Business Environment Analysis: Tesco's Structure and Factors

This report provides a comprehensive analysis of Tesco's business environment. It begins by defining the business environment and its importance, followed by an examination of different types of organizations, including public, private, and voluntary sectors, with Tesco, John Lewis Partnership, and Ca...Read More

Business and the Business
Environment

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
LO 1 ................................................................................................................................................3
P 1 Different types of organizations, its purposes and legal structure .......................................3
P 2 Size and scope of different organizations ............................................................................4
LO 2.................................................................................................................................................6
P 3 Interrelationship between different functions of organization and link their structure and
objectives.....................................................................................................................................6
LO 3 ................................................................................................................................................7
P 4 Positive and negative impact on external environment factors ...........................................7
P 5 Internal and external analysis of organization .....................................................................8
P 6 Interrelationship between strength, weakness and external factors ...................................10
CONCLUSION .............................................................................................................................11
REFERENCES ...............................................................................................................................1

INTRODUCTION
Business Environment means collection of all individuals, organizations and other forces
which are under the control of business enterprise. They affect overall performance, profitability,
growth and sustainability of the business. It is classified into two categories such as internal and
external environment. Business environment is essential for allowing and determining
opportunities, helping in utilization of resources and improving performance of organization
(Revia, 2014). This study is based on Tesco. It is British multinational groceries and general
merchandise retailer in the UK. This report will explain different types of organizations, its
purpose and legal structure. It will state size and scope of different organizations. It will
explicate interrelationship between different functions and link with objectives of firm.
Furthermore, assignment will identify positive and negative impacts of external environment
factors on operations of business. It will state that strength and weakness by internal analysis of
firm. Moreover, report will explain that relation of strength and weakness to external factors of
company.
LO 1
P 1 Different types of organizations, its purposes and legal structure
Public Organization:
Public sector is normally consisted of companies which are operated by government and
exist to provide services for public. It is part of economy combined of both public services and
enterprise (Global, 2014). Public organizations are self-financing commercial enterprises which
are under public ownership. They provide different products and services and operate on
commercial basis. For example: Tesco is public limited company.
Purpose: The purpose of Tesco is to serve better quality products and services to
improve living of standards of people in the society.
Legal Structure: Tesco is limited liability company whose shares can be freely sold and
traded to public with minimum share capital of £50000 and after their name normally with letter
PLC.
Private Organization:
Private held company is the business which is owned by non-governmental or small
number of shareholder (Qrunig and Qrunig, 2016). It is also called as private company and close
corporation. Stock of company is offered, owned and listed or exchanged over the counter. For

example: John Lewis Partnership. It is an employee-owned company in UK which operates John
Lewis & partners stores and Waitrose & Partners supermarkets. There are mainly three types of
businesses such as sole proprietorship, partnership and corporation. Such as:
Sole Proprietorship: It is business operated by one person. The owner of the business
has total and limitless personal liability of debts obtained by business.
Partnership: It is kind of business which is operated two or more person for common
objectives of making profits (Rainey and Jung, 2014).
Corporation: It is business for profits, limited liability companies that has separate legal
person from their members. It is corporation operates by one or more shareholders.
Legal Structure: John Lewis partnership is the partnership business in which two or
more person work together for common goal of making profits. There are three different kinds of
categorizes of partnership such as general, limited liability and limited partnership.
Purpose: The aim of John Lewis partnership is to emphasize the qualities that help to
beat competition in retail industry (Bryce, 2017).
Voluntary Organization:
Voluntary union is the group of individuals who enter into an agreement normally as
volunteer to achieve their aim and objectives. Voluntary union are wide and actual form of non-
profit organization. For example: Cancer Research UK. It is cancer study and awareness charity I
the UK.
Legal Structure: Cancer Research UK is the merger of Cancer Research Campaign and
Imperial Cancer Research Fund. It is the world's largest self-directed cancer research charity. It
is charitable organization which aim is social well-being of people in the society.
Purpose: The aim of Cancer Research UK is to decrease number of deaths from cancer.
Also, purpose is to increase awareness of diseases by providing the informations about cancer
and runs campaigns (Farberov and Meidan, 2014).
P 2 Size and scope of different organizations
Public Organization: Tesco
Tesco is the British multinational groceries and general merchandise supermarket located
in UK. It is leader of groceries market. Company repositioned after down market with high
volume and low cost retailer for attracting social group.

Size: Tesco have 6553 stores in 12 countries across the world. There are 476000
employees are working in different stores of company. By gross revenue, it is the third largest
retailer in the world (Starenka, 2015)
Scope: The revenue and operating income are £55,197 Million and £1280 Million of
organization. Tesco has expanded internationally with operations in 11 nations worldwide.
Product and Services: Company has varied into areas such as retailing books, clothings,
electronic, furniture, software, financial services and internet services.
Structure and objectives: Company has expanded their stores by providing the high
quality products and services to achieve objectives of business. Tesco has followed hierarchy
organizational structure which have many obligations, so that, it is difficult to achieve gaols of
business (Chen, 2015).
Private Organization: John Lewis Partnership
It is owned by employees and the head of this company is Lewis & partner department
stores and Waitrose & partner supermarkets. If the John Lewis Partners and Waitrose partners
working together effectively, so that both are achieving objectives of organization in terms
competition.
Size: There are 830000 permanent staffs are partners who own 51 shops of John Lewis
across the UK.
Scope: The revenue and operating income are £10.2 Billion and £74.1 Million of this
partnership organization (Saleem, 2017).
Product and Services: Partnership firm has varied products such as clothing, watches,
cosmetics, furniture, computing, financial service, direct food services, home appliances etc.
Structure and objectives: Firm has followed democratic organizational structure which
impact on objectives of business. Effective decisions help to achieve objectives of firm (Bryce,
2017).
Voluntary Organization: Cancer Research UK
It is world's independent charitable organization which aim is to decrease number of
death form cancer across the worldwide (Clarsen and et.al., 2014).
Size: There are 3964 employees and 40000 volunteers worked in the organization. The
charity funds work of over 4000 investigators, doctors and nurses throughout the UK. Also, over
200 clinical trials are supported and studies cancer and its risk in a million people in UK.

Scope: The revenue is £634.81 million of Cancer Research UK. Effective research about
cancer and increase awareness in the public that help to achieve objectives of firm.
Product and Services: Organization conducts study into prevention, diagnosis and
treatment of the disease. Research actions are carried out in associations, educational institutions
and hospitals across the UK.
Structure and objectives: Cancer Research UK follow functional organizational
structure, because there are many functions and activities that are connected with each other.
Therefore, it is very complex and affected objectives of company (Revia, 2014).
LO 2
P 3 Interrelationship between different functions of organization and link their structure and
objectives
There are different functions such as human resources, marketing, finance and operations
etc. in the Tesco. All are functions have highly impacted on objectives and structure of
organization.
Human Resources Functions: Human resources are essential for any organizations. HR
is responsible for recruiting new employees and ensuring that every vacancy is fulfilled by the
best person for job. The aim of human resources is retained good and experienced staff who are
working in relation to advertisement of products and effective consumer services in the business
(Global, 2014). Effective interrelationship human resources and marketing in organization which
help in achieving objectives of Tesco. Company has followed hierarchy structure in which direct
chain of command from top level manager to lower level in the organization. Therefore, this
structure link with interrelationship between HR and marketing in terms of making decisions of
effective human resources and selling of goods of firm.
Finance Functions: It is the most essential functional area because, company needs
regular flow of income to pay the bills. Staff of finance area are recorded all the money earned
and spent, so that senior manager know about profits and loss of firm. Therefore, the aim of
finance is to raise funds for effective marketing of goods and services as well as increase sales of
Tesco (Qrunig and Qrunig, 2016). Effective financial resources help to raise profits and achieve
gaols of business. Firm has followed hierarchy structure, so that marketing department easily
make decisions about selling of good and services of organization.

Marketing Functions: It is also the most essential functional area of business, because
firm needs to identify and meet consumer needs of Tesco. This area is interrelated with
production area in the firm. If the production department design high quality product on time
duration, so that it is easy to marketing and selling of goods in the market (Rainey and Jung,
2014). This interrelationship help to achieve the organizational objectives. In this context, firm
follow hierarchy structure in which top level manager give command to lower level manger, so
that it is easy to make decisions about production and selling of goods and services to firm.
Advantage and Disadvantages of Interrelationship between functions:
If HR department hire skilled and qualified candidate for marketing of good and services
of firm, so that they help in selling of products in the market. The advantage of this interrelation
is to increase sales and profits of business. The disadvantage is this relation is to take large
amount of money for hiring of people in firm (Wo, Hipp and Boessen, 2016). In this context, if
HR division recruit candidate for finance area, so that they aid to utilization of effective financial
resources in the business. The pros of this interrelation is to appropriate analysis of cost and
profits. Due to miscommunication between HR and finance, delay payroll to employees in the
workplace.
LO 3
P 4 Positive and negative impact on external environment factors
There are many external macro environment factors such as political, economic, legal,
environment, social and technological which are directly impacted in both positive and negative
way on operations of Tesco.
POLITICAL FACTOR:
This factor involves political stability, unemployment rate, taxation etc. which are
affected on operations of Tesco. For example: tax on large supermarkets in called as Tesco Tax
that initiative mainly avoid rising of price that can effect negatively on operation of Tesco
(Bryce, 2017). Company creating chances of employment due to financial instability for increase
workforce which can affect positively on operation of firm. International political factors highly
influence on performance of company's operations in the worldwide. This impact decisions of
operations of business and their profits.
ECONOMIC FACTOR:

This factor involves labour cost, inflation rate etc. which are affected on operation of
Tesco and their performance in retail industry (Bryce, 2017). For example: high per capita
income of people in UK which helps to increase sales of Tesco. This influence positively on
operation of firm. On other side, the borrowing cost is increasing that is negatively impact on
profits as well as operations of Tesco.
SOCIAL FACTOR:
This factor includes changing trends, consumer demand, taste and preferences etc. which
are affected on operations of Tesco. For example: high standard of living in UK that increase
buying power of customer (Farberov and Meidan, 2014). This factor is highly influenced
positively on operation of Tesco, because consumers more purchasing products on firm. On
other side, consumers are becoming more aware of health issues, so that firm adopt changes by
helping demand for organic goods. If the supply of organic goods is decreased, so that it is
negative impact on selling of food products.
TECHNOLOGICAL FACTOR:
This factor includes technological advancement, online shopping etc. are influenced on
operation of firm. Through technological encouragement, company create opportunity to regain
trust on consumer (Tesco SWOT Analysis 2018). This way on influence positively on operations
in terms of online selling of product and services of Tesco. On other side, ineffective utilization
of technology which is negatively operation of firm. This impact on profits of business and their
objectives.
LEGAL FACTOR:
This factor includes government policies and regulations are directly influenced on
performance of organization. For example: due to age and gender discrimination happen in the
workplace by firm that is negatively influence on working in the Tesco. On other side, firm make
efforts on conducting operations according to code of practices of Food Retailing Commission
that positive impact on firm (Farberov and Meidan, 2014).
ENVIRONMENTAL FACTOR:
It is necessary to address the issues related to environment by Tesco which impact on
their operations and performance in the retail industry. For example: company is trying to reduce
50% carbon footprint by upcoming years. On other side, there is high wastage by firm that highly

impact on environment which directly influenced negatively on operations of Tesco. It is
beneficial for society. This impact on decisions relating to labour and consumer rights.
P 5 Internal and external analysis of organization
Internal Analysis:
This analysis help to identify strengths and weakness of business. Also, identify
opportunities for reducing the threats of Tesco.
STRENGTH:
 The high level of consumer satisfaction and excellence workforce are strengths of Tesco.
 Through product innovation, firm has successful track records of developing new
products in the business.
 Company has large amount invested in building the powerful brand portfolio that is also
strength of business (Starenka, 2015).
 The powerful base of reliable suppliers of raw material which is allowing for decreasing
supply chain part.
 Selection of effective market strategies of their goods that is also strength of Tesco.
WEAKNESS:
 The average of profitability ratio and net contribution in the industry that is weakness of
Tesco.
 There are spacing in product range sold by the firm. This lack of choice can supply new
challenger footing in the market (Chen, 2015).
 Company is spending average on research and development that is weakness of business,
because fastest growing players in the industry.
 The position and selling proposition is not clearly defined which can lead to the attacks in
this section from their rivals. This section impact on decisions relating to sales of goods
and services.
 Firm requires to more investment in new technologies for integrating processes across the
wide. This highly impact on decisions in relation to utilization of financial resources of
business (Saleem, 2017).
OPPORTUNITIES:
 Due to slow growth and recession, Tesco create chances to reach new consumer and raise
market share.

 Company has invested on online channels for new sales and consumers over last previous
year. This impact on decisions making of business in relation to provide better goods and
services and meet their needs.
 Lower inflation rate in the market which allow credit at low interest rate of consumer at
company.
 Due to low shipping costs, it is decreasing transportation cost which help to raise profits
and gain market share of Tesco.
 The adoption of new technologies and government free trade agreement has given
chances to enter new market. This impact on decisions making of expansion of business
in new market (Clarsen and et.al., 2014).
 The adoption of new policies of environmental which is showing chance of driving the
new technologies and gain market share in new good category.
 Company is to raise competitiveness as compared to their competitors through leading
market development and solution of competitive advantages.
THREATS:
 The fluctuation in different laws relating to standards of goods in the market that is
threats of Tesco.
 There is no supply of innovative products in the firm that is influenced on making
decisions relating to sales as well as profits of business (Revia, 2014).
 Various online channels are changing customer purchasing behaviour that is highly
threats to drive supply chain model.
 Competitors has adopted and developed new technologies that is serious threat of
company and their long term objectives.
 Large level of competition has highly influenced on overall profits and sales of Tesco.
This also decrease position in the retail industry.
P 6 Interrelationship between strength, weakness and external factors
Tesco has faced various challenges such as changes in government policies, inflation rate,
customer demand, technologies advancement, environmental issues and different legislations in
the business. These factors are interrelated with strengths and weaknesses of organization. For
example:

 The strength is to strong distribution network, so that company easily meet the needs and
wants of customers as well as their satisfaction. This help to increase sales and earn
profits of business (Global, 2014).
 If the Tesco has developed new technologies, so that they beat competition in the retail
market.
 Through adoption of technologies advancement, company reduce weakness in relation to
improve position and selling proposition of firm (Qrunig and Qrunig, 2016).
 Tesco has highly skilled workforce, so that they help to meet needs and wants of
consumer by providing the better quality product and services. This strength interrelates
with social factor of business.
 Through technological advancement, company easily overcome weakness in terms of
expansion of brand in market.
 Strong online operations is help to beat competition in retail industry and achieve long
term growth and objectives of Tesco.
 The effective adoption of online operations assist in satisfaction of consumers and fulfil
their demand to their products and services (Bryce, 2017).
 If the company has followed all regulations and policies regarding environment and
employment legislation, so that, increase brand in retail industry.
 If the Tesco has created opportunities of employment, so that it improve work culture of
company.
 Larger level of customer satisfaction aid to increase profits and reduce leverage cost,
price and demand of products and services in the retail industry.
CONCLUSION
This report has summarised that different types of organizations such as public, private
and voluntary that have various purposes and legal structure. It has concluded that size and scope
of Tesco as public, John Lewis Partnership as private and Cancer Research UK as voluntary
organization that have influenced on structure and objectives of businesses. Furthermore, report
has analysed that interrelation between human resources, marketing and finance functions are
very useful for growth of Tesco in retail industry. It has concluded that different external factors
such as taxation, changing trends, inflation rate, technological advancement, environment issues

and legislations which have highly influenced on organization. Moreover, assignment has
completed that interrelation between external factors with strengths and weakness of business.

REFERENCES
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