Business Environment and Strategic Analysis of Tesco PLC Report

This report provides a detailed analysis of Tesco's business environment, examining its structure, objectives, and functions. It begins with an introduction to the business environment, highlighting the impact of internal and external factors on business operations, and then focuses on Tesco's operations. The report covers the types and objectives of different business enterprises, including private, public, and partnership firms, and contrasts Tesco with McDonald's. It then explores Tesco's organizational functions, such as administrative, customer service, and distribution, and their links to its overall objectives. The core of the report involves a PESTLE analysis to identify macro-environmental factors affecting Tesco, an analysis of its internal and external environments influencing decision-making, and the application of SWOT and TWOS matrices to identify key strengths, weaknesses, opportunities, and threats. The report concludes with a summary of findings and provides references to support its analysis.

Business Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Description on the types and objective of the business enterprise....................................1
P2 the size and scope of a range of different types of organisations......................................2
P3 Explanation on the organisational functions and their link to explain the objective and
structure of the chosen business enterprise............................................................................5
PART 2............................................................................................................................................7
P4 Using PESTLE analysis identifying various Macro environments and their impact on the
cited organisation....................................................................................................................7
P5 Analyse the internal and external environment of the Tesco which influence the decision-
making process.......................................................................................................................9
P6 Application of the SWOT and TWOS for identifying key strength and weakness........10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
The term business environment is the term which is inclusive of both kind of components
internal and external. These both can affect the operation of the business in large manner. This is
inclusive of the various factors such as customers, suppliers, competitors and technologies and
rules and regulation which are frame by the government. The nature of the business environment
is rapidly changing, to cope up with this there should be effective planning and progressive
strategies for the functioning of business. The forces of the market have its direct and indirect
impact on the performance of the business enterprise. The external factors are those which do not
have any of their control over the performance of business enterprise. The nature of environment
is very dynamic there can be changes on the frequent basis in the things like technology, taste
and preference and choice of the customer (Ullah and Lai, 2011). The alteration and modification
in the business environment are unpredictable but the organisation need to take initiative step in
order to cope up with and survive in the competitive market for the longer period. In this report
the activities of the Tesco are being considered. This corporation generally deals with the
products like grocery item. It has its many stores across the country. In addition to this, report
will describe the facts about size and structure of the corporation and it various purpose. The
SWOT and PESTLE analysis is to be given in order to promote growth of the market and
understanding the impact of macro environment.
LO 1
P1 Description on the types and objective of the business enterprise.
According to the present scenario there are lots of corporations which carries the
activities related to the business entity (Boons and Lüdeke-Freund, 2013). Each organisation has
its own objective but these are depended on the size and scope of the firm. Various business
enterprises are having different objectives as per the size of organisation such as-
Private enterprise- These types of the firm establish in the manner to have high productivity and
profitability in the business units. The main motive behind incorporating the firm as private
company is to expand their business activities in the large manner so that firm can grow their
revenue. McDonald's and KFC are the best example of private limited enterprise. The main aim
of these organisations is to gain most possible profit along with providing their customers
quality services and products to maintain customer's relation and fulfilment of their needs. With
the help of this private enterprise would be able to develop strong brand image of the company
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and provide more satisfactory services. This kind of customer satisfactory and better service
providing activities helps the company to gain competitive advantage to firm in the market
(Storey and Greene, 2010). The market share of the company can be enhanced if the main
motive of the firm is to serve their customers and provide them best services so their need can be
fulfilled.
Public limited enterprise- These are those corporations which are governed by concerned
authorities of the country. The main motive of this firm is to provide valuable products to their
customers and provide employment to their employees with better support which will assist in
progressive working of the business units. The current market is rapidly growing to deal with
this kind of issue in the market should take step in such a manner which can help to develop the
potential of the business (Zott, Amit and Massa, 2011). With the help of these motives firms can
grow their profitability for the longer period. Tesco plc is working as the public enterprise and
carries its business activities with the same purpose.
Partnership firm- These are those firm which do their activities with one or more person. They
work together and share risk and profitability of the business in their separate ratio. The main
aim of these firms is to work in manner to gain maximum productivity by increasing their rate of
selling in the market. The main object of this type of firm is to provide qualified services to their
customer. By this manner firm can have maximum growth in their service to the clients and they
would be able towork in the manner to serve best to their customer's. The profit maximisation are
not the main object of this kind of firm.
P2 the size and scope of a range of different types of organisations
Area for distinguish Tesco plc (public) McDonald's (private)
Mission The main aim of this company
is to provide quality service to
its customer. This system work
in the manner to develop the
strong brand image of
company. The motive is to earn
maximum profitability and
productivity in the market for
The mission of this business
enterprise is to earn profit and
sale of the organisation. They
take initiative step to deliver
those service to their customer
which can satisfy them with
their uniqueness of the work.
The help in gaining the
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the longer period. competitive advantage and
market share to firm (Crane
and Matten, 2016).
Type of the enterprise Public limited company. Private limited enterprise.
Scope The scope of these firm is
gaining competitive advantage
day by day to achieve profit for
having development
continuously. It has large
scope in the global market. The
government is taking initiative
in such a manner to provide full
support so that it helps to
develop the strong brand image
in the market.
The effective technology in
the firm help them in the
mode to have sustainability in
the complex market for the
longer period.
objectives 1. The main aim is to provide
quality service to the
customers.
2. They work in manner to
motive employees and provide
the best kind of training to them
so they can serve well to
business enterprise.
1. The main object of this
kind of firm is to expand their
business activities. They want
to serve in the well manner to
number of customer.
2. They work in the manner to
increase sale and market share
of the so that firm can
maintain the productivity and
profitability for the longer
period.
size The market size of the TESCO
is increasing day bay day. The
currently it is on the 32.7pc
which has increased from the
The McDonald's is getting
strong brand image with its
effective operation of
enterprise. The value of the
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rate of 30.7pc in last year
(Chesbrough, 2010). Sale of the
company also raise in the
effective manner with the
comparison of the last year sale
rate.
brand is 88.65 billion and the
revenues rate is reach to the
level of 25.7 billion us dollar
within the period of 2005 to
2016. Most of the person in
the market desires to take the
franchise of this store.
Goals The main aim is to maintain the
effectiveness and the efficiency
in the market. They work in
manner to minimise the rate of
wastage of food and
accomplish the task within the
stipulated time period.
They want to expand the skills
of the person so that resources
of the company can be utilise
in the best manner. They work
with the aim to accomplish
the objective of the company.
Number of workers in entity It is the large corporation. The
number of the employed person
are around 500000 persons in
the business enterprise.
In this there are almost 45000
employees currently working
in this firm.
Tesco is taking various initiative steps to have growth of business activities in the large
manner. Currently they are having their firm as public limited enterprise. They are following tall
kind of organisational structure. The decision-making power of this organisation should be well
and in effective manner that they can work with aim to develop the strong brand image and gain
market share to business enterprise (Halbert and Ingulli, 2011).
The McDonald's follows the flat structure of working. They work in the manner to
achieve the objective of the firm. They try to balance coordination in the business enterprise so
that each worker put their efforts in a manner that target can be achieve in easy manner. They
deal in all variety of products vegetarian and non-vegetarian, the items of the low price and high
price. They take each initiative to satisfy the need of the customer.
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P3 Explanation on the organisational functions and their link to explain the objective and
structure of the chosen business enterprise.
The Tesco has its large operation cycle and they are working well in market of the UK. In
the international market, they are working in the manner to get competitive advantage of the
market. The function of the Tesco is interrelated to each department of the business enterprise.
They should take their promotive steps in relation the matter which give their focus on activities
like objective, goal and mission. They work in the manner to full-fill the need of the customer by
providing qualified service to them. The function area of the Tesco are defined in the following
manner are as-
Administrative function- They work in the manner to have skill qualified personnel to
the organisation who are expert in the technical knowledge. The worker of the administrative
department has to focus on the external customer of the business (Sekaran and Bougie, 2016).
The manager of the unit provides them all necessary information on which basis they can have
their valuable opinion on the about the activities of the business enterprise. They keep their eyes
on the overall functioning of worker so they can make plan in corrective order if they find out
any deviation.
Customer service function- According to the present scenario of the market there are
very manufacture who deals with the particular products of brand. Due to the high level of the
completion in the market the offering prices of goods are on the low cost. It is important to
gather the attraction of customer by providing them effective and qualified service. With the help
of this they can have customer to their firm for the longer period. They should take initiative in
order to have customer service department where customer can tell their queries and get solution
in the easy manner (Turban, Sharda and Delen, 2011). The employees should provide effective
training so that they understand the need and problem of the customer.
Distribution function- This term as deal sin the service where customer has to deal in the
manner to have right product at the right place. The barriers to service can be occur if there is
any issue relating to the communication problem. The Tesco work in the manner to provide
online service to the customer. In this manner, the organisation need to have skilled and qualified
personnel who are expert in the service. They should have enough stock of the products all the
time. They can maintain such extra stuff in warehouse and deliver to the customer in the timely
manner. each product should be labelled correctly so customer can make proper identification
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among the goods. The delivery should be made in the appropriate manner so this service can
attract the customer loyalty towards the firm. The effective and qualified service to the buyer
always attracts customer.
Finance distribution- The payment system should be maintained in the well and
effective manner. The transaction of the business should be recorded in a manner that payment,
cheque and all the system can give the corrective details. They should monitor the cash outflow
and inflow activities of the business enterprise (Welford, 2013). In this manner they way idea
about the profit and loss of the organisation.
Human resource function- The main object of HR person to place qualified person to
firm who can able to manage the activities of business enterprise. With the help of the
performance of the commercial enterprise can be improved and entity system work in the manner
to have goals of organization. Human resource manager of organisation work in the manner to
provide effective training to all the workers. They take initiative in a way that performance of the
new comers can be impressive and they can manage the issue of organisation in the easy
manner. They should motivate the existing employees of the company so they can help to newly
appointed person of the business enterprise. They take efforts to build strong relationship
between worker of the organisation. With the help of this they can work in the well satisfied
manner can earn maximum profit to the business enterprise. The satisfied workers of an
organisation will work in progressive direction and work better to generate greater amount of the
revenue and profit generation for the company (Drucker, 2017). It is also the duty of the HR
manager to check the issues related to the health and safety of every individual and to deal with
accidents. HR policies also motivates the talented employees and encourage the development of
business unit.
ICT Department: - This department works in order to maintain the technical quality and issues
in the company. ICT department at Tesco promotes the development of advanced software and
technology which will enable them to work more efficiently and effectively in order to meet their
set objectives and goals. Introduction of this department will reduce the mistakes related to the
work and satisfy the need of service users significantly (Klapper, Lewin and Delgado, 2011).
This department will reduce the rate and probability to the occurrence of error in Tesco, and this
proper working policies and department will attract larger number of potential costumes and
enable organisation to maintain customer relation.
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These several departments will work progressively and for the accomplishment of their targets
company and its departments should have to coordinate with each other. In order to achieve the
entire business development in well coordination between each of this department is highly
required because it helps to have quality services and encourage the brand image of Tesco.
PART 2
Macro Environment is external factors which affects the working of the Company and factors
which affects the management and coordination of all activity function in the Business unit
(Aterido, Hallward-Driemeier and Pagés, 2011). These Components not only put their impact on
the particular industry but also it influences the whole industry.
P4 Using PESTLE analysis identifying various Macro environments and their impact on the
cited organisation
Macro environmental factors which impacts on various activities of the Tesco.
Political Factor: -
Tesco is following all the legal rules and promoting their activities abiding to the
legislation of United Kingdom government. This supermarket retail chain has to work in
direction that it will not affect any of the political factor adversely, and in context to this if
authorities arises correction or any other changes in existing policies of Tesco the organisation
has to change or modify their operation accordingly. This Political factor affects and make
relation to various protection acts such as Equality act, Employment legislation act, protection of
Data act and others. The political factors put their impacts such as for an instance if the
Government increases the rates of wages to the Employees than as according to this act Tesco
must have to increase the wages of their employees, this function also put their impact on the
operational costs of the Tesco which puts adverse impacts on their business unit. Other factors
such as increase in the Income tax rates will also negatively put their impact on the company and
reduces their profit rate and the same thing applies when the Government reduces the rate of
Income-tax will make huge profit to the organisation.
Economic Factor: -
This is one of the major factor which puts their impact on the working of Tesco.
Economic factors puts their effect on balancing the payment, fiscal and monitory policies. The
economy of the country puts huge impact in the success and further development of an
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organisation, if the economy of the country is under the inflation then it will result in the reduced
purchasing power to the customers. In this situation customers will not prefer to expand their
money to the unwanted expanses which will force the Tesco to change the list of their products
and services (Commander and Svejnar, 2011). Also, if the foreign currency of the country
decreases it will result in the loss to the company as it will result in rise to their import and
exportation of products.
Socio-cultural Factors: -
It includes different classes and factors of the country such as different ages, population,
demographic, education level, society and the culture of the country. For an example, if the
education level of the country is good then it will make the people to spend their money only on
the useful and worthy products, this puts positive impact on the business of Tesco because with
higher living standard people will prefer to buy products from the big stores and supermarket
which will definitely increase the rate of Sale in the largest supermarket retailer Tesco.
Technological Factors: -
With the increase in the level of technology and its advancement it will lead to the
development in the sales of the company. Introduction of new and advanced technology will act
as the resource to the cited to deliver better quality of the services to their client and potential
customers (Gecevska and et.al., 2010). But also, if the cost of essential technological resources
increases it will result in the loss to the company because they have to spend huge amount of
their resources to buy their essential resources such as billing mechanises, security checking and
others.
Environmental Factors: -
Environment factors also indirectly puts huge impact on the growth of cited organisation,
such as using of recyclable and natural resources will result to the less investment in the
processing of the company. Also, if the external environment around the company is not
attracting it will negatively put impact to the customer to visit the Supermarket.
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P5 Analyse the internal and external environment of the Tesco which influence the decision-
making process
Internal analysis of Tesco
Tesco is one of the most famous retail outlet in the UK which maintain its brand image in the 12
countries in Europe and Asia. The major strength of cited venture is its global brand image
which offer value of money, convenience and wide range of commodities. It has more than 6784
stores in the 12 countries. (Aishah Kamarazaly, Mbachu and Phipps, 2013) It another major
strength is its high quality of product and services. Cited venture delivers effective quality of
commodity in the reasonable prices (Siewiorek and et.al., 2012). Cited venture have high
qualified and skilled employees which contributes handwork for attaining the objective of the
company. Its another major strength is related social media. Cited venture have effective
presence on the social media channels so it can easily connect with customer and identify their
view, opinion, review related to product and services. Tesco have high quality of technological
infrastructure through which it produces high quality of product and services. However, there are
various kinds of weakness incurred with Tesco company. Its major weakness is related to the
poor promotion and advertisement activities. It should have required to improve its marketing
activities so as it can easily attract the large number of customers (Teece, 2010). Another major
weakness is related to the high competition. There are various other retail outlets similar to the
Tesco company so it is big weakness for cited venture. Corporation has another major issue
related to the supply chain management and inventory management. This system is very weak
through which many time customer may face issue related to delivery of product. In addition to
this, due to changing customer preferences, taste, life style, income level, company required to
make changes in the product quality, price and features (Teece, 2010). This it can be said that
company required to take business decision according to the internal strength and weakness.
External analysis of Tesco
 In the context of political factor, Tesco required to focus on the changing government
code of conduct, regulation, policies, practices and according to these aspects company
can take business decision. While Tesco adopts new system and structure then it need to
focus on the legal requirement, legislation and code of conduct. The UK government has
recently adopted a new taxation policy which largely influenced cited venture.
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 In the context of Technological component, company have impressive technological
infrastructure through which it produces high quality of product and services. If in the
UK nay changes occurred on the technology then it will influence the decision making
process of the company (Aterido, Hallward-Driemeier and Pagés, 2011). Due to regular
changing technology cited venture requires making huge investment.
 In the Economic factor, company's pricing policies and strategy can influence. While
inflation and recession condition occurs in the UK then it will directly affect decision
making process of the Tesco related to prices of product and services.
P6 Application of the SWOT and TWOS for identifying key strength and weakness
In the Tesco company there are various strength and weakness which define the internal
position of corporation (Gebauer, Paiola and Edvardsson, 2010). Following are some strength
and weakness which have relation with internal and external factor the TESCO-
Strength
 It has high quality of product and
services which helps in the manner to
develop impressive brand image in the
market
 High technological infrastructure
Opportunity
 Expansion of business
 Product customisation
Weakness
 Lack of marketing and promotional
strategies
 High level of competition
Threat
 Changing of regular taste of choice and
preference of customer related to
product and services.
 High competition
Linking strengths with external and internal factors:
Tesco have major strength is related to the high quality of technological infrastructure through
which it can able to develop effective presence on social media channels. With help of this
strength it can easily connect with customer and ask their queries and review about the product
and services (Cantwell, Dunning and Lundan, 2010). This strength is related to the technological
factor of the business environment. Tesco have another strength is related to the high quality of
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