Tesco's Business and Economic Environment: An In-Depth Analysis

This essay provides a comprehensive analysis of Tesco's business and economic environment, focusing on the UK retail industry. It explores the industry structure, highlighting key players like Sainsbury, Asda, and Morrisons, and examines Tesco's organizational structure, which includes regional, centralized, and store operations. The essay employs STEEPLE analysis to assess social, technological, economic, environmental, political, legal, and ethical factors impacting Tesco. It delves into microeconomic factors influencing demand and supply, such as commodity prices and buyer income, and discusses the UK market's competitiveness and potential random shocks like the COVID-19 pandemic. The analysis also addresses business problems and challenges faced by Tesco, considering external influences on customers, workers, competitors, and public image. The conclusion emphasizes the importance of understanding the business and economic environment for strategic decision-making.

Understanding the
Business and
Economic
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Industry Analysis........................................................................................................................3
Structure of the chosen industry..................................................................................................4
STEEPLE Analysis.....................................................................................................................4
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
Books and Journals:..................................................................................................................10

INTRODUCTION
Business environment explain as an aggregation of all the internal as well as external
factors that could affect the business activities and their operations as a whole. These factors
could be customers and their needs and expectations, employees, suppliers, market trends, social
trends, owners, government influences, economic changes and so forth. Analysing all these
factors supports in recognizing the corporate opportunities, assists in planning, tapping useful
resources and enhances entire business performance, profitability and growth (Ratten, 2020).
Whereas, economic environment can be elaborated as all the external economic factors that
affects the purchasing habits of customers as well as businesses and consequently, influences the
business performance. These factors could be on a small scale (micro) or large scale (macro).
The company which is chosen to complete this project is Tesco Organisation. It is a British
global company with headquarters in Welwyn Garden City, United Kingdom. It has outlets
across the Europe and become top market leader of retail sector in UK. It has founded in the
1919 as a group of market stalls in Hackney, UK. The project will discuss the industry structure,
business organisation and its nature in the selected organisation in context to the structure of the
industry. The essay will also demonstrate different macro environmental factors, including
social, technological, ecological, environment, political, legal as well as ethical.
MAIN BODY
Industry Analysis
Industry analysis is the tool which aims to serve the organisation to comprehend its
market position associated with other organisations which creates same kind of products and
services. This is regarded as the important element of effective strategic planning. The industry
which is chosen is retail industry from the UK Standard Industrial Classification (SIC 2007).
There are many channels which make up the UK groceries market and that are small
supermarket, digital businesses, conventional stores and many more (Bocken, Boons and
Baldassarre, 2019). In UK, along with Tesco, there are many supermarket chains that are
available for the customers and these are Sainsbury, Asda as well as Morrisons that are affected
by decreased sales as all such companies were taken over by other supermarket chain in
multinational market.

Structure of the chosen industry.
Retail store is reliant on the organisation structure of the business which mainly
concentrates three areas that are regional operations, centralised operations, along with store
operations. Centralised operations in the business cover the duties and obligations of the store
planning, along with human assets (Castillo, Sánchez and Dueñas‐Ocampo, 2020). These are the
operations which make sure that the flow of products and services in the potential market while
satisfying the needs and demands of the prospect customer who are resident in United Kingdom.
There are many forms of retailers which are single-store retailer, diversified retailer and national
chains.
STEEPLE Analysis
This is used as an advanced analysis strategical tool in the business. It aims to measure
and track all kinds of macro environmental factors. It is the acronym of social, technological,
economic, environmental, political, legal as well as ethical. In addition to Tesco, STEEPLE
analysis has been done below: Social factors: These are factors covering social and cultural norms, values, perceptions,
beliefs and many more. In addition to Tesco, as the consumer life has been moving and

shifting to a new pace of their lives, they tend buy products and services in one go and
these social trends comes under bulk buying (Centobelli and et. al., 2020). It is also found
that customer's behaviour has been changed towards the consumption of organic food so
as the respective organisation has managed to attain all their customers by serving goods
and services in order to satisfy them. Technological factors: This is the factor that deals with the technological development in
the nation and how it affects the business and its activities. In current times, it is very
important for the global business organisation to employ all the advanced tools and
equipment in their business so that it can compete in the market and among its key
competitors. In addition to Tesco, they have experimenting with various aspects of the
retailing while gaining huge success in terms of business profitability and customer's
satisfaction. In order to influence their customers, they have launched digital shopping,
social media promotions and many more. In recent launch of Tesco, the business was
paired up with the Amazon Go in order to develop new technology for cashier less billing
which supports in reducing time due to the long queues and hassle free shopping. Economic factors: The respective organisation includes a huge product portfolio which
plays a big role in the consumption of this broad array of goods (Liguori and Pittz, 2020).
It is essential for the chosen organisation to keep their eye on the economic changes and
fluctuations that arise in the country, it has spread business in, since these are elements
which will going to influence sales, revenue, distribution or profit.
Identify the microeconomics factors which influences the product and service's
demands with the demand curve:
Demand defines as the desire of the people to purchase the certain items or commodities
and having the capacity to pay for that item. It is found that there is an inverse relationship in the
certain prices as well as quantity demanded.

In context to Tesco, there are many factors that could influence the demand of goods and
services, some of them are as follows: Price of the commodity: These are the factors in which the demand for certain goods and
services increases when their prices falls down. In respect of Tesco, when the product's
prices rises then its demands falls down and vice versa.
 Income of the buyer: This factor deals with the income of the prospective buyer which
signifies that if the income of the consumer rise then they tend to purchase more of
quality goods while rises their demand for the same as well or vice versa (Le Vaillant,
2020).
Enlist the determinants of supply and what would cause the supply to increase or
decrease through supply curve:
Supply of products and services could be influenced by the many factors in the
environment and some of them are discussed underneath: State of technology: When the chosen organisation exploits modern tools and technology
in the business then it leads to make more products in the market by which the entire
supply of commodities rise or vice-versa.
 Number of firms in the market: If there are number of firms operating in the same
industry or market then it could affect the supply of the chosen company.

It is clear from the above diagram is that when the prices of products and services have
been increased then supply of them same also rise in the marketplace. Whereas, fall in the prices
of products and services of Tesco will lead to fall in the entire supply of them.
Discuss the UK market competitiveness and its affect on future of the business.
Competitiveness is the term that defines the entire market scenario which supports
business organisation to be sustained for a longer time period. It has been assessed that UK is
anticipating 11.00 in the end of 2020 and this is being examined and tracked that the trading
economic worldwide model in the market (Tura and et. al., 2019). This also assist Tesco to lead
the market all over the world as well as they are retaining their brand image in the huge market
segment.
Illustrations of random shocks that could undermine the UK fiscal policy of
government and explain if there is any fiscal policy could have an influence on the national
economy and the chosen organisation.
Random shocks defines as the emerging situations which are critical in nature which is
being arise and covers the world-wide pandemic due to which many firms have been facing
issues such as employment reduction, shut down of businesses, reduce profitability and many
more. Covid-19 rises the complete lock down in the entire world due to which many issues have
been created for the people and even corporate bodies. In UK, the government also has imposed
several restrictions on the company as well as increases the tax rate on import and export which
leads to slow down in the business communities (Njoku and Cooney, 2018). It also leads

restrictions on the tourism and travelling where people were not allowed to move from their
places to another. All such things happened in respect of contribution to the economy of nation. Environmental factors: As the government has been imposing several restrictions and
public also become strict to address environmental issues, it becomes essential for the
Tesco to adopt methods which would benefit the community. The respective organisation
clearly commits to limit the carbon footprint by 50% by the year 2020. Political factors: As the Tesco as a retail organisation operates their business in many
countries, it is important for them to analyse the political influences of each nations and
adhere all the regulations that make sure compliance, together with safety of its goods. In
addition to Tesco, the company has been clearly affected by the Brexit dilemma due to
which many trade activities have been influenced (Ramadhani, 2019). Legal factors: There are many laws and legislations have been imposed by the UK
government in order to protect the rights and duties of employees and employers. These
laws are anti-discrimination laws, health and safety laws and many more. In respect of
Tesco, it is found that the company has been exposed due to the discrimination among
employers and employees gets frustrated and file case against the company. Ethical factors: These are the factors which covers respect, dignity, honesty, clear and
effective communication which make sure that the workers and employees should work
ethically in the company. In addition to Tesco, the company needs to ensure that their
employees must get positive and ethical working culture which simultaneously helps in
retaining them in the business.
Discuss the business problems and challenges the Tesco faces and point out on the
external influences of the organisational decision on customers, workers, themselves,
competitors and on the public image at large.
Tesco is one of the public limited companies in UK which does their business operations
by keeping all the restrictions and rules imposed by the local government. With such things, they
are creating effective working to sustain in the marketplace for a good period of time (Lahti,
Wincent and Parida, 2018). On the other side, being a public limited company, the organisation
cannot move out of the box as well as cannot evaluate any alteration which are not at the
standard operating procedure of the authorities.

CONCLUSION
This has been concluded that there are several kinds of businesses that are operating in
the business world and every industry is different in nature. Every company runs their business
for certain goal and purpose for which they need to keep their eye on the business and economic
environment. For analysing all the external factors STEEPLE model is applied on the selected
business so that better strategic decision can be made. In economic environment, the demand and
supply are the main elements which make sure about the flow of products and services in the
potential market.

REFERENCES
Books and Journals:
Bocken, N., Boons, F. and Baldassarre, B., 2019. Sustainable business model experimentation by
understanding ecologies of business models. Journal of Cleaner Production, 208,
pp.1498-1512.
Castillo, M.M., Sánchez, I.D. and Dueñas‐Ocampo, S., 2020. Leaders do not emerge from a
vacuum: Toward an understanding of the development of responsible
leadership. Business and Society Review, 125(3), pp.329-348.
Centobelli, P. and et. al., 2020. Designing business models in circular economy: A systematic
literature review and research agenda. Business Strategy and the Environment, 29(4),
pp.1734-1749.
Lahti, T., Wincent, J. and Parida, V., 2018. A definition and theoretical review of the circular
economy, value creation, and sustainable business models: where are we now and
where should research move in the future?. Sustainability, 10(8), p.2799.
Le Vaillant, M., 2020. Understanding ecological tourism by different local business stakeholders:
a case study of Sao Miguel.
Liguori, E.W. and Pittz, T.G., 2020. Strategies for small business: Surviving and thriving in the
era of COVID-19. Journal of the International Council for Small Business, 1(2),
pp.106-110.
Njoku, K.C. and Cooney, T.M., 2018. Understanding how immigrant entrepreneurs view
business opportunity formation through ethnicity. In Creating Entrepreneurial Space:
Talking Through Multi-Voices, Reflections on Emerging Debates. Emerald Publishing
Limited.
Ramadhani, D., 2019. Understanding environment, social and governance (ESG) factors as path
toward ASEAN sustainable finance. APMBA (Asia Pacific Management and Business
Application), 7(3), pp.147-162.
Ratten, V., 2020. Coronavirus and international business: An entrepreneurial ecosystem
perspective. Thunderbird International Business Review, 62(5), pp.629-634.
Tura, N. and et. al., 2019. Unlocking circular business: A framework of barriers and
drivers. Journal of cleaner production, 212, pp.90-98.