Analysis of Tesco's Business Environment: Types, Functions, and Impact

This report provides a comprehensive analysis of Tesco's business environment. It begins by defining business and its environment, emphasizing the importance of internal and external factors. The report then explores different types of organizations, including public, private, and voluntary organizations, and their respective legal structures, using Tesco as a key example of a private organization. The size and scope of these organizational types are compared, highlighting Tesco's multinational reach. The report further examines the interrelationship between various organizational functions such as marketing, production, human resources, sales, research & development, and finance, emphasizing their collaborative roles in achieving business goals and generating profit. The impact of macro-environmental factors on business operations is also identified, along with an internal and external analysis of Tesco to identify strengths, weaknesses, and their interrelation with external factors. The report concludes by summarizing the key findings and insights gained from the analysis, emphasizing the importance of understanding the business environment for achieving organizational success.

Business and the Business
Environment

Table of Contents
Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explain different types and purposes of organisation.......................................................1
P2 Explain the size and scope of different types of organisation...........................................3
TASK 2............................................................................................................................................3
P3 Explain the relationship between different organisational functions................................3
TASK 3............................................................................................................................................6
P4 Identify positive and negative impact of macro environment on business operations......6
TASK 4............................................................................................................................................8
P5 Conduct internal and external analysis of the organisation to identify strength and
weakness.................................................................................................................................8
P6 Explain how strength and weakness interrelate with external macro factors...................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business is the term that defines the continuous action that will get performed to
accomplish the certain goals and the objectives to earn more profit. They have worked with more
roles and responsibility with that the management of the business will operate their function in a
systematic structure under which the mission and the vision will be the major aspect and helps
the company to make higher sales in systematic manner. In this the business must get sale their
products and the services to satisfy the need and the requirement of the customer in order to
develop the loyal customer base and generate more profitability (Ahmadi, 2018). The business
environment involves the collection of the internal and the external factors that includes the
employee, customer, clients, supply and demand, suppliers, government activities, social and
market trends etc. This report is based on the Tesco that is the British multinational retailer of the
greocreis and the merchandisers and having the headquartered in the Welwyn Garden,
Hertfordshire, UK. This report includes different type of the organisation, interrelationship of
various functions, and impact of macro environmental factor, internal strength and weaknesses of
the business.
TASK 1
P1 Explain different types and purposes of organisation
Organisation defines as the combination of different group of people that is well
structured by which the goals and objectives will get achieved in systematic manner. There are
different type and purpose of an organisation with it legal structure that is as defined below as:
Public organisation- It is the one that is devise by the government and they take several
decision and authority to deliver adequate products and services at lower prices. In this business
operates its functioning with self fund in order to provide more benefits to the local people. For
example, NHS is an organisation that will work to provide more advanced services to the patient
and to provide better services for the welfare of society (Foss, 2018).
Legal structure of public organisation Central government- The government is more responsible and have the authority thus
develop different policy for the public company so that working function operate in
systematic manner.
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 State government- The policy is designed and develop by government and that will get
followed by the public companies those operates their functions and operation in outer
state.
 Local government- The public company works to develop the society and thus they have
follow the rules and laws of the local governance.
Private organisation- It is an organisation that make their contribution in the
development of economic growth (Gaganis, 2019). It will get operate by the one who register the
business and then supply products and services to the customers. The purpose of these
organisations is to earn more profit while providing required products and service in the market.
For Example, Tesco is the largest retailer company and provide diverse range of goods and
services to customers.
Legal structure of private organisation
Sole proprietorship- It will get managed by an individual person that is responsible for
the business growth and profit as well as loss will earned through their business activities.
Partnership- In these more than two parties will work all together to gain more profit and
share all the sales benefits as well as loss too. It will get performed by making the legal
agreement by which more fluency will get induce in business operations.
Limited company- In this the business will get functionalised by the different members
and the loss will suffer to those who have that limited part of share only and also get the benefits
as well.
Voluntary organisation- It is an organisation that is operated by the different individual
for the betterment of the society and for this they have take permission from government. For
example, Oxfam will work to reduce the poverty rate of the country and provide required
resources to up-raise the living standard.
Legal structure of voluntary organisation- In this the group of individual will work to
provide more benefits to the society (Hamilton, 2018). They must follow some rules that are as
defined below as:
Trust- There is some of the different pillars as like the trustee, donors and the society and
would operate the function by developing more trust and with that provide more benefits to the
society.
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P2 Explain the size and scope of different types of organisation
Private organisation- Tesco is the biggest retailer of the merchandiser as well as
groceries and has operated the business at multinational level. The organisation has worked as
with the purpose of having diverse range of scope and size as compared to the public and
voluntary organisation (Hansen, 2018). Tesco have worked on larger size and have their store in
a lot of places and that is of around 6000 stores all across the UK and other countries as well.
They have capitalised more profit and higher revenue as maintain the supply and fulfil the basic
need and the requirement of the society.
Public organisation- These are the organisations that provide services to the society and
have the limited range as well through which try to satisfy the basic need of the people. For
example, NHS is healthcare service provider and takes minimum prices and developed the funds
from the public and government as well. It is England based organisation and having 1 million
employees and collectively provides dentistry services, primary care and long-term healthcare.
They have wider scope as they have worked with large number of workforce and have provide
free health services to a larger group of society.
Voluntary organisation- The Oxfam is a charitable trust that will worked as NGO in UK
and get established in 1942 and 20 trust work under their services and with that worked with the
target to remove the poverty from the regions. The Oxfam has worked with the aim to provide
the needed and required services to the people by which their livelihood becomes easier. For this
they have used the hierarchical structure and have performed the different function in the
segments and have the motive to work all the function through which poverty has been reduced
(Jamel, 2018).
TASK 2
P3 Explain the relationship between different organisational functions
There are some of the different kind of organisation function that are support them to
manage their working abilities while achieving the task and goal in specified manner. Thus the
different department have relationship that is as defined below as:
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Illustration 1: Organisational Chart of Company
Source- Organisational Chart of Company, 2013)
Marketing and production function- The marketing department have manage the supply
and the demand of the different product in the market as per the need of the customer. They have
performed different function to get attracts the larger number of population through the
advertisement and promotional activities (Luiz, 2019). On the other hand the production
department produce the required amount of products in the society to maintain higher
sustainability. Thus both the department have interrelation in which marketing provide need of
market and production department will produce that much amount of products. In Tesco as well
the marketing department analyse the need and requirement of customer and provide that
information to the production then as per that they have produce their produces to maintain the
adequate amount of stock for easy supply. There is more advantage of the interrelationship in
between the marketing and production department as like the marketing department perform the
promotion of the different offered product and services in the market and analyse the need of the
customer and as per that the production department will get manufacture the services
furthermore and with this cost efficiency will get maintained. There are some disadvantages as
well if the marketing department didn’t analyse the perfect estimation that it might occur the
huge loss to the business.
Human resources and sale department- The human resource department have recruit
and select the candidate those have good skills and have more talent as well by which they bring
more creative and innovatory ideas within the company and have worked with more zeal and
confidence. On the other hand the sales department perform different function to develop more
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sales and with that develop different strategy through which more customers will get easily
attracted by the company. Thus in this the HR department provide the validate employee those
have more sharpen skills and the sales department have furthermore perform different operation
to attract the most required candidate within the business (Marom, 2018). Tesco have the large
number of employee and in that it is needed that all employee will have more clear goals. While
working within the company it helps to maintain higher sustainability within the business.
Advantage: as human resource department get hired the validate candidate that has better skills
about the perfect specialisation and provide the training and development by which they perform
the better function at sales department. Disadvantage: if the human resource didn’t found the
validate candidate and didn’t provide the better training then the employee didn’t perform better
while working at sales department then the huge loss will get bear by the business.
Research & development along with finance function- The research and the
development department and generate better opportunities for the business by which the higher
profit will get gained for longer period of time. On the other hand the finance department must
have provide the different function to manage the better flow of funds within the business and in
order to this maintain the profit or loss and the credit and the debits ratio and also provide fund to
other department to perform their individual function with more perfection. In context of Tesco
they have faced a lot of competition from their competitors as like ASDA, Marks and Spencer
and many other too thus to gain the profit it is must that all the function must get performed with
more clarity by which more profit will get developed (Niemimaa, 2019). Thus it is more needed
that the adequate amount of fund will flow that will get generated by the finance department and
more facilities will get developed to gain higher benefits. Advantage: The research department
must get performed the different function as like estimating the better marketing changes and
analyse the better opportunity as well and they also get analysed the market share and list of
stakeholder that get accepted by the finance department and they have present the financial
report to them by which get attract the stakeholders. Disadvantage: if the research and
development and finance department didn’t work combine and didn’t gain the benefit if they
have less learning experience and have less competency then it is difficult and there is the
possibility to leak the competitors listing.
The interrelationship in between the different department is being more vital as in this the
Tesco must have work at larger level with this all the department get worked with better
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sufficiency and with this more profit will get gained. All the department have provide the
validate information to each department by which the relevant information will get circulated in
the business by which more clarity and transparency get maintained. The different functions of
an organisation worked collectively to advance profit generation through which possibility to
perceived higher competitive advancement along with attainment of standardised goals and
objectives is developed in profitable manner. The department get worked and perform its
functions to achieve clarity among task completion that has positive impact over profit
generation. In addition, the interrelationship in between different functions advance the working
proficiency and efficiency through which possibility to control risk credibility’s and success both
get achieved in successful manner.
TASK 3
P4 Identify positive and negative impact of macro environment on business operations.
Macro environment defines the external factor that has direct impact on the productivity
and the profitability of the business and also affects the working ability and the behaviour of the
company. Thus the PESTLE analysis have been analysed by the Tesco to measure both positive
and negative impact with lot of sufficiency and are as defined below as:
Political factor- It is the factor that defines the political stability of the government and
in that the UK governance has more stability. Thus they have developed the different rules and
regulation to manage the export and import and these have both positive and negative impact of
the working ability of the company. In context of Tesco, Negative impact as like the higher
import duty has the unconstructive collision on profit of the business and they have import the
raw material from other country to reduce the production cost. There is the positive impact as
well as while working at the different nations they get attract the labour from the other nations
that will reduce the labour cost as Tesco get employee at lower cost.
Economic factors- It is the factor that is related to the interest rate, inflation and the
deflation rate by which the cost, profit and the price will get fluctuated. Negative impact: As
after the Brexit the economy of UK will get dispersed and as they have import and export their
goods and services in this Tesco tries to enhance the borrowing cost and in that have the cost and
price will get increased (Nogal-Meger, 2018) and brand image of Tesco has the affective badly.
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Positive impact: Tesco performed operation in different nations thus gets developed profit from
other countries while trading over there and that has generated better revenue.
Social factors- It is the factor that defines the living standard and the attitude of the
public towards the acceptance of modified range of products and services. Negative impact:
customer always get more demanding and wants to innovation and thus Tesco implies all the
needed innovation within the product by which customer keep attracted towards their services
that has huge cost to the business (Salem, 2018). Positive impact: But as the UK has more
advancement that is in support of the Tesco and in that they have maintain the fast supply and
delivery to the customer to generate higher sales.
Technological factor- It is the factor that is more related to the technological
advancement and the UK has wider acceptability of all the diverse advancement thus it is needed
that all the business must have use that to manage the operation in systematic manner. Negative
impact: the technological improvements lead to more growth and development of the goods and
services that is in favour of the customers but it has huge cost to the company as they have
provide training and development to their employee on continuous basis that resist the working
flow and productivity of business. Positive impact: Thus Tesco uses the RFID technology to
meet the requirement of customer and make all the updates and changes within the business. It
has negative as well as the fastest change in technology need to provide training to the employee
and that is more costly process.
Environmental factor- It is the factor that is related to the safety and the security of the
environment and with that UK governance have developed different laws that must get followed
by all the companies to get protect the surround from pollution. Negative impact: act
environmental rules are act as threat as if it didn’t follow by the Tesco than their values get
decreased and they have to pay the amount in terms of image of brands that get despoils a lot.
Positive impact: Tesco must start using the bags that are more recycled by chose the adequate
path to deliver the service by which less fuel will get consumed. Tesco have made more initiative
to save the environment and it helps to preserve more sustainable surround.
Legal factor- It is the factor that includes the different rules and the regulation through
which the better and quality products will get supply in the market. In this the Tesco will follow
all the rules of UK governance to operate the function within the legalities and with this provide
adequate wages to their employee. In has some negative impact as well as by which Tesco faced
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absenteeism and high turnover rate but in return Tesco work as per the riles as follow the Food
Retailing Commission act. Thus always look forwards to keep the health of employee are safer
and they become wealthier (Trad, 2019). Positive impact: all the legal policy get followed by
the business and with this they have to manage their working operations by which get better
connectivity with the employee and customer that helps to maintain long term stability.
Impact of PESTEL analysis- The Tesco will get analysed the PESTLE analysis with
more systematic manner and in that have fulfil the strategy according to the rules of regulation of
UK government. They have manages the risk and reduces the uncertainties that helps to generate
long term profit with more efficient manner.
TASK 4
P5 Conduct internal and external analysis of the organisation to identify strength and weakness.
The companies must have different strength and the weaknesses and as per that try to
achieve more profit and sales. In contract of Tesco, they have faced a huge competition from
their rivals that have also dealt with the supermarket or retailing (Vevere, 2018). Thus to
measure the strength and weakness the SWOT analysis will get conducted by which more
appropriate result will be gained within the timely manner. It helps to develop the working
potential of the Tesco and are as define below as:
STRENGTH WEAKNESS
 TESCO is the largest retailer in UK and
that is the biggest strength as because of
thus have wider acceptability in the
market.
 They have provide the diverse range of
products and the services in the market
by which the potential customer will get
attracted and by which the market share
of the Tesco will get enhanced.
 The diversified range of products helps
to grab attention of customer as they get
all the basic needed products with more
 As after the Brexit the sales will get
reflect a lot and with that the operating
cost will also get decreased and company
faced rapid recession. Thus with that the
share price value also get decreased thus
the profit ration will get affect a lot.
 Tesco have a lot of rivals and with that
the price war will get start with that the
profit margin will get more decreased.
 The commercial scandal has been
performed by which the brand image of
Tesco will get decline and thus customer
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easiness. loyalty also get affect a lot.
OPPORTUNITY THREAT
 Tesco has the opportunity to get make
the strategic alliance and with that have
collaborate with big companies that
emphasis the range of products and
services of the company and with that
target the larger customer base.
 TESCO has better facility to get enter
into the online sales of retail products by
which have make better interaction with
the large number of customer and with
that profit ratio will get enhance thus
they have offer the discount as well to
their customers.
 TESCO will easily get expand the
business in the different countries and
with that the sustainability will get
enhances and with that more profit share
and sales get developed.
 The customer has a lot of options in the
market and with that the preference of
the customer also get shift and it is the
biggest threat of Tesco.
 The economy crisis has been negative
impact on the working condition of the
Tesco and the tax policies also bring
huge loss to the company (Viriyasitavat,
2018).
Tesco must get have the vital strength as they have better acceptability in the market and
have served the diverse range of products with that have the larger market shares as well but on
the same hand after the impact of the Brexit the company didn’t have much profit and due to the
different tax policy much loss get maintained. In this Tesco will generate more opportunity while
expanding the business at different places but there are more of the competitor with that it is hard
to attain the better profit and for this Tesco uses the different strategy to attract the customer by
offering the product at affordable prices.
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P6 Explain how strength and weakness interrelate with external macro factors.
The strength and weaknesses has interrelatedness with the macro environmental factors
and with that Tesco have made more efficient decision to get accomplish their aim and
objectives in satisfactory manner. The interrelation in between the different internal and external
factor is as defined below as:
Political factor-It is the factors that define the trade policy and it will get drives by the
UK government. The biggest strength of the Tesco is that they have large customer base and
wider acceptability as well. In addition to this have some weaknesses as well and it is that they
have not that much able to get manage the different stores that is working in the different part of
the globe (Vlados, 2019).
Economical factor- The major strength of the Tesco is their financial stability and with
that easy impart new strategy and creativeness within the business in order to attract the
customers. On the other hand have some weaknesses as well and in that the employee turnover is
more that get affect the working performance of the Tesco.
Social factor- In this the Tesco will develop the product and services to gain the belief
and enhance the value in the market and thus try to build the trust and faithful relation with the
customers and it is the strength of the Tesco. Whereas, on the other hand the customer has more
concern about their health thus become more selective while choosing the different services. In
this Tesco provides the quality products at lower price by and by this attract the large number of
customer with more easiness.
Technological factor- It is more related to the innovation and the creation of the
different technological advancement and with that have tries to make tough competition to their
competitors. The Tesco will introduce the online delivery and manage the demand and supply as
per the requirement of the customer and ensure that customer get the services on time. On the
other hand there are some weaknesses as well as it is hard for them to keep the data of the
customer more secured and it has negative impact on the brand image of Tesco.
Environmental factors- The Tesco have taken different initiative to save the
environment and have used the recycled bags and reuse material and save the fuel while making
the delivery to the customers and it is the strength of Tesco. In addition to this there are some of
the different weakness as well that induce more uncertainties and it is difficult to get make the
fast changes in the external environment (Volintiru, 2018).
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