Impact of Business Environment on Tesco: An Analysis Report

This report provides a comprehensive analysis of Tesco's business environment, examining both internal and external factors that impact its operations. The internal analysis focuses on a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis, highlighting Tesco's brand image, financial challenges, opportunities in its Jack's stores, and competition. The external environment is assessed through PESTEL analysis, considering political factors (tax policies), economic factors (employment rate), social factors (consumer behavior), technological factors (modern technology adoption), environmental factors, and legal factors. The report concludes that a thorough understanding of both internal and external factors is crucial for Tesco's successful growth and adaptability to potential challenges. References to relevant academic papers are included to support the analysis.

BUSINESS IN PRACTICE
Introduction
Business environment are the factors which impacted upon business
directly or indirectly. It has two main factors first is internal factors
which occur within the business firm like relationship between
management team and employees, organizational structure, firms
policies and many more.
On the other hand second factor of business environment is external
factors which are consist of political factors, technological factors,
social factors, economical factors and many more. These external
factors occur outside the business and companies have no control over
these factors. Tesco is a multinational groceries and general
merchandise retailing company which is founded in 1919 by its
founder Jack Cohen. It is headquartered in Welwyn Garden City,
Hertfordshire, England, and UK. The following report covers analysis
of external and internal factors of Tesco and to identify the impact of
external environment of business upon Tesco.
SWOT Analysis
Strengths: Tesco have created a good brand image in customer’s eye. Hence, due to their good brand image they can
attract more customers and their loyalty.
Weaknesses: Tesco is facing issues with their financial department. They misconduct the financial statements and they
declare wrong information about their profit due to which they have to pay fine also to UK government for avoiding
their law that no company will share wrong information to government and their investors.
Opportunities: Recently Tesco introduced Jacks Stores where they offer discounted goods. These stores are shown a
rapid growth in UK. Hence, investing in these stores is a good opportunity for them.
Threats: The biggest threat of any company is generated from their competitors. Tesco has many competitors like
Morrison, Sainsbury, Lidl and etc. which are growing faster and gaining customers trust by applying new and powerful
strategies.

BUSINESS IN PRACTICE
External Environment
Political factors: These factors includes tax policies, fiscal policies,
trade restrictions, political stability and etc.
Economic factors: It includes economical growth rate, interest rate,
GDP of country, unemployment rate and many others.
Social factors: These are those factors which states the behavior of
population of a country, their beliefs, purchasing power, lifestyle and
many others.
Technological factors: It includes the mode and condition of
technology used by a country. In context of UK, they are known for
their modern and advanced technology.
Environmental factors: This factor of external business environment
includes the condition of weather, climate, tourism, pollution control
and many others.
Legal factors: It includes all legal laws
and rules and regulations made by
the government of a country.
External environment impact upon Tesco
Political factors of UK are appropriate for Tesco to conduct their business but their tax policy which is unfavorable for
Tesco because they charge 19% corporate tax which impacted upon reducing overall revenue for company which they
measured after paying all type of taxes.
Economical factors of UK are appropriate for Tesco because their employment rate is high which is beneficial for
company to hire talented and skilled employees for their offices.
Social factors are good for Tesco, population of UK can purchase high rated goods also but the only condition is the
product must contain good quality.
Technological factors of UK are considered as favorable for Tesco because UK has high tech technology which is used
by Tesco to produce good quality of goods in less time.
Conclusion
It is concluded from the above information that both external and internal factors impact upon business and their
activities. It is compulsory to analyze both environment of business for successful growth of company. It is important to
identify both positive and negative impact of external and internal factors upon business so that in future if these factors
occur negatively then company can easily defend these threats and continue to work.
References:
Cui, J., Allan, A. and Lin, D., 2019. SWOT analysis and development strategies for underground pedestrian systems.
Tunnelling and Underground Space Technology. 87. pp.127-133.
Nicula, V. and Spanu, S., 2019. PESTEL analysis applied in tourism evaluation in Braila County. Revista Economica.
71(3).