LSC UoS BA Business: Contemporary Business Environment of Tesco Report

This report provides a comprehensive analysis of Tesco's business environment, focusing on the internal and external factors that shape its operations. It delves into the business, cultural, and natural environments, highlighting their impact on the company's behavior and strategic decision-making. The report examines Tesco's business model, its stakeholders, and the company's responses to economic and market dynamics. Furthermore, it includes detailed PESTEL and SWOT analyses to assess the political, economic, social, technological, environmental, and legal factors influencing Tesco, as well as its internal strengths, weaknesses, opportunities, and threats. The report also explores the company's strategic planning processes within the context of the UK's economic and regulatory landscape. The report concludes by emphasizing the importance of adapting to a dynamic business environment and the role of strategic planning in achieving a competitive position in the retail industry.

Contemporary Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
Discuss the business, culture and natural environment that shape the behaviour.......................2
PESTEL and SWOT analysis......................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment consist of both internal and external factors that play a major role
in decision making of a firm and affect the business directly or indirectly(Barr, and et. al., 2018).
In other words, it is a broader term that includes various aspects such as level of employment,
competition, innovation and technology, customers and so on that provide assistance in planning
and thus improve the overall growth and productivity of a business. There business environment
in which company carry out its operation is regarded as dynamic and provide goods and services
in order to fulfil the requirements of customers. The main motive of a firm is to earn profit and
meet with changes by optimum utilisation of resources in order to reduce waste. This poses
several challenges by combatting threats and thus help to modify the entire entity. This report is
based on Tesco which is one of the popular retailing industry in UK that deal with wide range of
products or services such as groceries and home appliances in various supermarket, convenience
stores and hypermarket and so on to gain access of large number of customers.
This firm aims to provide new and fast efficient services at 6800 shops and provide great
number of employment opportunities at a global level. The respective company has expanded its
operations in different parts of the country by providing an easy access to their customers. This
report also cover business, culture and natural environment that help to shape the behaviour
within an organisation. Every business has different aspect and culture that determine the overall
quality and productivity of a company.
This report also cover various aspects such as SWOT and PESTEL analysis to determine
the resources and competitive factors to achieve a significant position within the retailing
industry. Strategic planning help company to decide an appropriate course of action among the
various alternatives to achieve a competitive position in a dynamic environment. An external
analysis is conducted to evaluate the goal and resources of an organisation by continuous
monitoring of the environment and provide assistance in decision making of a firm. The
PESTEL analysis consist of various external factors such as political, legal, environmental,
technological and so on to determine various analysis and thus help in overcoming various
challenges of a business. The SWOT analysis is conducted to determine the various internal
factors by making use of opportunities and avoiding threats by using proper optimum utilisation
of resources. In a competitive era, the manager itself adapt the changes by facilitating proper
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coordination and cooperation in a workplace and thus this promote growth opportunities and
ensure success.
Discuss the business, culture and natural environment that shape the behaviour
Business environment consist of several factors such as level of employment,
competition, government policies, demand and supply of various aspects of an economy(Gee,
and Giller, 2016). Tesco is one of the leading company in UK that deal with wide range of
services such as toys, groceries, home appliances, furniture and so on to gain large access of
customers. The main purpose is to provide new and innovative technology so as to meet the
changes in taste and preferences of clients and to gain positive reputation in different parts of the
country. In a dynamic environment, it is necessary for the manager of respective firm to adapt
the changes by meeting the demand and preferences of customers. Changes play an important
role in an organisation which can be determined through innovative ideas and full commitment
under the current modern era. There are two types of business environment, namely, economic
and non economic environment. Economic environment includes the overall characteristics of
economic on the basis of which firm operates such as stages of business cycle, monetary and
fiscal policy and so on. Tesco is renowned public limited company which has 6800 shops and
number of employees are 4,50,000 in an around the globe and it is also considered as the second
largest retailer in terms of profit. The motive of respective firm is to add value among the
customers and thus maximize the wealth of shareholders.
Business: Tesco lead several kinds of businesses such as Tesco bank to offer customer
insurance, credit cards and saving account, Tesco telecoms to provide telephone services, Tesco
direct that provide electrical and home appliances, tesco.com to provide an experience of online
shopping among the customers across the globe. By understanding these business models, all
these help the company to work in an efficient manner and effective manner. The concerned firm
aims to provide low cost and good quality product in order to gain competitive position within
the retailing industry. Tesco holds the maximum market share as compared to its competitors
and thus this help in gaining positive reputation at a global level.
Stakeholders are the group of individuals, or associations that is majorly influenced by
various activities of a company and in case of Tesco, it includes customers, investors, employees
and so on. The shareholders want the company to make more profit so that they could get
maximum dividend. Customers are the first priority for any business that help in deciding the
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firms about changes in taste and fashion and also employees are regarded as the asset of the
company and they have various hopefulness from a firm such as job security, increase in salary
or wages, good working atmosphere so that they could work with greater efficiency and zeal.
This help them in completing the task in an appropriate time if proper roles and responsibilities
are assigned to them. The suppliers of Tesco want the firm to make order on a regular basis and
ensure timely payment so as to maintain the best solvency position in different parts of the
country. The most important stakeholder that is government want the firm to pay honestly taxes
and to provide employment opportunities and also to provide welfare of large number of public.
These are the different stakeholders who have different expectations from Tesco and it has to
fulfil its needs so as to gain positive reputation across the globe.
Culture: The top management of Tesco has several responsibilities such as legal, ethical
responsibilities and many more which could meet the requirements by preparing an appropriate
strategy(Lingeberzins, 2017). The manager perform various functions such as planning,
organising, controlling and coordinating the activities so as to achieve a goal for a specified
period of time. These also includes various aspects such as natural environment, global warming,
fair trade and so on so that it could work for the welfare of communities. As this company runs a
program that is named as 'Living Life to the Full' for assisting the adults who are suffered from
depression. The respective firm aim to meet its various legal obligations such as health and
safety laws, anti discriminatory laws and consumer protection laws. Tesco aims to provide new
and innovative products by meeting the requirements of customers and to provide one stop and
bulk shopping to overcome the social conditioning as well as the belief of various clients across
the globe. The respective firm accomplish several expectations such as to provide remuneration
along with job security among the employees, decreasing the cost of production to provide
standard quality at a reasonable prices by using better techniques, and also to make timely
payment to suppliers with an aim to maximise profit. Tesco adopt the strategy of purchasing the
raw materials at a low cost in an ethical manner and it fulfil its ethical responsibility.
Business environment represent the overall working of a company and culture is defined
by the norms, basic values and taste and preferences of the society. Good feedback ensure the
positive goodwill of the company and thus develop team spirit and positive attitude among the
employees within the retailing industry. Tesco has currently expanded its operation in almost 14
countries by employing more than 5,00,000 people from different parts of the country. The
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concerned firm provide customer safely product and thus maintain the powerful brand image
at a global level.
The economic system of the country consist of various aspects such as manufacturing,
allocation of resources and so on so as to achieve the goal in a completed time. UK is considered
as the fifth largest economy in the world in terms of GDP. UK is regarded as a mixed economy
and has highly educated and high class people and follow all rules and regulations pertaining to
the legislations of the country. The monetary and fiscal policies affect the supply of money
through various tools such as cash reserve ratio, open market operation while fiscal policy is
related to the taxation and spending of government that is determined by the economic activities.
If there is an increase in tax by the government, then Tesco would have less money to hire
employees and thus increases the price of products and services. The monetary policy have a
major impact on Tesco that affect the overall performance of the company and thus reduce the
growth opportunities and profitability of a firm. There are large number of competitors of Tesco
such as Walmart, Amazon, ASDA and so on that aims to provide low price product in order to
gain significant position within the retailing industry.
There are different market structure that determine the growth and profitability of a
company such as perfect competition, monopolistic, oligopoly and monopoly that help a firm in
deciding the price and output. Tesco adopt oligopoly market structure because of several
liberalisation policies and other rules and regulations within the confines of UK.
Natural environment: The national environment in UK determine its own characteristics
and also the government economic policies have a direct impact on Tesco(Luu, 2017).
Allocating resources is one of the essential constituent that ensure proper success and provide
growth opportunities in different parts of the country. The changes in climate and weather affect
the organisation in various ways which directly impact the ongoing issue of a production firm.
In an era of globalisation, there is change in the quality of life, future of new generation and so
on and also aims to provide protection towards the environment by adopting the strategy of 3R's
namely, reduce, reuse and recycle. Government has taken various measures to save environment
and thus provide sustainable development to improve the economical conditions.
For implementing the various pricing policies, Tesco is offering a reduction in prices in
order to gain large customer satisfaction. Another prospect of company is that it has skilled
employees and provide different strategies for smooth conduct of activities in an ethical manner.
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The leader of Tesco emphasises on rendering efficient training to their subordinates in order to
increase their skills and knowledge base so that they could work beyond their potential and thus
achieve the task in a respective time period.
PESTEL and SWOT analysis
The internal and external analysis of a firm is conducted to assess the resources that help
in decision making of a firm so as to gain competitive position within the retailing industry.
PESTEL of Tesco: This provide the framework among the industrialists in order to monitor the
environment that consist of various elements such as political, economic, social, technological
and so on. In the context of Tesco, the same is presented as follows:
Political: This consist of various aspects such as corruption, foreign trade, monatary
policy and so on(Maoxing, and Qi, 2017). UK is considered as the major political strength of the
country and it is a multi party system that consist of two parties such as conserve and labour
party. It has a constant ruling party since a long time. Due to the vote for Brexit, the VAT
increases from 17.5% to 20% and thus lead to increase in prices of product or services within the
confines of retail industry.
Economic: This cover various aspects such as inflation, exchange rates, unemployment
rates and disposable income(Silva, 2019). UK is considered as the fifth largest economy in the
world in terms of GDP. Due to Brexit, it has created an unimaginable chaos and adversities that
affect the economic growth of the country. This results as rise in unemployment and thus create a
negative impact on an economy.
Social: These factor serve as an important basis such as lifestyle, cultural barriers, career
attitudes, safety emphasises and diet conscious. The population in UK is considered as
multicultural and provide high standard of living across the globe. Tesco provide the experience
of one stop shopping among its customers in order to generate sales and profit within the
retailing industry. The concerned firm provide the demand of organic food in according to
constant changing behaviour of people.
Technological: This consider various factors that are taken into consideration such as
level of innovation, automation, technological awareness and so on(Wilkinson, Hislop, and
Coupland, 2016). UK is considered as the most technologically advanced country in the world.
The manager of Tesco provide the Andrews, R.N. and Johnson, E., 2016. Energy use, behavioral
change, and business organizations: Reviewing recent findings and proposing a future research
5

agenda. Energy Research & Social Science, 11, pp.195-208.introduction of online shopping that
saves time and cost and thus provide an ease of convenience among the customers. The
respective firm has develop its payment app, namely, PayQwid to provide the facility of online
payment among the customers.
Environmental: Various environmental elements such as change in climate, weather and
pressure from NGO's and so on. By looking this, government has taken various measures to
provide protection to the environment by reducing pollution. The major focus of Tesco is to
reduce carbon footprints by 50% and also to reduce the consumption of plastic polythene in
order to provide sustainable development.
Legal: This consist of various aspects such as copyright and patent laws, health and
safety laws, antitrust laws and employment laws(Xie, and Redding, 2018). It is mandatory for
the manager of Tesco to abides all the rules and regulations operating in the country so as to
avoid fraud and misleading activities. The respective firm conduct its operation in accordance to
Food Retailing Commission so as to follow strict code of conduct in UK.
SWOT analysis: This analysis is conducted that provide an internal analysis of a firm by
identifying the weakness and combatting the threats of a firm(Andrews and Johnson, 2016). It is
a strategic tool that help identifying the internal and external factors in order to gain a
competitive position across the globe. With reference to Tesco, the same is presented as follows:
Strength Weakness
 Tesco is regarded as the largest retailer
in the market which is geographically
located in 6800 stores.
 The concerned firm provide giant
number of employment opportunities in
an around the world.
 This firm uses innovative technology to
provide best shopping experience to its
customers.
 One of the major weakness of Tesco is
to determine the low cost strategy and
thus reduces the profit margin.
 Due to Brexit, there is decline in the
operational profit of the company and
therefore hamper the overall growth of
a company.
 Due to Brexit, it has adversely affected
the economy in various ways such as
decrease in employment, credit
crunches which affect the overall
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performance of the company.
Opportunities Threats
 The introduction of online shopping in
case of Tesco provide an ease of
convenience among the customers
across the globe.
 Also, there is an opportunity to provide
joint venture with small companies to
gain a large exposure within the
market.
 Tesco has expanded its operations in
different parts of the country such as
Turkey, Indonesia and so on in order to
maximise the profit of the company.
 In the context of Tesco, there are large
number of players such as Walmart,
ALDI and ASDA that possess a big
threat to a company.
 This has resulted in price wars that
affect the overall performance of the
company.
 There are severe government
legislations, legal and tax matters that
results in economic crises and thus
decline the sales of a company.
CONCLUSION
From the above information, it can be summarised that business environment play an
important role in an economy that includes various aspects such as national income, per capita
income, GDP and economic growth of the country. Therefore, it is important for a business to
bring changes in an organisation as there is transformation in technology, changes in taste and
preferences of customers and many more. It has been analysed that macro environment play a
constituent role that determine the decision making and overall efficiency and productivity
within the confine of retailing sector. The internal and external analysis such as SWOT, PESTEL
analysis is conducted to assess the resources by gaining competitive position within the market.
It has been analysed that manager through an appropriate planning help in achieving the goals
and objectives of a business in a short span of time and also adopt the changes in an organisation
by analysing the current scenario to gain significant position within the retailing industry.
Also, it has to fulfil the demands of various stakeholders such as customers, employees,
government and suppliers by making proper utilisation of resources. The firm also focuses on
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overall market growth by determining the sales and profit of a business. Choosing the right
person for a right job play a very important role for human resources manager as it aids in
determining the overall efficiency and productivity of a business enterprise. The senior position
is responsible for rendering training to their subordinates in order to improve the overall business
operations. The manger emphasise on quality and aims to deliver best services to their clients at
a low cost and it also focuses on providing fast and efficient services with an view to facilitate
smooth operation of a business.
The manager of a firm continuously monitor the activities of employees so that they
could provide superior performance and work with greater determination and self confidence.
This help in accomplishing the task within limited time period and thus ensure the overall growth
of a company. The firm can focuses on more advertising campaigns to grab large number of
customers from different different parts of the country. It prepare an appropriate strategy
byAndrews, R.N. and Johnson, E., 2016. Energy use, behavioral change, and business
organizations: Reviewing recent findings and proposing a future research agenda. Energy
Research & Social Science, 11, pp.195-208. taking an appropriate measures of reducing the
pollution and also abide all rules and regulations pertaining to the legislations of UK.
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REFERENCES
Books and Journals
Andrews, R.N. and Johnson, E., 2016. Energy use, behavioral change, and business
organizations: Reviewing recent findings and proposing a future research agenda.
Energy Research & Social Science. 11. pp.195-208.
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People and Places in the Global Economy.
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Grundy, T.D., 2017. Dynamic competitive strategy: Turning strategy upside down. Routledge.
Lancaster, G. and Massingham, L., 2017. The development of a strategic approach to marketing:
Its culture; internal macro-and external micro-environmental issues. In Essentials of
Marketing Management (pp. 1-32). Routledge.
Lingeberzins, E., 2017. The Insight of Tourism Operators in Contemporary Business
Environment. In Tourism, Culture and Heritage in a Smart Economy (pp. 107-120).
Springer, Cham.
Luu, T.T., 2017. CSR and organizational citizenship behavior for the environment in hotel
industry. International Journal of Contemporary Hospitality Management.
Maoxing, H. and Qi, Y., 2017. The Marxist green development concept and green development
in contemporary China: comment on incompatibility theory between environment and
development. Economic Research Journal. 52(6). pp.17-30.
Silva, D.A.C.S., 2019. An Empirical Overview of Contemporary Revenue Management Practices
in Hotel Industry; Evidence from Star Graded Hotels in Colombo District.
Wilkinson, A., Hislop, D. and Coupland, C. eds., 2016. Perspectives on Contemporary
Professional Work: Challenges and Experiences. Edward Elgar Publishing.
Xie, E. and Redding, K.S., 2018. State-owned enterprises in the contemporary global business
scenario: introduction. International Journal of Public Sector Management.
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