Business and Macro Environment Analysis: A Tesco Supermarket Report

This report provides a comprehensive analysis of Tesco's business environment, focusing on the positive and negative impacts of macro environmental factors. It utilizes the PESTLE model to examine political, economic, social, technological, legal, and environmental influences on Tesco's operations. The report also includes an internal and external analysis, employing the SWOT framework to identify the company's strengths, weaknesses, opportunities, and threats. Furthermore, it clarifies the interrelation between these internal and external factors, and how they affect decision-making within the organization. The analysis covers various aspects of Tesco's business, including its brand presence, competitive landscape, and adaptation to changing consumer behaviors, to provide a holistic understanding of its performance and strategic considerations.

Business and business
environment

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
LO3..................................................................................................................................................1
P4 Describe the positive and negative effects of macro environment has on company
processes, with concrete examples to illustrate...........................................................................1
M3 Adapt the PESTLE model correctly to enable a thorough study of an organisation's macro
climate..........................................................................................................................................3
LO4..................................................................................................................................................4
P5 Perform internal and external analyzes to define strengths and deficiencies in different
organizations................................................................................................................................4
P6 Clarify how shortcomings and strengths interrelate with external macro influences............5
M4 Applying the SWOT / TOWS model correctly and explain how it affects decision taking. 7
D2 Critically evaluate the impacts that both macro and micro factors have upon business
objectives and decision-making...................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCE..................................................................................................................................9

INTRODUCTION
The business environment is associated with marketing term which is used by an entity in
order to take the competitive advantages. There are different types of business are running in
market that all needs to be analysis themselves so they can identify which factor has impacted on
business. In other words, if a person is going to start an run their activities in relation to business
then it should use different tools and models for the purpose of evaluating business environment
(Cohen and Kietzmann, 2014. If it is properly checked then there is a changes to improve the
organisational productivity. This is important for organisation to conduct various analysis which
are related to different element and helps to run a business. This is the ability which uses by firm
to build and maintain the great customer relationship. This report is based on Tesco that is larger
size super market in London UK. This is retailing company that offers variety of products at
retailing cost that attracts customers and increase profitability. This report covers different topics
such as positive and negative impacts of macro environment, internal and external analysis and
strength and weakness of macro factors.
LO3
P4 Describe the positive and negative effects of macro environment has on company processes,
with concrete examples to illustrate.
Macro environment – This refers as combination of various external factor which arises
out of the organisation in competitive environment and has impacted on business whether
positive and negatively. Whenever, some is going to start or establish their business in business
environment then it should analysis the macro environmental factor that states how such factors
are related to business sand affected the business activities. These are uncontrollable factor
which cannot be control by management and needs to monitor on business activities so they can
be overcome. Tesco is larger size retailing super market that sales different types of products at
discounted cost and attracts customers.
PESTLE analysis – This is a tool which is used by organisation to analysis the industry
and particular business in order to know how such factor has affected the business and can run it
successfully. This is related to external factors which is used by management of Tesco company
to identify the all opportunities and dangers for a specific business. This involves some factors
that are as defined:
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Political factor – The relation of political factor with government, political system, trade
barriers, political stability, taxation rates, terrorism and military and fiscal policies which all are
set by government that has impacted the profitability and survival chances of a business entity
(Dobrin and Cioca, 2014). The positive and negative impacts in context to Tesco business are as
defined:
Positive impacts – In UK, there is stability in political system and tax rates after Brexit
that has impacted positively on Tesco supermarkets such as it is allowed to run a business and
provide products and services properly with the support of government.
Negative impacts – A small negative shift in tax rates such as incremental that dictate
Tesco is not allowed to run a business as having high tax rates that affected business adversely.
This increases cost of organisation and reduces company profits (Edelman, 2015).
Economical factor – The relation of economical factor with pertaining to the economy in
particular country and nation that involves foreign exchange rate, inflation rates, GDP rate,
interest rate that has impacted on business in case of little bit shifts. The impacts on Tesco
business of such aspects are as defined:
Positive impacts – In UK, there is high level of employment that means it is supplying
greater jobs at lower cost that is impacting positively on Tesco business as reduction in cost.
Moreover, stability in exchange rate that is supporting Tesco to trade at international level that
helps to generate high profits (Hautamäki, 2015).
Negative impacts – After Brexit, in UK interest rates are increased due to which it become
difficult for Tesco to expand its business in other areas by taking loan because there has to pay
high interest charges.
Social factor – The association of such factor with society which consists attitudes,
culture, beliefs, values and majority of people in community which focuses on needs and
lifestyle of people. this has affected the business of Tesco that are as defined:
Positive impacts – Tesco is very careful and aware regarding lifestyle and needs of people
that helps to provide the products and services accordingly and improve the business profitability
by increasing the sales (Jacob and Weiber, 2015).
Negative impacts – To ignore the needs and wants of different culture of people can shift
or reduce the selling graph of Tesco resulting affected business adversely.
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Technological factor – In competitive environment, technology is changing rapidly where
it is important for organisation to focuses on innovation and new technology that can support and
helps to take the competitive advantages.
Positive impacts – Tesco is getting benefits by bring innovation in their supplying
process, choosing products, payment online and increasing brand popularity that has impacted
favourably.
Negative impacts – This can be risky for chosen organisation to adopt new technology as
management needs to make high investment on new process and ideas that reduced profits.
Legal factor – In UK, government has formulated many regulation which are important to
follow that involves, labour law, minimum wages, healthy and food protection etc (Marcus,
2015).
Positive impacts – Tesco is following minimum wages, labour law, data protection, health
and safety and many legislation which has impacted on business positively increases Tesco
performance in competitive environment.
Negative impacts – Not providing healthy standard products and providing expiry date
product can harm people healthy which eliminate the customer trust and reduced organisational
sales (Karakowsky and Guriel, 2015).
Environmental factor – For running a business there is need to follow the environmental
standard which have formulated by government. This involves ethical consideration, carbon
emission, wastages, spoiling water in case of not following (Nel and Abdullah, 2017).
Positive impacts – Tesco is following all environmental standards in which it focuses on
reduction in carbon emission, growing plantation, renewable energy from wastages etc. where it
get government support to grow its business effectively.
Negative impacts – Change in climate would have impacted negatively on chosen
business such as decrease in demand of textiles and cooling products in winter that reduces sales.
M3 Adapt the PESTLE model correctly to enable a thorough study of an organisation's macro
climate.
PESTLE analysis is an appropriate framework that should be used by organisation in order
to analysis the external environment. This is important for organisation to focuses on political,
social, economical, technological, legal and environmental factor which has impacted on
business. For instance, changes in technology can be risky due to spending amount where
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management need to research properly and should hire skilled employees who can perform well.
Moreover, not following health and safety standard can be threat for organisation that needs to be
improve by following and providing best quality of food to customers (Nevin, 2016).
LO4
P5 Perform internal and external analyzes to define strengths and deficiencies in different
organizations.
Internal analysis – This is related to internal analysis of business where management is
required to use a appropriate framework and analysis the internal environment so strength,
weakness, opportunities and threats in relation to business scan get easily. This arises and can be
evaluated internally by using SWOT analysis that helps to operate a business and increase the
organisational profitability (Rofiq and Pramono, 2019).
SWOT analysis – This is a framework which uses by companies to identify their strength
and weakness. The weakness and threats of business needs to converted in to opportunities so a
business can be run effectively and maintain the high profits. Such as Tesco is using SWOT
analysis that are as explained:
Strength Weakness
 Tesco is having strong brand and global
presence specifically in Europe that
helps to run a business and increase
organisational profitability.
 It has incredible growth place which
help to operate business.
 Leading organisation in competitive
environment.
 Selling of retailing products and services
 Applying strategic business model that
uses to operate a business.
 Researching on marketing areas and
using various distribution channel.
 Business concerns are following the
centralised system.
 Lack of product range as per customer
demand.
 Having competitor such as Walmart,
Asda, Morrison etc.
 Shifting pricing charges activity that
reduces organisational sale.
 Sluggish and slumming profitability in
USA.
 Shifting in people demand and
choices.
 Spiked operation cost
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 Focusing on customer needs and wants
then deliver kind of products.
 The manager are researching the market
and bring innovation and new
technology in their process that
increases customers (Tajeddini and
Trueman, 2016).
Opportunities Threats
 Tesco is using new technology and
innovation in their organisation which
helps to grow the business effectively.
 It ahs skilled and talented employees
who works collectively.
 Best distribution channels.
 Larger stores in different countries.
 Developing customer needs and wants.
 Providing better quality of products .
 Focusing on minimal reduction of
wastages and reducing carbon emission.
 Government stability that provide
opportunities to run a business
appropriately.
 The substitution of retailing products
are available in market.
 Entrance of new business and using
technology by them.
 Changes in culture, taste and
preference of people.
 Climate changes that can reduces
organisational productivity and selling
activity (Uluskan and Godfrey,
2018) .
P6 Clarify how shortcomings and strengths interrelate with external macro influences.
In competitive business environment this is highly important that to focus on external
factors and run their business effectively. If business concern are able to control and reduce the
negative impacts then no change to loss with high competition. To run a business a person
should focuses on their macro factor which are relating to external environment that means they
arises out of the organisation. Such factors have contribution in organisational productivity and
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brand increasing by attracting customers and deliver them best quality of products. Tesco is retail
supermarket that is focusing on external environment that has interrelation with strength and
weakness that are as defined:
Basis of
interrelations
Strength Weakness
Political factor Stability of political system and
government regulation in UK is
creating strength for Tesco
organisation such as it can operate
business successfully without any
restriction. This also helps to increase
the brand image between many
competitors.
If government has changed its trade
policy and put some tight regulation
then it will be weakness for Tesco
to operate its business in UK
continuously because it will ha rd to
follow new trade policies (Zhang,
2015).
Economic factor In UK, by establishing supermarket
Tesco is creating job opportunities for
residing people that is strength for
economy and organisation. For
example, selection of skilled and
talented people at low cost and
improvement in economy by creating
job opportunities for domestic and
international people.
The weakness of economic facto is
rises in BRICS and inflation rate
can be limits the buying power of
customers. Resulting they will not
ready to buy necessity and wanted
products easily so it will be difficult
to sale its products (McDonald,
Moreno-Monroy and Springare,
2019).
Social factor The strength of society is to identify
the needs and lifestyle of people who
belongs to different society and
provide products and services
accordingly that helps to increase the
sale and profitability of Tesco
A small shift in people taste and
customer lifestyle can be difficult
for Tesco company to sale its
products and services effectively.
As customers can start to move
towards other brand and
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company as it focuses on people
culture, beliefs and values (Tackie,
2019).
organisation that may be weak point
for organisation.
Technological
factors
The strength of technology adopted
organisation such as Tesco is
incremental in brand image, supplying
products and distribution channel
which attracts customers by providing
information and it increases sale of
chosen organisation. This helps to take
the competitive benefits.
The cash flow statement and
income statement of Tesco
company can be go negatively
because spending a high amount on
technology and other working
activities that has directly affected
the business negatively.
Legal factor Tesco is strengthen their
organisational effectiveness by
following all legislations such as
minimum wages, equal opportunities,
health and safety standard, data
protection etc. which attracts
customers to but the best quality of
product that increases selling
activities.
If there is any mistake is done by
management of chosen organisation
in case of following all legislation
then there will be chances of
stopping the business as per
government regulation so it is
weakness of legal factor.
Environmental
factor
Reducing wastages and use it
renewable energy increases brand
image and customer loyalty in
business environment that helps to
operate a business successfully and
increase the profitability (Sattar,
UllahQasim, M. and Warraich, 2019).
Not commanding on wastages and
not providing seasoning products
will be weakness for Tesco to get
minimum amount and turn over in
changing climate that increase
challenges for organisation.
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M4 Applying the SWOT / TOWS model correctly and explain how it affects decision taking.
Tesco is super market that is using SWOT analysis to know the strength and weakness of
their organisation by identifying opportunities. It run business by leading the better quality of
products and services which helps to maintain the high brand image in competitive environment.
With the help of SWOT analysis management can make right business decision and perform
their all activities effectively by delivering the retailing products. The management of chosen
organisation are making right business decision at right time by eliminating threats and
converting in to opportunities (Sattar, UllahQasim, M. and Warraich, 2019).
D2 Critically evaluate the impacts that both macro and micro factors have upon business
objectives and decision-making.
From the above discussion it has critically analysed that macro and micro environment
should be analysed by organisation at the time of running a business that helps to operate a
business successfully and make profits. If organisation is able to convert the threats and
weakness in opportunities than mean it is using SWOT analysis which helps to maintain high
profitability. In macro it uses PESTLE analysis that focusing on external factors and have
impacted on business. These factor should be monitor by management so negative impacts can
be reduced.
CONCLUSION
From the above report it has been terminated that business environment is collection of
internal and external factor which are related to micro an d macro factors that arises in
organisation while running a business. PESTLE analysis is used by organisation evaluate the
macro environment that states how such factors have impacted on business . Where as SWOT
analysis states the strength and weakness of their business by operating it successfully.
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