Business Environment Analysis: Tesco's Macro Influence Report

This report provides a comprehensive analysis of Tesco's business environment, focusing on the influence of macro-environmental factors. It begins with an introduction to business environments and defines macro factors, followed by an examination of different types of organizations, including profit-making, non-profit, private, public, and voluntary sectors, with examples. The report then explores the size and scope of organizations, categorizing them as micro, small, medium, and large, and analyzes their characteristics. Furthermore, it delves into the relationship between organizational functions such as production, purchase, marketing, finance, R&D, and HR, linking them to organizational structure and objectives. The core of the report involves a PESTEL analysis, assessing the positive and negative impacts of political, economic, social, technological, legal, and environmental factors on Tesco. Finally, the report includes an internal and external analysis of Tesco, evaluating its strengths, weaknesses, and their interrelation with external macro factors, culminating in a concise conclusion and references.

Macro environmental
Influence

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Different types and purpose of organisation and legal structures.....................................3
P2 Size and scope of range of different types of organisation...............................................6
TASK 2............................................................................................................................................7
P3 Relationship between different organisational functions and links to organisational
structure and objectives..........................................................................................................7
TASK 3..........................................................................................................................................11
P4 Positive and negative impact of macro environment upon business...............................11
TASK 4..........................................................................................................................................14
P5 Internal and external analysis of an organisation............................................................14
P6 Ways in which strengths and weaknesses interrelate with external macro factors.........16
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Business environment refers to internal as well as external factors in a business which has
affected the functions of business including their customers, management, employees as well as
demand and supply of business. Business environment can be said to be how are the customers’
expectations made by a business (Hamilton and Webster, 2018). Macro environment factors are
all the factors in the external environment of a business which have a direct or indirect impact on
the business. These usually includes political, environmental, legal, social and a number of such
other factors in the external environment of a business. Following report is carried all Tesco
which is a British multinational company dealing in groceries and merchandise. It’s
headquartered in Hertfordshire England United Kingdom. It is the third largest company in the
industry of retailers. In the following report a number of factors related to business environment
such as different types of companies, structure of companies, size and scope of different
organisations, positive and negative impact of environment upon business, internal and external
analysis of organisation is conducted.
TASK 1
P1 Different types and purpose of organisation and legal structures
There are a number of different types of organisation based on various functions such as
profits, various aims and objectivists as well as ownership of a business. Below mentioned are
such types of businesses-
Types of business
Profit making: This refers to the companies whose basic aim is to earn profits. Such companies
have various number of products and services which they provide in market in order to earn
profits and expand their business further. A number of companies such as retail sectors, sole
proprietors work in order to earn profits.
Non- profit making: A non-profit making organisation are organisations which are tax exempt
and are formed for various religious, charitable, literacy, scientific or educational purposes. The
usual formation of this business is incorporated with trustees who do not use benefit of financial
for themselves. The finance is retained with organisation and they use it for their own expenses
and operations.
Other types of business

Private sector
Private sector are those businesses which include business owned by private individuals
and not by the government (Gaganis, Pasiouras and Voulgari, 2019). There are various types of
sole private sector businesses which include proprietor ship, partnership, private limited
companies and public limited companies.
Figure: Different businesses in Private Sector
Sole proprietorship- Sole proprietor ship refers to a sole trader or an individual
entrepreneur who is owning and running an enterprise by himself. In such businesses there is no
legal distinction between the business and the owner of the business. An example can be taken of
a carpenter who is running a small furniture shop. The shop is owned by the carpenter itself and
has a few employees working under him. The major goal and purpose of the organisation is to
earn profits. The shop and carpenter are the same legal entity and cannot be distinguished.
Partnership- partnership is called as an arrangement between different parties who can
be called as different business partners who have come together and agreed upon mutual interest.

Partnership may include individuals, interest-based organisation, individuals and businesses. An
example can be taken where to big retailing sector industries Sainsbury and Asda came together.
They formed an agreement with mutual agency. This was a general partnership in which each
partner has rights. The major reason behind this merger was to make sure that they can gain the
maximum stake in the market.
Private limited company- A private limited company can be called a business which have
private ownership. It is set up directly through registering company with company’s house. It has
a different legal entity and is owned by directors and shareholders. Virgin Atlantic is a private
limited company which has 8631 employees working in it. The major objective of business is to
earn profits. There are a number of managers and shareholders who help in running this business.
The legal entity of virgin Atlantic is different from its employees and the shareholders and
directors.
Public limited Company- There are a number of other companies which are legally allowed
to offer shares to public. Such companies are known as public limited companies. The public
limited companies are regulated by government and they have to publish their investment and
other financial position for investors so that the true worth of their shares can be deter mind.
Marks and spencer are a public limited company. Most of its shares are held by general public.
The company issued shares in market from time to time. There are benefits of public limited
company from Mike and Spencer like they can get investments from market whenever required.
Public sector:
These include businesses which are required to provide all the public services in the United
Kingdom. Emergency services, healthcare, education and social care are included in it. BBC can
be taken as an example for public limited company which is the largest and oldest broadcasting
Corporation. It is established by Royal charted and is also funded by government approved fee of
licence. The company aims at graduating training in technology, business, journalism and
production through a number of new talent schemes.
Voluntary sector:
The voluntary sector refers to all those companies whose major purpose is to focus on social
impact rather than just earning profit. These are also called third sector, civil society or non-
profit organisations. The British Heart Foundation is the best example for voluntary sector. It is a
charity organisation. The major aim of business is to research to beat heartbreak from various

heart and circulatory diseases as well as this factors. It helps in bringing different cure for heart
diseases for people. They fund research in order to keep hearts beating and blood flowing.
P2 Size and scope of range of different types of organisation
There are a number of different kind of organisations which are based on the size of
organisation. This refers to the number of employees in an organisation, the revenues on buying
an organisation as well as the profits of an organisation. The examples of various type of
organisations based on sizes can be micro, micro, small, medium and large organisations. Below
mentioned is the description of such organisations:
 Micro small enterprises are those businesses which have small manufacturing plants. They
can include a local bakery with 10 employs up to 50 employees. They have limited scope and
have limited geographical boundaries. They can also be privately owned restaurant, law firms
et cetera. A number of businesses also include business license.
 Medium businesses are a medium scale enterprise which have fewer than 250 employees
(Uluskan and Godfrey, 2018). They usually emerge through slow and steady growth of
business. They have business started from capital required for buildings, equipment’s as well
as recruitment of employs. Annual revenue of such businesses is from $10 million- $1
billion. They usually run their business in more than one location. This can include Captify
which specialises in search intelligence and media decisions.
 Large businesses are the businesses which have at least 5000 employees working for them.
The annual turnover of such businesses is more than €1.5 billion and also the balance sheet
total should be more than €2 billion. Such companies have a number of offices including
domestic as well as international locations. Tesco is an example or large organisation.
Scope of organisations:
Micro/Small:
Micro and small organisations usually work in a small region or a backward
region. They help an economy in providing taxes as well as employment to the general
public. The expansion of these business is not much focused on as the major objective is
just to earn profits. There are a number of example sof small and micro businesses such
as Boss Brewing organisation which is a woman-led craft brewery from South Wales.
The company is effectively providing employment opportunities in Suth Wales. They are
contributing to innovation as well as entrepreneurship in market.

Medium:
These are the businesses which earn profits and use them for investment. These
investments are made in the business itself in order to increase the functions of business, recruit
more employees in the business as well as investing capital for the business. They come with
new innovations in order to increase their capital and products as well as services. Captify is a
medium sized organisation which is specializing in search intelligent and media decisions. This
company prommotes skilled workforce ineconomies. They generate revenues for economy and
have great opportunities to expand their business globally.
Large organisation:
These businesses are already well set in the market and their major motive is to earn profits
for the business through expansion. They want to expand internationally. Mergers and
acquisitions are a major impact on these businesses as they usually conduct such mergers in
order to gain market leadership in the market. To stay in the competitive market is also the major
aspect of large organisations. Various examples of large organisations are Unilever, Rio Tinto,
HSBC Holdings and so on. Large organisations are the organisations whose major aim is to
expand their business internationally. They have scope for increasing their revenues and profits
which will effectively lead them to increase the reach of their businesses sfurther.
TASK 2
P3 Relationship between different organisational functions and links to organisational structure
and objectives
Organisation function refers to all the functions in an organisation which help in running of
a business. There are different types of functions in an organisations which are to be run by a
business in order to make sure that all the objectives and goals of business can be identified and
achieved in stipulated time period:
Production function: production function refers to all the functions in an organisation which
helps in production of services and products in a company. There are various operations related
in production function. Production function in Tesco is directly related to other functions as
when the goods will be produced only then the marketing sales of the product can be done. Also

human resource are required for development of a product. The purchase function in finance
function or also directly linked with production function in Tesco.
Purchase function: Purchase functions in an organisation refers to bring in raw materials in
order to produce services and products in an organisation. The purchase function in Tesco is
directly related to other departments such as finance as finance department issues the budget for
purchase. Also human resource department uses relationship with vendors in order to get in the
best quality of raw materials at best price.
Marketing sales function: marketing and sales function basically refers to the introduction of
products and services in the market. It basically incorporates all the other functions in it.
Marketing function decides how all other functions in the business will be conducted. Sales
functions bring in business profits for Tesco. This income from sales in Tesco can then be used
for different functions in the business.
Finance function: finance function is a very important question in every type of businesses.
This function helps in providing money to all other functions. In Tesco the finance department is
required to provide budgets to all other departments so that they can easily carry out all their
functions (Stanković, and Novaković, 2019).
Research and development function: Research and development function in organisation refers
to bring in new technologies into business. It is necessary for every business so that they can
stand in the competitive environment in today’s world. Tesco make sure that a lot of was meant
is done in research and development. The other functions like finance department and human
resources directly support research on development function in Tesco.
Human resource function: Human resource function is an important function through which the
human resources in an organisations are attend. It includes recruitment and selection of employs
along with their orientation and training and development. Tesco face major attention in
managing its employees. This function is related to finance function as the budget for
recruitment and training and development of employs is brought in from finance function also all
other functions are interrelated with human resource function because the need for employs in
every department and function is fulfilled by human resource function itself (Barr and et. al.,
2018).
Organisation structure

An organisation structure defines how various different functions, and activities are
allocated and supervised in a business. The major aim of organisation structure is to achieve all
the functions of a business. They basically provide foundation to the operating procedures in the
business.
There are various type of organisational function and structure which include
Functional structure: in a functional structure of environment the employees who are under the
similar task are grouped together. This includes various departments such as finance department
human resource department, production department and so on.
Figure: Functional organisational Structure
Divisional structure: In divisional structure based organisation the workers are usually divided
into teams which will be based upon various projects in order to meet the need of consumers
effectively. This can include a wholesale retail department, workforce-based client department
and so on. The major aim of this structure is to achieve greater efficiency and higher output for
the organisation.

Figure: Divisional organisational structure
Matrix structure: Matrix structured in an organisation uses functional as well as divisional
models in a complex way. In such structure the functional departments are based on the
specialisation of people and also it is divided into divisional projects according to the products
and services.

Figure: Matrix organisational Structure
Tesco effectively uses functional structure so that all the functions in the business are
effectively managed with the help of it.
Figure: Organisation structure of Tesco

TASK 3
P4 Positive and negative impact of macro environment upon business
Macro environmental factor refers to all the factors in the external environment of a
business which have a direct impact on functioning and operations in a business.
PESTLE Analysis is a deep understanding of all the macro environmental factors present
in external environment of a business which are directly or indirectly bringing benefits or
negative aspects for the company. It includes factors such as political, economic, social,
technological, legal and environmental.
Figure: PESTLE Analysis
Political factors: This includes all the factors such as tax rates, X of legislation as well as
stability in the economy of the country due to change in political parties. There are a number of
governments which encourage retailers which is good for Tesco (Luiz, Ganson and Wennmann,
2019). Tesco needs to take benefits from the political factors through encouraging employment
opportunities in the market.

Negative impact: How to change in political parties and introduction of new legislation Tesco
needs to change its strategy from time to time which is the negative impact of political factors on
Tesco.
Positive impact: The government is favoring retail business as it provides employment in the
organisation which is a positive impact of political factor for Tesco.
Economic factors: Economic factors for Tesco usually include the leverage cost, profits, prices
and demand in the economy. Various policies of taxation and foreign exchange are also included
in and. All these have a great effect on profits of the business directly.
Negative impact: Due to change in tax rate company needs to re-do its budget and which might
be a hectic process for Tesco.
Positive impact: Who can leverage cost and also take the benefits of market share it has in order
to make sure that all the economic factors such as demand and supply are in favour of the
company.
Social factor: This refers to various changing trends in market which have a direct effect on
company. The values and beliefs of customer also affect Tesco and its image in the market
(Michael, Reisinger and Hayes, 2019).
Negative impact: Due to changing trends company usually have to spend a lot of innovation so
that they can cope up with the changing needs of customers which require huge investment.
Positive impact: Changing trends and consumer is bringing in bulk shopping is helping Tesco. It
is a retail store where every possible thing for customers is available and it is also a one-stop
shopping for customers.
Technological factor: All the new innovations and technologies brought in businesses which
provide new opportunities to business are called the technological factors. It is important for
businesses to bring in competitive advantage through technological changes from time to time.
Negative impact: Tesco is bringing in a lot of technological advancement in its business but all
this advancement requires huge investment which impacts the financial function of Tesco.
Positive impact: provides a competitive advantage to Tesco and also the demand increases as the
company brings in innovation to fulfil the requirements of customers.
Legal factor: Legal factors include all the factors related to government policies and legislations
which have a direct impact on company. If a company does not fulfil all these requirements they
may face lawsuits from the government.

Positive impact: Through following all the laws such as food retailing commission code and so
on Tesco can effectively build a good brand image in the market.
Negative impact: Bringing in new laws and regulations in the market requires Tesco to change
its strategy from time to time due to which it has to make a flexible strategy. Also in order to feel
to any of these rules may lead to huge losses for company for legal lawsuits.
Environmental factor: Order to survive in market it has become a pressure on company to
address the environmental issues and also adopt a number of ways so that they can benefit the
environment. Companies take a lot of resources from the environment there for the required to
pay back to the environment. Environmental factors usually include the pollutants left by a
company in the environment, resources of environment used by them and so on (Shukla and
Pattnaik, 2019).
Positive impact: Tesco is committed to reduce its carbon footprint by 50% which will help in
building brand image for company.
Negative impact: The company needs to minimise the waste which is produced by its stores at it
is hampering the image of company in the market.
TASK 4
P5 Internal and external analysis of an organisation
Swot Analysis of a business helps in identifying all the internal factors of a business. This
includes strengths, weaknesses, opportunities and threats. Swot analysis of Tesco is mentioned
below:

Strengths: Company has the leading market share of 27% market share and is also most popular
supermarket in Ireland. It is the biggest grocery store in UK. Tesco is geographically diversified
in more than 14 countries with 6800 stores (Kasemsap, 2018).
Weaknesses: The operations in US and Japan of Tesco out of here. There are a number of fraud
and accounting scandals about Tesco. The operating profit of company is decreasing. Also the
local strategy of companies reducing its profit margin.
Threats: BREXIT have brought major threat to Tesco. The economic crisis and crunches in the
credit are also a threat for company. The controversy of company due to the Christmas ad almost
boycotted it due to disrespectful of Christmas faith. The competition in supermarket is also
increasing which is a major threat for Tesco.

Opportunities: Company has a great opportunity to expand Jack’s business which is new
discount store for Tesco. It can also go into joint ventures with regional companies in order to
grow. There are a number of emerging market in which Tesco can expand such as Turkey,
Indonesia and south Korea.
SWOT analysis of Sainsbury
Strengths: Sainsbury uses right expansion move; company also keeps on developing its
promotion activities from time to time and its innovative practices are strengths for Sainsbury
which help in development of company.
Weaknesses: Company have low profit margins due to competition which is one of the
weaknesses of company. There are also a number of customers switching brand due to growing
competition.
Opportunities: Growth and setting up outlets in rural areas is a great way for company to grow.
It can also overtake a number of brands in order to expand its business such as clothing.
Threats: Major threat for company is growing competition. Other than this changing demands of
consumer in market is also needed to be analysed by Sainsbury which might prove to be a threat
for the company.
External analysis of organisation can be done with the help of Pestle analysis which helps in
identifying all the external factors impacting businesses. It is described in detailed in the section
above in the following report.
P6 Ways in which strengths and weaknesses interrelate with external macro factors
Basis Political Economical Social
Strength Tesco is successfully
fulfilling all the legal
requirements in
various countries
which is leading to
increase in market
share of Tesco which
is a strength for
There are certain
benefits of foreign
exchange rates that
increases profits being
a strength for company.
The advertisements of
company specifically
focuses on customers
helping to make loyal
customers for Tesco
who are great asset to
company.

company.
Weakness Due to introduction of
BREXIT a number of
trade barriers have
resulted in decrease in
sales of Tesco.
Inflation is increasing
prices of raw materials
leading to increase
prices of products and
reduce profit margins
of company.
The changes in social
environment are
continuous and
company needs to
adapt with these for
which huge investment
is required for market
analysis.
Basis Technological Environmental Legal
Strength Using technological
advancement will
bring good
promotional strategies
for Tesco.
Fulfilling the needs
towards environment
and saving resources
will enhance goodwill
of organisation.
Fulfilling their
obligations towards
law company gains
good brand name.
Weakness There is huge
investment required
for these.
They need to invest a
lot on recycling and
energy saving
processes.
There are a number of
rules and procedures
which are to be taken
care of by organisation
and requires special
efforts, time and
attention.
CONCLUSION
From the above-mentioned report various structure of business can be concluded. It clearly
defines what are the purpose of different types of organisations and what are the legal structure
required for such organisations. There are a number of business functions in every organisation.
The above report concludes how these functions in a business are interlinked with each other.
Also, there are a number of factors in macro environment which have an effect on business

functions which is clearly mentioned in the following report. In order to conduct a business
successfully and make sure that the opportunities present in external environment are utilised by
a business getting rid of all the threats present in the external environment is necessary for every
business. With the help of proper analysis businesses can effectively use their macro
environmental factors and achieve all their objectives and goals within the stipulated time period.

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