Tesco: Analyzing Business Environment, Structure, and Impact Report

This report provides a comprehensive analysis of Tesco's business environment. It begins with an introduction to the business environment and organizational structures, followed by an examination of Tesco's organizational structure, including its matrix and divisional structures. The report then delves into the positive and negative impacts of the macro-environment on businesses, utilizing a PESTEL analysis to evaluate political, economic, social, technological, environmental, and legal factors. The report also includes an internal and external analysis of Tesco, identifying its strengths and weaknesses in relation to the external macro factors. Overall, the report offers insights into how Tesco operates within its business environment and the factors that influence its performance.

BUSINESS AND THE
BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 & P2...................................................................................................................................1
TASK 2............................................................................................................................................1
P3) Relationship among organisational functions and their structure....................................1
TASK 3............................................................................................................................................3
P4) Positive and negative impact of macro environment.......................................................3
TASK 4............................................................................................................................................5
P5) Internal and external analysis of organisations................................................................5
P6) Evaluating strengths and weaknesses interrelate with external macro factors................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................1

INTRODUCTION
Business environment comprises on internal and external factors which are responsible in
order to achieve growth and profitability for business. Every business is following organisational
structures which are helpful for them in order to assign roles and responsibilities to their
employees.(Agarwal, Grassl and Pahl, 2012). The factors operating in environment includes
competitors, suppliers, clients etc. and they are greatly affecting growth and supply of business.
Tesco is a retail organisation having their operations in all around the UK that is chosen for the
present study. This report is based on types and sizes of organisation, interrelationship among
various functions at workplace as well as positive and negative impact of macro environment on
business with assessing internal strengths and weaknesses of business.
TASK 1
P1 & P2
Covered in PPT
P3) Interrelation of organisational functions with their structure and objectives
Business is mainly having the responsibility to perform different operations like
marketing, sales, distribution, sales and research and development activities. The firms are
performing their operations according to their departments and this should be effective in order
to achieve best and effective results. The structure of organisation determines roles and
responsibilities that will be allocated to their workers in order to make their work to achieve all
their targets in desired time frames (Aterido Hallward-Driemeier and Pagés, 2011). This is
beneficial in achieving growth and development for business. Tesco functions are linked with its
organisational structures. The relation among structure and functions of firms are evaluated as:
Matrix structure: These are flexible methods adopted by firm in order to make the
employees understand how they have to execute working in order to achieve good results. In this
structure workers are given responsibilities according to their functional departments and if there
is any modifications in work process then they are provided training so they will not face any
difficulty. In this matrix all the functional areas are related with each other in order to ensure
smooth functioning. This is valuable in reducing burden from single department as all are
working in order to achieve higher proficiency and growth rates in economy.
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(Source: Organisational structure of TESCO, 2017)
TESCO is following organisational structures and there goals and objectives are interrelated with
each other. Thus they are able to carry out all there activities in planned and effective ways.
Marketing and sales: This is an vital function for all business as it helps in promoting
goods and creating awareness so that customer will purchase their grocery products. This helps
in increasing growth and productivity of business. Marketing activities are useful in establishing
good brand images in eyes of customers in order to increase their sales and profitability ratios.
Human resource management: This is an vital function as it recruit employees who can
increase their working productivity. They have the responsibility to recruit potential employees
and provide them training so they will execute work accordingly in order to achieve their
targets. They are working at all levels in order to establish coordination among all employees at
work in order to ensure smooth working areas. They have to develop plans in order to achieve
sustainable competitive advantages at work place.
Finance: The main responsibilities of these firms are related with managing flow of
money at work places in order to execute all their working in planned ways. They had to stock
sufficient amount of money in order to carry out activities like promotional campaigns etc. They
are keeping record of money which is flowing through various activities thus making plans to
expand their business operations. They are making strategies in order to give timely payments to
all employees who are working.
Divisional structure: TESCO is following divisional matrix structures as there are various
outlets which are opened all around the world. They are providing services to all people all
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Illustration 1: Organisational Structure of TESCO

around the world by delivering their goods. This structures helps in diving the functional areas
into various departments. If firms are having their operations in various sections like sales,
production, marketing and finance. It can also be reflected as each functional units will have
their own departments in which its operations will be executed in planned ways. This is valuable
in making division among line goods by separating them into different departments according to
their functions in order to ensure fast functioning.
TASK 2
P4) Positive and negative impacts of macro environment
The firms are mainly focusing on those factors in economy which are affecting their
business operations. These factors are majorly categorised into micro and macro that highly
influence the growth and development of firms. Business environment is dynamic in nature as it
plans and operations are changing on continuous basis. It is valuable for firms to adopt
themselves with external marketing environment as firms have to make their survival at market
places by fighting with all internal and external factors. Firms are gaining raw materials from
external business environment thus there operations are totally dependent upon them. There are
various macro level factors which are affecting activities of business are described as:
(Source: PESTEL Analysis, 2017)
PESTEL Analysis is described as:
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Illustration 2: PESTEL Analysis

Political forces: These factors are affecting firm in external ways as various rules, plans
and policies have to be implemented by governing bodies. There may be modifications in
government rules like interest rates, custom duties of tax, inflation rates etc. This is valuable in
determining future profitability and losses which are incurred from these firms.
Positive
 It helps in making stable economic conditions in economy.
 Business can achieve growth at national and international levels.
Negative
 Changes in rules can affect business operations.
Economic environment: This factor is valuable in determining buying behaviour and
patterns of customers in economy. It considered the income factors of clients because if they
have high purchasing power then they will buy the products and low power determines that they
have to think before making purchase decisions. If there is any modifications in income level of
clients then it results in changes in purchase factors of clients (Business environment, 2017).
Positive:
 It is valuable in understanding concepts which are linked with wider environment.
 It is beneficial in achieving sustainability in business environment.
Negative:
 If there is inflation in economy then products will be offered at very high prices.
Social and cultural forces: In present era, all the firms have to adopt social responsibility
in order to develop welfare for the citizens of economy. Each firms are focusing in order to adopt
plans for the welfare of society as business have to follow all rules and regulations in relation to
needs of society. If all plans related with society are followed in effective ways then it generates
healthy working environment. This results in developing goodwill for business.
Positive
 It is useful in development of skills and capabilities among all employees.
 Development of strong relations among all employees at work place.
Negative:
Changes had to be implemented in working plans according to needs and wants of
customers.
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Technological forces: In current era many of the business organisations are focusing on
different technological forces as it provides advantages to firms to manage all their business
activities in planned and effectual ways (Burns and Winter, 2011). These factors are valuable in
improving efficiency and powerfulness of employees in order to increase productivity at work
place. There are having a drawback as they have to timely upgraded their systems which is much
costlier (Wild, Wild and Han, 2014).
Positive:
 It is valuable in developing products according to technological advancement thus
increasing their profitability ratios.
Negative:
 High cost is incurred in order to execute new technologies at work place.
Environmental Forces: It is an important task in order to make managers carry out their
working without damaging any natural sources of environment. These factors can directly affect
cost of products thus all the resources should be used in planned and effective ways.
Positive:
 It is valuable in protecting environment
 Effective resources can be used for business.
Negative:
 Resources can be deployed if they are not used in planned and effective ways.
Legal Forces: It describes that economy should work by adhering to all legal plans and
procedures which are useful in executing workings which are very effective.
Positive:
 If rules are followed then it results in effective work flow at business organisations.
Negative:
If there is no procedure then business can face heavy losses.
TASK 4
P5) Internal and external analysis of organisations to identify its strengths and weaknesses
In each business external and internal environment factors are playing important role in
affecting operations of business. They are affecting the decision making process at work places.
Tesco is having their operations in retail industry all around the economy. They have opened
many stores around the globe with their headquarters situated in UK. They are achieving higher
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profitability. They are offering food and grocery items like mobile, hardware, insurance, finance
etc. PESTEL factors are used in order to determine strengths and weakness at internal and
external levels in business are described as (PESTLE Analysis, 2017).
Political factors: it have direct impact on performance of Tesco. Political factors
includes various aspects such as rules, regulations, taxes, which are beneficial in developing
stability in economy. If there are any modifications in plans then it results in affecting conditions
of economy and stability will also be threatened (Chow and et. al., 2011). To control this
situations government are looking for big retail business who can provide employment to large
group of people. Tesco is involved in this operation in order to provide job to people who are
having skills and capacity but they are jobless. Cited firms are making efforts in order to improve
the present conditions in economy in order to increase demand and supply factors in economy.
Their main aim is to diversify the working from employees.
Economic factors: These economic factors are affecting cost, price demand and supply
as well as profitability factors of business. They are mainly affecting decision making process at
work place. These are vital factors in determining growth and success of business operations.
The employees of selected firms had to aware about various rules and regulations of government,
and changes in tax rates etc. The financial factors must be maintained so they will not affect
business operations. Company is expanding their overall operations at international level but
they are earning higher profitability from UK markets which gains higher market shares. The
two strategies which are adopted by them are internationalization and diversification which helps
them to achieve success in their overall ventures. They are providing value added services to
their clients and offering them quality products (Wetherly and Otter, 2014).
Social factors: They are having impact on choices and preferences of clients. The main
focus of firms are on non-food items which helps them to gain attention of large number of
buyers. Most of the clients who are purchasing goods are of non-food category which helps them
to gain higher profitability. Taste and preferences of clients are different and they are demanding
goods according to their need and belief. If there is new products at market places then it helps in
catching attention of customers and they will buy products which helps in increasing sales and
profitability. They are mainly recruiting employees who are having knowledge about trends at
market place thus valuable for firms to produce goods according to preference of clients.
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Technological factors: In this global world firms are focusing on adopting new and
innovative technologies which are beneficial in achieving growth and development for firms. In
order to making production process effective they are adopting technological advancement for
developing innovative goods. They are offering goods at their online websites in order to
increase their customers and profitability ratios. They are making efforts towards adopting
projects which saves energy and are useful in achievement of long time aims and objectives. This
is beneficial in fulfilling demands of their potential customers (Commander and Svejnar, 2011).
Environmental factors: This is a vital aspect for every business as they make mangers
understand their roles and responsibilities towards the people of the society. They have made
policies on order to reduce their carbon footprints and minimising the total wastage and this can
be achieved by development of cultural ethics among customers.
Legal factors: There are various rules which are developed by government and this
affect performances of selected firms to a greater extent. Tesco is adhering to all rules and
policies in order to ensure smooth functioning of their business activities. The firms have
designed attractive strategies in order to attract large group of clients who will buy their products
International analysis are helpful in decision making process as they help people to give
their opinion in relation to take effective decisions.
SWOT Analysis of TESCO is described as:
Strength of TESCO:'
 They have spread their operations all around the globe.
 They have expanded their product line by adding new features in goods.
 They have achieved high efficiency in their supply chain policies.
 They have implemented effective management techniques in order to control their overall
operations.
 They are buying goods in bulk quantities thus achieving economies of scale.
Weakness:
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 There profitability ratios have declined due to various types of bad debt
 They have not achieved sustainable competitive positions at market place.
 Not able to achieve growth in some market areas as there products were not sold.
 They are not investing money on new technologies thus reduce in their sales.
Opportunities
 They have achieved third position in selling grocery products thus maintaining
economies of scales.
 They can expand their business by selling their products online as people are mostly
buying products from online stores.
 They have made improvements in their products by ensuring quality factors.
 They have focused on health aspects of customers and establishing their own brand labels
on goods.
Threats:
 High competition from their rivalry firms.
 Cost of raw material is high for both food and non food products.
 Rising in price of commodities.
P6) Evaluating strengths and weaknesses interrelate with external macro factors
Tesco is leading firms which are running their operations in retail business and they have
planned different strategies which are valuable in gaining attention of clients but there are
various weakness which had to be resolved. There strong point is that they are having a group of
10 to 15 persons are involved in analysing trends at market places thus company can
manufacture products accordingly (Ullah and Lai, 2011). There weak points is that the methods
adopted by them for their business operations are effective as they are not able to achieve good
results thus linked with external macro elements.
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In business all functions are interrelated with each other thus they are beneficial in
achieving growth and success for firms. All the factors which are operating at Macro
environment can be evaluated with the help of PESTEL Analysis. SWOT analysis are also linked
with external macro elements thus affecting competitive advantages. The higher authorities are
using plans and policies in order to achieve growth and success for their ventures. There are
various political elements which can affecting strengths of business. Example: TESCO will be
benefited if government will make strategies in order to reduce taxes from all types of retail
goods.
If there is any modifications in economic conditions then it results in increasing sales and
profitability of firms. Due to advancement in technologies modifications can be made in goods
this is beneficial in attracting large group of customers but it is disadvantages for those firms
who are operating at smaller levels as they are not having money to adopt new machinery
according to technological changes. Thus they are not able to build strong positions at market
place.
In relation to all social factors the choices of all clients can be changed according to
market trends and life cycles. This can also create positive impacts by enhancing performance of
employees as the products can be extended to greater levels in economy.
Thus macro factors are having negative and positive impacts on strong and weak areas of
firms. All these elements are beneficial in achieving growth for business and establishing good
image among all people at market places.
CONCLUSION
From the above report, it can be concluded Business environment are important factors
which helps in achieving growth for firms. There are three sectors that are operating at working
environment which are classifies as public, private and voluntary sectors. There are various
internal and external factors which are affecting business activities thus these should be
controlled in order to achieve effective results. It has been assessed that PESTEL analysis is
useful in identifying all strong and weak points which are helpful in the decision making process.
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