Tesco's Business Context: Environmental Factors & Leadership Style

This report provides a comprehensive analysis of Tesco's business context, focusing on both micro and macro environmental factors that influence its operations. The micro environmental analysis covers customers, employees, suppliers, distribution channels, competitors, investors, and shareholders, highlighting their impact on business performance. The macro environmental analysis explores demographic, economic, socio-cultural, technological, ecological, and political forces shaping Tesco's strategies. Furthermore, the report delves into Tesco's background, vision, leadership style, management practices, and implemented strategies, including an emphasis on low pricing and technological innovation. The analysis also touches upon Tesco's HR practices and employee training systems, concluding with recommendations for sustained success in the competitive retail landscape. Desklib offers a wide array of solved assignments and past papers for students seeking to enhance their understanding of business concepts.

Running Head: MANAGEMENT 0
Context of business

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Table of Contents
Task 1.........................................................................................................................................2
Micro and Macro environmental factors................................................................................2
Task 2.........................................................................................................................................5
Background of Tesco.............................................................................................................5
Vision of Tesco......................................................................................................................6
Leadership Style and Management Practice of Tesco...........................................................6
Strategies adopted by Tesco...................................................................................................7
Implementation and achievement of above practices and strategies.....................................7
Recommendations......................................................................................................................9
References................................................................................................................................10

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Task 1
Micro and Macro environmental factors
The dynamic and modern business in this global environment is rapidly changing at a
very fast pace. These are due to both micro and macro environmental aspects close to a
corporate and have a direct influence on its success. It is important for business management
to consider full exploration of those macro and micro environmental factors that closely
impact business decision making.
Some of the significant micro environmental factors include – customers, competitors,
supplier, distribution channels and public (Park et al, 2011). These micro environmental
factors impact the business performance in many ways and make them understand the
significance for strategy formulation. Below, these micro-environmental factors are outlined
–
• Customers – In the modern global environment, customers are known as the most
significant factor in the microenvironment due to the influence they have on it. In this
competitive 21st Century, their importance has grown higher. With regard to this, the better
an organisation knows its customers, the better is its profit and revenue. For instance, if the
company understand their customer better they can effectively draft strategies and
promotional campaigns to attract and retain prospective customers in a better way. This
competitive era also required an organisation to be more customer-oriented as serving them
in a customized way can help them in retaining them longer (Angelova & Zekiri, 2011).
Hence, Customer engagement has become a key area for organisations due to the rising
competition and complex business microenvironment.
• Employees – The driver of business performance and productivity is connected with
the performance of employees. Considering the researches of many scholars and academics,
it is also ascertained that HR also plays a key role in business success. Many successful
organisations have excellent HR policies that offer best training and salary to their staffs and
also motivate them to successfully attain the business goals (Farndale, Scullion & Sparrow,
2010). This is the reason why most of the organisations focus on retaining and attracting the
best talent.

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• Suppliers and distribution channels – If business wants to effectively deliver their
products and services to the consumers, it is important for them to manage their supply chain
and distribution channels with the objective to reduce costs and enhance efficiency. Saving
cost in supply chain helps the organisation to gain competitive edge in the market as they can
transfer this benefit to the consumers by offering products at affordable prices (Bayraktar et
al, 2009). Moreover, it also enhances operational efficiency and thus helps the business to
earn more profits. In this dynamic and competitive environment, customer service also plays
a key role and it is significant for the business corporation to be in customer easy reach if
they want their business to expand at more places.
• Competitors – In this global modern business, there is competition in every industry
that significantly impacts business profits. More the number of competitors, lower an
organisation market share. To gain competitive edge, every enterprise needs to differentiate
itself from others to attract number of customers (Porter, 2018). In addition, this competitive
pressure also induces businesses to constantly update their marketing and business strategies.
• Investors and Shareholders – These are considered to be internal stakeholders for
any businesses. One of the key objectives of any business is also concern with building of
shareholder value. Shareholders and investors help in the growth of business and expect
returns on the investment (Luo et al, 2015). Hence, it is the major responsibility of any
business to keep the investor happy.
The organisation functions operates in larger environment context and it is surrounded
by many specific factors having significant influence over it. It is related with the macro
environment that brings various opportunities for any business firm, but also pose threat to
the corporation. Macro environment in business context includes six forces i.e. – economic
forces, demographic forces, socio-cultural forces, technological forces, ecological forces and
political forces. All these forces are briefly outlined below,
• Demographic forces – there are diverse market segments that are usually influenced
by common demographic factors. The diverse and large demographics both offer
opportunities and challenges to the business mainly in the phase of rapid world population
growth (Beechler & Woodward, 2009). It also demands a need for adjusted marketing
strategies. These macro environment factors possess many sorts of characteristics such as
density, growth, size, structure, gender and so on.

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• Economic Forces – These are the forces relate to aspects that impact customer
purchasing power and their pattern of expenditure. These forces impact both productions of
company and process of their decision making. Some of the important aspects of these
economic forces are tax rates, GDP, inflation, unemployment, disposable personal income,
GDP, import and export duty, etc. For example, an organisation need to examine the
spending habit of people before start exporting to a nation
• Socio-Cultural forces – Every organisation needs to consider various social and
cultural forces in order to recognise their influence of product and services to the markets. An
organisation need to adopt social responsibility practices so that any process of any product
or services can be eliminated harmful to society (Wilson, 2012).
• Technological forces – This modern and contemporary world is largely affected by
various technological forces which mean emerge of opportunities for a corporation. It is
important for the management and marketers to closely identify all aspects of technological
environment as due to intense competition, the product may soon be outdated.
• Ecological forces – Since the resource are scare and it is important for every
organisation to get best out of resources with the help of various production and operation
activities. With the increased intervention of government, environmental concern has been
increased within organisation and they also need to fulfil the demands for the consumer
including responsible and environment friendly products (Jamali, 2008).
• Political forces – It is necessary for the business enterprises to make sound marketing
decisions with consideration of legal and political aspects with regards to business market
and organisation. It involves various laws and government agencies wrapping issues like
protection of environment, pricing laws, competition, etc., involve the business to adopt
definite aspects and approaches for the new markets.
Micro and macro environments have a substantial influence on the accomplishment of
marketing campaigns and hence, it is necessary for the strategic marketers to consider these
environmental factors during the decision making process (Jormanainen & Koveshnikov,
2012). It helps the business to be competitive in the complex market and help in attaining of
various goals and objectives.

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Task 2
Background of Tesco
In UK, the food and drink retail sector represents the largest industry generating £
395billion worth of retail sales in 2017. Tesco is one of the prime food retailers in the globe
having its operations in 13 countries employing over 4, 50,000 people (Tran, 2005). The
company also offers its online services with its subsidiary, Tesco.com. Jack Cohen
established the corporation in 1919 and the company first store was open in 1931 in Burnt
Oak, Barnet. In 1939, the company expanded with over 100 stores across the nation. In
addition, the company also expanded into various extents such as retailing of clothes, books,
furniture, electronics, software, financial services and various internet service.
Tesco PLC has a market capitalisation of 29.43B (YCharts, 2019). In UK, the
company is having largest and operates under four banners of Superstore, Extra, Metro and
Express. With regards to this, there is also increase in stores of Tesco to 3,739 in the year
2017. Like others, the company also has its own vision and mission. Tesco core purpose
stands upon building value for the customers so as to gain lifetime loyalty. Tesco foresees
themselves as the most highly valued corporation over the globe including consumers,
society, employees and all stakeholders.
Over the years, the company has successfully created strong goodwill within UK as
well as in various other nations. The market share of Tesco in UK stands for 27.8% besides
other retail groups like Sainsbury, Asda, Aldi and Waitrose (statista.com, 2018). This shows
that Tesco is the leading chain in the retail industry and on world-wide level and they also
emphasize greatly on being third biggest world retailer behind US giant Walmart. The
Superstores of Tesco are standard large supermarkets, runs a number of in-shop cafes, but
also began to present new restaurants in its shop from 2013 under the “Decks Carvery” brand.
They have other stores by the name Tesco Extra, Tesco Express, Tesco Metro and One Stop.

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Vision of Tesco
Tesco has positioned as a leading brand which put consumers, groups and staffs at the
heart of everything it does. The core values of this retailer brand are –
• “No one tries harder for consumers
• We treat everyone how we like to be treated
• We use our scale for good”
Their vision encompasses more than one perspective considering innovation, way of
doing business, customers, employees and communities. The core purpose and mission of
Tesco is to “We make what matters, together” (tescoplc.com, 2018). The mission, vision and
values of Tesco are interrelated that shaped the identity of the company as a whole.
Leadership Style and Management Practice of Tesco
One of the main objective of company is to develop the leadership qualities of its
individuals throughout the enterprise, from managers and consumer assistance to the board of
director. It embraces an identical approach to leadership developments for employees at all
levels. Tesco utilizes all leadership styles in their operations. The company constitute as the
one of the biggest grocery store in the UK and offering jobs to over 4, 50,000 individuals. In
various conditions, some administrators can allow teams to make decisions for achieving
most of the job duties. In the company, the team leader only establishes and place the goals
whereas the team members adopt on how to attain the specified aims. This practice
encourages the staffs to be experts in their respective fields. Considering democratic
approach, the organisation program manager treats input of each member equally. Laissez-
faire style is also used by manager by permitting teams such as budget group to make their
decisions as they have broad information on the matter (Munusamy & Wong, 2008).
Tesco management practices in relation to HRM help the company to achieve vertical
integration. Tesco holds broad recruitment at the current time increasing the span of its
human resource. In connection with human capital, both internal and external sources of
human resource help Tesco to fuse the idea of prize administration in its operations
(Alexander & Doherty, 2010). Considering internal recruitment at Tesco, it helps the

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organisation to be consistent to the association as there are huge risks of professional
progression. In relation to the development of human resource, the administration of Tesco
has developed a successful employees training system for all its personnel. In addition, the
line managers of Tesco are accountable for dealing workers by the way of straightly
communicating with them regularly. They also carry out daily operations of the business by
maintaining certain regulations and delegating the tasks to the employees.
Strategies adopted by Tesco
With the foundation, Jack Cohen goal was to sell the product at low-priced and draw
the interest of consumers. The company also used slogans like “pile it high and sell it cheap”.
Cohen also used several motivational approaches during the sales time such as
“YCDBSOYA” which signifies that “You Can’t Do Business sitting on your Ares” (Peston,
2013). Considering their corporate strategy, putting stress on innovative technology was their
main focus and the company built self-service tills and reduced queues with using cameras.
The company also maintains the brand image which launched the policy of defamations
proceedings. In light with their corporate strategy, the company also believe and do
promotions in both television and print media. The company also fulfil the expectations of
the country people by making partnership with the local associates. For example, Samsung
group and Tesco established a joint venture which came to be known as “Samsung TESCO
Home Plus” (businesstoday, 2015). Hence, developing small acquisitions is a part of the
organisation strategy. Moreover, Tesco also offers online services including grocery home
shopping, telecommunication, consumer good and financial services.
Implementation and achievement of above practices and strategies
Tesco has a core vision that remains intact while the professional practices and
strategies constantly adapt to the dynamic world. This era is of high competitiveness and
without a clear vision an organisation will lack direction and may not endure. To achieve its
vision, Tesco has a seven-part business strategy. A vision is an aspiration view which offers a
benchmark for what the corporate aims to achieve (Gioia, Nag & Corley, 2012). In
achievement of vision, it has five elements that include – needed and wanted around the

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globe, a rising business full of ideas, modern, innovative and full of opportunities, inspiring,
gaining trust and loyalty from consumers and groups. The vision of Tesco pushes the
business and the values entrenched throughout the strategic planning process. The
management of Tesco identifies the crucial role that is strategies, vision and mission played a
significant role in its success and use a series of key performance indicators (KPIs) to
monitor and measure its performance.
Considering implementation of leadership in Tesco, the management is likely to take
theory X approach relating to work of Douglas McGregor (1960). In theory X, managers take
directive approach to take control of their subordinates (Russ, 2011). Due to enormity of the
number of subordinates a manager is likely to be in supervision of, it would difficult to adopt
latter approach. In addition, the tasks required to be passed out by personnel do not need
many skills like sale assistant duties, shop floor duties, checkouts, etc. Hence, these
employees will be required continuous supervision and direction to ensure continuity and
consistency so as to attain the organisation goals.
Effective colleague engagement is the key to organisation success (Deverka et al,
2012). The company carry out several initiatives to involve and engage their employees as
well as maintain transparency within the business firm with a seamless flow of information.
In relation with human resource development, the team has led various numbers of initiatives
spreading across digital communication, events, campaigns to build platforms and cross-
business awareness for colleagues to connect with the volunteering and leadership
opportunities. This makes Tesco HRM department to sync with the employees, well rounded
and is in line with company objective.
To evaluate the business condition, various framework of strategy and tools are being
used related to structuring. Tesco implements its market development strategy by showing
and spending towards retailing in Asian markets like the company is well interested to
expand the trade in Japan. With regards to this, 3 success criteria are also being emphasized
including partnership-sustainability, acceptability and feasibility. In growing and diversifying
Tesco product mix, it is also important to realize domestic growth when new products are
built and formed. With changing needs of the customers, Tesco also launched new product
lines to compete against the rivals like Aldi and Lidl like opening of discount stores Jack
where 70% of the products, from milk to eggs, bread and fresh meat are branded under its

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name (Butler, 2018). Tesco due to its voluminous structure chooses to merge with another
grocery in the UK to increase its market and expand its market share.
Recommendations
The company fostered influential identities through developing their retailing into the
community via diversified channels, consumer knowledge, culture funding and brand
expansion. However, the company need to emphasize diversified strategies to continue its
foremost marketplace in UK and other nations.
The company can increase its market sales by opening additional 24/7 Tesco Express
on high streets, however, with extra self-service facilities. In order to boost organisation sale,
there are required to conduct recommended promotion every season. Moreover, the sales can
also be increased with offering of free health services for aged people, including medical
check-ups, nutritionist, and medical practitioners. This makes the consumer benefit with the
help of free consultation and also help to gain points for their club-cards.
In order to accomplish vision, the company can align its resources and initiative to
attain strategy is ensured by continuous monitoring of activities and deploying KPIs at all
levels of the business enterprise. To enhance the management process in Tesco, the
leadership style of Tesco also operates customer management whereby the customer voice
can get positive direction to provide better service in an organisation. In relation with HR
strategy in company, practising TQM help the organisation to attract and retain competent
employees that also brings various development opportunities. This also helps in creation of a
pleasant working environment that can help organisation to gain manageable result.
Considering marketing strategy, the company can launch new products portfolios including
private and branded labels. All these strategies will help Tesco to attain its business and
corporate goals.

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Management Inquiry, 21(4), 364-375.

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