Business Environment Analysis of Tesco: A Detailed Report

This report provides a comprehensive analysis of Tesco's business environment, examining various organizational types such as private, public, and voluntary sectors. It delves into the size and scope of these organizations, highlighting their distinct characteristics, objectives, and structures. The report explores the relationship between different organizational functions, including finance, marketing, and human resources, and how they contribute to achieving organizational objectives. Furthermore, it discusses the positive and negative impacts of the macro environment on Tesco's business operations, offering insights into the company's internal and external analysis to identify its strengths and weaknesses. The report also covers Tesco's vision, mission, products, and organizational structure, including the adoption of a lean organizational structure. The analysis includes comparisons with other organizations such as the BBC and Wellcome Trust, illustrating the diverse approaches to organizational design and function within the business landscape.

BUSINESS
ENVIRONMENT
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INTRODUCTION
Business environment is a marketing term used for analysing internal as well as external
factors that influence a business (Andersson, Forsgren, and Holm, 2015). A business
environment is defined as the sum of all external and internal factors that affects the functioning
and decision making of a business. When a successful business has to be sustained then there is a
need of effective utilisation of resources. Business environment is defined as the sum of total of
different internal and external factors that affects the business of an organisation. A business
environment is an essential aspect of any business and it helps the managers and leaders to
estimate the success of company in new markets. There are different forces which constitute the
business environment such as media, government, economic conditions, investigators etc. The
different forms of business organisation depends upon nature of business and size of operations.
There are different kind of organisations including public sector organisation, private sector
organisation and voluntary organisation. All these organisations have different scope, size and
mission and vision. All these kinds of organisations uses different type of organisational
structure like matrix, lean and hierarchical organisational structure. A business environment will
present opportunities as well as threats of a business. The business environment should be easily
understood. The company which is considered in this report is Tesco. This is a multinational
company that deals in groceries and it is a merchandise retailer. The headquarters of Tesco are
located in England, UK. Tesco is a multinational retail company that is their largest retail
industry of the world. Tesco was founded by Jack Cohen in the year 1924. Tesco has a
successful expansion at global level since the day it started business. This company is listed on
the London stock exchange it has a market capitalization of around £18.1 billion. This report
consists of explanation of different types and purposes of organisations. It also describes the size
and scope of different types of organisations. In this report, relationship between different
organisational functions and organisational structure has been discussed. This report includes the
positive and negative impacts of macro environment on the business environment. In addition to
this, the report consists of internal and external analysis of the organisation for determining its
strengths and weaknesses.
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TASK 1
P1 Explain the different types and purposes of organisations
There are different types of organisation that are present in business environment. These
include private, public and voluntary. There are some goals and objectives of each and every
organisation which helps it to work effectively and perform all functions of the company. The
different kind of organisations are described below-
Private limited – This is a kind of organisation that is a small enterprise which has some
liabilities for shareholders of the organisation (Bah, and Fang, 2015). The private limited
companies are restricted for selling shares to public. Tesco is a private sector company that deals
in retail sector in UK. Sole traders – These are people who are responsible for managing different activities of
business by their own and having separate identity from their organisation in legal term.
The owner of organisation is liable for losses, debt as well as for profit generated. Partnership – This is known as the best way for introduction to private organisation if
there are less funds present. The partnership companies are basically of two people or
partners who invest money in starting same business. The amount invested by both of
them in business is known as capital and every partner is responsible for profit and losses
according to contribution made by them
PLC (public limited company) – PLC is the company which is ruled by government of
any country. The main objective of these companies is to provide quality products to customers
for increasing economy of the country (Belás, and et. al., 2015). Some example of these are
health care companies, fertilizer companies, oil and gas companies, etc. The main objective of
these companies is to enhance the profitability of whole economy of the country. Central government department – Organisations of particular state run by the central
government bodies.
 Local authorities – In particular nation, local authorities are those who control and
manage working of specific city organisations.
Voluntary Sector: These are those organisations which are known as non profit
companies and these do not get any profit for doing business. The main objective of these
companies is to do work for welfare of society (Botha, Kourie, and Snyman, 2014). For example
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Wellcome Trust is the voluntary sector organisation of UK that was founded in year 1936 by Sir
Henry Wellcome which has main objective of Biomedical Research. Trust- There are few trustees who provide funds to voluntary sector organisation day to
day operations. Unincorporated association- they are the management committees of an organisation or
may be also named as council. Although, unincorporated association don't have their
identity distinct from trustees.
 Others- Royal charter bodies, community and several others.
P2 Explain size and scope of a range of different types of organisations
There are different organisation present in business environment and all of them have
different scope, size, offerings, vision, mission, stakeholders and structure. The scope and size of
different organisations is described below-
Private limited
Those Organisation which have an objective for earning money and profit by providing
products and services to customers according to their needs and requirements are known as
private limited companies. Tesco is a private firm which is dealing in retail sector. The private
limited company is a kind of business enterprise which is owned privately and this ownership is
used in many jurisdictions. There are basically following advantages of private limited
companies -
Limited liability - The main advantage of owing a private limited company is that the
financial liability of shareholders is limited to the shares. Thus if the company is in financial
trouble, then stakeholders will nor get affected.
Restricted trade of shares – There are restrictions placed on the sale of transfer of shares
is considered as a limitation or advantage depending upon outlook of the entrepreneur. Some
shareholders want to sell the shares but cannot share them outside so this becomes an advantage.
On the other hand, in case where shareholders agree to the sale or transfer of share, the risk of
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hostile is low. This restriction on the sales of share is a disadvantage as shareholders have limited
option for liquidation of shares.
Continued Existence – This is an advantage of private limited company for continuing
existence after the owner dies or leaves business. When a business is incorporates, it becomes an
independent legal entity which is able to sue assets which are separated from the owner of
company. A private limited company is different from sole proprietorship as it is owned by
single person. Background: Tesco is a British retail sector industry that is one of the largest food
retailer around the world which was established by jack Cohen in the year 1919. Vision and Mission: To be an organisation which is wanted and needed around the
world. Objectives: Objectives is to contribute in sustainable development of society by their
business model. Products : This company is dealing with groceries and food chain, clothing and bank. Size: Tesco has around 6,569 stores at worldwide level and having revenue
approximately £57,491 million per annum.
 Structure: Lean organisational structure is adopted by Tesco for attracting more number
of Tesco. A lean organisational structure is designed for creating more customer value
by utilising the available resources. The main objective of all members of a lean
organisational structure is to find different ways for improving processes of the
organisational and for making the companies efficient and productive.
PLC (public limited company)
A public limited company is one which is a type of public company under the United
Kingdom law, common jurisdictions and the Republic of Ireland. A public limited company is
legal designation of a limited liability company (LLC). These kind of organisations are offered to
the general public and it has limited liability. These companies are generally used in UK and
some commonwealth countries which follow norms of UK. The main advantage of public
limited company is the ability of increasing capital by issue of public shares. The selling of
share to public means that anyone can invest in the organisation. Companies which are listed on
London Stock Exchange(LSE) are known as public limited companies. The example of public
limited company is BBC i.e. British Broadcasting corporation.
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 Background: The British Broadcasting corporation is a British public service broadcaster
which has headquarters in London. This was started on 18th October, 1922 by John Reith.
The BBC is established under a royal charter and it operates under its agreement with the
secretary of state for Digital, Culture, Media and Sport. Products and services: The BBC corporation provides various services like providing
information through digital media such as television, radio, news , internet, etc. The
vision, mission and values provides information about the work of BBC and the way in
which promotions are done. Vision: The vision of this company is to be the most creative organisation in the world. Mission: The vision of this company is to enrich lives of people by providing
programmes and services that enhances knowledge of individuals and give them
education and entertainment. Size: The number of employees working in British Broadcasting company are
approximately 20,916. Objectives: The objective of British Broadcasting Company is to provide entertainment
and knowledgable programs to people and this company has purpose for Royal Charter
and Agreement, the constitutional basis for BBC.
 Structure: The organisational structure followed by British Broadcasting company is
Hierarchical structure of organisation. In this kind of organisational structure, employees
of the company are ranked at different levels within the organisation. Every
organisational level has a single leader under which several employees are working.
Voluntary sector
These are those organisations who work for welfare of society and their motive is not to
earn money or profits. A voluntary organisation is one which includes a group of individuals
who enter into an agreement and these people are known as volunteers. Some of the examples of
voluntary organisation includes trade associations, learned societies, professional associations
and environmental groups. The voluntary associations can be incorporated and unincorporated.
Voluntary groups are a broad and original form of non-profit organisations. An example of
voluntary sector organisation is Welcome Trust is offering services related to biomedical
research in UK and it has approx. 2,057 personnel according to the data of 2017. Principles of
Wellcome trust is to improve health of their clients.
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 Vision- “To gain extra improvement in health of human beings and animal for whom
they are conducting biomedical research.” Mission- “To do work in such a way that no other can bring their brightest mind in the
field of biomedical research.” Size: The number of employees working in British Broadcasting company are
approximately 20,916. Objectives: The objective of Wellcome trust is to achieve extraordinary improvements in
health by supporting the brightest minds and funding many biomedical research which
help in understanding of science.
 Structure: The organizational structure followed by Wellcome Trust is matrix
organizational structure. This kind of organizational structure is one in which the
reporting relationships are set up as a grid, or matrix and not on the traditional hierarchy.
Employees have dual reporting relationships for both functional and product manager.
TASK 2
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure
An organisation consists of various departments and functions so that all operations of
the company are operated effectively. All the functions are interrelated for smooth running of all
business operations and functions (Chang, 2016). The different departments present in Tesco for
running successful business are human resource, marketing, finance, operations and management
etc. Some of the functions and their interdependence in Tesco are described below- Finance department – Finance is the department of organisation that is required for
doing each and every activity of business. It is termed as the backbone of company. The
main objective of this department is to provide money for doing all activities of the
business. In Tesco, finance department is connected with all other departments as it
provides money to them for performing activities of their function. The daily activities of
operational department that includes distribution of products to customers and retail
shops in time. The finance department allocates all activities and time at which this will
take place. Tesco’s finance department provides money for human resource department
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to provide training and development to people of the company. Also the company
provides money for recruitment process and hiring of new employees. Human resource department – It is the most important function of any organisation. The
human resource department of Tesco provides effective trainings and development
sessions for growth and increasing knowledge of employees. In Tesco, there are several
roles and responsibilities of the human resource department. This department has the
main aim for making employees of the company competitive and strong. The human
resource department of Tesco manages employees by motivating them and enhancing
their knowledge and abilities. In Tesco, the human resource department is interlinked
with all other operations of every division as they manage all employees.
 Marketing department – It is another important department of the company which takes
care of the functions like advertising, promoting, and organising campaigns for products
and services of the company (Charter, 2017). The marketing department of the company
is interrelated with all other departments as this department analyses the needs and
demands of customers and guide all other departments to make products according to
demand of customers. This helps in developing brand image and reputation of the
company.
There are some advantages as well as disadvantages of link of all functions of the company
and these are discussed in the table given below-
Advantages Disadvantages
 The interrelation of departments helps
to easily collaborate and cooperate with
all departments of company and
achieve goals and objectives of the
company in an effective manner.
 This helps in managing all activities of
the company in an effective manner.
 If in a company there is no proper flow
of communication then the interrelation
will not give effective results.
 There are chances of fights and
conflicts if many people have to
collaborate and work with each other.
In context of Tesco, there are different departments which have to perform functions and
operations in an effective manner. Tesco is a retail sector company which is a privately owned
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organisation and it follows lean organisation. There are different departments in Tesco like
marketing, finance, human resource management, operation and management department and
sales and distribution department. In Tesco, the marketing department is responsible for
conducting research and evaluating the needs and demands of a customer. Marketing department
takes money for conducting research from finance department of the company. The human
resource management of Tesco helps in increasing employee engagement and motivation. When
employees of the company are motivated it is easy for accomplish the goals and objectives of the
company. The operations and management activities of business can be developed by
establishing good interrelations between all departments of the company.
In context of British Broadcasting Company, it is a public service broadcaster which uses
hierarchical organisational structure. In this company the main function is of the marketing and
technical department. Both these departments cooperate and collaborate to aware people about
information of programs that are used for enhancing knowledge of individuals. BBC is involved
in broadcasting media on radios, televisions, web portals, etc. Finance department of this
company is responsible for providing money for promoting and advertising programs and
increasing the awareness of programs.
In context of Wellcome Trust, there are different teams available for performing activities
that will help in achieving the objective of the company. These teams includes education
team,grants team, humanities and social science team, innovations team, policy team and public
engagement teams. The wellcome Trust is an organisation that is involved in welfare activities.
This organisation has different interdependent teams which work together for attaining the goals
of company.
TASK 3
P4 Identify the positive and negative impacts the macro environment has upon business
operations
There are several factors that affect business environment and they affects decision
making of the company directly as well as indirectly (Cohen, and Kietzmann, 2014). Tesco can
undergo a PESTEL analysis for identifying the different external factors that affect businesses.
The PESTEL analysis of Tesco while running it's business successfully is described below-
Political factors
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These are related to all policies and governmental rules and regulations that an
organisation has to follow for effective and smooth functioning of the company. If there are any
changes in rules and regulations abide by law and government of the country then it has a great
impact on company's operations. There are both negative as well as positive implications of
political factors on BBC. These are mentioned below- Positive impact - The political factors of countries change rarely and business expansion
of BBChas always been appreciated in all countries as it operated by following all rules
and regulations abide by government of the country.
 Negative impact - Sometimes it is not easy for the companies to obey all rules and
regulations of the company. BBC has experienced negative impact on the company's
operations while it was operating when there is lower economic growth. Thus, it is
advisable for this organisation to have proper knowledge about the expansion.
Economical factors
These are the factors which affects business and operations directly. All
economic factors are essential for increasing profits and revenue of the company
(Erasmus, Strydom, and Rudansky-Kloppers, S. eds., 2016). The different kind of
economic factors are rate of exchange, growth of economy, rate of interest, etc. Negative impact – If the company operates in a country which is having low economy
rate and it is not developed, then there are chances that it can face several negative issues
that impact efficiency of operations of the company.
 Positive impact - The British Broadcasting company should expand it's business where
economy growth is high and exchange rates are fixed. This helps in smooth functioning
of the organisation.
Social factors
The social factor is one which means the changes that occur within the society and these
have a major impact on the functioning of business. Social factors include trends, fashion styles
and lifestyle trends of an individual. Negative impact – The changes in social trends of an individual have negative impact on
BBC as it deals with lifestyle, news, trends and social life of a person.
 Positive impact – The change in social factors also have positive impact on operations of
BBC. This company ensures that quality and authentic information is provided to them.
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Technological factors
The technological factor is important to be considered while doing business (Hillary, R. ed.,
2017). Technological changes like new techniques and equipments helps company in attracting
more customers and increasing it’s customer base. Negative impact – The use of latest technology, equipments and trends cause high price
to the company. It is not very easy for BBC to adapt new technical changes and provide
services to customers.
 Positive impact – The use of new technology is important and it helps a company to
provide good and quality products and services to people. This creates positive image in
front of customers.
Environmental factors
The environmental factors are associated with several elements that affects the
operations of a company. The environmental factors that affects operations of BBC in different
countries include global warming, greenhouse effect, natural calamities, etc. Negative impact – There are some natural calamities or climate that limits an
organisation to do successful business. Thus, it is important for BBC to analyse the
climatic condition of the country before starting business there.
 Positive impact – Sometimes climate is the only reason for the companies to make more
profits and money by establishing business in that country.
Legal factors
The legal factors include several rules and regulations that are given by government for
operating business. It is important for BBC to follow all rules and regulations and do business
without any hurdles and problems. Negative impact – There are different rules and regulations followed in different
countries and it is important for companies to follow them and do business appropriately.
There are some rules and policies which causes decrease in sales of the company.
 Positive impact - It is important for BBC to earn more profit and expand it’s business for
enhancing the global market share. BBC analyses all policies and rules of the company
and then operates business.
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TASK 4
P5 Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses
Tesco is a British multinational groceries retailer of UK and it is earning profits by doing
business in UK and other countries. Tesco was founded in 1919 by Jack Cohen. The SWOT
analysis of Tesco is important for doing business effectively and appropriately. The SWOT of
Tesco is given below-
Strength of Tesco Wide and Diversified Customer Base – Tesco is a firm that has a large customer base
that includes various equipment brokers, drilling contractors, oil and gas companies,
general public, etc. Tesco is a company that does not depend on a single segment of
target customers for revenue and sales (Shenkar, Luo. and Chi, 2014). This is the biggest
strength of this company to have a huge customer base. Strong Product Portfolio – Tesco has strong portfolio in product and it is selling
equipments and provides service around the world. Tesco has adopted the six model
system for analysing the demands and needs of customers. This helps in easily handling
the competition in market.
 Patent and Patent License Agreements – Tesco has different patents and patents license
agreements for using latest technology which are beneficial for growth and development
of the company. A company which is having a strong portfolio of patent technologies can
easily attract companies for doing projects.
Weakness of Tesco Infringement controversies – Tesco has been facing many issues and controversies that
affects its brand image and reputation (Savrul, Incekara, and Sener, 2014). The major
controversy this company faced is violation by companies like Varco and Weatherford
which have violated their patents. The legal cost of Tesco was increased after this
controversy for defending the infringement claims on the company.
 Concentrated operations – The major operations of the country are operated in North
America and revenue is contributed by Mexico, Canada and US. These concentrated
operations decreases the economy in that region.
Opportunities of Tesco
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 Continuous investment in Research and development – Tesco is technology based
organisation and therefore it is important for this organisation to innovate for sustaining
in the competitive business environment. Tesco allows improving and enhancing the
existing technologies for providing new innovation to it's clients. Strategic Acquisitions - Tesco has done an investment in strategic acquisitions for
enhancing it's functioning and operations. Tesco is looking for new opportunities by
utilising resources and technology that saves time.
 Positive outlook for global top drive market – When Tesco has experienced a slowdown
in it's revenue, it has starting making efforts to become better every year (The social
responsibility of international business: From ethics and the (Laudon and Traver, 2016).
When this company experienced fall of oil process, the market grew at CAGR of 5.7%.
Tesco is taking initiatives for becoming the leader player in the industry.
Threats of Tesco Global economic Environment – When any company operates globally, it is very
difficult for it to handle different factors that affects business in other countries like
economic situation, legal rules and regulations, social factors and cultural issues of that
area. These factors are a great threat for Tesco to operate business.
 Seasonal Variations – The equipments and services of Tesco depends on seasons as the
drilling operations are carried out in regions when they are frozen. The seasonal
variations have a huge impact on planning and execution of different projects.
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SWOT analysis of British Broadcasting Company
Strength Weakness
 This is an old reputed organisation.
 It is the largest broadcaster.
 This uses great marketing strategies.
 Sometimes this company is biased
towards making decisions on news.
 It has a high operating cost.
Opportunity Threats
 This is becoming trendy among
youngsters as well as middle aged
people
 There is a he opportunity of increasing
revenue of the company.
 There is a strong competition in market.
 There are some domestic channels
which are becoming competition to
BBC.
P6 Explain how strengths and weaknesses interrelate with external macro factors
The external factors that affect the business environment are not in control of the
company. These factors directly impact the decision making of Tesco. This company deals in
retail sector and and it is important for the management of this company to analyse the external
factors that will affect the business of the company. The PESTEL analysis tool will be able to
analyse the unpredictable environment in which Tesco operates. Tesco is a British retailer
company and it operating in many countries. This is the third largest retail supermarket of UK.
Tesco is providing retail products and it also operates at a global level. PESTEL analysis is
defined as the analysis that is used for identifying the macro or external forces that are faced by
an organisation. The managers and leaders of Tesco suggests that when a strategy or tactical plan
is implemented in the company, then it is fundamental to conduct a situational analysis. The
companies that successfully monitors and responds to changes that occur in the macro
environment are able to differentiate from the competitors and helps the company in building
competitive advantage. The PESTEL analysis of Tesco is described below-
Political factors – The factors that are influenced by government in performing
operations of Tesco are known as political factors. This company is functioning in different
countries and it has to follow rules and regulations of the government of that particular country.
The various political factors on which the decision making of managers of Tesco depends are tax
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policies, licensing practices, direct trades, etc. Tesco is operating in different countries that
includes big countries like Asia and Europe. Tesco has to face several political factors that
affects the operations of the company. There are various political factors that affect Tesco
indirect as well as direct ways. Some of these include political stability which is the most
important element has to taken into consideration while operating business in any country. The
retail chain of Tesco is affected by the activities of trade union and home market lobbying
initiatives in global markets. According to the chairman of Tesco, the prospect of an EU
referendum is the cause of uncertainty of investors and this decreases the economy of a country.
Some political factors can have negative implications on operations of Tesco. For instance, the
group of local council in UK asked the government to increase the tax charges for retail
supermarkets and this initiative was called as the “Tesco Tax”. After some time, this initiative
was refused by government. There are some positive impacts also of the political factors on the
retail sector industries as these organisations require some kind of protection using different legal
compliance, tax rates,etc.
Strength Weakness
Tesco is obeying all governmental rules and
regulations for effective functioning of the
company.
There is no problem or issue faced by Tesco
due to tax factors, industry laws, labour laws,
etc.
Political factors affects the functioning of any
company so it is advisable for Tesco to ensure
that they are always followed.
The decision making approach of the company
depends upon political factors.
Economical factors – There are different macroeconomic factors that Tesco's operations
and business. One of the most important factor that affects the revenues earned by Tesco is cost
of labour. If there is any increase in wage of labour then organisation has to provide that much
amount to labour otherwise they will not work. Some other economic factors that affects
business of Tesco are overall economic situation of the country, monetary and fiscal policies of
the country given by government, inflation rate, availability of credits, etc. The economic factors
have positive as well as negative impact on the impact on the functioning of the Tesco. If the
economic conditions of the company are good and stable then it is effective for the company to
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operate efficiently. On the other hand if the economic situation of a country are not stable then
business in that country will be helpful in increasing profits and money earned by the company.
Tesco is operating in those countries which have good economic condition and where the gross
domestic product rates (GDP) are high. This analysis of economic condition will help the
country in knowing whether business will be profitable or not.
Social factors - It is important for an organisation to evaluate the demands of customers
for improving the quality of products and services of the company (Kolk, 2016.). The social
factors influence the lifestyle and different elements of an individual life such as family,
community, religion, socio-economic status, etc. These factors are analysed before offering
products and services to people for making good profits and money. The customers have
changed their perspectives and demands as there is change is trends of customers. One of the
major shift of choice of customers is that customers are preferring bulk shopping and one stop
shopping nowadays. Thus Tesco has increased the number of non food items which this
company offers. The choice of customers towards a product or service is mainly dependent on
beliefs and attitude of customers. Customers are influenced by social conditions and nowadays
people are more concerned about health issues. This is the reason for Tesco to apply changes in
their stock and products or items offered at supermarket. This can be explained with an example,
customers are preferring healthy food and that is why Tesco has started offering organic food
products. The negative impact of social factors on company is that different people have
different social beliefs and choices, so it is not easy for Tesco to satisfy needs and demands of all
customers. On the other hand, the positive impact of social factors on business is that customers
are given products and services according to their social beliefs and attitude.
Strength Weakness
The main objective of Tesco is to provide
quality services and products to customers as
this helps in building positive relations with
customers. Moreover this helps in building
trust and loyalty among customers. This
benefits in sustaining in competitive business
environment for long time.
There are various change in trends, fashion and
lifestyle of customers. As the company cannot
make changes in its products rapidly so this is
limits Tesco in providing the latest trend and
fashion to it's customers.
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Technological factors – Technology is a major macro environmental factor that
influences the development of various products of Tesco.when new technologies are adopted in
the company, it provides benefits to both company and customers. When products which have
latest technology then customer satisfaction is increased. Use of latest technology helps in
making more personalised services and it also makes shopping more convenient. Tesco has
adopted efficient consumer response initiative and this provides effectiveness in managing the
food supply effectively. Technologies used by Tesco stores are wireless devices, intelligent
scale, electronic shelf labelling, self check out machine and radio frequency identification. Latest
technology used in Tesco includes electronic point of sales (EpoS) , Electronic Funds Transfer
system (EFTPoS) and electronic scanners. All these technologies have greatly helped in
improving the efficiency of distribution and stocking activities. These technologies help in
communicating the needs to suppliers in an appropriate manner. There are both negative as well
as positive impact of technological factors on the organisation. If company uses latest
technologies, operations become convenient and easy but on the other hand, technology acts as a
negative factor in case if all data is erased or new devices stops working, then this is harmful for
management of Tesco.
Environmental factors – The environmental factors are those factors which includes
surroundings, weather, air , water conditions of a particular place or area. This is important for
every organisation to analyse the environmental factors before establishing business in other
countries. There is a pressure on companies and managers of organisations as they should help
society by doing welfare activities for poor people. Tesco is a food retailer company and
therefore it faces many societal issues that are based on environmental problems. The main threat
is to provide customers quality products and services. Tesco was threatened for providing people
quality products and services which are not harmful for consumption. Tesco performs various
corporate social responsibility activities which are concerned in ways that a company exceeds
the minimum obligations to stakeholders that are specified by regulations and corporate
governance. Various governments have been initiated to launch a new strategy for sustainable
consumption and production for cutting waste, reducing consumption of resources and
minimising environmental damage. Th latest legislation of government has created a new tax for
advertising fatty and highly processed food items. This is called the “fat tax” and this affects
product range of Tesco and is is adopted by Tesco which impacts relationships with both
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customers and suppliers. Some other environmental factors that affects the functioning of a
company are increase in pollution, emissions, soil pollution, climatic change, etc. It is important
for the company to analyse the environmental factors before starting the business in other
countries. Generally, Tesco does not launch business in countries which do not have feasible
environmental conditions. This helps the management to minimise wastage involved in failure of
business because of unfavourable environmental situations. The positive impact of
environmental factors on business is that if a company knows these factors then it is analysed
that all factors are feasible then only business should be launched in that area or country.
Legal factors- There are different government legislations and policies have a direct
impact on the performance of Tesco. The food retailing commission has suggested this company
to adopt a code of practise that includes banning of several current practices like demanding
payments fro suppliers and changing the fixed prices of products without providing nay notice.
Tesco has many competitors and it is important for the company to keep prices lower than the
competitors for increasing the sales of the company. There is presence of effective legal practise
in Tesco for establishing strong requirement for product differentiation. Tesco has governmental
policy for monopoly control and reducing power of buyer. This can limit entry of other
competitors in this sector by having controls through license requirements and limits on access of
raw materials. Tesco is offering a price reduction to products of the company that depends upon
amount spent upon groceries at shops. The prices of products are lowered on promoting goods
and prices in the store are increased for compensating. There are various legal factors that refer
to how law affects the way in which business is performed. Different legal factors that affect
business of Tesco in different countries are consumer law, copyright law, employment law, fraud
law, import export law, health and safety law, etc. various laws are introduced for preventing
Tesco from changing prices of products without providing information to customers. It is
important for Tesco to analyse legal factors before establishing business in different countries.
Every country follows different rules and laws and thus Tesco has to estimate the legal factors
and do appropriate business.
CONCLUSION
From the above report, it has been concluded that business environment should be
analysed before starting any business. Business environment is dynamic in nature and it affects
the company in one or another. The business environment includes various external and internal
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factors that have to be evaluated before launching products and services in a new country. A
business can be established easily but it is not easy to remain successful throughout all time if
there is no stability. Thus it is essential for the organisations to estimate all factors that influence
a business and all organisations must do external as well as internal analysis. There are different
kind of resources which are required by business such as finance, social norms, market
conditions, environmental conditions, etc. to check feasibility of establishing business. These
factors are dynamic and ever-changing and thus it is important for organisations to keep
analysing these factors for a successful business. It is important for the company to evaluate and
analyse all internal and external factors before entering into a new market for business. There are
some effective models that helps in analysing the various macro factors that affect functioning of
a business such as PESTLE, SWOT analysis, etc. These help in evaluating the strengths and
weaknesses of the company for doing business effectively.
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Online
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