Business and Business Environment: Tesco's Macro Environment Analysis

This report provides a comprehensive analysis of Tesco, a major player in the retail industry. It begins with an introduction to Tesco, outlining its products, services, vision, mission, and objectives. The report then delves into Tesco's organizational structure, explaining the roles and responsibilities of different management levels. A key focus is the impact of the macro environment on Tesco's operations, explored through a detailed PESTLE analysis, considering political, economic, social, technological, legal, and environmental factors. Furthermore, the report conducts a SWOT analysis to identify Tesco's internal strengths and weaknesses in relation to external opportunities and threats. The analysis covers various aspects such as market conditions, competition, and strategic responses. Finally, the report provides a conclusion summarizing the key findings and insights regarding Tesco's business strategies and its adaptation to the business environment.

BUSINESS AND BUSINESS
ENVIRONMENT
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Table of Contents
INTRODUCTION...........................................................................................................................3
LO1: EXPLAIN DIFFERENT TYPES AND PURPOSES OF ORGANISATIONS; PUBLIC,
PRIVATE AND VOLUNTARY SECTORS AND LEGAL STRUCTURES................................3
LO1: EXPLAIN THE SIZE AND SCOPE OF A RANGE OF DIFFERENT TYPES OF
ORGANIZATIONS.........................................................................................................................3
INTRODUCTION TO TESCO...................................................................................................4
PRODUCT ANS SERVICES OF TESCO..................................................................................4
VISION AND MISSION OF TESCO.........................................................................................5
OBJECTIVES OF TESCO..........................................................................................................5
LO2 EXPLAIN THE RELATIONSHIP BETWEEN DIFFERENT ORGANIZATIONAL
FUNCTIONS AND HOW THEY LINK TO ORGANIZATIONAL OBJECTIVES AND
STRUCTURE..................................................................................................................................6
ORGANIZATION STRUCTURE OF TESCO...........................................................................6
LO3: DEMONSTRATE BOTH THE POSITIVE AND NEGATIVE INFLUENCE/IMPACT
THE MACRO ENVIRONMENT HAS ON BUSINESS OPERATIONS......................................7
PESTLE ANALYSIS OF TESCO...............................................................................................7
LO 4: DETERMINE THE INTERNAL STRENGTHS AND WEAKNESSES OF SPECIFIC
BUSINESSES AND EXPLAIN THEIR INTERRELATIONSHIP WITH EXTERNAL MACRO
FACTORS.....................................................................................................................................10
SWOT ANLYSIS OF TESCO..................................................................................................10
CONCLUSION..............................................................................................................................11
REFRENCES.................................................................................................................................13
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INTRODUCTION
Organization is termed to be a place where people work together to achieve a common
goal. The mangers perform different work related activities like planning, executing,
coordinating and supervising. Even organization needs to work in different types of cultures such
as political, economical, communal, legislative, and innovative to perform different activities.
LO1: EXPLAIN DIFFERENT TYPES AND PURPOSES OF
ORGANISATIONS; PUBLIC, PRIVATE AND VOLUNTARY SECTORS
AND LEGAL STRUCTURES.
There are different types of trading units which operate in the markets which are private,
public, cooperatives, charity and NGOs. Private enterprises are those which are owned and
operated by private people in which follows the legal system of the country in which it is
operating. It is classified into sole traders, partnership and cooperative trading units.
Sole traders are those who are responsible for the conductions of all the operations related
to the company taking all the liabilities and legislations into consideration by the sole owner. In
UK to start business one needs to register with HM revenue and customs before starting business
where all the conductions like payment of tax is also done by the owner. Partnership is the
contract which is framed between two or more companies or individuals. In this case the partners
are responsible for liabilities which are based on the share in the partnership.
Public organizations are those enterprises which are governed by the governmental
bodies and their main purpose is to serve the community rather than making profits. They are
democratic in nature where decision is taken by an authorized body and execution is carried out
by other team of workers. Charity organizations are organizations that are work independently
without the governmental interference and operate for cause of the common people. Cancer
research organization is one of the charitable organizations that operate in UK.
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LO1: EXPLAIN THE SIZE AND SCOPE OF A RANGE OF DIFFERENT
TYPES OF ORGANIZATIONS
Organization should have a common purpose of working which motivates them to work
hard. They have a clear set of vision, mission and objectives of the organization that they have to
achieve in the specific period of time. Tesco is one of the largest retail companies of UK. It has
expanded into different countries like china, India, hungry, Malaysia etc.
In organization the people are working together to achieve the common goal that is set by
the organization. Tesco is known to be one of the leading retail companies that are functional in
UK which is alos operating in different countries like China, India, Hungry .
The organization is committed to provide quality services to the customers for which the
manager is providing his best services to the customers who are direct customers in the store or
do digital shopping. They collect feedback from the customers and provide to the high
management who after considering the feedbacks formulate appropriate strategies which would
help the company to progress.
INTRODUCTION TO TESCO
Tesco was incorporated in the year 1919 as a public limited company which has its
headquarters in Welwyn Garden City at Hertfordshire, United Kingdom with about 100 branches
all around the world. The company has adopted the legal structure of the country where it is
operating and maintains transparency in its operations (Coe and Lee, 2013). The company is
suitably meeting the demands of the customers and is efficiently fulfilling its responsibilities
towards the social community. The company has opened a zero carbon supermarket which is
well efficient in providing services to the customers without emitting any pollutants in the
environment.
PRODUCT ANS SERVICES OF TESCO
Tesco is well known super market which deals in a number of products like general
groceries, electronic items, clothing for all male, female or children belong to all age groups,
toys etc. they also produce products under their own brand and provide home delivery facilities.
It also deals in the insurance sector covering automobiles, health, dental and travel insurances.
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The company also deals in providing loans and mortgage services to the customers along with
that also provide services to the kids by introducing a saving account facility for kids. The
company is also involved into travel business along with insurance covered with it.
VISION AND MISSION OF TESCO
Tesco has set five main notions for is vision. First being a company which is known as
customer based company and grabs the opportunities that are present for the growth of the
company. Secondly the company lays stress on being innovative so have a competitive edge over
the others. Thirdly the company wants to establish itself as a trusted brand among the customers
and uses the help of global talent for this. Fourth, the company concentrates on developing
strong customer base that are loyal to the company and its products. Fifth providing quality
service and products to the customers for which the company is adopting innovative approaches.
The mission of the company is to provide bet quality product and services to the
customers at best possible prices through which the company would become more reliant and
close to the customers.
OBJECTIVES OF TESCO
The objectives of the company are mentioned below.
1. Increase sales are the main objective of the company Tesco which can be increased by
increasing the demand of the customers which is related to price constraints. Hence the
company is concentrating to increase demand by opening more stores, purchasing bulk
raw material and concentrating on increasing the sales of the currently operating ones.
2. Price reduction is next objective which is done by providing discounts and offers like but
2 and get 40 % of third product. This approach reduces the price of the product and
increases the demand of the product.
3. Introduction of health product is the next objectives as it is observed that the needs of the
customers are changing and they prefer to purchase those products that have more health
content. Tesco is providing organic meals which are healthy in nature to its customers in
the retail stores.
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4. Next objective is develop a sound digital foothold through online retailing for which the
company is providing innovative offers to attract more customers.
5. Last objective is to contribute to society and generate more employment opportunities for
which the company is continuously expanding is operations into different regions.
LO2 EXPLAIN THE RELATIONSHIP BETWEEN DIFFERENT
ORGANIZATIONAL FUNCTIONS AND HOW THEY LINK TO
ORGANIZATIONAL OBJECTIVES AND STRUCTURE.
Tesco follows a hierarchal work culture where the main control remains in the hands of
the top management (Son, Baek, Park and Kim, 2018). The company has set rules and working
environment where no confusion arises between the workers related to conduction of work. The
structure of the company is based on the topography features of the place where it is located.
ORGANIZATION STRUCTURE OF TESCO
Top Level management: The top level compromises of the dignitaries of the company
who are classified into 9 heads who are responsible for all the decision making process that takes
place in the company. It includes the chairman, chief financial officer, director, non executive
director and chief executive officers who hold a control over the activities that are conducted in
the company and present the company in the market.
Middle level management: This level consists of vice presidents and managers of the
company who establish a bond between the board of directors and the working staff. They help
in establishing communication between the two and transfer information among the high and low
management.
Lower level management: This level mainly consists of managers who perform tasks for
the smooth running of the store. Tesco is classified into three sections which are food items, non
food items and products for personal uses. The working force in this level is in direct approach to
the customers who send the actual feedbacks to the higher management based upon which the
management is able to make effective decisions for the progress of the company.
The working framework of Tesco Company is classified into different sections which are
well maintained in a hierarchal order. The top management is responsible to exercise control and
has the main decision making power. The middle and the lower management mostly do the
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implementation work. A major shift in the operation of the company took place in the year 2014-
15. Mr. John Allan became the chairman, Mr. Dave chief executive officer, and Mr. Alan
Steward was appointed as chief financial officer. The company experienced the retirement of its
four essential top management executives who were replaced by new entrants. The company is
further classified into five heads compromising of audit team, corporate responsibility group,
nomination board, payment group and revelation team. However in the store a regional manager
supervises all the three sections that compromise of food, non food and personal usage items.
The food section is further divided into two sub heads, first compromising of fresh food items
and the other is of ambient food products. The non food section is also classified into two parts
one being clothing and the other being electrical items. However the personal product section is
maintained by personal staff members.
LO3: DEMONSTRATE BOTH THE POSITIVE AND NEGATIVE
INFLUENCE/IMPACT THE MACRO ENVIRONMENT HAS ON
BUSINESS OPERATIONS
PESTLE ANALYSIS OF TESCO
Tesco is one of the leading retail stores in UK which is functional in other 12 countries
also. The operations of the company is highly effected by political conditions prevailing in the
operational countries as the company is liable to follow all the guidelines and pay taxes, payment
to workers etc. as per the country norms and regulations.
Political Factors: The world economy is in instable position because of which domestic
growth is preferred which can be done increasing employment at the domestic levels. Tesco is
employing a large number of working force which has made the company popular resulting
increase demand of products and incorporating diverse work cultures in to the operations of the
country. The governing authorities has imposed VAT which has negatively impacted the
company as the spending power of the customers have decreased due to which the company is
suffering loses. Now the company needs to change its moves and re-plan to provide solutions
and attract the customers under such conditions. The UK governing body is also planning to
increase tax on the food products which are not healthy and lead to increase in obesity which is
also impacting the company in an adverse manner (Burt, Johansson and Dawson, 2015). To cope
with the situation Tesco is concentrating more on supplying healthy products to its customers.
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Economic Factors: The economy of UK is getting better in term of the financial
condition. The gross domestic product is increasing. Better economic condition is better for the
The economical conditions of UK are improving because of which the country is
experiencing rise in gross domestic product which is providing better opportunities to Tesco to
operate and function as the purchasing power of customers gets increased and they spend more
on purchasing goods and products they require. If the economic conditions are not well the
spending power of the people also gets decreased which leads to sales of the company products.
The company has already pre determined set of targets of generation of profits and has not
counted the economic functions while making plans (Wood, Coe, and Wrigley, 2016).
Social Factors: The birth rate in the country is decreasing and the old age propensity is
increasing because of which the spending of the people is also increasing especially in the old
age section. This has shifted the purchasing perceptions of the people. Tesco is also adopting the
change into its operations and has incorporated digital feature into its operations which will
effectively meet the needs and demand of all the age groups especially the elderly who do not
prefer to go outside to purchase products and want everything at their home comfort. An increase
in the demand of online commodities is seen to maintain this upward flow Tesco makes sure
that it is supplying quality products to the customers so that the customers remain loyal to the
company. Tesco is continuously making changes as per the demands of the customers so that no
controversy arises which would negatively impact the image of the company. The company has
already experienced a horsemeat scandal which had destroyed the image of the company. The
demand of the food item has decreased so such issues are necessary to be solved by the company
and take steps that such incidents do not occur again.
Technology Factor: Tesco uses competitive and cost effective technology which enables
the company to supply products in an organized manner to all its customers and different
branches. The technology used by Tesco is in accordance with its product which maintains that
the company is technically sound. The digital platform used by the company has also provided
better opportunities to the company. The advancement of the company towards digital platform
has increased the sales of the company and helped in generating more revenues.
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The company is making efforts to make constant changes in improving its quality of
product and services so that the customers could be better served and their demands could be met
in a better way. For this online facility was given to the customers so that it will provide easy
option sot the customers to get the products. The technology used by Tesco is said to disruptive
in nature as the implementation of digital platform is considered to be disruptive as the company
was required to introduce the online concept suddenly to meet the demands of the customers
which is tough for the company. To bring about any change in the working of organizations
needs proper planning but introduction of digital technology was quick and fast which did not
allow mush time for proper planning and organizing. Along with that huge investments were
done which has negatively impacted the company for which the company was not prepared
which has increased a lot of pressure on the company to perform better. Tesco has introduced
multi scalar approach to get accustomed to the different technologies that are used by company
in different countries.
Environmental Factors: The ecological setting are changing at a fast pace. The high
incidence of global warming has led to increase in the temperature because of which the Arctic
Circle is melting and the temperature around the world is increasing at an alarming rate. Citing
such situations Tesco has also made necessary changes so that maximum energy and resources
by the company could be utilized in amore better manner reducing the percentage of wastage and
even in the case of generation the waste must be harmful to create more pollution (Wood, Coe,
and Wrigley, 2016).
Legal Factor: The Company follows all the rules and regulation that are laid by the
governing agencies around the world from where the company is operating. For this the
company has effectively made improvements in the agriculture policies implemented by the
company. The farmers are given subsidies so that they could work more in an efficient manner.
The company is always making changes into its pricing policy which is done as per the demands
of the customers such that the demand of the products rises and the profit of the company also
increases. Many changes are observed to be initiated in the finance sector. Tesco being dealing
into finances also has made changes in its financial services policies also. Changes have been
incurred due to incidence of Prudential Regulatory measures which is introducing new changes
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and directives in this sector. To adhere to this Tesco is also making regular changes to have a
stand in the competitive market.
LO 4: DETERMINE THE INTERNAL STRENGTHS AND WEAKNESSES
OF SPECIFIC BUSINESSES AND EXPLAIN THEIR
INTERRELATIONSHIP WITH EXTERNAL MACRO FACTORS
SWOT ANLYSIS OF TESCO
Tesco is operating in 12 countries for which it is necessary that it improves its strengths
and work on weakness. The SWOT analysis will effectively showcase the different attributes of
the company.
Strengths: Tesco is one of the leading companies in the retail segment which works with
a notion to provide quality products and services. The company makes huge investments so that
the customers are provided with best services for which it has initiated Tesco metro and digital
platform to provide comfort to the customers. Through this a wide range of customers is captured
who want to do shopping at the comfort zone of their homes. Moreover being a big company the
company invests in the purchase of the raw materials in bulk quantities because of which the cost
of the company gets decreased and the profit margins of the company get increased. Even upon
provision of best services and quality products the customers remain loyal to the company.
Weaknesses: Tesco is dealing a variety of products due to which its profit margins are
getting reduced as all the different businesses operated by the company are not functioning well.
The credit card business is at loss the smart phone business is at loss as the company does not
possess the experience and expertise in dealing the smart phone section. Along with the constant
change in the demands of the customers has made the company to invest huge amounts in
research and development which has increased the cost of the company. The introduction of
digital platform was also not easy and has further increased the unstable factor for the company.
Opportunities: Company can invest into new ventures to promote its products and
services. The smart phone section could be used to promote the company. Even there is a lot of
opportunity in expanding the business in the digital segment as the demand for online shopping
is increasing and more people are getting connected with the digital platform (Wood, Coe, and
Wrigley, 2016). The company can expand its roots to Australia as the governing bodies there
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favor the retail model adopted by Tesco. Tesco could also opt for joint undertaking with the
locally operating companies of the nation. The local companies will efficiently guide Tesco to
learn about the new markets and deliver products and services accordingly. The company can
also opt for horizontal merging which will help the company to utilize the company’s assets to
the maximum which will ensure that there is less wastage which will reduce the cost and increase
the profit margin of the company. The resource allocation can be done in a more organized
manner as per the priority basis which will improve the quality of products and meet the
demands of the customers.
Threats: The Company is facing a number of threats as there are large numbers of other
competitors who are also dealing in the same segment which Tesco is doing. Wal-Mart is the
main rival of the company whose market share is continuously increasing which has created
threat for the company. The problem with the company is that the stores are located in far flung
areas due to which the commutations of people are not feasible. People do not want to take extra
efforts to travel to far places to groceries or anything of need. The in-house customers in the
Tesco stores have decreased considerably which has led to the decline in the sales of the products
offered by the company. The company needs to formularize strategies that could meet the
changing perceptions of people. It must be noted that the government directives are changing
constantly so the company also needs to change its policies as per the government regulations.
Labor is also a problem in the company. Cheap and quality labor is not available which is
increasing the cost of the company. Even the cost of raw materials is also increasing due to
which the profits of the company are getting impacted which is effecting the whole production
process and upsetting the demand and supply of the products and services. The economic
recession has also impacted the company adversely which has limited the spending of the
customers leading to decrease in the demands of products (Son, Baek, Park and Kim, 2018).
CONCLUSION
Tesco is one of the pioneer retailing companies in UK functional under the leadership of
Mr. John Allan. Its vision is to serve the community with quality products and services at
economical prices. It is operating smoothly in different countries by adopting the policies of that
particular country (Coe and Lee, 2013). The PESTLE analysis concludes that economic and the
social factors are in good proportions to provide growth opportunities to the company. the
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company is also involved into contributing towards the social well-being and has provide
subsidies to farmers. Technology is an important aspect for the company and uses it effectively
to bring about positive changes in the company. The SWOT analysis propagates that the
company’s brand is its biggest strength and inability to allocate and utilize resources is its
weakest features. The company has newly ventured into micro finance and lacks experience and
expertise in this segment. The company is also facing labor problems as the directives related to
labor has increased the cost of labor due to which profit of the company has decreased. The only
way to reduce the cost of the company is to buy bulk raw materials so that the cost will reduce
and the profit margin will increase.
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