TESCO: Business Environment Analysis, Functions, and PESTLE Impact

This report offers a comprehensive analysis of TESCO's business environment, exploring various aspects of its operations. It begins by differentiating between various types of organizations, such as public, private, and voluntary entities, using TESCO as a case study for private organizations. The report then examines the size and scope of these different organizational types. It further delves into the inter-relationship between different functions of the organization, like human resources, production, and finance, and their impact on achieving the company's objectives, also including different organizational structures such as divisional, functional and matrix structures. The PESTLE analysis is employed to evaluate the positive and negative impacts of macro-environmental factors on TESCO, encompassing political, economic, socio-cultural, technological, legal, and environmental considerations. Finally, the report conducts an internal and external analysis of the organization to determine its strengths and weaknesses and highlights the inter-relationship between these internal factors and external macro factors. The report concludes with a summary of the findings and references to relevant sources.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Different type and purpose of organization ..........................................................................3
P2 Size and Scope of different types of organization ................................................................4
TASK 2............................................................................................................................................5
P3 Inter-relationship between different functions of organization with its structure and
objective .....................................................................................................................................5
TASK 3 ...........................................................................................................................................6
P4 Positive and Negative impact of macro factors using PESTLE Analysis ............................6
TASK 4............................................................................................................................................9
P5 External and internal analysis of organisation to determine strengths & weaknesses...........9
P6 Inter-relationship between strength and weakness of external macro factors ....................11
CONCLUSION .............................................................................................................................12
REFERENCES .............................................................................................................................14
.......................................................................................................................................................15

INTRODUCTION
Business environment comprise of all the internal and external forces that impact tasks
and exercises of an association. It is an accumulation everything being equal, people and
different segments which could possibly be responsible for firm (Asif, Garvare and Ahmad,
2011). Different components are associated with business surroundings, for example, clients,
administration, supply and request, representatives and business directions. The given report is
based on TESCO which is globally renowned UK based retailer. It cover different types of
organization and how size, scope and purpose of each varies from one another. Along with it also
included PESTLE and SWOT framework which aid in identifying various micro and macro
forces affecting business operation.
TASK 1
P1 Different type and purpose of organization
Different kind of companies exist in the market place such as public, voluntary and
private. Each one is distinct from one another in terms of purpose, legal structure etc. There are
some organization that mainly run with an aim of generating high revenues while there are some
who run with a motive of promoting the interest and welfare of society and its members.
Public: Such type of enterprises are control and managed by government of respective nation.
They render service without the interest of making profit from it. Along with these, funding of
public companies are managed by government only. For example: National Health Care
Services. Company Overview: NHS is publically funded organization of England that provide
medical and healthcare services to all British People and that too with free of cost.
Basically it is funded by general taxation system and manager of Health Department. Purpose: “To improve the health and well-being of all its patients, people from all
communities (Bhaduri and Ha-Brookshire, 2011).
 Types of Legal Structure: It compromise of central, state and local government who
formulate all policies and legislation according to which all public players are bound to
operate their business operation and activities.
Private: Such associations are not controlled and overseen by government rather these are
essentially dealt with by private players as it were. They produce benefits out of offers they make

(Chetwood and et. al, 2014). Privately owned businesses produce income by going up against
their opponents by guaranteeing that their products and ventures make an incentive for their
objective client. For example: TESCO PLC Company Overview: TESCO PLC is a leading British multinational retailer, located in
Hertfordshire, England. It is the 3rd largest retailer in terms of profits and 9th largest in
terms of revenue. Purpose: “To deliver high quality products at economical rate that create value for
customer”.
 Types of Legal Structure: It categorise into partnership, sole trader, co-operatives and
limited companies.
Voluntary: Such type of enterprises run with an aim of promoting the interest and welfare of
society and its members. The main objective of companies under this is to improve the living
standard of people. A few people like to fill in as a volunteer with a few foundations that give
them no cash consequently. Company Overview: Maytree is a beneficent based association that assistance individuals
in self-destructive emergency to re-establish trust and to reconnect with life. Their
administrations run 24 hours per day. They have immense group of volunteers who about
go through 77 hours with every visitor so to give them best administrations (Crane and
Matten, 2013). Purpose: “To provide effective services and formulate strategies with a purpose of
eliminating poverty and helping people who have attempted suicide”.
P2 Size and Scope of different types of organization
Public: Vision: "To convey better care, better esteem and better well-being to all legitimate
English Residents" Mission: "To render nature of care to each individual on consistent schedule" Size: NHS was set up inside different nations of UK through various enactment. By and
by, there are four well-being administrations running in United Kingdom including NHS
Wales, NHS England, HSC Northern Ireland and NHS Scotland.

 Scope: Plenty of administrations related with well-being and therapeutic care is given by
NHS to all UK occupants with a point of improving nation a place to live, for example,
youngsters' physiotherapy, heart recovery, diabetes administrations etc.
Voluntary: Vision:"To defend the social and financial privileges of each person". Mission: "To propel activity that prompts advance the intrigue and welfare of society
and its individuals". Size: It is an independent beneficent trust who keeps running with a point of destroying
neediness, advance instructive rights and human rights. Their administrations are
accessible 24*7 with a point of giving administrations to individuals when they required Scope: It was established in the time of 1982 with a goal of making answer for expelling
destitution and give direction to person who tries to attempt suicide.
TASK 2
P3 Inter-relationship between different functions of organization with its structure and objective
In a company, different capacities are performed which helps with achieving goals of
organization. For meeting necessities of clients and giving great products to them, Marks and
Spencer plays out a few capacities that aides in achieving its foreordained business targets (Kian
Chong, Shafaghi and Leing Tan, 2011) . Such capacities and their connection with targets are
characterized below:
 Human resource department: This branch of firm performs part of enrolling, choosing
and procuring gifted possibility for right position. Diverse exercises are related with this
office, for example, execution examination, worker pay, pay and wages, preparing and
advancement and so on. These all exercises helps HR manager of TESCO in expanding
representative inspiration and accomplishing set goal and focuses of organization.
 Production and Operation Department: In this capacity, crude material is changed over
into conclusive products. Activities chief apply different systems or methodologies that
helps with controlling generation cost and guarantees ideal utilization of assets in a
successful and productive way (Meiners, Ringleb and Edwards, 2014). In TESCO, this
division helps with assembling products of high quality so as to address client's issues in

an effective manner. It helps firm in accomplishing its set targets and destinations in a
powerful way.
 Finance Department: This capacity of an association assumes significant part in running
its exercises and activities easily and viably. TESCO's financial manager has the
obligation to appoint spending plan and in addition dispense appropriate assets to all
offices. They are additionally mindful to keeping up proper measure of back inside firm.
This helps with performing exercises and activities on time which thusly brings about
accomplishing goals of organization.
Different types of organizational structure:
Divisional: In this, capacities are gathered into division which thus helps in getting adaptability
activities of organization. Geography or product offering of firm is bolstered by required
capacities and assets that are incorporated into specific division.
Functional: It is based on specific territories, elements of firm are isolated into little gatherings.
This structure is usually utilized as a part of associations as it helps with acquiring productivity
activities in light of the fact that common abilities are assembled by work
Matrix: In this structure, individuals are gathered all the while by 2 unmistakable operational
points of view. It is mind boggling structure and utilized as a part of huge associations which
works in a few nations. In TESCO, network structure is utilized as it is innately flexible that
makes it gainful for firm (Sekaran and Bougie, 2016).
TASK 3
P4 Positive and Negative impact of macro factors using PESTLE Analysis
TESCO is a globally renowned brand which is engaged with the business of selling
groceries, home-ware, electricals,clothing, electronics etc. It falls in the list of biggest companies
that generate higher revenues. However food industry require lots of efforts to exactly penetrate
in the selected targeted population. With the help of PESTLE Analysis, NESTLE will get the
hint regarding enhancing operation at right time, right place & with correct direction.
Political: As TESCO operate in several countries which means rules and regulation framed by
government vary from country to country (Türetken and et. al., 2011, June). Company needs to
laid stress on these political forces such as import-export excise duties, taxation, permission of
government, political stability etc. for carrying out business operation smoothly.

 Strength: Due to ongoing political instability in the world, TESCO significantly
contributes towards generating employment opportunities for vast number of people.
 Weakness: Any change in VAT rate will adversely affect overall sales of TESCO.
Increase in VAT rate results in lowering customer purchasing power. As a result,
consumer prefer to buy such products that are available on low cost.
Economical: It include factors that are related with economic structure and policy of the
country. Basically economic factors determines the extent to which entire economy is
influencing the business. The economy of United Kingdom is showing positive sign in context of
recovering from financial crisis. High gross domestic product and economic growth rate has been
estimated. This comes as a benefit for TESCO as it is highly depend upon UK market.
 Strength: Any growth in UK economy will comes out as an advantage for TESCO
because it holds near about 40% share of UK market.
 Weakness: Situation like economic recession, adversely affect the sales and revenue of
the company. British People start consuming cheaper product instead of luxurious items.
Socio-Cultural: These factors include likes and dislikes of customer that posses an impact on
total sales figures of respective company. In modern scenario, there is a high shift observed in
the taste and likes of consumer. Opinion of any customer quickly changes due to any change in
the price or quality of company's product or services.
 Strength: Today most of the people prefer to buy products via online shopping websites.
This enable TESCO to launch its own website which indirectly provide great assistance
to elderly people who are facing mobility issues (Vaiman, Sigurjonsson and Davidsson,
2011).
 Weakness: Likes and Dislikes of an individual is constantly changing which comes out as
a barrier for TESCO in terms of changing its product line on frequent basis.
Technological: High end technology brings many opportunities for TESCO in terms of
improving its supply chain management which aid in saving overall cost and energy on large
scale. With the introduction of mobile technology its distribution network gets improved because
consumer can simply order their preferred product through mobile only (Wack, 2017).
 Strength: TESCO has developed various self-service check-out point that gives
convenience and simplicity to customers which in return reduce overall labour cost of the
company.

 Weakness: In some of production process, TESCO is still using tradition technology
which serve as their major drawback.
Legal: There are various government legislation and policies that directly influence overall
performance of TESCO. Recently, Food Retailing Commission has framed new Code of
Practices which implies that any company is not liable to change price without giving prior
notice to its suppliers.
 Strength: Government of UK has revise the way in which direct subsidy is allocated to
farmers. As a result, farmers will now get high subsidy which improve their standard of
living.
 Weakness: Non-compliance to rules and regulation formulated by UK government results
in representing bad image of the company in customer's mind.
Environmental: With increased pressure on companies in context of adopting such business
practices that do cause any harm to nature or environment. Taking this into consideration,
TESCO is adopting number of measures that all are aimed to protect the environment (Yu and
Ramanathan, 2013).
 Strength: By 2020, the aim of TESCO is to reduce carbon footprints by by 50%. This
results in improving image of TESCO in the mind of customer.
 Weakness: Any business practice that cause harm to environment or nature impact
adversely as now a days everyone is becoming conscious about protecting nature.
TASK 4
P5 External and internal analysis of organisation to determine strengths & weaknesses
SWOT analysis is an strategic tool to review micro environment that represents firm's resources
and capability that aid to competitive advantage (Zsambok and Klein, 2014). Following SWOT
analysis help nestle to identify its strength and opportunities that makes company grow and
weaknesses and threats that company must respond to.
SWOT analysis of TESCO:-
Positive factors Negative factors
Internal factors Strength
 TESCO has high brand
loyalty and brand recall as
Weakness
 TESCO has lack of
experience in some markets

it spend more on
promotions through
advertisements like online
ads, print media,
sponsorships etc.
 Mergers and acquisitions
and joint ventures has
strengthened TESCO's
market share.
 It is widely present across
Europe, South America,
North America, North
Africa and Asia.
 It follows Multi Format
Strategy like hypermarkets,
supermarkets, hard discount
stores and convenience
stores.
 TESCO have relatively
large stores with broad non-
food line such as books,
apparels, electronic,
furnitures,telecoms and
internet services etc.
 Its long standing history in
UK, giving it credibility
and assurance that it will
continue to operate in
future for long run.
that it intend to enter such as
its own brand smartphones
and tablets.
 Its profit has been impacted
by household insurance
claims,bad debts and credit
cards arrears.
 Pressure from competitors
leads to price wars that have
erode away TESCO's profit margin
 TESCO is highly dependent
on Europe and UK for its
sale.
 TESCO has faced various
controversies with
companies like Varco and
Weatherford for violating
some patents that led to
negative media coverage and
public image.
External factor Opportunities
 There are number of
Threats
 TESCO faces price war

emerging market like
Indonesia, Turkey, Mexico,
South Africa and many
more where TESCO can
enter through acquisition of
smaller chains and tie-ups.
 TESCO can rebrand its
store through innovative
digital media advertising
and promotions.
 In countries where TESCO
is not performing well ,
have an opportunity of joint
venture where local
companies can help them
with market research to
improve performance in
those areas.
 There is an opportunity for
TESCO to facilitate online
shopping and home
delivery service to its
customers that will help
them to reach broader
market area at lower cost.
threats from Aldi and Lidl as
these two competitors uses
discounting strategies and
make it difficult for TESCO
to compete with them and
have a great impact on its
price.
 Rise in price of raw material
for both food and non food
affecting the profit of
TESCO to a great extent.
 Increasing competition from
other retailers like
Sainsbury's, ASDA, Wal-
Mart(ninth most valued
brand around world) affect
its profitibility.
 Economic recessions and
credit crunches are major
concern for TESCO as it
affect the market share and
profitability of company by
reducing the purchases made
by consumers.
 Government regulations and
policies also putting
pressures on TESCO to
follow new regulations that
require them to make
changes to their operating
structure.

 Social responsibilities and
stakeholders pressure related
to environment also
adversely affect the cost
basis of TESCO
P6 Inter-relationship between strength and weakness of external macro factors
There is a interlink between strengths & weaknesses and macro factors exist in external
environment of business. Identification of these assists in gaining competitive advantage in
market as well as exploiting opportunities from it. Managers of Tesco needs to determine all
those factor and their interlink in order to formulate strategies in proper way and attain objectives
and targets of company effectively (Bhaduri and Ha-Brookshire, 2011).
Political: This force involves various variables such as regulations and policies and other which
assist in developing teams.
Strength: Effective operations and activities are ensured by company by complying with political
variables. This will assists in performing its operations in well manner.
Weakness: Any political instability adversely affect overall functioning and operation of
business.
Economic: Business working is exceedingly affected by monetary factors, for example,
financing costs, collapse, expansion, trade rates and so on.
Strength: If economy of individual nation is solid then it aids its improvement and long haul
development and additionally likewise underpins in creating more benefits (Asif, Garvare and
Ahmad, 2011).
Weakness: Product request in advertise is very impacted amid expansion as obtaining intensity
of clients turns out to be low.
Social: It includes social parts of individuals of society and additionally age conveyance. Firms
are require to satisfy necessities of society with the goal that their expectation for everyday
comforts can be improved.
Strength: TESCO is occupied with different social exercises which encourages in building its
solid picture in the public arena.

Weakness: Production of those items which are of low quality decreases offers of merchandise
and in addition incomes of firm.
Technological:Firm is require to continue refreshing themselves about any change that happens
in innovation. It encourages them in getting high focused edge in showcase.
Strength: Use of most recent innovation in assembling of products helps with fulfilling clients in
more better way and achieving upper hand in advertise (Kian Chong, Shafaghi and Leing Tan,
2011).
Weakness: Use of customary procedures of creation may brings about declining development of
organization.
CONCLUSION
` According to above mentioned report, it can be concluded that size,scope, structure and
purpose of every single organization vary from one another. Business operation and activities
also gets influenced by internal and external forces that are available within and outside the
company. Impact of these forces can be positive or negative depending upon the nature or size of
business. Additionally, there are certain tools like PESTLE, SWOT that assist in identifying
these forces and its impact on overall business operation. Inter-relationship among internal and
external factors help running organization smoothly and also aid in getting high competitive
advantage over other rivals exist in the market place.

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