Business Environment Analysis: Tesco Company Report and Functions

This report provides a comprehensive analysis of Tesco's business environment, examining its company type, size, and scope in relation to competitors like NHS and Oxfam. It delves into the interrelationships between organizational functions such as human resource management, marketing, production, and finance, highlighting their roles in achieving business goals. The report identifies the positive and negative impacts of the micro-environment, utilizing PESTEL analysis to assess political, economic, social, technological, environmental, and legal factors. Furthermore, it explores Tesco's internal and external environments to pinpoint its strengths and weaknesses, and it concludes by analyzing the interrelation of these strengths and weaknesses with external macro factors, offering a complete overview of Tesco's strategic positioning.

Business and the
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
P1 Types of company..................................................................................................................3
P 2 Size and scope of various type of organizations...................................................................4
P3- Interrelationships between organizational function and their roles in organization...........5
P4 – Identify the positive and negative impact of micro environment on business
environment.................................................................................................................................7
P5- Internal and external analysis of organization to find out strength and weakness..............9
P6- interrelation of strength and weakness with the External Macro factors.........................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business Environment is sum or collection of all internal and external factors such as
employees, customers needs and expectations, supply and demand, management, clients,
suppliers, owners, activities by government, innovation in technology, social trends, market
trends, economic changes, etc.
This report will cover the case study of Tesco company, It is British multinational
company. This report will explain the types and purpose of the companies such as private,
public and legal structures and voluntary. It will also explain the size and scope of different
type of organizations. This report will provide the relationship between organizational
function and how they help- company to provide objectives and goals of the business. It will
also identify the negative and positive impact of the micro environment has upon the operation
of the business. This report will analyses he internal and external environment of the company
which will help to find out strength and weakness of the TESCO company. IN the end of this
report will analyses how the strength and weakness interrelate with the external macro
factors.
MAIN BODY
P1 Types of company
Public Company-
Companies who are categorized under this sector distributes their shares between the
public who are known as shareholders of the company. These people tend to invest in the
company. NHS is an example of public company as NHS has sell parts of his ownership into the
market of trade to people who are ready to buy the shares of the company. In order to establish
these type of companies there is a criteria or specific conditions which needs to be taken care of.
A minimum of 7 people is required and the limit for maximum has no extent. Other than this a
minimum of 5 lacks as a paid up capital is required and if any private company which is a
subsidiary of NHS will also be considered as a public company. In order to classified as a public
company NHS needs to meet every criteria under the legal guidelines. Documents such as
members of association and articles of association with the prospectus of the company in order to
invite and take the funds from public.
Private Company-

These type of companies are usually owned by an individual or registered as a
partnership. There are exceptional cases such as Tesco whose scale is large otherwise it is small.
Tesco commenced its operations as a private company with minimum of 2 members but they had
a option up to 200 members. For private companies the minimum paid up capital is 1 lacks and
the limit can go up to the requirement of the business. Tesco is a private company which restricts
them to transfer their shares in the market. In order to keep the interests of the company safe they
have put a void so that there can be no takeovers by their competitors. This states that company
does not have to deal with the issue of raising money through the market. The directors of the
company are not independent. They do not take deposits they open their stores as per their own
will and preference (Veselovsky and et.al., 2017).
Voluntary Company-
One of the most renowned voluntary companies is Oxfam. The company has able to
maintained its operations in the market for a long period of time and they have partnered up with
19 other organizations who also serves in the same area of operations such as charity and work
for reducing the poverty on a global level. Oxfam and other companies like it serves as non profit
organization. The company commenced its operations in 1942 in Kenya and the executive
director of the company is Winnie Byanyima. Other than this company has some NGOs which
provides education to those children who are underprivileged. Oxfam has a aim that is to give
equal opportunities to the community of poor people such as having equal rights like everyone so
that they can deal with their day to day issues. The legal structure of the company binds their
trustees responsible for the act of law of charity and their assets (Deasy, S., and et.al., 2016).
P 2 Size and scope of various type of organizations
Size of NHS is an extent to where the company has made their services reached. There are
countries such as England, Scotland and Wales where the company is successfully maintaining
their operations. Other than that the company has also affiliated in North Ireland to provide
social and healthcare services. The company commenced their operations 72 years ago which
was around at the time of second world war. The company employs over 1,70,000 employees
and for the citizens of UK they provide their services at no charge except for services and cases
which needs expertise of dentist and optician. The company even exempts the charges of
prescription from the patient and the delivery made to the patients is also non chargeable. Scope

of NHS is to expand their area of operations and made their service available in more areas as
possible (Prajogo, 2016).
Size of Tesco is big as it operates on a very large scale and it is considered as the company who
is largest in terms of providing employment in UK. The company has over 2,50,000 people
working for them just in UK and 3,67,000 people globally. On top of that company has more
than 2300 of its own stores over the world. Scope of company is considered over its past
accounts and for the last three decades company has transformed its image in the market with a
persistent strategy and purpose that is to create value for the customers. The main area of focus
that the company has is to fight with the competition in the market and increase their share of
customers with expanding their area of operations so that they can increase their revenue and
increase their share in the market.
Size of Oxfam is its partnership with 20 other firms globally so that they can work together for
the betterment of society and reduce the issues of poverty as much as possible. Scope of the
company is to change the way of people thinks so that they can get some help or add more
people donate something without working for them. The approach of the company working is
practical and straight forward so that they can take out new and innovative methods which helps
them to cover a large area. At the time of disaster management they help those people who are in
need, who require support to build up again. Oxfam has been motivating many companies to
join hands with them and finding people who are eligible and kind enough for the job so that
they can be able to distribute equally among poor people (Hamilton and Webster, 2018).
P3- Interrelationships between organizational function and their roles in organization
There are some important function in an organization such as Human resource
management, Finance function, marketing, production etc which help TESCO company to
achieve their business goals and their set objectives (Bertolini and et.al., 2018). All the function
of the organizations are interlinked with each other, and they help each other to run their
department. Failure in any of the function can become the reason foe the TESCO company to
fail in their business and other brands can overtake them a take competitive advantages. It is
essential for the TESCO company have their organizational function strong and superiors
should make sure that every function and departments are working properly or not, so they can
gain competitive advantages.
Human resource management

HR of the TESCO helps to provide skillful labor force to the company and also make
companies process related to the employees. This is one of the top department and it is an
strategic function to the effective management of the people in the company so company can
gain competitive advantages,. HR of the TESCO also give their contribution to the other
function by providing skillful team members to every department of the company. For
example- when marketing team need more employees in their team then they take help from the
HR department (Crişan and et.al., 2018). HR department post recruitment on the varies
platform and search for the candidates who have experience in the marketing, and they should
have necessary skills, this makes the marketing team more strong.
Marketing
Market is the activities process, set of the institution for creating delivery, effective
communication and exchanging the offering which have value for their customers , partners
and society at large. Marketing reefers to advertise product of the TESCO company on the
varies platforms so people can be aware about the company's product, and they can satisfy their
needs. Marketing team of the company has huge contribution I the company because they find
the customers who can but their product and also set the prices which customers are willing to
pay for the product. Marketing team of the company also interlinked with the other functions of
the company such as production, HR management and finance every function of the company.
When it is necessary marketing team of the company find the people from the marketing who
can work for the company which makes easy for the HR to recruit and select. Marketing
search is useful for the production department because they can develop their product according
to the research. Marketing team also search the sources of funding for the finance function
because they know every thing abut the market.
Production department
Production department is the place where group of employees manufacturing the goods
for the TESCO company. They are responsible to maintain the production rate according to the
demand among the people, and they also maintain the product quality. Functions of Production
Department Productions the functional area responsible for turning inputs into finished outputs
through a series of production processes (Elia, Massini and Narula., 2019). The Production
Manager is responsible for making sure that raw materials are provided and made into finished
goods effectively. They are interlinked with the other function other department collect the

information and manage the organization activities but production function use all the data to
make final product which creates outcome for the company. Without this function company
cannot make profit and take competitive advantages in the market where they are operating
their business.
Finance function
Finance which is needed to run organizational activities for the TESCO company and it
is responsibility of the finance manager to find the proper sources of finance so company can
run their other act6vtiees. Finance plays important role of the company and create flow of cash
within organization. Provide necessary funding to every department of the organization, so they
can run their day to day activities smoothly an proper so company can take competitive
advantages in the market. This shows that the finance function is interlinked with every other
function because it provides funds to run their departmental activities, and they also maintain the
all the cash flow in the organization.
P4 – Identify the positive and negative impact of micro environment on business environment
Micro environmental factors such as political, social, economical , legal and
environmental factors have huge impact on the organizational functions of the TESCO company
(Gibb and Burns, 2018). This can be positive and negative both and it is necessary for the
TESCO company to make proper strategy to overcome from those negative impact from the
Micro environmental factores. PESTEL Analysis is the Micro environmental tool which will
help to show the impact the TESCO business.
PESTEL Analysis of TESCO
Political factor
TESCO company has created job opportunities for the many people and because of this
people are getting employment so some government is investing this company to open their
business in their country, so they can create job opportunity for the people in their own country
This company is operating in 12 countries including Asia and Europe. It is exposed to
many political factors that many affect the business of Tesco. These factors include Tax rates,
current and impending legislation, political instability, unemployment rate, economic condition
of the countries where it is operating.
Economical Factor

There are some factors such as increase in demand and decrease in demand have both
positive and negative impact on the TESCO business. When product demand on the market
increases the marketing during the season then production of the company also increases and
company earn profitability in the business. They can also increase the price's of their product
and earn more profit by selling their product but when demand decrease in the market then it
affect t the profitability and people start saving more than spending on the product. This shows
that increase in demand creates positive impact and decrease in demand creates negative impact
on the TESCO companies business.
Social factor
TESCO company is adding value offer their customers by making good relationship with
their customers which is creating positive impact for the company (Gu And et.al., 2019). They
are able to gain the customer loyalty which is leading this company to take competitive
advantages in the market where they are operating their business.
Change is behavior of the customers and their demand affect on the operational
function of the company because they have to study the demand and behavior of the customers
and according to the customers demand they need to developed their product which takes times
and money both.
Technological factor
Technology has huge contribution toward the Success of the TESCO company ad it is
necessary for the TESCO to update their technology to take competitive advantages.
Technology is useful for the employees because its make their task easier and they do their job
more conferrable. Presence of Artificial technology at the TESCO stores attracts customer to
visit their stores and this is profitable of for the company and technology is also useful for the
customers because makes their shopping experience more better and smooth.
There are some negative impact of the technology which can impact the TESCO
companies operational functions (Gürel and Tat., 2017). Implementation of the new technology
takes time to process in the full efficiency. Company also have to provide training to the
employees so they can develop new skills to use technology and produce positive outcomes.
Environmental factors
Many companies are facing immense pressure from government agencies to address
environmental issues. companies are liable to respond to these issues to benefit society. Now

Tesco encourages its consumers to shop at tesco.com. Tesco Van Drivers will not only use fuel-
saving routes but also collect unwanted plastic bags from customers and recycle them.
Company create good reputation among their customers by focusing on the
environmental issues. This creates goof image and this result in their profitability and their
sales. Their sales increase because of the environmental factor.
Legal factor
TESCO has huge political support in various country, and they are following all the legal
and governmental rules ad they are also getting good support for the UK government as well
which is helping them to expand their business properly.
In 2016, Tesco 17 workers took legal action against the employer on the basis of age and
gender discrimination. Workers were extremely frustrated after noticed low pay rates for night,
weekend and bank holidays shifts. Tesco also faced legal action for accounting fraud and
misleading the investors, lastly, agreed to pay GBP 12 million to settle the legal action.
P5- Internal and external analysis of organization to find out strength and weakness.
Internal and external analysis tools are used to find companies strength and their
weakness so companies superiors can gain upcoming opportunities. For the TESCO company
best tool to find their weakness and opportunities are Swot and Vrio Analysis and Swot analysis.
Here is analysis of the company -
SWOT Analysis of TESCO company
Strength
 Biggest Grocery stores in Britain – TESCo has captures the whole UK market in the
term of revenue and this company is also top supermarket chain in the whole UK
(Indartono and Wibowo., 2017). In the year 2018 this company has made revenue
around 63000 million pounds which is huge amount and it was an combination of the
Uk and Ireland and their annual profit has been raised by 10 percent in 18/ 19.
 Highest market shares - As a major supermarket and mart retail store in the UK, it has
also become popular among the people of Ireland country as well. TESCO rule the UK
market by keeping the peak market share which is around 27% of the UK market,
Weakness
 Failure in the japan and US- company have suffer from the losses in the two markets
japan and US. In result company has to shut down their business. The major reason

behind the Failure of the TESCO was that they were not able to export the operations
and execute their plans effectively off-stores.
 Less operational profit- The Brexit referendum has been huge impact on the performance
of the TESCO company, and this company is making little profit because of it.
Therefore, the market share price of the company has been fall down by approximately
10 %. It is not good news, because it wouldn’t attract new investors.
Opportunities
 online market- TESCO company should look for the online market because now a days
people like to do their shopping from the online stores. This will increase their business
more and they can also make new customers and gain customers loyalty.
 Expansion of jack's stores- TESCO company is looking to open their new discount stores
in which they will use competitive pricing strategy to give competition to the existing
stores such as AlDI etc (Kim And et.al., 2017). they will also look for the employee's
motivation, so they can increase their efficiency, and they will give their best to achieve
the goals and objective of the business.
 New emerging market- there are some new marketing such as China and Indonesia where
company can expand their business and capture both the market. Competition in both the
market is very less as compare to the others.
Threat
 competition in the UK market – Competition n the UK marketing is increasing because
of the competition who are giving strong competition to the TESCO company. Some of
the competitors such as M&S and Aldi group are performing well in the business which
is creating pressure on the TESCO.
 Brexit deal - The British exit from Europe also goes by the shortened name of Brexit. If
this trade dealing happens, then it’d have a serious impact on the business of Tesco
company . It is because Tesco has been moving their business activities in many
European countries.
 National Economic Crisis- National economic factors like taxation, credit, government
rules, and regulations are a serious threat to the growth and performance of Tesco in
some parts of the country. The company has to be very creative to counter such threats
for the TESCO company. They need to be prepared in the future.

VRIO Analysis of TESCO
Valuable
 financial resources of the TESCO company are most valuable because they can invest
resources on the external opportunities which arise (Lalonde., 2016). This will also
help them to fight with their external threats.
 Employees of the TESCO company are most valuable resources because they are
skillful and they get regular training which increase their efficiency and motivation.
Training of the employees are making them more productive and efficient, they are
giving their best to achieve the task goals and objectives.
Rare
 `The local food products are found to be not rare as identified by Tesco Plc VRIO
Analysis. These are easily provided in the market by other competitors. This means that
competitors can use these resources in the same way as Tesco Plc and inhibit competitive
advantage.
 Distribution channel of the TESCo company is rare because its take time to build strong
distribution channels for the company (Langston, Hammer, Cragun and Ellen., 2017). To
make distribution channels strong like The local food products are found to be not rare as
identified by Tesco Plc VRIO Analysis. These are easily provided in the market by other
competitors. This means that competitors can use these resources in the same way as
Tesco Plc and inhibit competitive advantage. Company required huge financial fund.
Imitable
 The employees of Tesco Plc are also not costly to imitate as identified by the Tesco Plc
VRIO Analysis. This is because other firms can also train their employees to improve
their skills.
 Patents f the company are very difficult for the other to imitate as identification by te
VRIO.
Organization
 The financial resources of the company are is organized because finance manager know
which department required financial resources, and they are able to forecaster the future
requirement as well (Lee, Lee and Ning., 2017).

 Distribution Channels of the company is well organized and every channel knows what s
their duty and they send the final product to the customers without any problems and
also receive the row material for the product from the other well organized distribution
channels of the TESCO company.
P6- interrelation of strength and weakness with the External Macro factors
As per the above study has fund that the TESCO has some strength and weakness which
is affecting their business (Lopes and et.al., 2018). Both the strength and weakness are
interrelate with the external micro factors because political factor is their strength and
weakness both because Brexit Affect the profitability of the TESCO company, but they are
getting support from the other countries because some counties are inviting them to expand their
business, so they can provide jobs to their people. Same it is technology is their strength and
weakness both because they are getting advantages of the technology, and they are taking
competitive advantages but weakness is that technology is changing continually and TESCO is
not able to adopt new technology every year because its take time to implement, and they also
have to provide training to their employees which is weakness for the company. Economical
factor such as n increase in the employment in the country is the weakness are strength for the
TESCO company because when employment rate in the country increase then people are ready
to work in less salary which become strength for the company, and they can save money and
spend on the employees training but when employment rate in the country decreases then
people demand for the high salary so company have to recruit employees from the other
country, and they have to pay for their rent, food and basis needs which becomes weakness of
the company, and they also have to provide training which takes times (Newhall., 2017). TESCO
company is adding value offer their customers by making good relationship with their customers
which is creating positive impact for the company. They are able to gain the customer loyalty
which is leading this company to take competitive advantages in the market where they are
operating their business. Change is behavior of the customers and their demand affect on the
operational function of the company because they have to study the demand and behavior of the
customers and according to the customers demand they need to developed their product which
takes times and money both.

CONCLUSION
` AS per the report has been explained the types and purpose of the companies such as
private, public and legal structures and voluntary. It also has been explained the size and scope
of different type of organizations (Pati And et.al., 2018). This report has been provided the
relationship between organizational function and how they help- company to provide
objectives and goals of the business. It also has been identified the negative and positive impact
of the micro environment has upon the operation of the business. This report has been
analyzed he internal and external environment of the company which will help to find out
strength and weakness of the TESCO company. IN the end of this report has been analyses
how the strength and weakness interrelate with the external macro factors.

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