Detailed Business Environment Analysis Report of Tesco's Operations

This report provides a comprehensive analysis of Tesco's business environment, encompassing various organizational types (public, private, and voluntary) and their structures. It defines the size and scope of organizations like NHS, Tesco, and Oxfam, exploring their objectives and product/service offerings. The report demonstrates the interrelationship between different organizational functions, such as finance, marketing, and human resources, and their impact on overall business operations. It then delves into the positive and negative impacts of macro environmental factors (PESTEL) on Tesco, followed by an evaluation of the company's internal and external factors to identify its strengths and weaknesses. Furthermore, the report examines the interplay between these strengths and weaknesses and the external macro factors, offering a holistic view of Tesco's position within its business environment.

BUSINESS AND THE
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
P1: Explain different types its purpose and legal structure of various organisation..............3
P2: Define size as well as scope of various organisation ......................................................5
P3: Demonstrate the relationship between different organisational functions.......................6
P4: Explain the positive or negative impact of macro environmental factors........................7
P5: Evaluate internal or external analysis of the organisation in order to identify strength &
weakness.................................................................................................................................9
P6: Explain how Strength & Weakness interrelated with external macro factors.................1
REFRENCES...................................................................................................................................3

INTRODUCTION
Business environment includes internal as well as external factor like customer need or
expectation, supplier, owner, employee, economic changes and so on that affect the performance
of business (Hilton and Platt, 2013). Thus, these factors directly or indirectly affect company's
function its internal environment as well as situation. For the better understanding of report
Tesco has been selected which is multinational grocery store of United Kingdom. It is one of the
longest retail chains that deal in grocery items, electronics, clothing, daily necessity items and so
on. This report contain following topics such as various types and purpose of organisation, size
and scope of various organisation. Along with that discussion will be made on relationship
between different organisation function and its impact on macro environment on business
operation. Moreover, identify strength and weakness of specific organisation as well as
interrelation of strength and weakness with external macro factors.
P1: Explain different types its purpose and legal structure of various organisation
Organisation refer to the group of people who work together to attain the objective of
organisation. There can be various types of organisation such as public, private or voluntary that
has its own purpose as well as legal structure (Hillary, 2017).
Public company: Public company are companies which issue the securities from general
public through initial public offerings. It is basically managed as well as controlled by the
government due to which ownership does not rest in the hand of single individual. In context to
NHS public company that is National Health Service it was established in 19478 and is situated
in United Kingdom. Hence, the legal structure as well as purpose of public company is defined
below:
Legal structure:
Central government: Central government is an independent supremacy that is
responsible to govern the entire nation. Thus, their prime role is to attain economic development
by working for the welfare of public (Hamilton and Webster, 2018).
State government: State government are responsible to look after the requirements of
local residence and address them appropriately. They have the power to make regulations for the
proper functioning of state.

Purpose: Th purpose or motive of NHS is to work for social welfare and provide best
health care facility such as dental facility at reasonable rates. Along with that it provide
employment opportunity to the residence of UK (Deasy, et.al., 2016).
Private company: Unlike public company the motive of private company is profit
maximisation. They are basically owned as well as managed by an individual having unlimited
liability. In relation to Tesco, being private organisation has wide supermarket chains that
provide different range of products or services such as electronics, grocery item as well as daily
necessity items of various brands under one store.
Legal structure:
Sole proprietorship: Sole proprietor are the owner of business that run as well as manage
their own business independently (Charter, 2017). Moreover, as they start their own business
with their own fund or capital due to which they are sole responsible for the profit or loss
incurred by business.
Limited company: As the name suggest within such company the liability of the
members are limited based on the investment they have done in business. In simple words
shareholder are not obliged to incur company's debt .
Partnership: Partnership refer to when two or more individual come together and sign an
agreement to run the business operations (Deasy, et.al., 2015). Thud, the liability of each
member is limited.
Purpose: The purpose of the Tesco is to identify the need or change in trend in market.
Accordingly they offer wide range of goods to satisfy their customers and earn huge revenue.
Voluntary company: Voluntary company's are non-profit organisation, which basically
work to safeguard the interest environment as well as society. It involve group of those people
having common interest and address the social issue accordingly. Herein, Oxfam which was
established in 1942 with the motive to work against global poverty. Thus, the legal structure as
well as purpose of voluntary company are defined below:
Legal structure:
Trust: It refer to the group of interested people such as trustee, donor as well as
beneficiary who formulated a formal relationship and work work to overcome social issue.
Association: It includes the structure of of those group which gets united to work for the
welfare of society without concerning about the profit (Bansal and Hoffman, 2012).

Purpose: Oxfam's purpose is to look after the needs of people who come under below
poverty line and help them by not getting deprived of essential or basic needs such as clean food,
water, cloths, shelter and so on.
P2: Define size as well as scope of various organisation
Public company
Size & Scope of NHS: National Health Service offer quality health services at nominal
rates for which they have offered employment to huge number of worker which is approximately
1.2 million. Thus, being large organisation it involve wide range of doctors that are around one
lac with more than three lac visitors. Therefore, they are more keen to provide optimum quality
services by making the use to technology to reduce the time as well as cost.
Company's objectives: The primary objective is to expand the health care facilities
globally. Along with that company provide education not only to their staff but also patients
regarding health care.
Product & Service: NHS offer wide range of health care services like dental facility and
emergency services to cure the health of visitors.
Private company
Size & Scope of Tesco: Tesco has expanded its reach worldwide as it has around six
thousand store from which they have at-least one thousand retail store which are spread in UK.
This shows their existing size is huge along with that their future scope is to more more outlet in
various untapped area in order to expand the market share. In addition to it respective company
wants to offer wide range of food and beverages for its customers.
Company's objectives: Their objective is to provide high quality services at reasonable
prices to overpower their competitors (Bartlett, Doz and Hedlund, 2013).
Product & Service: Selected company deals in enormous range of goods like dairy items,
books, furniture, juices, grocery etc.
Voluntary Company:
Size & Scope of Oxfam: Oxfam have around twenty independent organisation and have
approx five people who are connected with them. Moreover, its scope is to remove poverty by
looking after the need of unprivileged section of society.
Objectives: Its objective is to handle grass root problem to conduct social welfare
identifying the solution of needy people (Cai and Yang, 2014).

Product & Service: It take precaution to enhance the livelihood or living standard ODF
people, eliminate injustice by promoting equality.
P3: Demonstrate the relationship between different organisational functions
Finance: The function of financial department within the organisation involve various
activities like maintaining all the financial transactions and prepare financial statements (Klem,
2013). This helps the company to determine the amount of profit earned by company or expenses
to be paid. The financial department of Tesco is responsible to provide fund in order to perform
all the operational activity whether related to marketing or human resource. Thus, management
of all financial statemented as well as transaction helps in formulating the financial decision
which are used by different department of the organisation. For instance, if Tesco needs to invest
in promotional activity then the budget of investing in various promotional tool will be decided
by the financial department and accordingly they will allocate the funds. Hence, every
department required fund to function effectively which helps in maintaining coordination
between financial department as well as other department for the proper functioning of
organisation. For instance, respective company require manpower to look after financial
department which involve the role of HR to make team of skilled personnel.
Marketing: Marketing function emphasize on providing wide range of goods and
services to satisfy the need of customer (Meiners, Ringleb and Edwards, 2014). If Tesco
company wants to provide value to its customers then they will focuses on research and
development to cater the changing interest as well as preferences of customer. Moreover, it
involve making strategies regarding various decision such as targetting market appropriately, set
price, product development as well as adoption of promotional strategy. Therefore, marketing
function plays a vital role for respective company to develop effective strategy while
coordinating with other departments. Like, respective company depends upon production
department which help the company in providing finished material to attain its objective.
Similarly, marketing department require HR to training the employees. Therefore, every
department within the organisation are interlinked.
Human resources: The role of HR functions within Tesco is to conduct whole
recruitment cycle as well as provide training and development session to the internal staff of
organisation. This function helps in enhancing the skill as well as knowledge of employee for the
better fulfilment of target. Moreover, such function help in employee engagement by providing

monetary as well as non monetary benefit and handling their grievances appropriately.
Furthermore, to perform such function the manager of HR require funds for which they depend
upon finance department. Therefore, this depict that each function are interrelated to each other
(Schaltegger, Hansen and Lüdeke-Freund, 2016).
Organisational structure include flow of information as well as roles and responsibility
which are delegated to various level of organisation. There are various company that adopt
different structure based on size, purpose, scope as well as hierarchy system. Herein, Tesco has
maintained functional structure which is based on the interest, skill as well as specialisation of
employees. Each function has its own managers that have specialised knowledge and guide the
whole team accordingly. Therefore, each department whether it is human resource, finance or
marketing helps in the fulfilment of organisational objective by satisfying customers need.
P4: Explain the positive or negative impact of macro environmental factors
PESTEL is an external market analysis that affect the profitability of organisation by
positively or negatively affecting the profitability of business. Therefore, it include political,
economical, social, technological, environment as well as legal factor that directly affect the
Tesco which are stated below:
Political factor: It include various factors such as political stability, government policies,
tax rate as well as legislation. These factor directly affect the operations, productivity as well as
profitability of business within the global market (Psychogios and Garev, 2012).
Positive: As Tesco provide employment to various people due to which government of
various country make favourable policies to attract the operation of Tesco and other big

companies. Moreover, it mostly operate in developed country which does not faces political
instability.
Negative: Some of operations of Tesco take place in developing country where
government regulation keep on changing. This can hamper or negatively affect the growth of
Tesco.
Economic factor: It involve factors such as disposable income, deflation rate, purchasing
power, inflation rate and so on. These factor directly affect the growth as well as profitability of
Tesco.
Positive: As Tesco provide wide range of premium goods and services at reasonable rates
which is its unique selling proposition. Due to which respective company attract wide range of
customer base as they pricing strategy are favourable.
Negative: Tesco faces the pressure from the side of worker in order to increase the
wages, Therefore, this decrease the profit margin of company which further affect the operations
of business.
Social factor: Social factors include the values, population, ethics, social culture, age
distribution as well as lifestyle of people (Burke, Trahant and Koonce, 2012). These factor
directly affect the performance, profitability as well as profit margin that finally affect the
objective of company.
Positive: Tesco analyse the customer demand or their preferences to satisfy their
requirement like they shifted from one to shopping to bulk shopping. Therefore, such efforts
satisfy the customers and increases the profitability of business.
Negative: As respective company operate in various market due to which it faces huge
competitors pressure that can adversely affect the profitability of firm. As if customer are not
satisfied with the services of selected company then they will shift to its substitute.
Technological factor: Technology factor refer to advancement of technology to conduct
business operation as well as strengthen supply chain. Thus, adoption of latest technology help
the company to achieve long term competitive advantage (Abe, Bassett and Dempsey, 2012).
Positive: Tesco believe in innovation due to which it has adopted various technology for
the better management of its inventors which help to refill the stock before it fall short. Along
with that it provide online as well as delivery services that has increased convenience for the
customers.

Negative: Adoption of latest technology require huge investment in term of money which
lower down the profitability of firm. Along with if respective company adopt innovation before
that they need to need to provide training to their internal staff so that they can handle things
effectively. Therefore, it require huge cost as well as time.
Environmental factor: Environmental factors include laws related to environment,
climate changes and so on. Thus, organisation must take into consideration such factors before
doing its operations.
Positive: Tesco adopt various CSR activity like it has eliminated the use of plastic bags
as well as reduced the emission of carbon which has enhanced the image of company and build
goodwill for public.
Negative: Company may face several ethical issues due to sales of organic foods as well
as treatment of animal.
Legal factor: Legal factor involve factor such as labour law, employment law,
discrimination law and so on. Organisation must take care of legal laws for effective as well as
efficient business functioning.
Positive: Tesco make sure they abide by all the rules and regulation of various country to
gain long term sustainable development.
Negative: If the government passes any new law then in order to adopt that law the whole
process of business may get hampered.
P5: Evaluate internal or external analysis of the organisation in order to identify strength &
weakness
SWOT analysis is an internal as well as external analysis that helps an organisations to
develop future plan as well as strategies. Tesco makes the use of SWOT analysis to identify its
strength, overcome its weakness, exploit opportunity and faces threat. Thus, SWOT analysis of
Tesco is determined below:
Strength:
 Tesco has wide range of retail stores which are expanded globally and generate high
revenue as well as sales for company like it is diversified in more than twelve countries
due to which it has huge customer base.

 It deals in wide range of goods and services such as clothing, electronics and furniture of
different brands. This helps the customer to make better choices on the basis of various
alternatives.
 Tesco has not only maintained its existing technology as well as adopted new technology
such as they have RFID technology that keeps a check on inventory and updated the
information to supplier regarding fulfilment of stock.
Weakness:
 Tesco operate its business in developing country as well like Asia market where the
company is not doing well as they are not able to increase the footfall for its product.
 Due to the competitive pressure respective company does not earn huge profit as their
have adopted low cost strategy which finally lower down the profit margin of company.
 Moreover, due to extension of credit facility as well as high debt the financial profit of
company gets affected.
Opportunity:
 In order to reduce the chances of risk company can form strategic alliances as well as
partnership with other companies that helps the company in attracting customers.
 With the increase of digitalisation the online trend has increased, thus company should
focus on its website as well as they can promote the product through digital media.
 Though Tesco has expanded its business in developing country but there are several
untapped areas where respective company can expand its reach before vits competitors
establish their stores.
Threat:
 Tesco has been continuously facing the threat of existing as well as new entrant. Thus,
they should make precaution for them otherwise respective company may loose its
position.
 Any change in external factor like government regulation, inflation and so on negatively
affect the growth of organisation.

P6: Explain how Strength & Weakness interrelated with external macro factors
PESTEL analysis was propounded by the Francis S. Aguilar who is professor by
profession at Harvard Business School. This analysis is a tool used for scanning and monitoring
the external marketing environment which influences the operations as well as working of any
firm. It provides a concept to the managers for identifying threats and weaknesses related to the
potentiality, market situations along with position of business in the competitive environment.
Such framework is used to provide directions towards the smoothly implementation of the plans,
policies and working. PESTEL stands for political, economic, social, technological,
environmental and legal. The strengths and weaknesses along with PESTEL analysis of Tesco
are as follows:
Political factor: Political factors are related to government plans, rules, policies and
regulations provided for smooth working of a firm in an economy. Various environmental laws,
government policies, labour laws, foreign trade policies are included in it.
Strengths: The government rules, policies, regulations, plans helps the business to
prepare various strategies of current as well as future by scanning the external environment.
Weaknesses: Due to distinct rules and regulations by different governments, the selected
business fails to perform operations in various countries.
Economic Factors: Economic factors influences the working at great extent of any
organization. It include exchange rates, economic growth, interest rates along with inflation
rates.
Strengths: By considering all the factors, wise decisions are taken by the managers of
Tesco.
Weaknesses: various economic strategies such as low cost strategy reduces the
profitability of such firm.
Social factors: Social factors are the shared attitudes, beliefs, values of the people in the
society. Such factors includes: age distribution, health consciousness, population growth rate and
cultural beliefs.
Strengths: Tesco understands and provides the demanded products as well as services to
its customers by fulfilling the responsibilities towards society.

Weaknesses: the demand, preferences and attitudes changes with change in time. Thus,
unable to produce accurate products.
Technological factors: technological factors influences the working with the changing
technology. It includes technological changing rates,research and innovation techniques,
technological incentives.
Strengths: By using advanced technology and production of innovative products, Tesco
converts potential customers into loyal customers.
Weaknesses: With the passage of time, the technology becomes obsolete so as the
products and services.
Environmental factors: All the elements which are surrounding near the business. It
includes trends of macro along with micro environment.
Strengths: Tesco understands and monitor the surrounding environment and deliver the
suitable products to society as well as environment.
Weaknesses: Due to the changing environment situations, fails to operates its
performances in new and dynamic environment.
Legal factors: legal factors are the legislations enforced by the governments of different
countries. To operate the business in successful manner, any organisation have to perform the
operations according to those laws.
Strengths: Tesco follows all the legislations in the country it operates its business and
able to satisfy the demands of its customers.
Weaknesses: Various changes in laws of different countries impacts at great extent to the
business performance of chosen firm.
CONCLUSION
From the above report it has been determined that business environment plays a
significant role in building up the strategies as well as effective decision of company. Along with
that there are several organisation that vary on the basis of size, nature as well as purpose of
operations. Thus, it is essential for business to analyse its internal as well as external market
through SWOT and PESTEL analysis. Therefore, this further helps the company to visualise the
external factor and its impact on the survival of business.
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