A Report on Tesco's Business Environment: Macro and Micro Factors

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BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
LO 1: Explaining the different types, size and scope of organizations.........................................................2
P 1: Explaining different types and purposes of organizations and legal structures....................................2
P 2: Explaining the size and scope of a range of different types of organizations.......................................3
M 1: Analysing how the structure, size and scope of different organizations link to the business
objectives and product and services offered by the organization...............................................................3
LO 2: Demonstrating the interrelationship of the various functions within an organization and their link
to organizational structure..........................................................................................................................4
P 3: Explaining relationship between different organizational functions and their link to organizational
objectives and structure..............................................................................................................................4
M 2: Analysing the advantages and disadvantages of interrelationships between organizational functions
and the impact that can have upon organizational structure......................................................................5
D 1: Providing a critical analysis of the complexities of different types of business structures and the
interrelationships of the different organizational functions........................................................................6
LO 3: Using contemporary examples for demonstrating both the positive and negative impact that the
macro environment have on business operations.......................................................................................7
P 4: Identifying the positive and negative impacts the macro environment have upon business
operations...................................................................................................................................................7
M 3: Applying appropriately the PESTLE model for supporting a detailed analysis of the macro
environment within an organization.........................................................................................................10
LO 4: Determining the internal strengths and weaknesses of specific businesses and explain their
interrelationship with external macro factors...........................................................................................12
P 5: Conducting internal and external analysis of Tescoin order to identify strengths and weaknesses...12
P 6: Explaining how strengths and weaknesses interrelate with external macro factors..........................13
M 4: Applying approximately SWOT analysis and justifying how they influence decision-making............14
D 2: Critically evaluating the impacts that both macro and micro factors have upon business objectives
and decision making..................................................................................................................................14
Reference List............................................................................................................................................15
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LO 1: Explaining the different types, size and scope of organizations
P 1: Explaining different types and purposes of organizations and legal structures
As mentioned by Harper (2015), organizations are categorised into three types that are public,
private and voluntary organizations. Each organizations have its own features, purposes, scope
and legal structures.
Public: As stated by Kuiperset al. (2014), public organizations are owned and controlled by the
government. The organizations can either be under the administration of state government or
national government. The primary purpose of public organization is to provide services to
citizens of nation. Unlike private organization, the public organization is less profit making
centric and more service providing centric. The government directly funds the public
organizations. As per the view of Van Wart (2014), the purpose of the public organization is to
provide three types of good/service. The three types of good/service are public good, merit good
and essential services. Thus, the legal structure of public organization can be categorised in
public corporations and nationalised industries, local authority undertaking and state services.
Private: As mentioned byRahmanet al. (2016), the private organizations are formed by
individual or group of people with the primary objective of profit making. Thus, the purpose of
private sector is to provide services to large number of customers and expand its business.
Therefore, the private organizations have the scope of expanding its business in the international
market and serve the customers of the global market. The private organizations also have the
purpose of ensuring job satisfaction, employment, power and prestige in the market. The legal
structure for private organizations include sole traders, partnership, companies, co-operatives and
franchises.
Voluntary: As stated by Butler andWilson (2015), voluntary organizations are managed by
volunteers of the community. The primary purpose of the voluntary organization is to serve the
community without the intention of gaining any monetary profit. In addition, the other important
purpose of the voluntary organization is to spread the social awareness on different issues. These
purposes of voluntary organizations are not bounded to any geographic limit. Hence, the
voluntary organizations can operate in other countries depending on its donations and collections
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from volunteers. The legal structures for voluntary organizations are trust, unincorporated
association, company limited by guarantee and charitable incorporated organization.
P 2: Explaining the size and scope of a range of different types of organizations
As per the view of Alexander (2014), the size of the organization is dependent on its financial
statement and urge to expand the business. In context of size and scope of a range, the public
sector is usually a large or medium size organization. However, the scope of range is limited for
the public organization, as it focus on serving the people of the country. On the other hand, the
size and range of the private organizations is not limited. The private organizations can grow into
enormous size, as international organization. Thus, the scope of range is not limited for private
organization because it focus on expanding its business in international market. In case of
voluntary organizations, the size and scope of a range is very limited. The primary reason for the
limited size and scope of a range is the lack of financial support. Since, voluntary organizations
does not focus onmaking profit and do not have any source of revenue collection. Therefore, the
size and scope of a range is limited. However, some voluntary organizations with the aid from
various sources succeed in expanding its services to other countries.
M 1: Analysing how the structure, size and scope of different organizations link to the
business objectives and product and services offered by the organization
According to Thompson (2017), various factors of the organizations link to the business
objectives and product and services offered by the organization. The above discussed structure,
size and scope of different organizations shows that it differs in different organizations. Thus, the
structure, size and scope of different organizations are not same. The structure of public
organizations results in categorization of the organization into large and medium size. The scope
of range in public organization is limited to the geographical boundary of its country. As a result,
the business objectives, product, and services offered by the organization is centred on the people
of the country.
The private organizations have a diverse structure that categorise the organizations into large,
medium, small and macro size of organizations. However, the range of the private organizations
is not limited. It could expand to international market depending on its size and financial status.
Therefore, the business objectives of the private organizations differs, the business objective of
expanding the business is not same in different private organizations. As per the view of
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Thompson(2017), the idea of maximizing the profit plays important role in creating the business
objectives of the organizations. Since, the business objectives of private organizations differs and
the scope of range is very vast. Therefore, the product and services offered by the organization is
also very diverse.
As stated by Butler and Wilson (2015), the primary business objective of voluntary organization
is to serve the community. It is identified in the above discussion that the structure of the
voluntary organizations is broad. However, the size of the organizations is not large because of
limited financial resources. The voluntary organizations are dependent on the collection and
donations from volunteers and community people. As a result, the scope of range for the
voluntary organizations gets limited. However, some voluntary organizations gets financial aid
from private organizations and government. This, help the voluntary organization sin expanding
its size and range of scope. Even, though the size and range of scope can expand in voluntary
organizations. Yet, the business objectives of the organization remains same that is to serve the
community without the intention of gaining the monetary benefit. However, the services offered
by the organization can differs, as the people of different community requires different types of
assistance from the voluntary organizations.
LO 2: Demonstrating the interrelationship of the various functions within an organization
and their link to organizational structure
P 3: Explaining relationship between different organizational functions and their link to
organizational objectives and structure
As mentioned by Harper (2015), the basic organizational functions are design and production,
finance, human resources, sales and marketing and research and development. These
organizational functions are linked to organizational objectives and structure. The following
discussion will help in explaining the relationship between organizational functions and their link
organizational objectives and structure.
As mentioned by Thompson (2017), the source of income for the organizations is the products
and services it sells to the customers. It is important to develop or design an attractive products
and services for convincing customers to buy it. Therefore, the design and productions are
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primary function of organization. However, the organization requires appropriate finance for
ensuring the design and production. Hence, undoubtedly finance is related to design and
production. As opined by Alexander (2014), apart from the finance the other important factor for
production is the human resource and to maintain the human resource the organization is
dependent on its finance. The next function of the organization is the sales and marketing. The
proper sales and marketing strategies is very important for the organization to ensure the better
sales rate of its products and services. On the other hand, proper sales and marketing is
dependent on both finance and human resource. In addition, the sales and marketing is related to
the finance because it helps in enhancing the profitability of the organization. The other function
that is research and development is very important for the growth of the organization. It is
important for developing the product that has higher chances of sales and meet the demands of
customers. However, the research and development function is also dependent on the finance and
human resource of the organization. The appropriate research and development helps in
strengthening the finance and human resource of the organization. It also benefits in increasing
the sales of the products by identifying and developing better sales and marketing.
These functions are linked to organizational objectives and structure, as these organizational
functions play crucial role in achieving the objectives of the organization. It is linked with the
structure of the organization in context that it requires better management. The different
functions of organization requires the intervention of expert of the concerned field or functions.
Therefore, organization have to develop the structure that ensure the proper management and
administration of these functions.
M 2: Analysing the advantages and disadvantages of interrelationships between
organizational functions and the impact that can have upon organizational structure
The interrelationship between organizational functions have both advantages and disadvantages.
The primary advantage of interrelationship between organizational functions is that it helps in
improving the overall organizational functions. In other words, since functions are interrelated
therefore organizations have to ensure that each functions operate well. The organizations are
bound to focus on each functions because of its interrelationship. However, the interrelationship
of function do have certain disadvantages. The major disadvantage of the interrelationship of
organizational functions is that it create a complicated scenario for the management. The
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management have to analyse each functions of organization for the identification of any issues.
In addition, the analysis of each functions is required prior to the development and
implementation of any strategies or decisions. These advantages and disadvantages have certain
impact upon the organizational structure. As opined by Harper (2015), the organizational
functions are influenced by the organizational structure. Thus, the decision of making an
organizational structure that could be functional structure, divisional structure and matrix
structure is determined by the functions of the organization. The selection of appropriate
organizational structure is important for the better management of organizational functions.
D 1: Providing a critical analysis of the complexities of different types of business
structures and the interrelationships of the different organizational functions
As mentioned by Alexander (2014), the organizational structure influence the functions of the
organization. Thus, there is complexities of different types of business structures and the
interrelationships of the different organizational functions. As stated by Lee,Kozlenkova
andPalmatier (2015), the basic organizational structures are functional structure, divisional
structure and matrix structure. These organizational structures have their own features,
advantages and disadvantages. The functional organizational structure have a chain of command,
as a result different functions goes into different departments. Appointed department manager
manages these departments. On the other hand, in the divisional organizational structure the
functions are spread across different branches. Therefore, each product line has its own
functional groups. In the matrix organizational structure, the organizational functions are adapted
to the change in organizational needs. Hence, the organizational functions gets most complex in
the matrix organizational structure. Thus, as an analysis shows that functional organizational
structure is less complex and matrix organizational structure is most complex in context of
organizational functions.
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LO 3: Using contemporary examples for demonstrating both the positive and negative
impact that the macro environment have on business operations
P 4: Identifying the positive and negative impacts the macro environment have upon
business operations
As mentioned by Holienka,Pilková andOstapenko(2016), the macro environment affects the
business operations of the organizations. Therefore, it is important to analyse the macro
environment of the organization. However, the macro environment have both positive and
negative impacts upon business operations. The following table can help in identifying and
understanding both negative and positive impacts of macro environment upon business
operations:
Factors Positive impacts Negative impacts
Political The positive impact of
political factors is that it helps
in ensuring the ethical
environment. The
government regulations and
legislation helps in ensuring
legal business operations.
The negative impact of the
political factors is that
political powers is not
stagnant and are subject to
change after elections. The
change in political power
often results to changes in the
regulations and taxations.
This affects the business
operations, as it gets difficult
and often results to loss while
adjusting with the sudden
changes in regulations and
taxations by the government.
Economic The positive impact of
economic factor is that it
helps in ensuring the market
stability. The market stability
benefits in maintain the
The negative impact of
economic factor is that it
results to change in business
operations with the change in
economic conditions. As
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business operations
effectively and efficiently.
mentioned by Hamilton and
Webster (2018), the
economic condition does not
remain same particularly in
context of international
economy it is subject to
frequent changes.
Social The positive impact of social
factor upon the business
operations is that it benefits
organizations in developing
appropriate strategies for
business operations based on
the social condition of the
geographic location.
On the one hand, the social
condition have positive
impacts, as it helps in
developing appropriate
strategies. On the other hand,
the social condition also have
negative impacts upon
business operations because
the social condition is not
same in every region or
country. Therefore, as
suggested by Cavusgilet al.
(2014), the organization have
to implement different
strategies of maintain
business operations in region
with different social
conditions.
Technological The technological factor have
great positive impacts upon
the business operations of the
organization. As mentioned
by Holienka,Pilková
andOstapenko (2016), the use
However, the technological
factor also have a negative
impact that is the
compatibility of employees
with new and advance
technology. As per the view
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of technology enhance the
business operations. It makes
the business operations
easier, effective and efficient.
of Van Wormer andBesthorn
(2017), failing in getting
compatible with new and
advance technology affects
the performance and
productivity of employees.
Environmental The positive impact of
environmental factors on the
business operations is that it
helps in ensuring the ethical
consideration and
environmental protection.
This benefits the
organizations in creating
better image among its
customers.
The negative impact of the
environmental factors is that
certain regulations for
ensuring the environmental
factor in the business
operations results in the
limitation of decision-
making. Thus, organization
are bound to make certain
changes in its business
operations because of
environmental factors. The
changes in business
operations because of
environmental factors often
affects the profit of the
organizations.
Legal The most important positive
impact of legal factors upon
the business operations is that
it helps in maintaining
business ethics. The legal
factors ensures that every
organizations have legal
business operations. Thus, the
The negative impact of legal
factors upon the business
operations is that it limits the
strategy and decision making
of the organizations. The
legal factors enforce
organizations to ensure
certain issues in their
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chances of wrong or unethical
business operations for the
gain is diminished. It helps in
ensuring healthy completion
among the organizations.
business operations.
M 3: Applying appropriately the PESTLE model for supporting a detailed analysis of the
macro environment within an organization
PESTLE analysis of the Tesco
Political Tesco operates in different countries around
the world (TESCO PLC, 2019). The political
powers and their ideologies is not same in
these countries. As a result, the regulations
and legislation differs in the countries that
Tesco operates. Therefore, as suggested by
Hamilton and Webster (2018), the companies
operating different countries should make
changes in their business operations based on
the political scenario of the concerned
countries.
Economic Tesco’s overall economic contribution to the
economy of UK is accounted to £ 37.3 billion
and the total amount of tax paid accounts to £
1.2 billion (TESCO PLC, 2019). However,
the change in the taxation by the government
has been initiated after the exit of Britain
from the European Union. The changes in
taxation has affected the economics of the
company. In addition, the wage rate is not
same in every countries that Tesco operates.
Thus, the labour cost of the Tesco is an issue
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that eventually influence the economics of the
company.
Social Since, the Tesco operates in different
countries it have an opportunity of serving the
diverse society. In addition, the changes in
fashion is highly prevalent in the society.
Therefore, it is important for the Tesco to
make changes in its products based on the
social demands.
Technological As mentioned by Cavusgilet al. (2014), the
technological factor is important matter of
concern for organizations to ensure their
growth. The technology provides
opportunities for the organizations to improve
its business operation and productivity. The
Tesco has successfully used the technology
for enhancing the performance of the
organization by opening the online store for
customers (TESCO PLC, 2019).
Environmental As mentioned by Ahmady,Mehrpour
andNikooravesh (2016), it has become an
integral part of the business to ensure safe
environment. The Tesco has given priority to
the environmental factor and that is evident
from the sustainability approaches of the
company (TESCO, 2019).
Legal Undoubtedly, the government policies and
legislations affects the organizations and
Tesco is not exceptional. The recent legal
controversy that could result to huge
economical loss for the Tesco is equal pay
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