Tesco's Business Environment: Analyzing Functions and External Factors

This report provides a comprehensive analysis of Tesco's business environment, examining both macro and micro factors that influence its operations. It begins by differentiating between various types of organizations, including profit-making, not-for-profit, private sector, public sector, and voluntary organizations, highlighting their purposes, objectives, and legal structures. The report then delves into the scope and size of different organizations, categorizing them as small, medium, and large enterprises based on employee count, market share, and geographical location. A PESTLE analysis is conducted to assess the external environmental factors impacting Tesco, while a SWOT analysis evaluates its internal strengths and weaknesses. Finally, the report explores the interrelationships between these internal and external factors, drawing conclusions about the overall business environment affecting retail organizations like Tesco. Desklib offers a wealth of similar solved assignments and study resources for students.

Business and the
business
Environment
1

Table of Contents
Introduction......................................................................................................................................3
TASK 1............................................................................................................................................3
P1 various purpose & type of diverse organizations..............................................................3
TASK 2............................................................................................................................................7
P3 Interrelationship among different organizational functions..............................................7
TASK 3..........................................................................................................................................11
P4 Pestle analysis of organization along with their negative and positive impact...............11
TASK 4..........................................................................................................................................13
P5 Internal analysis of the organisation................................................................................13
P6 Interrelation of strength and weakness with the external macro factors.........................15
Conclusion.....................................................................................................................................18
REFERENCES..............................................................................................................................19
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Introduction
Business environment consist of both macro and micro environment that affect the functioning
of a business organisation. Present report is based on Tesco to understand various factors that are
affecting the overall functioning of the retail organisation. It is having presence in UK and was
founded in the year 1934 by jack Cohen. There is discussion about different types of
organisations and their scope and size there is interrelationship between different functions of
organisation and the external environment is understood with the help of pestle analysis and
internal with the help of SWOT analysis (Puurunen, 2020). Further, there is inter-relationship
that is being understood between strength and weakness of each associated factor of macro
environment and on basis of these discussions there is conclusion drawn according to the
business environment affecting functioning of retail organisations.
TASK 1
P1 various purpose & type of diverse organizations
There a different scenario of each business activity according to the type of business like profit
making not for profit making and type of other businesses can be public sector or private sector
and voluntary sector (Yashkova, and et. al., 2016). There is a discussion of this differentiation of
different types of business according to the aspects they possess.
Type of business:
A) Profit making:
These are the type of businesses who are solely working for earning profits and monetary profits
are the major mission and objectives of the business. Examples are Regent College, Ibis hotel,
Tesco supermarket, Mercedes Benz.
B) Not for profit:
These what does resources that are set up as charities or organisations and willing to provide
services to the community according to improving the circumstances for social good. Examples
are Oxfam, British Heart Foundation, save the children, world food program.
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Types of other business:
A) Private sector:
Private sector or those Enterprises who do not possess any governmental control or interference
and they are solely on by any private entity there are different types of private sector enterprises
as mentioned below.
Sole trader:
Meaning: Sole trader is describing a business that is controlled and owned by a single person
they may employ other workers (Saura., Palos-Sanchez and Correia, 2019)
Features: These organisations there are no separate legal existence according to the law and the
business and the owner or considered same.
Goal: Goal of this organisation is to achieve the lid on business objective by the sole trader.
Purpose: Sole traders are formed for the purpose of earning monetary profit.
Legal features: In this type of business owner is personally liable for all the debts and has to pay
losses to the business out of their own pocket this type of liability is referred to as unlimited
liability.
Examples: services like Columbus photographers there is no differentiation between the
business Example specialist and the owner or considered same and they are liable for all the
losses and profits that are taking place in business.
Partnership:
Meaning: Partnership Act 1890 defines partnership as the basic relation that forms between
persons who are dealing in the similar business with a view of earning profit.
Features: It is formed when there is more than one person involved in a particular type of
business.
Goal: The overall goal in all partnership form of business is to earn profit.
Purpose: Partnership form of business organisations will always formed with a purpose of
sharing the roles and responsibilities in order to achieve their down business objectives.
Objectives: Partnership form of business organisations is to maximize the profits and minimise
the liability according to the partnership deed.
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Legal features: Partnership Act 2002 has made it legal that there is requirement of sharing skills
and workload among all the partnerships.
Examples: Solicitors doctors are examples of professionals who are always up for partnership
type of business by sharing the expertise they possess.
Private limited company:
Meaning: A private limited company is a business or organisation that is independent retailer in
a particular market. There’s not reading on the stock exchange.
Features: Limited companies are always independent and government not possess any control
on the functioning of these companies.
Goal: The main goal of private limited company is laid down in the mission and vision objective
of the business organisation that they are willing to achieve apart from the monetary profit.
Purpose: Usually large scale Private Limited organisations are form for the purpose of providing
Employment to people and contributing towards the development of economy (Barrand et. al.,
2018).
Objectives: Every Private Limited organisation is to work as a independent retailer and do not
posses liability of all their decisions to be made in the organisation.
Legal features: There are certain legal features that are part of private Enterprises are all the
rules according to memorandum of association that have been formed in these companies and
there are written rules that help in governing the overall functioning.
Examples: Sainsbury and Tesco are retail organisation of UK. The main objective of retail
organisations is to enhance their sales and increase the profitability by offering quality products
to the target market.
B) Public sector
Meaning: A public limited organisation is that in which there is a well known Business and Its
shares are always traded on stock exchange.
Features: Organisations are controlled by government institutions trustees and local authorities.
All the stakeholders can possess a complete influence on overall work in performance and
conditions of public organisation.
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Goals: The goal of public sector organisation is to maximize the Welfare towards people of the
society and apart from monetary profit to achieve some non-monetary objective.
Objectives: Public sector organisation is to contribute positively towards development of the
society.
Purpose: Main purpose of public sector like NHS organisation is to provide Medical Services to
poor people so that they are able to improve their living standards.
Legal structure: Legal structure of public organisation is related with all activities been in the
control of government. Central government has the power to take the session and they have to
follow proper regulations and rules without any delay. Also, it has a limitation related to
participation of staff members and making some efforts to maximize their contribution
(Viriyasitavat, Da Xu, Bi, and Sapsomboon, 2018).
Example: National Health Services is a public organisation that is having a main objective and
purpose to provide Healthcare services to people who are belonging to the below poverty line.
C) Voluntary organization:
Meaning: Voluntary organization are controlled or directed by government. These are activities
that have to be implemented by volunteers according to improving the social conditions.
Features: Voluntary organisations are made up with a vision to enhance the living standards of
the people were living in society.
Goals: They have a goal to take initiative that can help in improving the conditions of people
living in extreme conditions of poverty.
Objectives: The main objective of voluntary organisations is that they are willing to implement
activity according to Welfare of people.
Purpose: The main purpose for voluntary organisations are from is to make society a better place
to live.
Legal structure: The legal structure of these is managing by top level and there are for the
trustees who are responsible for executing different functions and providing the financial
resources.
Example: Oxfam is a Voluntary organisation that is formed with the objective motor and
purpose to work towards reduction of poverty and helping people who are living below the
poverty line.
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Summary: There are many different types of organisations like public private and voluntary each
having different purpose objective goals and according to their legal structure have been defined
by the government of every country. All these organisations are helping in smooth running of a
country by helping in economic development providing employment opportunities and helping
in increasing the living standards of people in society (Kasemsap, 2018).
P2 Explain scope & size of organisation
Different types of small, medium and large organisations:
Small Medium Large
Meaning Organisations that are
employing employees
between 10 to 49
employees are
classified as part of
small enterprises.
There are
approximately 5.6
million such
enterprises in UK.
These enterprises are
those that are
involving less than
250 employees.
Large organisations
are employing more
than 250 employees in
an organisation.
Goal These are formed for
purpose of specific
objectives. Example:
Bright star financial
who are engaged in
late life lodging and
residential mortgages.
Smith brothers are a
contracting business
of UK. It was founded
by John smith and
Richard in the year
1999.
Tesco is a large
organisation having a
vision of becoming
biggest retail brand in
coming period of 5
years.
Market share They are having
limited market share
as they are focusing
on specific products
They have presence in
UK and also
expanded their market
share by launch of
They are having
presence in Europe
and Asia along with
this they also have a
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categories and they
have established only
10 years ago that is in
the year 2011.
new products in their
Irish division in year
2016 and 2017.
market share in
Ireland, UK, Thailand
& Hungary.
No. Of products and
services
They are offering
financial services like
later life lending.
They are offering
several services
related to construction
and renewable energy
sectors.
There is a vast range
of product categories
like clothes, furniture,
internet services and
financial services.
Legal structure They are having a
hierarchical structure.
They are having a top
management and a
team working towards
their specified goals.
They have a matrix
structure.
Stakeholder size Internal stakeholder
size consists of three
founding directors and
approximate strengths
of 100 in total.
Stakeholder size
consists of
approximately 200
employees and
owners, directors.
There is a stakeholder
size of 450, 00000.
Employees Number They are having 50
employees in number.
They are having a
team of approximately
100 multi disciplined
engineers.
7000 employees are
working in Tesco.
Profit volume They have a 71
percent profitability
ratio.
They are having a
high profitability
ratio.
Tesco is having profit
of 300 million in year
2019.
Sales Earnings are more
than 35000 pounds
every year.
40 million pounds
was their turnover in
year 2017-18.
63.911 billion pounds
is turnover of Tesco in
year 2018.
Geographical
location
Presently they only
cater to three specific
sites of UK
They are Elland based
and having a
nationwide client
They are having
presence across 3400
locations worldwide.
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base.
Above discussed is the classification of small, medium and large enterprises that are
present in UK.
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Private Public Voluntary
Size Tesco is one of the
largest private
employer of UK. They
are employing
approximately 250,000
staff alone in UK and
367,000 staff across
different parts of the
world in their 2365
stores.
NHS is a public sector
organisation that is
employing
approximately 1.6
million people and
they have a workforce
of 2,165,043 across
UK.
Oxfam is a voluntary
organisation that is a
confederation of 19
independent charitable
organisations that is
having focus on
alleviation of global
poverty and it was
founded in the year
1942. it is a major non
profit group.
Scope Tesco is focusses on
achievement of their
laid down mission that
is to create a value for
their customers and
earning high amount
of loyalty that can help
them in long run
functioning and
earning high
profitability.
NHS has a high scope
as they are able to
cater to requirement of
one million patients in
every 24 hours and
they are having a
objective of bringing
social reforms in four
major locations like
England, Scotland,
Wales and Northern
Ireland.
Oxfam believes that
powerlessness and
poverty are avoidable
situations that can be
eradicated by human
cations. They have a
belied for right to
sustainable livelihood.
They have a major
mission to reduce the
inequalities prevailing
between rich and poor
countries and this is
the major reason they
are having a wide
scope for future
possibilties.
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TASK 2
P3 Interrelationship among different organizational functions
Different functional units in organisations:
Figure 1Functional organisation structures
Production function:
Production function is related to producing goods and services according to the requirements of
different customer segment in the target market. Production function is perform in Tesco where
there according to the requirements of customers this function is having a strong internal
resistance is with other functional units of organisation as it helps finance function to maximize
the effectiveness of managing inventory and sales department in Planning their future sales target
(Eling and Schaper, 2017).
Finance department:
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Every business organisation requires financial resources for their functioning. In case of
Tesco also there is finance department that provides finance to all the other functional
departments and help in maintaining the effectiveness in overall functioning. The functional unit
is having relationship with marketing department as it has in smooth running of all the marketing
campaigns. It also helps the research and development department in utilising the available
resources in making detailed research of the primary market.
Human resource department:
Human resource Department is concerned with hiring competent and talented employees in
an organisation. Human resource department of Tesco make efforts to make the competent
individuals apply for various vacant positions so that there can be skilled workforce in the
organisation (Chasdi ,2017) . This department has an interrelationship with all the other
departments as it helps in hiring the individuals according to requirement of specific skills that
and competence for performing the functions specified by these functional organisation.
Marketing and sales department:
Marketing department of every organisation is one of the most crucial as they have the direct
contact with the potential and present customer base of the market. In Tesco, Marketing
department helps in utilising the available competence by running campaigns on social media
platforms and digital media sources so that they are able to attract more customers. There is
always a interrelationship between different functional departments like sales department and
marketing department are highly interrelated as they co-ordinate and help in maximization of
sales and minimization of stock inventories.
Purchase function:
Purchase function is related with extracting raw materials according to the demands of the
sales and production department of organization like Tesco. Department has in relationship with
all other departments like marketing as Marketing department has to convey the information
according to which forecast are made by purchase department for future production activities.
Organization Structure:
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