Analysis of Tesco's Business Environment, Functions, and Strategies

This report provides a comprehensive analysis of Tesco, a major UK supermarket chain, examining its business environment and functions. The report begins with an overview of different organizational types, differentiating between private, public, and voluntary organizations, and discusses the growth of the international business environment. It then focuses on Tesco, detailing its background, products, services, size, scope, vision, mission, objectives, organizational structure, and key stakeholders. The core of the report involves a PESTLE analysis to identify the macro-environmental factors impacting Tesco, followed by a SWOT analysis to evaluate its internal strengths and weaknesses, and external opportunities and threats. The report also analyzes Tesco's core business functions including human resources, operations, marketing, and finance. Finally, the report reflects on the key findings from the analyses, drawing conclusions about Tesco's strategic position and decision-making processes within the competitive retail industry.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
An overview of different types of organizations.........................................................................3
Explanation of Tesco with its key aspects...................................................................................4
Different business functions for Tesco........................................................................................6
PART 2............................................................................................................................................8
PESTLE Analysis........................................................................................................................8
SWOT Analysis...........................................................................................................................9
Reflection of key findings..........................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
Business environment is referred as the collection of all the external and internal factors
such as customer needs, employees, government market trends etc. which has a significant
influence upon the decision making process of a business organization. These factors may
directly or indirectly have an impact on the overall productivity of a company in the industry.
The determinants in the business environment encourages the businesses to make effective
changes in their business strategy in order to gain advantage (Möller, Nenonen and Storbacka,
2020). There are different types of business environment which are created by the businesses that
are helpful in increasing the overall success of the business in the competitive industry.
The current report will be based on Tesco which is one of the most popular supermarket
chains in the UK. The company provides wide variety of products and services to their customers
which is beneficial to grow. This report will explain an overview of different types of
organizations with growth of international business environment, explanation of the chosen
organization, different business functions of the chosen organization, PESTLE analysis to
identify various macro environmental factors, SWOT analysis and reflection of key findings of
their influence on the decision-making process.
PART 1
An overview of different types of organizations
There are different types of organizations which are operating in the business
environment which have a major contribution in the overall development of a region. They have
unique features and structures that help them to gain competitive advantage in the industry.
Private organizations are the businesses which are aimed for-profit and are considered operate
without any collaboration with the government. Sole proprietors, partnerships, SMEs etc. usually
come under privately owned businesses which have a major focus on earning profits and
achieving better growth in the industry. Pentland Group is one of the most successful privately
owned business organizations in the UK retail industry having a significant brand image in the
market. It offers high quality products in the sports section and is known as a popular brand in
the market of UK (Abu-Rumman, 2021).
Public organizations sell their portion of shares to the public directly in order to arrange
large amount of capital for business operations. Tesco Plc. is a successful supermarket chain

having a significant market share in the UK retail industry. This company has a wide network of
operations in different countries which has been crucial for the business to grow in the
competitive industry. It operates on a large scale with many employees in their business which
contribute towards the growth of the business in the industry.
Voluntary organizations are composed of individuals who come together in order to
provide aid or services to people who need help. These are non profit organizations which helps
the business to gain better advantage and create opportunities for the organization to increase
their development opportunities in the industry. British Heart Foundation is a research charity
organization which provides services related to cardiovascular problems (Cepel, 2019). It is an
influential organization which consistently runs effective campaigns for promotion heart care in
order to enhance the health benefits of the general population. It is helpful reducing the health
issues which are faced by the business in the country.
International business environment has experienced massive growth with the help of
various factors that have a major contribution the business environment. The changes and
developments in different sectors such as technology, education, economy, import & export etc.
have facilitated the overall international business environment. The business organization have
been able to expand their services at a global level and achieve better recognition in the industry.
The amalgamation of various traditions, beliefs and attributes of different businesses and
consumers has been one of the major reasons for the overall growth of the industry. The
communication and connectivity has become which is crucial to conduct the daily business
activities with better convenience. Candidates are able to gain employment in different
organizations where they aspire to get selected which also helps in enhancing the talent pool of
businesses. The international business environment has achieved better growth due to these
aspects and has been able to gain better advantage in the industry.
Explanation of Tesco with its key aspects
Background details
Tesco Plc is a multinational supermarket chain which is having a crucial existence in the
retail industry of UK. The business organization has its headquarters in the Welwyn Garden City,
England and it was founded in the year 1919 by Jack Cohen. Tesco has expanded in various
markets globally since 1990s focussing on diversifying its services and gaining better market

share in the international markets (Cepel and et.al., 2019). It has gained the trust of the customers
which is helpful for the business to grow and achieve better success in the industry. The brand
name of Tesco has become familiar to the customers as they want to purchase these products
more frequently in their daily life.
Products and services
Tesco provides a wide range of products and services such as clothing, books,
electronics, software etc. to the customers which is helpful for the business to fulfil the
maximum needs of individuals effectively. It has expanded its collection of products which it
offers to the customers which has created various opportunities for the business to grow in the
industry.
Size and scope
Tesco is one of the largest organizations in the food retail industry which operates with
around 4074 stores at different locations in various countries. It has over 32600 individuals
which are working towards achieving the aims and objectives of the business (Belyaeva, 2018).
It has strong brand equity in the market as the customers have developed a trust over the
products and services which are offered by the brand to them.
Vision
The organization has a vision to become the most valued business in the world fulfilling
the needs of customers and the communities in which they operate.
Mission
Tesco's mission is to make a better business environment where all the key stakeholders
and the can gain the maximum satisfaction from the activities which are undertaken by the
business.
Business objectives
 To maximize the profits and sales of the businesses by cutting their prices and expand
existing stores to new markets which will be helpful in attracting more customers towards
the brand.
 To introducer healthy food options for the population for improving the health condition
of people and engage the customers towards the businesses practice who are interested in
maintaining their health.

 To develop a large e-commerce store for remaining relevant in the changing business
environment which will be helpful in providing the customers with better service.
 To provide better employment opportunities for people in different remote locations in
order to improve their economic development.
Organizational and legal structures
Tesco has a hierarchical organizational structure which helps in the business to organize
their businesses operations and function in vertical flow of authority. Different positions and
structures are added in the business environment for improving the sustainability of the business
(Belás and et.al., 2019). It is helpful in simplifying the management of crucial operations of the
business on a regular basis which is beneficial to enhance their services and gain better
advantage in the industry.
Information about stakeholders
The major internal stakeholders of the business are its employees, board members,
managers, shareholders etc. who have a major contribution towards the overall development of a
business in the industry. The employees of the Tesco are highly qualified having and helps the
businesses to enhance their performance in the industry. The external stakeholders such as
customers, government, suppliers, competitors etc. have a major influence over the decision
making process of the business. Changes in the interests of these stakeholders may increase
difficulties for the organization to manage their productivity in the business environment.
Different business functions for Tesco
There are different functions in a business environment which are helpful for the
organization to enhance them and manage their daily activities appropriately. These functions
have certain specific roles which creates better opportunities for the business to grow in the
industry. Organizing these business functions plays an important role in increasing the success of
the business in the industry. There are four types of business functions which are discussed
below:
Human Resources
The HR department is mainly responsible for managing employees of the business in
order to fulfil the needs of the business in the industry. It is helpful in identifying the workforce
needs of the business in order to recruit high quality candidates towards the development of the
business (Črešnar and Jevšenak, 2019). It focuses on providing training and development

activities to the employees which is beneficial for improving their performance in the business
environment. The management of rewards and appraisals of employees is also conducted by the
HR which is helpful for the employees to achieve better growth opportunities in their company.
With the help of different aspects, the business is able to grow and produce better quality of
output for the business to grow in the industry.
Operations
It is also understood as the production function which is responsible for managing all the
operational activities of the organization effectively. This function is responsible for producing
goods and providing services to the customers which is beneficial for the business to achieve
growth. With the help of this function, the business is able to increase the utility of their inputs
and create better opportunities for them to achieve success in the industry. The organization may
highly focus upon achieving better consistency in providing quality services to their customers
which is a positive factor for the business and plays a vital role in the overall development of the
company. It is helpful for the other crucial areas of the business to manage their work and create
better opportunities for achieving growth in the industry.
Marketing
The marketing department is responsible for the promotional activities which are
undertaken by the business in order to promote their products and services. There are different
aspects which are dealt by the marketing department on a regular basis such as product
development, distribution, customer relationship management, market research etc. The
employees under this department work towards improving the brand image of the organization in
the competitive industry which may create better opportunities for the business to grow
(Gogokhia and Berulava, 2021). These activities may have a negative influence over overall
development of the Tesco in the market which plays a vital role in creating better sustainability
for the business in the industry.
Finance
This function of Tesco deals with the daily accounting needs and practices of the
company which is necessary to maintain the overall profitability of the company in a competitive
business environment. Providing adequate financial to the management is a major factor for the
organization which has a significant role in increasing the overall effectiveness of the brand in
the industry. They work upon strict policies and procedures which are followed in order to

minimize the possibility of errors in the company's financial records. This function further
provides help to the other areas by provide appropriate budgeting information to them which is
crucial for them to create better impact in the business environment.
These factors are crucial for the business to manage their daily operations appropriately
and increase their overall productivity in creating better opportunities for the business to grow in
the competitive business environment. By analysing these areas appropriately, the business will
be able to provide better assistance to their employees and achieve their short and long-term
goals.
Organizational Chart
PART 2
PESTLE Analysis
PESTLE analysis is an effective framework which is helpful in analysing the external
business environment of an organization. There are several factors which are included in the
external environment which have a significant impact on the overall organization. These factors
include:
Political Factors
Changes in the corporate taxation and fiscal policies by the governments may have a
negative influence on the overall operational capability of the organization in the global retail
industry. Instability in the political environment of various countries is another significant factor
which has a major role in creating difficulties for the business to grow in the industry (Rimita,
Hoon and Levasseur, 2020). There are certain positive influences of this factor as well because
Business Functions
Human
Resources
Operations Marketing
Finance

the governments offer special services to the supermarket giants which provide employment
opportunities in a large quality for the population of the country.
Economic Factors
There are frequent modifications in the taxations or monetary policy of different
countries which has a significant impact on the overall profitability of Tesco. Due to these
aspects, the business may lose its stability in the industry and get affected by these changes in the
structure of the economic conditions of the retail industry. The economic crisis may have a
negative impact on spending capacity of the customers which is a major consideration for the
business to achieve success in the industry.
Social Factors
The social trends and promotional activities on social media platforms are positive factor
for the business in order to increase its productivity in the business environment. Customers have
developed a trust over the products and services which are offered by the business to them which
is beneficial for the business to grow in a competitive industry. There are certain negative impact
of these social trends as the customers have started become more aware towards healthy foods
which may have significantly decreased the sales of unhealthy food items by the business.
Technological Factors
Advancements in the technological sector have created various development
opportunities for Tesco in the industry. With the help of these services the business has been able
to develop effective e-commerce store for their customers which is appropriate in attracting more
customers towards the business (Vlados and Chatzinikolaou, 2019). The advanced technological
tools such as Big Data and AI has facilitated the customer data management process of the
business which is successful in analysing their needs and wants and providing them with better
satisfaction.
Legal Factors
Government legislations and policies have a direct impact on the performance of the
business in the retail industry. Various restrictions are imposed by businesses in order to regulate
the quality check of the food products which are provided by the Tesco to their customers on a
regular basis. These aspects may not be beneficial for the business to maintain their sustainability
in the business environment as these restrictions may reduce the overall effectiveness of the
company in the industry.

Environmental Factors
The carbon footprint released by Tesco in the environment may have a negative influence
on the sustainability of the areas where it is operating. These aspects are not beneficial for the
business as governments might impose restrictions on the business to operate successfully in the
business environment and create better opportunities for achieving growth in the industry. The
waste products released on regular basis is a major cause for pollution in the environment which
is unacceptable in various nations. In order to overcome this situation Tesco may take effective
steps and reduce their contribution in the environmental degradation.
SWOT Analysis
SWOT analysis is an appropriate framework which is effective in analysing the internal
business environment of and organization which provides a better understanding of the strengths
and weaknesses, threats and opportunities which are present with the business. The factors in this
analysis are as follows:
Strengths
Tesco has a significant market share in the retail industry which is its one of the main
strengths which helps the business to build and effective brand image among their customers.
Innovative practices undertaken by the business is another crucial strengths which is useful in
attracting more customers to buy the products and services which are offered by the supermarket
chain (Krajnakova, Navickas and Kontautienė, 2018). The organization has a positive approach
towards their business practices which motivates them to adapt better solutions even in the
situations like pandemic. With the help of these strengths the organization is able to establish a
better business among their customers which provides them with the better options to grow in the
industry.
Weaknesses
Shortage in the products is a major concern for the business which reduces their
capability to serve the customers and fulfil their satisfaction needs. This factor further creates a
negative impact on the business to manage their inventory and help the business to have a control
over their products. The changes in leadership of Tesco may create conflicts in the business
environment which are not suitable for the business to achieve success in the industry. These
changes in the leadership may reduce the trust of employees in the management decisions which
may have a negative impact on the business.

Opportunities
Tesco can build alliances with other brands which have a significant market share and
customer base in the industry which is crucial for the business to attract more customers by
offering them with attractive products and services (Kiseľáková and et.al., 2019). Expanding
their business into new markets can be another effective opportunity which may increase the
overall impact of the business in the global business scenario. The business can strengthen their
online selling platforms in order to provide better convenience to the customers and increase
their effectiveness in the industry.
Threats
Competition from big supermarkets chains may create potential threats for the business in
order to sustain in the market. The economic crisis in the global business environment due to the
recent pandemic and war like situations has a deep impact on the overall profitability of the
company in the industry.
Reflection of key findings
These internal and external factors may create different critical situations for the
company which makes it difficult for them to stay with their original decisions. It becomes
necessary for the business to make effective changes in their decision-making process which is
helpful for them to gain better advantage in the industry. These factors interrelate and have a
significant impact on each other which is either beneficial or harmful for the business. Tesco has
a significant market share in the global retail industry which may increase its opportunities to
expand in various other regions and markets in order to achieve growth (You and et.al., 2019).
These expansion opportunities have a significant influence over the global presence which the
business has in the international markets. The innovative approach of Tesco towards the business
practices is useful for the business to develop an effective online platform and attract more
customers towards the company. With the help of these strengths the business may be able to
develop better opportunities the industry which will be helpful for it to grow in the competitive
business environment. It can be useful for the business to enhance their key strengths which will
provide them with better capability to achieve success in the industry.
Shortage in the products of Tesco which restricts it to provide better satisfaction to the
customers is a factor that has a negative influence on the overall sustainability of business in the
industry. This weakness of the business may reduce its competitive advantage in the industry and

give their key rivals an opportunity to enhance their dominance in the market. It may not be
suitable for the business as due to this factor the business may lose its attractiveness to the
customers which can create difficulties for the organization to grow. The frequent changes in the
leadership of the business may not be beneficial for the business to grow and enhance their
services which are crucial for achieving competitive advantage in the industry (Kozubikova and
et.al., 2019). Due to this weakness of the business, it may not be able to make crucial decisions
in the tough times of the war and Covid-19 pandemic. It may have a negative influence over the
company to manage their stability in the complex business environment which plays a vital role
in the overall development of the business.
CONCLUSION
It has been concluded from the above report that business environment consists of several
internal and external factors which have a significant impact on the overall effectiveness of a
company in the industry. There are different organizations which are working in varied sectors
that have various purposes to carry out their daily business or non-business practices. Different
types of business functions have specific roles and duties assigned to them, but they interrelate
with each other and have a significant connection between them (Głodowska and Pera, 2019).
The relation between these activities plays a major role in enhancing the overall success of the
business in the industry. The coordination between these aspects creates better opportunities for
companies to gain better advantage in the industry and improve their overall impact.
SWOT and PESTLE analysis are major evaluations tools which have been used by the
business to interpret specific internal and external factors which have an effect on the
development of the business. Due to these factors the business have been able to experience
growth or downfall in the industry. They are interrelated with each other and have an influence
on the overall decision-making process of the business in the industry.