Business and the Business Environment Analysis Report on Tesco plc

This report provides a comprehensive analysis of Tesco plc and its business environment. It begins by defining business and its environment, then explores different organizational types (public, private, and voluntary) and their purposes, using Tesco plc, the National Health Service (NHS), and Oxfam as examples. The report examines the size and scope of these organizations and their stakeholders. It then delves into the interrelation of organizational functions (marketing, human resources, finance, and technology) and their contributions to organizational objectives. A significant portion of the report focuses on the positive and negative impacts of macro-environmental factors on Tesco plc, followed by a SWOT analysis of the company. Finally, the report interrelates the company's strengths and weaknesses with the identified macro-environmental factors, providing a holistic view of Tesco's position within its operating landscape. The report concludes with a concise summary of the findings and their implications for Tesco plc's strategic direction.

BUSINESS AND THE
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Types and purposes of organisations....................................................................................1
P2 Size and scope of chosen organisations.................................................................................3
TASK 2............................................................................................................................................5
P3 Interrelation between organisational function and their contribution towards organisational
objectives.....................................................................................................................................5
TASK 3............................................................................................................................................8
P4: Positive and negative impact of macro environmental factors upon the business................8
TASK 4.........................................................................................................................................10
P5: SWOT analysis of Tesco plc..............................................................................................10
P6: Interrelation of weakness and strengths with macro environmental factors.......................11
CONCLUSION..............................................................................................................................12
REFERENCE.................................................................................................................................13

INTRODUCTION
A business can be defined as the organisation where a large number of people work
together in desire to achieve the common objective and goals. In other words, business can be
denoted as a medium of exchanging goods and services in exchange of money. The business
environment is defined as the internal and external factors that affects the business operations of
an organisation and the behaviour of the employees. The report is based on Tesco plc, the
company is one of the largest retail industry of UK. The report will discuss the size, scope and
mission with different organisation in public, private and voluntary sectors. Further, the
interrelations of organisational functions and measure to achieve objectives will be discussed.
The report will define the positive and negative impact of macro factors in environment with
interrelation of the strengths and weaknesses with these factors.
TASK 1
P1: Types and purposes of organisations
Different types of business organisation are present in the market and they differ from
each other on the terms of goals and objectives. Some organisations desire to achieve more and
more profits whereas, some work for non profit terms and just believe in providing services to
the customers as much as they can. These organisations involve huge investments on them that
will affect the economy of UK and it can be used by the government in several taxes(Aithal, P.
S., 2016). The different organisations are categorized in public, private and voluntary
organisations. They are defined as follows:
Public organisations- Public organisations render services to the residents of the country
without focusing on the objective of earning profits. These organisations are fully organized and
controlled by the government authorities. The Shares of public sector companies are sold freely
to the public. National Health Service(NHS) is a public sector organisation based in UK which
provides health services to people all over the world.
Purposes of NHS are:
 To accompany the customers with proper health and medical services.
 To work in order to improve the economic and social conditions of the customers.
 To improve the structure of the society by eradicating the health issues.
Legal structure:
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 Local government: it is accredited to modulate the small part of the society and
regularize the role in a city or a region.
 State government: This governing authority apply laws and regulations to a state. It is
responsible for solving the issues that concerns a state. NHS works under the state
government as it intent in finding the source of health problems and analyse best solution
for its cure.
 Central government: It is responsible to regulate the economy of a country as a whole.
It is responsible for keeping law and order in the country in appropriate manner.
Private organisations- Private organisations work with the sole objective of earning
profits at any cost in the market. The private organisation is directed by two or more persons who
are liable for applying policies and strategies in order to achieve the organisational
goals(Cavalcante, Kesting and Ulhøi, 2011). The main task is to gain profit by supplying
products and services with proper quality to the customers. The organisation which is selected in
this report in private sector is Tesco plc. The company was established in 1919 based in London,
United Kingdom. Tesco is one of the largest retail industries. The company aims to understand
the needs of their customers and provide them quality products accordingly.
Purposes of Tesco plc are mentioned below:
 To eradicate the wastage of the products and to attain profit in the market.
 To supply quality products to the customers to increase their satisfaction level.
 To form a positive impact on the society and to gain sustainability.
Legal structure
 Partnership: Formation of two more persons in an agreement to achieve a common
objective. Partnership contract makes them liable to share profit and loss equally and
allows them to take decisions collaboratively.
 Sole proprietorship: These are owned and regulated by a single person who is solely
accountable for all the profits and losses of the organisation.
 Limited company: This crossed structure allows owners to bound their obligations. It
implements that the associates are not accountable for the losses or debts until their
illegal act is not proved.
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 Multinational corporation: these companies operates their business functions
worldwide and operates through their headquarters which are located in parent country.
 Global company: The companies supply their products in different countries under a
individual brand name. The Head office is accountable for formulating the policies and
strategies.
 Transnational company: This type of organisation also functions in more than one
country but the headquarter is not fixed.
Voluntary organisation: Voluntary organisations are developed by a group of individuals
with a common goal of forming a non-profit organisation to achieve the desired objective of
providing services to customers(Erasmus, Strydom, and Rudansky-Kloppers, 2016). The report
discuss about Oxfam which is a formed with collective decisions of twenty charitable
organisations with the aim to control poverty. This organisation was developed in 1942 to help
the people of UK.
Purpose:
 The intention of Oxfam is to provide welfare requisite services to the citizens of UK
which are not capable to help themselves due to the lack of financial resources.
 To maximise the knowledge of people in regard to education with different development
programs.
Legal structures:
 Trust: It is developed by different individuals who do not demand any sort of
membership in the institution. It is considered as a structural form of charity.
 Associations: It is formulated by group of people who are in a contract to work for a
common objective and not to earn profit.
P2 Size and scope of chosen organisations
The three kinds of organisations are represented in the report which are public, private
and voluntary. These organisations varies in the business activities and objectives. So, the size
and scope of these companies also dissent with each other. The size, scope and mission of these
organisations are discussed below:
National Health Service (NHS):
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 Size: The size of NHS can be defined as it is one of the largest international workforce
that has around 1.5 million workers in it. It includes a large force of doctors, nurses,
dental and ambulance staff for the betterment of the society.
 Scope: NHS consists of great scope in the international market and in UK as well. It
mainly focuses on providing health and medical services to the customers situated in the
world to improve the condition for social welfare.
 Mission: The main intention is to supply services to a large sum of people with the
assistance of team force and effective health services in nominal price and favourable
policies.
 Vision: The organisation aims to aid the people of UK with impressive health services at
low prices.
 Stakeholders: NHS is a public sector organisation so, the shareholders of the company
are government bodies and people.
Tesco plc:
 Size- Tesco plc is carrying their business activities in more than 7 countries and possess
around 6,500 stores. The organisation has a workforce of more than 470,000 employees
all over the world. Tesco plc has a merger with different organisations with the sole
objective of maximising their market share.
 Scope- The company has grown to a larger extent in the past years because of alteration
in the policies and schemes. The company was following the scheme of their founder
Jack Cohen which was quoted as 'Pile it high, sell it cheap' which was a great method to
draw in the customers.
 Vision- The company wants to attain topmost priority from their customers by supplying
quality products and services at a healthy price which will result in increasing their
market share.
 Mission- The company aims at changing their visitors into daily customers by rendering
belief in the company products and services that will increase the satisfaction level of the
customers.
 Stakeholders- the stakeholders include the company owners, employees, investors, and
the public.
Oxfam:
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 Size: This institution is based in UK and is considered as one of the largest non profit
organisation. Oxfam has covered international borders also with a great number of
candidates who work as volunteers for the welfare of the society.
 Scope: The scope of Oxfam is related with achievement of its objectives in a formed time
period that can be accomplished with effectual use of work force and acquirable
resources.
 Vision: Oxfam is working to deliver suitable services to backward persons in the society
by providing appropriate employment facilities to eradicate the poverty problems from
the country and leads improve the economic condition.
 Mission: The administration of the organisation intent to supply necessary facilities to
the people to improve their living condition with safety and security.
 Shareholders: As, it is a non profit organisation so the shareholders are the volunteers
only.
TASK 2
P3 Interrelation between organisational function and their contribution towards organisational
objectives
Illustration 1: Organisational Chart of Tesco plc
Source: Organisational Chart of Company. 2013
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As Tesco plc is one of the largest company, it comprises of various functional departments to
operate properly. For effective operation in a company, each departments is interlinked with
another either directly or indirectly. For this purpose, TESCO will perform functions like :
 Marketing function: It is the essential function of an organisation which involves
investigation, packaging, promoting goods to the customers, etc. This is useful in
maximising sales of the company. This is helpful in analysing the needs and demands of
the customers so that company can fulfil them and accomplishes goals and objectives.
This function is interlinked directly with the other functions of management(Halbert and
Ingulli, 2011). If affects the activities of human resource management in the process of
recruitment when marketing department gives them the specifications needed in a
personnel and human resource department focuses on the needs of the marketing
department while recruiting the person for marketing field. Also, each activity of
marketing is assigned a certain budget by finance department and operations are carried
in compliance with it.
 Human resource function: This function of management is responsible for performing
the activities of recruiting, selection, training, development, employment law for the
safety and security of employees, compensation, motivation, etc. These activities are
very crucial for accomplishing organisational goals and objectives in the company. This
function is interlinked with all other functions in the management. HRM is linked with
marketing in using various promotional tools for job vacancies and applications(Helms
and Nixon, 2010). They will use various social media network, internet, advertisements
in newspaper, etc. so that large pool of candidates will apply for job in the company.
Now a days, organisation also uses tools like video conferencing, for conducting
interview.
 Finance function: This is one of the most crucial function in a TESCO and no
organisation can exist for longer duration without adequate funds. This helps in
maintaining and managing the financial resources of the company. It is essential to
ensure that adequate financial resources are always there to meet the day to day expenses
of the company. This function sets the budgets required in human resource activities like
for providing training, hiring, etc. They play a key role in allocating the budgets for the
marketing department because this needs huge amount of money for identifying,
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researching, manufacturing, promoting and distributing the goods to the end customer. It
is strongly linked with production department because to ensure that raw materials are
available and people are working such that it will lowers the cost of production
department and increases the efficiency while accomplishing the overall objective of the
business.
 Technological department: It is one of the most important function in a present day.
Every organisation works on some or the other technology and so in TESCO. This made
work easy, fast and efficient. This is linked with marketing as it uses various
technological tools for advertisements, graphics, images, animations, etc. which makes
the promotion effective such that it will attract people towards the organisations product.
Apart from this it is important in production and manufacturing department because it
transformed the work from labour intensive techniques to capital intensive which made
work easy, efficient and minimises the production cost(Hilton and Platt, 2013). It helped
finance department in maintaining the records, accounts, etc. technically through
automation which helps in reducing flaws, eliminating errors, reduces data redundancy
and thus, contributes in producing relevant and reliable results.
 Research & Development (R&D) Department: The R&D division is needed to
proceed a research to analyse the new thoughts that will lead the organisation to attract
customers with advanced products and services and result in accomplishing the
competitive advantage in the market.
The interrelation of different departments will have its own advantages and disadvantages
which are described as follows:
Advantages:
 It will improve the communication channels within the organisation and will lead to
achieve the desired tasks easily.
 The work place environment will be improved and it will form good working relations
between the employees.
Disadvantages:
 The chance of conflicts may increase and confusion can also be created.
 Decision making authority will be consists to limited persons.
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The business structure of the organisation describes the different departments and the
roles and responsibilities they carry to acquire the desired objectives. Tesco plc is required to be
more flexible with the departments to permit them to work in maximising the profitability of the
organisation in the market.
TASK 3
P4: Positive and negative impact of macro environmental factors upon the business
The companies that operates in the international market deals with the effects of macro
environmental factors to a large extent. As, Tesco plc is operating in around 7 countries it also
faces the issues related to these factors which are linked to political, economical, environmental,
social, and legal conditions(Karagiorgos, Drogalas and Giovanis, 2011). The macro
environmental factor consists of both positive and negative impacts on the business operations.
These impacts are defined as follows:
Political factors: As, the company operates in the international market it is required to follow
different rules and regulations formulated by the respective countries. Tesco plc should focus on
the various political factors like taxation policies on import and export, government stability.
 Positive impact: The current taxation policies and the tax incurred for import and export
activities in UK and other concerned countries are supporting the business activities for
now that will provide great opportunities for Tesco plc in expanding their business in
other countries which lead in increasing the market share for the company.
 Negative impact: The alteration in these taxation policies or instability of the
government will affect the business of the company in negative form and will decrease
the sales in the market.
Economical factors: As, Tesco plc operates in many countries and the respective country has its
own level of economic developments(Scheer, 2012). So, Tesco plc is required to formulate
appropriate strategies in order to the economic factors like inflation and deflation rates, funds
requirements, level of income, etc.
 Positive impact: The examination of economic factors helps in evaluating the knowledge
of inflation and deflation rates and level of income at different levels.
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 Negative impact: The bad economic condition of the customers will lead to a negative
impact on the business of the company and will decrease the demand of product in the
market.
Social factors: These factors consider the action, belief and values the customers consists in the
market which has a direct influence on business activities. These factors consider education,
age, value, belief etc.
 Positive impact: Tesco plc is required to examine the behaviour and requirements of the
customers in the market which will help the company in rising sales of products and
services accordingly.
 Negative impact: It will result in creating negative impact as it will generate lack of
knowledge among customers in the market which will lead in having unfavourable effect
on profit and productivity of Tesco plc.
Technological factors: Technological factors affects in the way of using latest tools and
technology which renders the possibility to the organisation to create advanced and improved
products and services for the customers(Schneider and Spieth, 2013).
 Positive impact: It will encourage the use of advanced tools and techniques in the
organisation structure and will result in maximising the sales for the company and will
lead in making effective relations with the customers.
 Negative impact: The Utilisation of obsolete technology will effect in decreasing the
quality of the products which will effects the product development and lack of interest of
the customers in the company.
Legal factors: Various legal laws are given by different government authorities which is
required to be followed by the Tesco plc for smooth functioning in the countries. The
management is required to follow these legal requirements to accomplish the need and
requirements of the customers.
 Positive impact: Tesco plc precede the regulations described by the government in
improving the quality standard and pricing of products.
 Negative impact: The failure in fulfilling the regulations by the government will lead the
company to face legal chargers and penalties. This will degrade the image of the
company in the market and will incur the loss in future.
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Environmental factors: These factors have large impact on the performance of the organisation.
Different laws and regulations are imposed by the Government in accordance to assist the
environment from the different factors of environment.
 Positive impact: Tesco plc is bound to cut down their carbon emission by 50% till 2020
which will result in improving the environment and will lead to increase productivity of
the organisation.
 Negative impact: Mistreatment of these environmental situations will diminish the value
of the brand and company and the customers will also criticize the organisation for not
considering these environmental issues.
TASK 4
P5: SWOT analysis of Tesco plc
Every organisation desires to supply quality products to its customers and to fulfil their
needs and requirements to increase the satisfaction level of the customers. SWOT analysis is
conducted by the organisation to analyse their strengths and weaknesses and possible threats and
opportunities for the organisation(Kew and Stredwick, 2017). Swot helps in analysing the
internal and external factor that lead to growth of the company. These factors are described
below:
Strengths  Great number of loyal customers and
several stores are considered as the
strengths for Tesco plc.
 Strong brand image and many varieties
of products and services that attracts the
customers.
 Developed use of technology in trading
operations and massive investment in
R&D division.
Weakness  The conflicts that arise because of
violation of patent will diminish the
brand image of the company.
 Lack of knowledge of developing
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markets where the organisation wants
to enter can result in incurring losses.
Threats  Different environmental laws and
regulations related to carbon emission
could lead to a huge threat for the
company.
 Emerging costs of raw materials will
impact on the profit ratio of the
company.
Opportunities  Mergers with different technical
organisation can render possibility to
raise the business operations with
advancement of technology.
 In countries where development of
Tesco plc is going on a slow pace, the
opportunities can grow with the help of
joint ventures to modify the market
share in positive directions in these
countries.
 Advancing the structure of online and
home delivery services will lead in
constructing new opportunities for
Tesco plc.
P6: Interrelation of weakness and strengths with macro environmental factors
The strength and weakness and their interrelation with the macro environmental factors
of macro environment which are discussed as follows:
Political: political factors are constructed by the government and they have full control in
regulating them which involves trade restrictions, taxation policies, etc. Tesco plc had gained a
good strength in the market as the organisation business operations are constructed accordingly
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to the government policies(Moutinho, 2011). The company is facing weakness related to these
factors as they are unable to adapt some changes installed by the government. Therefore, it can
be stated that the strengths and weaknesses of Tesco plc are interrelated with these factors.
Economical: This factor defines the economic conditions in which the company
performs its operations as, the brand image of Tesco plc is very strong it results as a major
strength and it is because the company has adapted changes in inflation and deflation rate,
exchange rate, etc. The weakness faced by the organisation is arising due to lack of insufficient
funds for the proper functioning of advance business operations(Reed, 2013). These are the
interrelation between these factors and Tesco plc strengths and weaknesses.
Social: These factors considers about the social culture, traditions and changes that take
place in the society. The strength of Tesco plc is the employees working with full of their
abilities, the organisation take care of the work force in appropriate manner. The weakness of
Tesco plc is the employee turnover ratio is increasing due the company is treating the workers in
unequal manner. Thus, this factor describes the interrelationship between strength and weakness
of Tesco with the social factors.
Technological: These factors consist of changes in the technology that occurs in the
market. The strength of Tesco plc is the strong brand image it possess which is because of the
business operations are using advancement in the technology in their production system. The
weaknesses are because of some problems that company is facing in adapting particular changes
because it involves huge investment in it(Savrul, Incekara and Sener, 2014). It shows the
interrelation of technological factor and the strength and weaknesses.
CONCLUSION
The above report assist in analysing the role of internal and external factors on the growth
of the organisation. The management of Tesco plc is required to formulate appropriate strategies
for reducing the problems caused by these factors. The report also described the various
functions and objectives of the different departments of Tesco plc and their interrelation in
helping the company to develop in the market. The macro environmental factors is been
explained with there positive and negative impact on the growth of Tesco plc by the help of
PESTEL analysis. The strengths and weaknesses are identified with the help of SWOT analysis
and their interrelation with the environmental factors. These factors will help in formulating the
suitable policies which lead in building a strong position of Tesco plc in the market.
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Online:
Organisational Chart of Company. 2013. [Online]. Available
through:<http://www.innovationmanagement.se/2014/04/03/for-all-departments-how-
can-ip-help-hr-rd-sales-and-marketing-production-finance-purchase-ceo-or-owner/>
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