Impact of Macro and Micro Factors on Business: Tesco Case Study

This report provides a comprehensive analysis of Tesco's business environment, examining the impact of both macro and micro factors. It utilizes PESTLE analysis to evaluate political, economic, social, technological, legal, and environmental factors influencing Tesco's operations. The report also includes a SWOT analysis, highlighting Tesco's strengths, weaknesses, opportunities, and threats. Furthermore, it explores the interrelation between these factors and their impact on Tesco's strategic decision-making and overall performance. The analysis considers the company's brand value, competition, financial health, and market opportunities, offering insights into how Tesco can navigate challenges and capitalize on growth prospects within the dynamic business landscape. The report also includes a brief SWOT analysis of Sainsbury, comparing its strengths, weaknesses, opportunities and threats.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1) Critical evaluation of various macro and micro factors on business......................................1
2)SWOT analysis of Tesco.........................................................................................................3
3) Interrelation between strengths and weaknesses with factors of extremal macro
environment.................................................................................................................................4
CONCLUSION...............................................................................................................................4
REFRENCES...................................................................................................................................5
.........................................................................................................................................................6

INTRODUCTION
Business is defined as a procedure which is undertaken by an individual for purpose of
generation of revue or profit by performing functions and operations. Factors which effect
decision making of an organisation are very essential to be analysed. This plays an major role in
promoting of those strategies which helps in creating an balance with current situation going on
in an business environment. Also it helps managers and directors to promote these strategies
which helps an business organisation to grow according to situation of market. Things to be
covered under this file is SWOT analysis, PESTEL analysis and interrelation of strength,
weaknesses with macro factors.
MAIN BODY
1) Critical evaluation of various macro and micro factors on business
Macro factors of various types creates different effect upon an organisation like Tesco.
For this purpose PESTLE analysis is used. Such analysis helps in identifying those factors which
helps in smooth performing of operations in Tesco. Further analysis of these factors are given
below (Rittenburg, Gladney. and Stephenson, 2016).
Political Factors: Under these types of factor all the policies formed by government in
order to monitor flow of business are deal with. Also these factors helps government to intervene
into operations of business. Factors of such kind helps and organisations to handle problems of
legal framework.
Positive impact: Condition come out because of Brexit is also helpful in providing
opportunities to Tesco. That is going to increase its growth in future. Also lot of business is
going to come which is going to help company in achieving goals and objectives set by it
(Gromoff, Bilinkis. and Kazantsev, 2017).
Negative impact: There are certain conditions which does not help an organisation in
achieving its goal. These conditions are rise in tax because of change in tax policies by
government. This lead towards increase in price of product. That eventually leads to loss of
customer for Tesco.
Economic factor: There are various factors that creates an direct effect upon a firm's
economic condition in both negative and positive manner. These factors deals with inflation rate,
1

interest rate, employment and exchange rate. Tesco is going to have an different effect because
of these factors because its going to directly impact economic stability of the company and
further impact is explained below:
Positive Impact: If condition of an economy is good then it is likely to create an
positive impact over an organization. This is going to help in gaining of more profit and gives
financial stability to the organization (Gaganis, Pasiouras. and Voulgari, 2019).
Negative Impact: If inflation rate increases then it is going to have an negative impact
on an organization like Tesco. This is going to lead in decreasing of profit and also loss of
customers.
Social factor: In these types of factors various aspects related to society and its people
are covered. It includes behavior, culture, believes and individual organization. This is going to
have drastic effect upon Tesco that is given below:
Positive Impact: Such environment is going to have an positive impact upon a business
organization because it is going to help in aiding of it. This also leads to identify of new trends
and culture which should successfully attract more customers to it (Kasemsap, 2016).
Negative Impact: Negative impact of such factor upon an organization like Tesco is.
This going to increase conflicts in an organistion because of dynamic culture.
Technological factors: In these kinds of factors development related to technology is
dealt with. These are helpful for an business organization as it is going to help in increasing or
making work easy for them. For Tesco changes can take place only after adopting of new
techniques. Impact of it is explained below:
Positive Impact: This is going to make production faster, as new technology is going to
better than others present. It is also going to make smoothness of working conditions.
Negative Impact: Due to this investment regarding capital for a company increases,
then a firm is going to impacted negative manner because he would not be able to buy new
machines that leads to reduction in quality of product produced.
Legal factor: It covers legal factors in it which deals with any kind of legal issues ocured
in an country. These are required to be followed by Tesco to form a legal frame work.
Positive Impact: It helps in staying within rules and regulation defined under a law. That
helps a company to establish itself in smooth manner.
2

Negative Impact: If such rules and regulations are not full fill by any organization, then
they have to face legal issues in future.
Environmental factor: Under these factors all the requirements that is related in order to
protect an environment is considered (do Rosário Cabrita. and et. al., 2016). In a simple way it
deals with all regulations required to be followed by organization in order to maintain ecological
balance in society.
Positive Impact: These haves an positive impact upon an organization in a manner that,
it helps in increasing goodwill of a firm in the market.
Negative Impact: If regulation of such kind are not followed then goodwill of company
is going to reduce because environmental experts is not going to approve it as per standards of
environment (Chung. And et. al., 2016).
2)SWOT analysis of Tesco
Strength Weakness
The main strength of Tesco is its brand value.
This helps it in maintaining customers for it in
market. Also because of high brand value
company is able to maintain goodwill in
market.
Quality is also an important strength of the
company because being a big brand in market,
it is the duty of company to maintain quality of
its product produced. This leads to increase in
profit which directly gives an upliftment to
company by providing financial stability.
Competitor in market is going to provide an
negative impact over Tesco because this going
to lead towards decrease in customer
percentage. As seeing better services customer
switch to other brand.
Also financial debts has caused lots of loss to
the company in a manner that it created an bad
images of company which result in negative
impact in front of investors. Due which
investment has become low.
Opportunity Threat
Tesco has a very better opportunity of creating
joint venture with other companies. That is
going to create opportunity for organisation to
Company has to take care of political factors as
it can have drastic impact upon its sales and
3

grow. growth.
SWOT Analysis of Sainsbury
STRENGTH WEAKNESSES
Major strength of Sainsbury is its goodwill
which has helped it in attracting customers and
cover wider range.
Promotional strategies of Sainsbury has also
helped in building a strong image in front of its
competitors.
Sainsbury needs to take care of growing cost of
its product. As this can lead to less profit to the
company.
Brand switching has effected percentage of
customers. Despite of promotions and
programs retaining of customers is challenge
for the company.
Opportunities Threats
Sainsbury can grow its business in village
areas which is going give it opportunity to
attract customers in village. This is going to
lead to expansion of its market.
Due to rise in competition switch of brand can
take place which is going to decrease
percentage of customers. That is going to
decrease in profits for Sainsbury.
3) Interrelation between strengths and weaknesses with factors of extremal macro environment
A better interrelation among internal strength an weaknesses, also strong external macro
factors can help an organisation in achieving more efficient and effective results. After analysing
of external factors of an organisation various new opportunities and threats accruing in business
environment has been identified. Now plans and strategies are developed according to these
analysis. This is going to promote growth and increase in profit of an organisation. Also has
resulted into better decision making in an organisation.
In relation to Tesco an organisation it can be analysed that political factor in micro factor
is going to create an negative impact over this organisation because it is going to create policies
which is rigid in nature, that is going to impact overall development of company. Interrelation of
4

macro factors with an internal decision making mechanism can leads towards uplift in terms of
growth and success (Hamad, Elbeltagi. and El‐Gohary, 2018). Also an opportunity is observed
under social environmental factors which are related to Tesco that is environmental products
demand is increasing at very high rate. A proper balance of external factors along with strength,
opportunities gives lot of innovative and uniqueness in its product produced. An high level of
technology or improvement in technological factors results into improvement of micro
economical factors of Tesco. Internal factors and improvement of strength has lead towards
better efficiency. Operations are performed in better manner which results into better and
efficient results. This result in gaining success to Tesco at much faster and better rate. So, an
interrelation between both factors is going to create an better opportunity for an organisation like
Tesco as it ensures for success and growth in much faster manner.
CONCLUSION
From the above file it clear that business environment are those internal and external
factors which are responsible for growth of an organisation . Different types of organisations
are public, private and social form of organisation. Organisation of different have size, scope and
objective. SWOT analysis has helped in identification of those factors that has lead towards
growth in an organisation. Then PESTLE is also there which covers lot of factors of political,
social, legal, technical and environmental factors. The file is concluded by showing interrelation
of both external and internal factors impact of it over an organisation like Tesco.
5

REFRENCES
Chung, H. F. And et. al., 2016. Organizational capabilities and business performance: When and
how does the dark side of managerial ties matter?. Industrial Marketing Management.55. pp.70-
82.
do Rosário Cabrita, M. and et. al., 2016. Integration of lean, agile, resilient and green paradigms
in a business model perspective: theoretical foundations. IFAC-PapersOnLine. 49(12). pp.1306-
1311.
Gaganis, C., Pasiouras, F. and Voulgari, F., 2019. Culture, business environment and SMEs'
profitability: Evidence from European Countries. Economic Modelling. 78. pp.275-292.
Gromoff, A., Bilinkis, Y. and Kazantsev, N., 2017. Business architecture flexibility as a result of
knowledge-intensive process management. Global Journal of Flexible Systems Management.
18(1). pp.73-86.
6

Hamad, H., Elbeltagi, I. and El‐Gohary, H., 2018. An empirical investigation of business‐to‐
business e‐commerce adoption and its impact on SMEs competitive advantage: The case of
Egyptian manufacturing SMEs. Strategic Change. 27(3). pp.209-229.
Kasemsap, K., 2016. Advocating electronic business and electronic commerce in the global
marketplace. In E-retailing challenges and opportunities in the global marketplace (pp. 1-24).
IGI Global.
Rittenburg, T. L., Gladney, G. A. and Stephenson, T., 2016. The effects of euphemism usage in
business contexts. Journal of Business Ethics. 137(2). pp.315-320.
7