately 2.2 billion users, tie up with 8 global markets which
include approximately 200 employees to work for.
LARGE ORGANIZATION:
Tesco is a British multinational grocery and merchandise retailer, found in 1919. It is a large
scale organization which serves in 11 countries. Currently, they have around 6,553 shops with
4,76,000 employees working for (Winterman, 2015). The revenue of Tesco is €55.9 billion along
with a market share of Tesco is 28.3%.
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SECTION 2
THE RELATIONSHIP BETWEEN DIFFERENT ORGANISATIONAL FUNCTIONS AND
HOW THEY LINK TO ORGANISATIONAL OBJECTIVES AND STRUCTURE
Every organization has a variety of departments which includes Production, Finance, Marketing,
and Human resource. When these departments of the organization start acting as a group, it
makes easier for the organization to achieve its objectives effectively. Tesco is a large scale
organization which includes all of these departments. Every department has a different function
and it has been observed that every department has a certain relationship with another
department.
Finance department’s function manages the part of the money received and paid out by an
organisation. It helps in producing the financial statements of the company. It has the capacity
to influence other departments which results in managing cash flow to the capital structure and
control risks and costs (Hong, 2015).
The marketing strategy helps in introducing product or services to potential customers. Strong
and attractive strategies are needed to increase sales, which cannot be done without Human
resource and production department (Adams, 2017).
Human resource plays a vital role in understanding, controlling and governing people and
supplement the environment of the workplace. This includes managing, recruiting and hiring
employees, coordinating employee benefits and suggesting employee development strategies
(Scott, 2018).
It has been assessed that all the departments of Tesco work collectively in an effective manner
which helped Tesco to be one of the leading competitors in supermarkets today. Due to
working in a combined form, the operations are handled in a proper manner. The collective
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functioning of various departments provides the availability of different types of employees
which helps in ease of operations.
In addition to it, Tesco follows a hierarchical Legal Organizational Structure in which positions
and responsibilities are clearly divided into different parts to make sure work will be done
effortlessly and easily. The departments of Tesco connect and works parallel to the
organizational structure which reduces the hindrance in achieving the decided objectives and
goals. Furthermore, the communication between all the departments is simple and
straightforward. The transparency between all the departments helped Tesco in attaining the
position of a leading company.
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