Business Environment Analysis of Tesco: Structure and Functions Report

This report provides a comprehensive analysis of Tesco's business environment, organizational structures, and functional interrelations. It begins by defining the business environment and then delves into the different types of organizational structures, including private, public, and voluntary sectors, highlighting their purposes, legal structures, and examples like Tesco, Bank of England, and Welcome Trust. The report explores the size and scope of these organizations, examining their visions, missions, and stakeholders. It further analyzes the interrelationship between various organizational functions such as marketing and sales, and their impact on organizational objectives. The report also discusses the effectiveness of PESTLE and SWOT analysis tools in identifying internal and external factors. Finally, it examines the interrelation of internal and external factors and their impacts. The report includes detailed information on Tesco's operations, stakeholders, and strategic approach, offering valuable insights into the company's business environment.

INTRODUCTION
Business environment is a collection of both internal and external factors which can have several
positive and negative impacts on the performance of company and objectives (Veselovsky and
et.al., 2017). This present study is mainly based on Tesco which is a British multinational
groceries and retailer. Headquarter of this retailer is in Welwyn Garden City, England. It was
founded in the year of 1919 by Jack Cohen. This present study of business environment is going
to show different types of organization on the basis of their purpose and legal structure such as
private, public and voluntary. Different types of organizations have different scope, aim and
legal structure. Further, it will also discuss effectiveness of interrelation of all functional units
and their positive impacts on organizational goals and structure. This present study will discuss
effectiveness of using PESTLE and SWOT analysis tools as it allows them in identifying both
internal and external factors and according to analysisanalysis, they make better decision which
helps them out in improving their performance and accomplishing goals. Lastly, it will discuss
interrelation of internal and external factors as changes in internal factors have direct impact on
external factors.
MAIN BODY
P1 Different types and purpose of organizational structures
As per the control and purpose, business organizations are being divided into 3 types such as
private, public and voluntary. All these organizations play an important role in improving
infrastructure, providing employment and improving overall economy of the country. Detailed
information of all three types of organizations such as: their aim, purpose, reasons of
establishment are being discussed below:
Private: This sector includes all businesses which are not being controlled by the government.
Such businesses are being run privately and owned by individuals or group of people. One of the
main purposes of private sector organizations is to earn profit out of the sales which they make.
It allows employees to get a raise in their wages or income. They mainly focus on competing
against big players in the market in order to generate revenue and make sure that their products
have value and they are satisfying needs of customers because it is one of the best wayways of
being in the competition and increasing sales. (Sukhankin, 2018) As per the legal structure they
are being divided into 2 types as they may be in sole traders and partnership form. A sole trader
is a type of private business which is being run by single individual. And partnership type of
3

private business is being run by 2 or more than 2 partners. All partners in his form, share all
profits and loss as per their share or invested amount. There are several private sector
organizations that run business activities for earning profit and called profit for organizations
such as: ASDA, Tesco, Apple, John Lewis and others. There are several different objectives
which private companies set and work accordingly such as: To gain competitive advantage by
providing value to customers, to increase market share and to become one of the best
confectionery company in the market and earning profit.
Public: It includes all those companies or organizations which are being controlled by the
government. They do not run business activities for earning profit and increasing sales as they
provide all of their services to everyone for making them beneficial and satisfying their needs.
They earn money but they rethey’re invest money for better infrastructure and providing better
services to everyone. Working in such sector is not an easy task as all members have to follow
all strict rules in order to protect themselves against lawsuit and improving their services. So, it
can be said that the main purpose of public sector organizations is to help people by providing
effective services (Obraztsova and Kamenik, 2017). Public sector organizations are being funded
by the government and this fund is being generated by taxes and all other fees paid by all citizen.
Some examples of public sector organizations are: schools, some banks and others. Bank of
England and BBC is the public sector organization. In the context of legal structurestructure, it
can be said that companies of this sector have to register themselves with companiescompany’s
house and also have to prepare memorandum of association at the time of registration. It is also
known as non profitnon-profit organizations,
Voluntary: It is also just like non profitnon-profit organizations along with some differences.
There are some features of voluntary organizations which make it differ than public
organizations. The main purpose of voluntary organization is to help people and work for their
welfare without thinking about making profit. People work in this sector as per their own choice
and voluntarily and they not earn profit out of it as they only want to help vulnerable people who
are in needs (Rivera, 2016). Organizations in this sector do not focus on generating revenue for
their workers because people chose to work with charities voluntarily. Money which they raise
from this all go for charities. For example: Money generated by NSPCC goes for children
welfare and their educations that are in needs and are abused.NGOabused. NGO, Oxfam,
4

Welcome trust are some examples of voluntary organizations. These organizations also focus on
making a positive change in the society and increase cultural awareness.
Limited companies: Private and public limited companies have their own separate legal entities
ad are incorporated. All managers tat different levels are protected with limited liabilities. In both
private and public limited companies. Shareholders or members are limited by shares and by
guarantee. Harvey water software is known as private limited company.
From the above discussed different types of business it can be said that all play an
important role and as per the purpose and legal structure they make themselves differ than others
P2 Different size and scope of range of different types of organisations.
Private
Tesco: Tesco is British multinational groceries and general merchandize retailer with
headquarter in Hertfordshire, England, United Kingdom. It is third largest retailer in the world
measured d by gross revenues and the ninth-largest in the world measured by revenues. The firm
was founded in the year1919 and listed in London stock exchange. The firm have differed
combination and acquisition of different stores, retail services and adapting differentiated
consumer.
Vision
Tesco vision statement to be highly valued business with customer serving and
communities operate. Tesco have need to be with loyal and committed colleagues along with
roper participation of shareholders.
Mission
Tesco mission is to drive business is simple stating We make what matters better,
together. Mission is embedded with proper value and strategic planning process. the mission
statement has emphasis on ensuring that everything works as planned to meet the needs of the
clients.
Size
The firm have the employed over 500000 people worldwide along with operating in
almost 7000 stores around the world. The firm have the annual revenue amount to almost 52
billion British pounds whichpounds which is approximately have increase seven billion pounds.
Scope
5

Tesco main activities are buying and selling in the food and non-food sectors working in
tertiary sectors manufacturing the products under their own label. Tesco have tentative growth in
next two decades which involves the proper transformation of strategy and image. Its initial
success was based on the "Pile it high, sell it cheap" approach
Stakeholders
The internal stakeholder of Tesco are employees, managers, board and executive
committee, and shareholders. Tesco has 500,000 ‘colleagues’ worldwide. As of January 2019,
the major shareholders of the company are BlackRock, Inc., NorgesForges Bank, and Schroders
plc with 6.64%, 3.99%, and 4.99% holding respectively
Public: The bank of England is the central bank of UK and a model on which most of the
modern central banks are set up. The firm is established in years 1694 act as English
government banker holding the position of world eighth oldest banks. The firm have it establish
headquarter in central financial district of the City of London. It has wide range of responsibility
similar to other central banks all around the world acting as government banks and lender of last
resort.
Vision
The firm have vision to facilitate change needed for working of commercial banks along
with setting policy for financial stability, supporting financial market and settlement of
transactions and prudential regulation. The BOE will improve effectiveness and build up the
strategy for banking sector in United Kingdom.
Mission
The firm have mission to deliver monetary and financial stability for people of United
Kingdom. The bank will make proper recognition with new economy, a new world and new
demographics with new financials system. The bank mission is to promote the good of people
through maintaining monetary and financial stability.
Size
The bank of England has the financial assets of the £14.6 million of capital.
Scope
The firm is the leading bank with adoption of various modern practices in
administrations and management outlining the useful purpose in challenging aspect. Bank are
moving in the right directions by delivering value of money from its central services.
6

Stakeholders
Currently the company have more than 17000 shareholders in which most have relatively
taken small amount of bank stock. There are almost 17000 shareholders in which two thirds
have less than £1,000. they were al compensated by government receiving treasury of almost 3%
stock in exchange for their bank stock.
Voluntary: Welcome trust is the massive fund providing charity which tends to support and
incorporates with different researcher and invention done by scientists and researcher at global
level. The firm was developed in years 1938, which supports biomedical science, health &
safety, medical inventions, social and human engagement and more areas like such for
betterment of society.
Vision- The firm have ultimate vision to work for betterment of society and provide proper
support to research. Organization is trying to change the imbalance present in society and give
reason for development in nature.
Mission - The firm have vision to serve society and people aware of new harmful situation
in upcoming future. This have basic concepts in supporting the bright ideas and minds by
providing the new technological concept and development in society. Such organization have
basic purpose to help in society with no profit is gained. Hence, this is social services done by
firm towards society with non-revenues earning in nature.
Size- Different group tends to come together for the formation of company. So, number of
embers are not confined to any specific limit but follow proper structure in operation.
Scope- The firm is successful in creating benefit to society researcher and developers by
supporting ideas and providence of funds.
Stakeholders – It has more than 20 big funders globally. All the research funded by
Welcome trust mostly fund from all over the world.
P3 Relationship between different organizational functions and their link with organizational
objectives
Organizational functions refer a core process which carried out within different
departments of company. There are some common functions which each type of company has to
perform such as: marketing, purchase, finance, sales, HR and others. All these functions have
7

interrelation with each otherseach other’s, Interrelation of functions of Tesco and Bank of
England are:
Marketing and sales: The main function of marketing of Tesco is to promote products
and making customers able to buy their products. Bank of England also wants to maintain
monetary stability and financial stability for which it wants to make people aware about it.
Marketing department of both companies interact or communicate with customers and gather
appropriate information of them like their requirements, needs and others. Whereas, sales
department is mainly responsible for selling products of company and making customers able to
retain with the company (ZhulinaShelina and et.al., 2020). For identifying needs of customers,
sales department have to communicate with market department and marketing department
provides all information to sales department. On the basis of needs of customers, sales
department provide appropriate and qualitative products to customers which make them feel
valued and increase their experience. So, it can be said that sales and marketing department are
interrelated with each other’s and with cooperation they accomplish their goals.
HR and finance: HR and finance both functions play an important role. HR of both Tesco
and Bank of England is responsible for hiring skilled workforce within company and train them
for satisfying needs of customers. For performing all functions like hiring, training, performance
appraisal, they require financial resources and for that they have to work closely with finance
department. Finance department is also responsible for allocating resources to other department
and support in accomplishing organizational goals by maintaining a balance between cost and
revenue (Hidayat, Putong and Puspokusumo, 2016). Finance department of Tesco and Bank of
England, focuses on profitability and views the HR department as a cost unit. So, it can be said
that for accomplishing individual goals both departmentdepartments require working closely for
maintaining both financial and human capital in an effective manner.
Operation and supply chain: Operation department of Tesco and Bank of England is
mainly responsible for producing goods and provides them, offered by the company. Whereas, a
supply chain is the sequence of organizations and their all facilities and functions help
production department to produce materials. So, all materials, facilities and functions of supply
chain are required in completing functions of operations as without input or materials given by
supply chain, it is not possible for operation department to give final products to company. So,
8

from this it can be said that there is interrelationship between supply chain and operation
functions and interrelation between all functions for accomplishing goals in a better way.
Organizational structure
All departments and interrelation of functional department of Tesco has several positive
impacts on organizational structure. It is found that Tesco follows hierarchical organizational
structure and according to this structure, all of its departments require to interact with each
otherseach other’s for better flow of information.
Figure 1: Organizational structure
Sources: (Organizational Structure of Tesco, 2016)
So, it can be said that when functional departments interact and cooperate each other’s
then they have positive impacts on its structure by reducing miscommunication and allowing
flow of information. This interrelation of departments and link with organizational structure also
help Tesco in accomplishing its goals and objectives. Tesco wants to become a pleasing place to
9

work by giving effective working environment to employees and opportunity to prove them. It
also wants to satisfy needs of customers and taking competitive advantages (Saiti and Stefou,
2020). So, in this context it can be said that when all functional departments co-operate and
interact with each other’s then they are more likely to reduce miscommunication and conflicts
among employees. This conflict free area and better flow of information make an effective
working environment and increase concentration power of employees. It motivates them to
accomplish goals by providing better quality of product to customers.
Organizational structure of Bank of England: Bank of England has several subordinate
units which fulfil its all functions. Some important units of its structure include: banking service,
markets, monetary analysis, HR, Communication and others. For accomplishing goals, all these
departments or units are required to work closely with each otherseach other’s. ItIts structure
includes 3 separate organizations such as: Bank of England, UK treasury and the financial
service authority. For accomplishing the main goal of its structure like maintaining financial and
monetary stability, all these units require to interact with each otherseach other’s for having
proper and accurate knowledge (Bouchez and et.al., 2020). So, from this it can be said that
interrelation of all functional units has several positive impacts on organizational structure and
its goals.
P4. Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples
Pestle analysis of Tesco will examine various external factors such as the political,
economic, social, technological which impacts its business along with legal & environmental
factors. Pestle analysis is the framework which is imperative for companies to understand market
dynamics and improve business in continuous manner.
Tesco is multinational food retailing company headquartered in UK with store all over 12
countries across the world, GernerllyGenerally firm is known for selling foods and on food
products along with providing finance, mobile, insurance, hardware services and much more.
Political factors
As the firm is operating all around the world, the global political factors have great
influences on the performance. This have inclusion of different tax rates, acts of several
legislation and most important the stability of country’s it operates.
Positive
10

Due to stable environment of country, Tesco have positive impact on employment opportunities
along with increase the products sales and diversified workforce.
Negative
Brexit have created a new dilemma of new regulation which can cause a decrease and increase in
sales. The different regulation and manage in tax policies will have effect on first profitability.
Economic factor
These factors have major concern for company as mostly effect the leverage cost,
demand, profit and prices. Market around the world are expanding and it have major share of
revenue generate from UK.
Positive
As United Kingdom's GDP rate is around $2.829 trillion (2019), which means Tesco
looks forward to expand its business among the areas of UK, it is may be possible that company
would gain highly competitive advantages in a short span.
Negative
Due to change in country economic conditions can result in Tesco decline within the
business environment. The company have need to be aware of any change in policies which
could affect the accessibility of finance.
Social factor
This factor influences customer taste and preferences of UK populations as it affects
behaviour of consumer related to healthy lifestyle, buying habits, educational level, income level,
family structures, etc. These forces are present within society, interests and attitudes. Thus, it
impacts sales of products and profits which effects organisational position
Positive
Due to the change in the social factor, customer of UK has moved into bulk shopping and
one stop shopping. hence the Tesco have increased the non-food items offered for sale.
Negative
UK customer value and belief have change in term of consumption of organic food. This
will affect the sales of company as the approaches towards the food is constantly changing.
Technological factor
Tesco is using efficient and updated technology to keep on providing better services and
products. Business environment is dynamic in nature and technological changes are mostly
11

unpredicted, which continuously makes present technology outdated and changing is costly
affair.
Positive
As technology implementation makes Tesco process easy and hassle frees for operating
with efficient productivity. This will be result in increased profits for company.
Negative:
Continuous technological advancement turning out to be expensive for company along
with full of uncertainties and effect cash flow of company.
Environmental factor
With increased pressure on companies to address environmental issues and to adopt ways
of operations which what would benefit society.
Positive
Tesco is clearly committed to have reduction in the carbon footprints 50% by 2025.
Tesco is minimizing the waste produced with increase social conscience in customers.
Negative:
Packaging ad supply chain management of the company have along been affected by the
creation of sustainable of business environment.
Legal factor
It has to follow all the rules and regulation of all countries. Sometimes become very
difficult for the company to be very efficient in nature. This procedure havehas major
requirement of paper work which leads to wastage of time.
Positive
Tesco follow the significant change in government policies effecting directly operation of
company. There is need to follow both local as well as international market law to continue
smooth operation.
Negative:
In 2016, there were certain allegations imposed on Tesco, regarding the age and gender
bias that prevailed in the work culture. Due to this company have lost it credibility’s due to
certain level of biasness prevailed in working business environment.
Bank of England
Political factors
12