Business and the Business Environment: Tesco's Strategic Report

This report provides a comprehensive analysis of Tesco's business environment, focusing on its purpose, organizational structure, and the impact of internal and external factors. It begins by categorizing different types of organizations (public, private, and voluntary) and their legal structures, using Tesco as a key example of a private sector entity. The report then explores the size and scope of Tesco, its vision, mission, and organizational structure, including its functional structure. A significant portion of the report is dedicated to the PESTLE analysis, examining the political, economic, social, technological, legal, and environmental factors affecting Tesco's operations. Furthermore, a SWOT analysis is conducted to identify Tesco's strengths and weaknesses. The report concludes by explaining how these strengths and weaknesses interact with the external macro factors, providing a holistic view of Tesco's strategic position within the business environment. The report references relevant literature to support its analysis.

Business and the
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Purpose and different type of organisations and adoption of legal structure........................1
P2. The size and scope of different type of organisation............................................................2
TASK 2............................................................................................................................................3
P3. The relationship between different organisation function and their link to organisational
objective and structures...............................................................................................................3
TASK 3............................................................................................................................................4
P4. Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples................................................................................4
P5. Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses............................................................................................................6
TASK 4............................................................................................................................................9
P6. Explain how strengths and weaknesses interrelate with external macro factors..................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment is a combination of various internal & external factors which focus
on influencing every company's operations. Such factors are very important for company and at
same time very crucial also as they are affecting company's internal management and overall
functioning. Some of they factors present n macro environment are environmental, social,
political, suppliers, customers, competitors, all other stakeholders which are related to company
directly or indirectly play a very important part in taking various decision for regular and smooth
functioning of company.
Present report is based on Tesco which is a super market company, and it was founded in
year 1919. Jack cohen was the person who laid the foundation of this company. This report is on
some important topics such as size, scope, structure based on analysis of external environment of
Tesco. Such factors affect a company both in negative and positive manner(Virglerová, Dobeš
and Vojtovič, 2016).
TASK 1
P1. Purpose and different type of organisations and adoption of legal structure.
Every company is founded and started with some laid objectives and a vision in mind. Such
vision actually sets the whole guideline for various strategies and plans which company will
undertake in its due course of actions. These factors help in creating a goodwill and brand image
in market. This helps in economic growth of company and country at same time.
Public Sector: these are those companies which are controlled and are under regulation
of government of country. Such companies do not focus on profit maximization but they are
build up to serve the people and satisfying their needs. There are many problems which are faced
by people and for solving that problem a business opportunity is identified and then a venture is
created. National health service is also one such organisation, which is providing employment to
approximately 1.6 million people. Main objective of this company is to improve health of their
patients. Government controls all their operations.

Private Sector: These are organizations which belong to a country's economy and help
in growth and development of industrial sector. They are controlled and managed by the private
sector or private individuals and government has no role to be played in management of
company. Tesco is one such company which is located in UK and they are having many
convenience stores, hyper markets, super markets. There are approx 3000 stores in UK of Tesco
and they are considered to be biggest retailers of UK.
Voluntary Organisation: There are some companies who do not want to earn monetary
profits but they want to fulfil other objectives which are for benefits of people living in society.
Oxfam is one such company which is involved in doing social service and not to earn monetary
profits. Main objective of this company is to eradicate or at least minimize poverty in their
country. There are around 20 independent companies which are part of Oxfam and the are
working under it. All their operations and functions are taking place under this company who
controls their overall functioning. They work for benefit of people and upliftment of society.
They make efforts to create employment opportunities for people so that they are able to earn a
living and ensure their survival.
P2. The size and scope of different type of organisation.
There are three basic categories in which companies are divided that is voluntary, private
and public. There are other differentiations also on which companies are distinguished, based on
company's productivity and their turnover(Sodeyfi, 2016).
TESCO
Vision & Mission- Tesco has a vision that they want to becoem one of biggest
supermarket chains of UK.
Size & Scope- There are around 700 stores and they are giving employment to 5 lacs
people in across world. Tesco has a very wide scope of growth as they posses a transformation
strategy which will help them in achieving long term growth and development.
Organisation Structure- Tesco structure is hierarchical which includes regional
manager, then store manager and food division manager, personnel manager. All such divisions
he;lp in smooth functioning of all major functions of company.
National Health Services:
Vision & Mission- Company has a vision to ensure healthy living of people.

Size & Scope- Around 15 lacs employees are employed in this company. It is at fifth
number in terms of giving employment to people.
Organisation Structure- they are having a “Tripartie Syssytem” which includes hospital
services, dentists & opticians and third part structure includes maternity, ambulance etc.
Oxfam
Vision & Mission- They have a vision to fulfil the very basic needs of people and help
them in bringing a change in their lifestyle.
Size & Scope-There are around 20 organizations which are functioning in around 90
countries. Company has been successful in achievement of their aims and set objectives.
Organisational Structure-They have a council of members which have trustees who
govern activities, functions and operations of company.
TASK 2
P3. The relationship between different organisation function and their link to organisational
objective and structures.
Structure of every company is made in a way that it helps company in achieving their objectives
and goals. Four major structures of company are explained below:
Marketing and Finance:
Tesco is a supermarket company and they have a marketing department, main function
of this department is to increase sales of company, Finance department has the responsibility of
making budgets for different functions and operations of company. Events, marketing campaigns
are organized by Tesco time to time so that they keep their customers aware of various new
products company is launching, innovations they are doing all this requires funds. Such
monetary assistance is provided by finance department of company. Thus it becomes that there
are relation maintained between both these functional departments of Tesco which will help
them in achieving overall objectives set by company(Prajogo, 2016).
HR and marketing:
Human resource department has the sole responsibility to hire competent and qualified
people in company so that various functions take place in a m ore productive and effective way.
Marketing department provides information to the HR department of company related to they

skills they require employees for performing planned activities and various strategies being
decided by this department. Such information helps human resource department in making job
profile according to various vacant positions and then further recruitment is done.
Organisational structure
Organizational structure of Tesco is Functional structure. They divide their organization
in different departments according to different functions. All these functional departments help
in smooth running of organisation as a whole. Below is the flow chart which can help in
understanding this structure as adopted by Tesco(Otache, and Mahmood, 2015).
TASK 3
P4. Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.
Tesco's management is required to use PESTLE approach so that they are able to analyse various
factors which are present in the external environment and affects their internal
management(Moroni, Arruda and Araujo, 2015).
Political factor: There are some political factors which affect every company which are mostly
related to political government of the country. Tesco is present in UK and political environment

of UK has a affect. UK government has started a new regulation related to taxation in the year
2011tehy started a new policy which lead to increase in VAT rates by 2.5% that si 20% which
was earlier 17.5%. this lead to reduction in disposable income with citizens of their country
because of t his sales of Tesco also show decline.
Economic factor: UK government is showing recovery from recession period. The are
experiencing higher growth rate in economic terms. In csituatiosn of recession the employment
rate of the country decreases people loose jobs or remain unemployed for a period of time. This
situation affects country's performance in a negative manner as people don't have adequate
income to spend so they are not able to use it for spending or purchasing of products. Such
economic situations in a country can have both positive and negative impact on a company's
productivity.
Technological factor: Technology is very critical factor which plays a very important part in
the process of supply chain in company. Tesco has been able to develop a effective supply chain
network so as to attaining a competitive advantage and also for attaining cost efficiency. This
will help them in having a differentiating advantage as compared to various competitors of
Tesco(Kolk, 2016).
Social factor: Social factors are present in every country they rae related to society and affect
sales & profitability of every company(Khan, and Quaddus, 2015). For Tesco also they are
affected by the type of people of UK, like there is increase in number of old age people because
of baby boom generation. Also, there has been decrease in birth rate and increase in life
expectancy of people of united states. Tesco new plans and strategies are affected by the social
factors for example Tesco has make changes they are using e-commerce websites for their
products but using online source as a medium to purchase products requires to be technology
friendly, they rely on physical stores for fulfilment of their shopping needs. This is not the case
with old age people they face difficulties in using online source to purchase products this has
reduction in overall sales of company

Legal factor: Legal requirements are present in every country which have to be compulsorily
adopted and followed by all companies working there. Tesco is also engaged in various financial
products such as credit cards, loans, savings and mortgages. Financial services act has been
implemented in UK which Tesco has to take into consideration when they are making various
strategies relation to these financial products.
Environmental factor: Environment is the place where every company is operating and
functioning. This factor plays a very crucial in ensuring proper functioning of company. Tesco is
a company which has a concern for environment this is reason why they have always adopted
measures which will help them in protecting and saving of environment. Sustainable
development is what which this company is adopting in their process for example Tesco has
made efforts to minimize the consumption of energy and at same time they have make sure that
there are no emission of green house gases is done by them in course of their manufacturing
process(Huang-Horowitz, 2015).
P5. Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses.
SWOT Analysis of Tesco
Strength Weakness

 Tesco is one of biggest retailers of UK.
 They are having a leading share in
market, they are successfully
dominating the UK market.
 Tesco has been involved into
continuous expansion they are growing
by opening more stores in different
parts of world.
 They are involved in using latest
technology ion their operations such
that this company uses RFID a new
barcode system which counts products
automatically.
 Tesco has not able to get successful in
Japan and US.
 In 2018, share prices of Tesco fell
around 9% because of decline in the
operating profits of the company.
 The low cost strategy has helped this
company in becoming a cost leader but
this has also leads to reduced margin of
profits.
 Tesco has been involved in credit card
liability and high debts has resulted into
negative affect on financial profits of
Tesco.
Opportunity Threat
 Tesco is trying to make strategic
alliance with various companies which
can help them in offering more
products and attraction of more
customers also.
 Tesco has a opportunity they can
expand their operations in other
countries which are having emerging
markets such as turkey, south Korea
and Indonesia.
 Brexit has affected this company in a
way that many trade formed by
company have been broken, profitable
deals have been lose by them.
 Increasing governmental regulations
and tax reforms is increasing pressure
on Tesco which is affecting their
operational efficiency.
Threat of substitute: Tesco has many competitors in market which is imposing threat on the
company, that their customers will switch from their products to various other competitors such
as Sainsbury, Morrison etc.
Threat of competitors: Comapnies such as Sainsbury, Morrison, ASDA provide a very intense
competition to Tesco in case of increased variety and quality which such brands are
offering(Grigore and Drăgan, 2015).

Bargaining power of suppliers: Suppliers play a very crucial role in every company and in case
of Tesco also this company has always laid emphasis to maintain good relations with them . So
that company is able to get raw materials at economic prices. This efforts to maintain good
relations with suppliers help in reduction of cost of procuring raw materials and also maintaining
the present margin of profit.
Bargaining power of buyers: In relation with tesco, buyers have relatively low bargaining
power as the variety and range of products which Tesco provides is difficult to be find in its
other competitor brands.
Threat of entry: There are many brands which are already providing Tesco good Competition
apart from this there are other new start-ups which are bringing innovation and can posses threat
for this company(Fabuš, 2017).
Swot Analysis of Oxfam
Strength Weakness
 Oxfam is having clear defined goals
which acts as a motivation for their
customers.
 They are having a strong global
network which helps company in
increasing their overall sales.
 Oxfam is a lifestyle brand they are
having a wide range of diversified
products which helps them in fulfilment
of basic needs of their customers(Deasy
and et.al 2016).
 This company is having a less
recognition in terms of having a
popular image as this company deals in
online retailing only.
 This is less preferred by those
customers who are looking for luxury
products.
 This company is less known and has
less preference because it is a non-
profit organization.
Opportunity Threat
 Oxfam can increase their operations
and functions by spending more in
promotional and marketing activities
which can increase awareness related to
this brand.
 Oxfam has lack of committed
employees which can be a threat to
company as they might face high
employee turnover which can lead to
increase in cost of company and

 Company can start their physical stores
so that it is easily approachable by
those who are looking for offline stores.
reduction of their profit percentage.
 Competitors of Oxfam are offering
more quality products which is making
it difficult for their target customers to
switch to their brand.


Threat of substitute: There are many online brands such as Amazon which can be easily
substituted in place of Oxfam products(Clarke and Xu, 2016).
Threat of competitors: There are many competitors present in market which provide high
amount of competition to Oxfam such as eBay, Amazon and Hive which are dealing into similar
category of products and can give adequate amount of competition to Oxfam.
Bargaining power of suppliers: It is essential for Oxfam that they are bale to have good long
term relations with their suppliers otherwise it may posses threat to them. This will also help
them in reducing of bargaining power of suppliers.
Bargaining power of buyers: There is high bargaining power of buyers as there are many
competitors which are offering similar products and at same prices. This leads to high bargaining
power of buyers.
Threat of entry: There is a total shift in the trends, people are shifting to those products which
are available to them at reasonable prices and also at required quality standards. There are many
new competitors which are emerging who are ready with business ideas which is a threat for
Oxfam(Banica and Hagiu, 2015).
TASK 4
P6. Explain how strengths and weaknesses interrelate with external macro factors.
Basis Strengths Weaknesses
Political
Tesco is a company which is properly
implementing all regulations and
policies which government
This has a impact on company'
functions and operations they have
to modify them and make changes
with time, this leads to changes in
every single department and
employees in every company always
show resistance to change.
Economical
Tesco is a brand which is willing to
enter in countries who are having high
potential for growth, this is affecting
company in a positive manner as they
TESCO is a brand which wants to
expand their area of operations and
if country is having low GDP
growth then it is not feasible for

can experience growth and increased
sales.
company to expand to such
countries.
Social Factor
Tesco is a brand which believes in
continuous improvement and
modifications in their products, in
accordance with changing customer
preferences this leads to higher profits
for company.
Social factor is related to behaviour
of consumer which is very
unpredictable and is continuously
changing. Tesco is also involved in
continuous modifications so that
company can adapt easily to
customers requirements and
fulfilment of their expectations.
Technological
Tesco has been successful in adoption of
technological advancements with
growing use of e commerce company
has successfully adopted digital media
as their advertising medium.
Rapid and frequent changes in
technology makes Tesco to do a lot
of investment and time has to be
invested by company.
Legal
Every company is affected by laws and
regulations prevailing in external
environment of company. Such
regulation help in achievement of
customers trust.
Regulatory authorities timely change
legal laws which affects company in
a way that they also have to make
very frequent amendments.
Environmental
Tesco management always have focus
on conservation and sustainable
development of company at same time
they want to take care that they are not
harming the external environment.
Each company operates and
functions in the external
environment, there are lot factors
present in the environment which
have a effect on company and they
have to do such changes on
continuous basis, this sometimes
leads to time wastage of company
which they could use in doing other

productive work.
CONCLUSION
From above report it is being concluded that there are various organizations and they all vary
according to their size, scope etc. there major categories involve public, private & voluntary.
Apart from this there are several other criteria used to categorize companies which includes on
basis of their scope, size and structure. Internal and external factors have been analysed using
SWOT, PESTLE which can help company in planning their future strategies.