Business and the Business Environment: Tesco Report, Semester 1

This report provides a comprehensive analysis of Tesco's business environment, examining its organizational structure, and the interplay of various organizational functions. It begins by defining the business environment and its impact on organizational performance, specifically focusing on Tesco, a British multinational retailer. The report delves into the different types of organizations, including public, private, and voluntary, using examples like McDonald's and Oxfam for comparison. It explores the size and scope of these organizations, highlighting their products, services, and objectives. Furthermore, the report examines the relationship between different organizational functions, such as research and development, marketing, and human resources, and how they contribute to achieving organizational objectives. The report also conducts an internal and external analysis of Tesco to identify its strengths and weaknesses, and how these relate to the external environment. The report concludes with an overview of the key findings and insights gained from the analysis.

Business and the business
environment

Table of Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
P1 Different types, purpose and legal structure of the organisations..........................................3
P2 The size and scope of range of different types of organisation ............................................5
LO 2.................................................................................................................................................7
P3 Explain the relationship between different organisational functions and there link to
organisational objectives and structure.......................................................................................8
LO 3.................................................................................................................................................9
P4 Identify the positive and negative impacts of the macro environment upon business
operations....................................................................................................................................9
LO 4...............................................................................................................................................11
P 5 Internal and external analysis to identify strength n weaknesses.......................................11
P 6 Interrelation of strength and weakness level 5of the Tesco with external factors .............13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business environment includes all the external and internal factors such as customers
need and demands, management, suppliers, clients and social trends etc. that influences
organisations overall performance. Present study is based on Tesco. It is a British multinational
retailer. It is the 3rd largest retailer in the world according to their gross revenue. Its headquarter
in Welwyn garden city, UK. It holds more than 6569 shops across the world with 460000
employees.
The report will include different types, purpose and legal structure of the organisations. It
will define the size and scope of different type of organisation. It describes the relationship
between different type of organisation that links with organisational objectives and structure.
Furthermore, it conducts internal and external analysis of Tesco to identify strengths and
weaknesses.
LO 1
P1 Different types, purpose and legal structure of the organisations
Public organisation:-
The public sector organisation usually operated and owned by the government. It consists
of publicly controlled, publicly funded agencies, government, enterprises and any other entity
that deliver public programs and good and services. Those company who holds more than 50%
shares that consider as public organisation(Prajogo, 2016). McDonald is a public organisation
that operates their operations as public organisation and the general people can buy the shares of
the McDonald.
Purpose:-
The main purpose is providing public services rather than making profits and increasing
sales. Public organisation is to provide public services that includes governmental services and
public goods, public education along with goods and services. McDonald purpose is to serve
good food in fun and friendly environment and provides good return to their customers.
Legal structure:-
The public organisation is managed and accountable by central and local government and
also funded by government. They tend to supply services to public rather than produce products

and services. McDonald's legal structure includes government, board of director of the company
that manage the company.
Private organisation:-
Private organisation is any corporation, agency, person and partnership that is operated for
making profits and increasing sales not for providing public services(Hamilton and
Webster,2018). It is also defined as non-federal body that is established on federal property and
self-sustainable by the people. Tesco is a private company that is
Purpose:-
The purpose of the private organisation is worked for benefits of the owners,investors and
shareholders. The private company is financed by bank loans and money from shareholders.
Their main purpose is to maximize the profitability as well as sales of the organisation. Tesco's
purpose is to provide quality products at lower price that helps to maximize the profitability as
well as sales of the organisation.
Legal structure:-
It has separate legal identify from their owners. Shareholder of the private company is a part
of the company. They can not sell their shares to the public in any circumstances. Tesco's legal
structure includes their board of directors, chief executive officer, management and employees
and also their customers, suppliers as well.
Voluntary organisation
It is a group of individuals that voluntarily enter in an agreement and from an organisation
for achieving their purpose. It is also collection of individuals who work together to undertake
certain activities for the benefit of the community(Asia and Hetherington, 2017). Traditionally it
has occupied third space and sits between the public and private sectors. Oxfam is non-
governmental organisation that is formed in 1942 as voluntary organisation. It is led by Oxfam
international.
Purpose:-

The purpose of voluntary organisation is to create social impact rather than creating profits
and provides better lives to the specific group of people in society. The purpose of Oxfam is to
create poverty free society, pro-migration and disaster relief.
legal structure:-
The legal structure of the voluntary organisation includes trustee, founders and
management of the organisation. The Oxfam legal structure includes trustee, fonder,
management, volunteer etc.
P2 The size and scope of range of different types of organisation
Bases Public organisation
(McDonald)
Private organisation
(Tesco)
Voluntary organisation
(Oxfam)
Background details McDonald is an
American fast food
company. It is world
largest restaurant chain
by its revenue. It
serves more than 69
million customers
daily over 100
countries. Its
headquartered in
Chicago, Illinois, U.S.
That founded in 1940.
Tesco is a British
multinational retailer
company that is
groceries and general
merchandise retailer,
headquartered in
Welwyn garden city,
Hertfordshire,
England, United
Kingdom. It is the 9th
largest retailer in the
world according to
their revenue(Bah and
Fang, 2015).
Oxfam is a charitable
organisation, founded
in 1942. It is
confederation of 20
independent
organisation that is
led by Oxfam
international. It has
extensive collection of
operations. Oxfam is
largest retailer of
second hand books.
Product and services Their products and
services are
hamburgers, French
fries, chicken, soft
drinks, desserts,
There products are
supermarket,
hypermarket,
superstore,
convenience shop. It
Oxfam has shops in all
over the world which
sales number of items
such as fair trade,
donated item such as

milkshakes, coffee,
wraps and breakfast
etc.
mainly deals in
groceries and general
merchandise.
books, music, bridal
wear and furniture etc.
Size and scope It holds more than
37,855 restaurant in
worldwide. Its revenue
is $21.025 billion with
the operating income $
8.823 billion in 2018.
There stores are
located in more than
6569 locations in
worldwide. Its revenue
is £57,491 millions
with operating income
in 2018.
Oxfam has more than
1200 shops
worldwide. In Europe
their selling is
12million per year in
2018. it raising £17.1
million for the
programmes of the
Oxfam(Virglerová,
Dobeš and Vojtovič,
2016).
Vision & mission The vision and
mission of McDonald
is to provide their
better the world's best
quick service and best
restaurant experience
that helps to make
every customer to the
restaurant smile.
Tesco's vision and
mission is to make
what matters better,
together means every
day to provides better
goods and services to
their customers and
make a leading retailer
of the retail industry.
Their vision & mission
is to develop the world
without poverty and
people can have right
to take their own
decision, assume their
responsibilities as well
as enjoy their own
rights and also treat
each other’s equally.
Business objectives The main objective of
the customer is to
become a customers
favourite place to eat
and their main focus is
to create an
The main objective of
the Tesco is to leading
the retail supermarket
and providing
qualitative products
and services at cheaper
The objectives of the
Oxfam is poverty
eradication, disaster
relief, pro-migration,
policy research and
advocacy.

extraordinary
customer experience.
prices than their
competitors to their
customers.
Organisational
structure
McDonald has flat
organisational
structure.
Tedifferent types,
purpose and legal
structure of the
organisations. It will
define the size and
scope of different type
of organisation. It
describes the
relationship between
different type of
organisation that links
with organisational
objectives and
structure. Furthermore,
it conducts internal
and external analysis
of Tesco to identify
strengths and
weaknesses.sco
follows hierarchical
organisational
structure(Eling and
Schaper, 2017).
It follows flat
organisational
structure.
Number of employees McDonald holds
21000 employees in
2018.
It have 460,000
employees in 2017.
Oxfam has more than
20,000 volunteers in
their shops in UK.
Stakeholders There stakeholders are Tesco's stakeholders The Oxfam's

government, board of
director, chief
executive officer,
managers, employees,
suppliers and
customers as well as
general public.
are non-executive
director, chief
executive officer,
suppliers, managers
and customers etc.
stakeholders are
founder, management
and volunteers etc.
Websites www.mcdonalds.com www.tescoplc.com www.oxfam.org
LO 2
P3 Explain the relationship between different organisational functions and there link to
organisational objectives and structure
In Tesco organisation has performs variety of tasks in their organisation. It has different
stores like books, clothing, and provide different services like telecom and internet service. For
smooth operation of this department there are various functions in the Tesco such as finance,
marketing, production, research and development, human resource etc. these all interconnected
with each other and helps in their operation.
Research and development with production function
The research and development of Tesco researches about market conditions, competition
in the new market and in existing market as well and needs and demands of the customers,
search about the new policies by the government, geographical region and many more, according
to the research and development department's report helps to production department in producing
goods and services. The research and development departments provides all information related
to the external environment such as their competitions, substitute products, pricing strategies,
packaging strategy etc.(Kolk, 2016)
Marketing and Human resource function:-
Human resource function provides manpower with skills and abilities to the marketing as
well as other departments that helps to build strong manpower for the company that effects
positively on marketing department because that helps to make effective marketing strategy with
new and innovative ideas. This helps the organisation to enhance their sales and profitability of

the organisation and if they work effectively towards the organisation objectives that can
enhance their salary and incentives by the human resource function and that satisfied their
employees of the Tesco. In Tesco, the functions maintain good relation with each other and
contributes their 100% towards the business objectives that enhance the profitability of the
organisation.
Marketing and production department:-
There are very closely related to marketing and production department that both function
helps to Tesco in enhancing their performance. The only reason is friendly communication
between production and marketing function and in return this functions helps to fulfil their
customers needs and increase the profitability of the organisation such as production department
produces the large amount of the products and services that helps marketing manager to make
their strategies accordingly for which market there they want to sell, what should be the price of
the products, they set the MRP and CRP according to production and set the profit margin. This
helps the organisation to stop access flow of money and wastage of products(Saleem, 2015).
LO 3
P4 Identify the positive and negative impacts of the macro environment upon business operations
PESTLE analysis
It is a strategic analytical tool for evaluating the external environment of the Tesco that
includes political, economical, social, technological, environmental and legal factor that affect
the retail chain.
Political factor:-
This factor affects Tesco company such as political stability, extent of corruption and
bureaucracy in Tesco's international market. The positive impact of the political factor is the
company operates its operations in more than 12 countries. The Political environment helps to
Tesco in the growth of their market share by Political stability, interest rate, fix taxation, and
other policies of the country helps the company to sustain in the market and implements to their
current strategies. The negative impact of the political factor is that Tesco run their business
operations across the world, so the different political region of that countries affects their market
growth as well as profitability of the Tesco, sales as well(Komljenovic, Loiselle and Kumral,
2017). They have to make strategies according to that country's government. Political trends and

environment of election influences the organisational sales because changing political party
creates different policies and trends for the organisation that affects the overall process of the
Tesco Because every time they have to plan strategies according to political condition and
policies of the each country.
Economical factor:-
Economical factor such as value of the currency and employment rate is high then people
will have the adequate source of income that helps to enhance the satisfaction level of the
organisation it impacts positively on the organisation. This helps the firm in attracting more
employees and customer. This will help the organisation to buy more products of Tesco and
helps to expand business. One of the important economical factor is labour cost that effects UK
supermarket because UK's annual wage bill amount is GBP 4.5 billion and in 2018 the minimum
wage rate increased by 4,5% that effect negativity on the Tesco because that shifted upwards the
cost of the Tesco as well as decrease the profitability of the organisation because of the high
prices of the product and services(Fabuš, 2017).
Social factor:
Tesco has a large diversity customers for their target market and Tesco tries to fulfil the
needs and demands of their customer by provides their choice-able products and their product are
social and cultural according to the particular environment. It helps to Tesco to makes
sustainability in the market and to maintain good brand image and satisfying their customers that
helps to enhance the sales and profitability of the organisation. One of the major social factor is
change in customers preferences and their buying behaviour over a time and also their needs and
demands are increased over a time such as they want same day and fast delivery with the return
policy of the goods and also customers are not loyal to the one supermarket. They only loyal to
the products prices and their services that impacts negativity on Tesco's sales and profitability
and some time create delay on their operation.
Technological factor:-
Technology factor is bough some opportunities for Tesco that helps to attract their
customers towards the company. Tesco introduces RFID technology that helps to increase
customer's in-store experience by automatically counts stock and also remove it after sales. This

information is helpful for supplier and that replenish the goods when required that impacts
positivity on the Tesco and helps to enhance customer loyalty as well as also increases the sales
and profitability of the organisation(Khan and Quaddus, 2015). If Tesco is not adopted the
emerging technologies and innovation they will lose their customer and investors too. They fails
to fulfil demand of the customers within the time and also risk of reducing the quality of
products because of lack of technology that creates the risk of Tesco that their customer will shift
to other supermarket and reduces their sales and profitability of the organisation..
Legal factor:-
Tesco always follows all the legal regulation of each country before entering into new
market as well as new location. it considers the government policies and apply these policies in
their business operations that helps to Tesco in running operations effectively. This impacts
positively on the Tesco by helps to enhance brand image as well as profitability of the
organisation. If the government of any country is made changes in employment legislation, trade
laws, import policies and all laws related to employees that affects negativity on the profitability
of the Tesco.
Environment factor:-
Tesco company always considers social responsibility in their business operations by
delivering sustainable products and services to their customers and clients and also focus take
initiative on pollution control activities to save environment that impacts positivity on the
organisation by enhancing customer satisfaction and their brand image. Company can face huge
losses due to change in weather that impacts there services related and providing through
internet, telecom and any other media to their customers that impact negativity on the Tesco
because that affect the sales as well as long distance relationship with stakeholder(Gavurova and
et.al.,2017).
LO 4
P 5 Internal and external analysis to identify strength n weaknesses
To analyse the internal and external strengths and weaknesses of the company Tesco
apply the SWOT analysis. As the Tesco company is global retailing company in UK which
offers verity of products to the customers (SWOT Analysis of Tesco,2019). To maintain the
smooth running operation of the company Tesco need to identify its internal and external

strengths and weaknesses that Tesco can overcome its weaknesses and increase the strengths
that help to go forward with its business strategies and brand engagement. SWOT include the
four elements in which strengths and weakness are the internal and opportunities ad threats are
the external analysis.
Strengths
 Tesco is the third largest retail company in the world and no 1 of the UK with 27.8% of
market share in the grocery market. It expand its business in number of countries and
have the high brand image. This brand image put the Tesco company's management
affect the decision to build and develop such plan that sustain its brand image globally.
 Tesco has won many awards to provide best customer services, retail experience and
overall shopping experience. This affect the Tesco to always provide the best customer
services to their customers. And work to wards to win award again (Gürel and Tat, 2017).
 It has various store in different country with different format that appeal to local and
cultural need, this helping the Tesco to offer different and more personalised products
and service to the customers. Affect the Tesco to understand all the need and wants of the
customers on the basis of their cultural and region.
Weakness
 The business model which is follow by the Tesco is similar every where. That have to
according to different geographical region that can attract the customers more and more.
 The retailer of the Tesco is more likely to depended on he UK and Europe to generate
more sales and not spent time to expand business and resources in other market. Tesco
must have to try to serve in other markets too (Bull and et.al, 2016).
 Tesco has failed to operate market on America and Japan and had to take exit in
2012,because its failed export operations forced the company to close its store.
 Limitation in rage of the products which is sold by the Tesco. This give the opportunity
to other competitor to fill this range gape and increase their sale.
Opportunities