Business Environment Analysis: TESCO Plc's Macro and Micro Factors

This report provides a detailed analysis of TESCO Plc's business environment, examining various factors that impact its operations. It begins with an introduction to the dynamic nature of the business environment, differentiating between micro and macro factors and their impact on organizations. The report then delves into the organizational structure of different types of businesses, including public, private (TESCO Plc), and voluntary sectors, and explores their legal structures. The analysis extends to the size and scope of these organizations, providing examples and descriptions. Furthermore, the report examines the different functions within a business, such as research and development, marketing, production, human resources, accounting, and IT, and their interrelation within the organizational structure. A key component of the report is the PESTEL analysis of TESCO Plc, assessing the impact of political, economic, social, technological, environmental, and legal factors on the company's performance. The report also includes an internal and external analysis of the organization, highlighting its strengths and weaknesses in relation to external macro factors. The conclusion summarizes the key findings and provides insights into TESCO Plc's strategic approach to navigating its business environment.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different type of organisation and their legal structure.........................................................1
P2 Size and scope of different type of organisations..................................................................3
TASK 2............................................................................................................................................4
P3 Different functions and their link with functions and organisational structure.....................4
TASK 3............................................................................................................................................6
P4 Impact of macro environment on organisation and their impact...........................................6
TASK 4............................................................................................................................................8
P5 Internal and external analysis of organisation.......................................................................8
P6 Strengths and weaknesses interrelate with external macro factors........................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment is dynamic in nature and is the surrounding where several
organisations exist. Several changes made in that because of its flexible nature. This is of two
type’s micro and macro factors, where micro involves all such elements when modification is
made in all these then it don't give huge impact in business. On the other hand, macro factors
include competitors, political factors, market conditions, economical factors etc.
An organisation is of three types such as public, private and voluntary which is explained
below with their legal structure. Several factors change in business environment which can give
[positive and negative both impact (Lee, Olson and Trimi, 2012). For this several efforts are
ways are used by company for minimising its negative impacts on working is described.
Private enterprise in this assignment is TESCO Plc which is into retail industry founded
in 1919 by Jack Cohen. Areas served by them are Ireland, United Kingdom, and India. As per
data of 2017, number of employees working are 4,76,000 and products are Supermarket,
Hypermarket, Superstore, Convenience shop (these are such stores which is near to the house
where people can go and purchase required goods and services).
TASK 1
P1 Different type of organisation and their legal structure
Business environment involve three types of company in it like public, private and
voluntary. Description of all these is given below:-
Public sector – Companies involve in this sector is control and manage by government
of particular nation. Main motive behind introducing these type of organisation is to render
services to people who are living in that country. As well such firm are not working with the
motive of generating revenue and profit maximisation. Best example of such association is
DCMS (department of digital, culture, media and sports) this is department of United Kingdom
government. Responsibility of the same is for sports and culture in England and of media
throughout the whole UK like internet and broadcasting. Main motive of government behind
introducing this division is to increase activities related to sports, culture, media and digital in the
entire United Kingdom. Legal structure of this is given below:-
 Central Government department : there are some organisation which is directly manage
and control by government of that particular nation. Organisation come in these three

sections local, state and regional are managed by central government department of
particular nation.
 Local Authorities : Companies come under this is running by local state government of
that specific nation.
Private sectors - Firm of private sector is running and managing by owner of the company who
introduce it. Although, they are working with the motive of profit maximisation and covering
entire market. TESCO Plc is private sector relate company founded in 1919 by Jack Cohen and
serving their products in several countries. Variety of goods and services are offering by them
which attract more and more customers as well also assist in revenue generating. Legal structure
of the firm is given below:
 Sole traders : they are the person who run their business by their own as well owner and
company both have separate legal entity in business environment. In this the person who
bring company in market is liable for all the profit and loss which occur in their business.
 Partnership : It is the organisation which is formed by two or more than two persons.
They all invest some mount in business which is known as capital and necessary for
running company. Ratio of dividing loss and profit is based on the amount they invested.
Voluntary Sector – These companies are non-profit organisation who are not working with the
motive of profit maximisation. Major work of this is to provide services to society for social
welfare. Voluntary enterprises are distinct from public and private Welcome Trust is best
instance of this. It is founded in 1936 and firm of United Kingdom by Sir Henry Wellcome.
Legal structure of this is are as follows:
 Trust – These are known as trustees of company who provide fund for day to day activity
of business. This is important because finance is backbone of company without this no
company can run smoothly.
 Unincorporated association – These are management committees of company and they
also named as council. They don't have detach categorize from trustees.
P2 Size and scope of different type of organisations
Companies are classified on the basis of nature, size and scope such as small, medium
and large. Their description is given below with the assistance of example:-
Public sector company and its description: Department for digital, culture, media and
sport is public sector company which is responsible for culture, sport in England and media

activity Within United Kingdom such as broadcasting and internet. Formation of this
organisation is done by government of UK with the motive that increase culture activities, sports,
media and other activities.
 Size and scope : DCMS is formed in 1997 by government of UK there are approximately
550 employees are currently working. They are responsible for culture, digital, sports and
media. Annual budget of this is £1.4 billion (current) & £1.3 billion (capital) for 2011-12.
Private Sector and its description: TESCO plc is the private sector company serving variety of
goods and services to customers. They are serving products according to the needs and wants of
the customers retail sector have too much competition because of changing taste and preferences
of customers. Along with TESCO Plc also have their one shopping which provide home delivery
services to customers.
 Size and Scope : respective company is founded in 1919 and currently working in several
countries such as UK, Thailand, Hungary, India, Malaysia and many other. As per that
data of 2017 there are approximately 4,76,000 number of employees working with them
and they have 6,553 stores.
Voluntary Sector and its description – Companies come under this is working for social
welfare their motive is to provide development in society not profit maximisation. In simple term
Wellcome Trust is an company who is working for welfare of society and it is founded in 1936.
main work done by the same is biomedical research and they are providing their services only in
United Kingdom. Value of respective enterprise is to improve health of their customers for
whom they are working.
 Vision- Respective organisation vision is to achieve surplus improvement in health of
human beings and animal for whom they are doing research.
 Mission- Wellcome trust companies mission is to render such services to their clients so
they can highlight their name in the area of biometrical research.
 Size and scope – Wellcome Trust is introduced in 1936 and its founder is Sir Henry
Wellcome. They are providing their services in United Kingdom and overseas along with
this presently staff members working are approximately 2,057. There website is
www.wellcome.ac.uk. Major motive behind introducing this company is to providing
Biomedical research.

TASK 2
P3 Different functions and their link with functions and organisational structure
Business organisation need proper structure for their day-to-day working along with this
it also have several departments in their business. In company work of every department is
interrelated with each other all these contribute in development and growth of business.
Relationship within every department of TESCO Plc is given below:-
Research and Development - This department plays crucial role in every enterprise
whether it is a large scale or small scale (Rossi, Vrontis and Thrassou, 2012). R&D division is
important for identifying current market trends and customers needs and wants as well their
perfection or satisfaction level about existing goods and services. Through this department
company get several advantages such as it help in identifying that what innovation they have to
do for getting more competitive advantages. Along with this it also aid in generating revenue
which is important for its survival.
Marketing Department – Every organisation needs this for promoting and advertising
their goods and services in the market. This division is also related with structure of organisation
because if marketing is done in better manner then it builds an image and get position also in
market place. Although it is necessary for every scale business large or small.
Production Department – It is the division which is necessary for producing goods and
services as per requirement of customers. Company must implement various production
approaches that are necessary to minimise wastage of resources, overlapping of production, cost
minimising as well assist in consumption of new or latest technology products.
Human Resource Management – HRM division is that which manage overall working
of the department along with this it is important for managing day to need of customers along
with company. In general work it can be said that HR department is backbone of business
because it coordinate several other departments also (Pham, Segers and Gijselaers, 2013) . Major
work of this is to hire candidate, plan training and development program, performance appraisal.
With this skills and knowledge of employees enhance which directly results in generating more
revenue and in achieving goals and objectives. When new candidate is appoint they have new
through and ideas which help in many ways like growth, development, implementing latest
technology, competitive advantages and many more.

Accounting and Finance - Finance is the blood of company without this any department
can carry out their working properly. This division provide funds or resources to everyone for
doing their day-to-day activity. Budget of the company is frame in accounts and finance
department along with this they manage cash inflow and outflow of business, capital
management and manage other things also related to funds which is important for achieving
goals and objective of business. Entry of all the staff member of organisation are not allowed
because of this department have some confidential information which should not be disclosed or
leaked to everyone.
IT (information technology) – This division is important because now a day
technologies are improving day by day and this plays an important role in organisation structure.
With the help of IT, advertising tools which is using by company can become more attractive
and help in pulling more and more customers and also in increase sale volume.
The entire above-mentioned departments are important and everyone is interlinked with
an organisational structure (Gharajedaghi, 2011). Although these assist in generating more and
more revenue which is important for survival in the competitive business environment.
Illustration 1: TESCO Organisational structure, 2018
(Source: TESCO Organisational structure, 2018)

TASK 3
P4 Impact of macro environment on organisation and their impact
Macro environmental factors are those when they changes give wide impact on business
that can be positive and negative both. As well these are such factors which is related to
economy and international business environment includes several things in it such as fiscal
policy, gross domestic production, currency rate, exchanges rate and many other. In simple term
macro environment is wide in nature and when it get change give wide impact on working of
company. PESTEL analysis of TESCO plc is give below:-
 Political factors – Retail organisation is that which is operating worldwide thus political
factors influence performance of TESCO Plc. Political factors includes Tax rates,
stability of nation, laws and legislation of particular country and several other which
gives impact on operation of respective firm. Every nation have their own rules and
regulation which must be followed by every company when they are launching their
business in that (Crane and Matten, 2016). Because of financial instability many
countries government encourage retail sector for creating job opportunities for the
population of that particular nation. In this activity TESCO plc also taken part because of
this practice demand of their goods and services increase as well diversify its workforce.
 Economic Factors – This factor includes exchange rate of every organisation in which
TESCO Plc is doing their business. Every nation have their own culture, taste and
preferences, customs, desires and many more which must be kept in mind by the
respective organisation when they are offerings goods and services. Along with this,
when new product is launching or doing innovation in existing at that time also need and
wants of customers should be kept in mind (Welter and Smallbone, 2011). Economic
factor also includes entry and exit of business because this is also an reason of
competition.
 Social Factors – Several social changes are taking place which indicates customers of
United Kingdom start purchasing goods in bulk and some stop shopping. This is the
reason because TESCO Plc increase non food item in their stores. Products and services
is demanding by customers re totally related with their attitude and beliefs which is
influencing by changes in social conditions (Elliot, 2011). Now a days customers are
getting more aware about health issues because of this their purchasing habit of goods is

changing they are buying organic and more hygienic products. TESCO is adopting social
factor changes by providing organic products to their customers. Thus, this factor play
important role in business of this organisation.
 Technological factors – Technologies are changing day by day and they are bringing
new products in market. Which brings several opportunities in business of TESCO plc
major two benefits company gain by technological factors. First in online shopping which
provide facilities of home delivery to customers because there are some aged customers
also of the same firm who are not able to visit stores and then purchase. So for them
online line shopping is beneficial and it help in increasing sale and in generating more
and more revenue. Second advantage is self service checkout point which is easy for
customers as well reduce employees cost also because their will be no requirement of
employees for checkout (Cotter and Fritzsche, 2014). Moreover, same firm invest their
amount in energy efficiency project for achieving long term objectives of business by
reducing its carbon footprints.
 Legal Factors – Policies and legislation of government gives direct impact on working
of business like TESCO Plc. Along with this the same organisation is producing variety
of goods and services thus, legal factors gives wide impact on their working. As well
there are several laws and legislation formed by which is formed by government of
particular nation and must be followed by every company. It is must to confider all these
laws when any planning related to working of enterprise in going on so it well result in
effective and effectual plan of action. Thus, TESCO Plc have to kept in mind variety of
legislations and laws which is necessary to be followed by company when process is
conducted such as packaging, manufacturing, marketing, distribution and many more.
Few of the laws are related to employees and taxation policies which should be followed
or fulfilled by firm.
 Environmental factors – Healthy and Safe environment is important for human beings
and also for other living things in surroundings (Reeves, Love and Tillmanns, 2012 ).
Government pressurising companies to do such practices which save environment and
also for addressing issues related to same. Adopt such techniques of operations so that it
would be beneficial for company. TESCO Plc is taking initiate for reducing their carbon
footprint up to 50% by 2020. along with this it minimising level of waste produced in

their stores by increasing social conscience in their customers. Although firm have to take
care that they fulfil their responsibilities towards environment as well don't pollutant air,
water and surroundings.
TASK 4
P5 Internal and external analysis of organisation
There are various kinds of factors which impacts on operational activities of an organization. All
these elements are relevant to internal and external business environment which are mandatory to
be observed, analyzed and evaluated. This will help to determine various risk factors and
opportunities through which company can take appropriate steps to reduce negative impacts and
expand beneficial chance to get better productivity as well as profitability of an organization. In
case pf TESCO, it is necessary to focus on several internal and external factors through inducting
required analysis such as SWOT (Zott, Amit and Massa,2011). This technique refers to
determine strengths, weaknesses, opportunities and threats of an enterprise that facilitate to put
desired actions. A brief description about SWOT analysis is given below:
Strengths: - The term strength is known as strong points of an organization which are
beneficial and provide support to boost up productivity and image of brand in market. These
factors are helpful to reduce problems or issues and improve growth of business. It will facilitate
to provide a chance to grab more market share. In case of TESCO, they have various strengths
such as increasing market share, insurance, Tesco inline, brand value and UK market leadership
reinforced. They have a better coordination and cooperation between staff members which
facilitate to conduct each and every task properly through generating desired outcomes. It is due
to establishing a healthy and peaceful working culture of company by applying effective
strategies properly.
Weaknesses: - This can be described as weak points of an organization which are
responsible for arising several problems or losses. It is necessary to determine weaknesses of
company so that an appropriate step can be taken top reduce possibility of raising issues because
they are responsible for negative outcomes in an organization. TESCO has few of weak factors
such as debt reduction, reliance upon UK market, signs point to serial and acquisitions. These

elements become more harmful if desired actions do not taken by management of company. It is
mandatory to remove these weaknesses as they are responsible to give birth to risk factors.
Opportunities: - The term opportunity refers to a specific chance which can be grabbed
or skipped by company as per their situation because these factors may beneficial in different
aspects. There are various kinds of trends which are regularly changed or modified according to
a particular period of time (Hair, 2015) . Every fashion of market bring several opportunities for
an organization so that they can grab them easily at correct time to improve productivity as well
as profitability. In case of TESCO, they have several opportunities such as non-food retail, health
& beauty and further international growth. It is necessary for this organization to utilize these
chance for earning benefits in terms of boosting up business growth.
Threats: - This can be explained as problems or issues which may results dangerous for
productivity or company. These negative factors should be determined at right time and take
proper actions to sort out them properly. TESCO has several threats like spark a price war,
overseas returns could fall, international expansion, UK structural change and other challenges
which are facing by an organization. It is mandatory to put appropriate steps towards these
threats for reducing possibility of damage or loss in an enterprise.
The above mentioned factors are necessary to be observed analysed and evaluated which
helps to expand positive impacts and reduce issues properly. SWOT analysis of TESCI provide
support to identify strengths, weaknesses, opportunities and threats which are helpful to take
essential decisions in accurate way.
P6 Strengths and weaknesses interrelate with external macro factors
Business environment is full of competition which include internal and external both the
factors. When changes take place in this gives positive and negative both impact in working of
business (Low, Chen and Wu, 2011). Which directly results in decision making process of
company for example main strength of Tesco Plc is that they have high market share value and
equity also. The same organisation is serving in several countries in this process company must
have to follow all the laws and legislation of that particular nation. Strength and weakness are
interrelated with its external macro factors which is given below:-
 Economic Factors – Tesco Plc is the financially strong company so they can easily come
out with economic factors. It involves various elements like tax rate, foreign direct
investment, inflation and deflation, foreign direct investment and many other factors also

related to economic (Van Vuuren, Roberts-Lombard and Van Tonder, 2012). Economy
is not stable thus, elements involves in this are also flexible and these should be analysed
by association on time basis for betterment.
 Political and legal factors – Every nation have their own laws and legislation when
TESCO Plc is serving in several companies they have to follow their all the laws.
Otherwise, if they don't fine can be charged against it and if their any modification then
also they have to implement this in organisational structure. It is compulsary for every
business to follow this.
 Technological Factors – This is the factor which easily change and when it modify gives
company several advantages. Because with the help of latest technology company can
produce fine quality of goods. Which assist in attracting more and more customers and
also in growth and development of business. Modification in the same factor is not good
for small sector company because they are not able to implement this reason behind this
is expensive.
 Environmental Factors – This gives wide impact on production procedure of goods
because in some products there is requirement of natural resources without these it is not
possible to do production. Now a days customers are becoming more health conscious
because of that TESCO Plc is start selling organic product. For production of these there
is requirement of natural things.
Above mention are the strength and weakness of the same private sector company which is
interrelated with its strength and weakness. These gives several benefits in company that assist in
achieving goals and objective in effective manner.
CONCLUSION
As per the above discussion it has been concluded that business environment is flexible in
nature. This is of two types Micro and macro when they change gives wide impact on operation
of business that can be positive and negative both. Company use several tools and techniques for
implementing positive elements and also for minimising negative factors. Apart from this
organisation is of three types public, private and voluntary. Every sector enterprise have different
legal structure which and these three are different from each other. Internal and external factors
are linked with organisational structure As well its strength and weakness also. This assignment
is based on TESCO Plc which is company of retail sector have too much competition in it.