Business Environment Analysis Report: TESCO, Private Sector Focus

This report provides a comprehensive analysis of TESCO's business environment. It begins with an introduction to the concept of the business environment and its impact on business functions. The report then examines different types of business concerns, including private, public, and voluntary sectors, along with their respective legal structures. The analysis includes a focus on TESCO as a private sector entity. The report further delves into the size and scope of these different business types, highlighting TESCO's operations and market position. It explores the interrelationships between various organizational functions, such as marketing, human resources, and finance, and their role in achieving organizational objectives. The report also assesses the positive and negative impacts of macro-environmental factors using a PESTEL analysis. Finally, the report conducts internal and external analyses of TESCO, using SWOT analysis to identify its strengths, weaknesses, opportunities, and threats, and concludes by summarizing the key findings and implications of the analysis.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types of business concerns along with their legal structure...............................1
P2. Explain size and scope of different types of business concerns.......................................3
TASK 2............................................................................................................................................5
P3. Relationship between various organisational functions and their relation in achieving
organisational objectives........................................................................................................5
TASK 3............................................................................................................................................6
P4 Positive and negative impacts of macro-environmental factors........................................6
TASK 4............................................................................................................................................8
P5 Internal and external analysis of specific organisation to identify strength and weaknesses.
................................................................................................................................................8
P6 Interrelation of strengths and weakness of macro environment elements on a company. 9
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Business environment is a quite anonymous term. It mainly focusses on all internal as
well as external forces or factors that are a part of business or in any way affect business. These
factors ave a quite significant impact over various business functions. Examples of factors
included in this context are customers, political factors, suppliers, economic factors etc. All these
factors play a quite significant role in maintaining functionality of business and also leading to
healthy relationships with customers in competitive market as well (Business environment.
2018). This report considers TESCO which is a private sector business concern dealing in retail
industry. It is basically a supermarket chain store with its headquarters in England. Furthermore,
this report focusses on different types of business concerns such as private, public and voluntary
along with a brief discussion regarding their legal structure. This report also mentions
interrelationships of various organisational functions combining with internal and external
environment analysis by infusing SWOT and PESTLE.
TASK 1
P1 Types of business along with their legal structure.
Business environment basically is a marketing terminology which combines both internal
as well as external market factors that work in a coordinated or a collaborative manner and help
in smooth operational functioning of business concerns as well. In context of business concerns,
it has been examined that every business today has varied aims and objectives which they wish
to achieve so as to be successful in competitive market. Many a times even such a condition
happens that external environmental factors are not under the control of business. Various types
of businesses have further been mentioned as under:
Private sector organisation: A private sector business concern is one which is owned,
managed or controlled by individuals, agencies or partnership agreements as well. Main aim of
people behind choosing this type of business entity is to generate huge amount of profits. In the
present TESCO has been chosen which operates as a supermarket chain store (Chetwood and et.
al, 2014).
Purpose of private organisation: Purpose or aim of every business entity is quite
different from other. Hence in this context, purpose of TESCO is to enhance productivity and
brand image of its business by providing excellent quality goods and services,
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Legal structure: Legal structure refers to a structure that has been incorporated by law
bodies. There are some legal requirement for setting up private organisation such as
shareholders minimum two and maximum 200, directors minimum number of 2 and a maximum
number of 15 and so on. In context of private sector companies, their legal structure can further
be classified into two broad categories which have further been specified as under:
Sole Proprietorship: Sole proprietorship refers to a type of business entity which has
been known to be owned, managed and controlled by a single individual. Hence, in such a type
of business entity decision making lies in the hands of a single person (Gharajedaghi, 2011).
Partnership: Partnership is a type of business concern in which two or more people join
their funds and resources so as to run business in an effective and smooth manner. Also partners
of a business share their profits and losses equally in a business or as per the ratio decided by
them.
Public Organisation: Any business entity which has been run by government of a
country or offers its shares in public are referred to as public sector companies. These companies
are owned managed and controlled by government or government officials as well. These type of
organisations mainly formed by the government under a special act of parliament. All the
powers, objectives, rules and regulations of the organisation is decided by the government or by
the act of legislature.
Purpose of public sector company: Crown prosecution services or CPS aims is to help
the community by providing judicial and law based advice to investigation agencies and general
public so that they can easily resolve their legal issues.
Legal structure of public organisations: In context of legal structure public sector
companies can further be divided into two categories which has been discussed as under:
State government: Companies that are run managed and controlled by state government
fall in this category. Main aim of such business concerns is to monitor requirements of common
people.
Local government: Companies that are run managed and controlled by local bodies are
referred to as local government companies. Such businesses aim towards fulfilling needs and
requirements of people.
Voluntary Organisation: The word is derived from the Latin word “Voluntas” which
means freedom and will (Crane and Matten, 2016). This type of organisation is not controlled or
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directed by the board of trustees. It is fully owned by the members and not by any external
forces. Providing Social services to the needy people, poor, old aged is what voluntary
organisation is worked for. An example of voluntary business concern is Cancer research UK.
Purpose of voluntary organisation: Main purpose of voluntary organisation is to
conduct Cancer research for controlling number of deaths that may happen due to deadly
diseases such as cancer. This is possible only by researching about new technology and remedies
(Gilboy, 2016).
Legal structure of voluntary organisation: Legal structure of every company is different
from another. Hence in context of legal structure of voluntary companies it can further be
divided into two parts.
(a) Association: This is most popularly existing structure in voluntary sector. It is
usually formed by small groups who aim towards carrying out all key and important tasks. These
type of associations are way more cheaper than other business concerns.
(b) Trusts: These types of associations get formed due to mutual trust and understanding.
Companies in this head are generally governed by a trust deed and do not need any sort of
membership structure.
P2. Size and scope of different types of business.
Business environment refers to a sum total of all internal as well as external factors that
affect environment as a whole. It further includes a number of business entities such as
voluntary, private or public. Size and scope of all these organisations are quite different from
another and have been mentioned as under:
Private organisation:A business concern that is owned managed and controlled by a
single individual. All such people have a common objective. An example of private business
concern is TESCO which operates as a supermarket chain store.
Background: TESCO basically works as a supermarket chain store with its headquarters
Germany. They operate as supermarket stores and aim towards providing excellent
quality goods and services to its customers worldwide.
Products and services: In present scenario, TESCO supplies excellent quality products and
services to their customers at a very nominal price. This provides them a stable
competitive edge over their competitors. (Gilboy, 2016).
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Size: TESCO in the current scenario has been constantly growing with an approx 6569 shops
in number of location. Also their revenue is estimated to be more than € 57,491 million.
Along with this, there are approx 460,000 employees are working in respective
company.
Vision: Vision of TESCO is to provide excellent quality goods and services to its customers
thereby enhancing overall customer base.
Mission: Mission statement of TESCO states to spend less and live life in a more valuable
manner.
Objectives: TESCO operates with an objective of providing excellent quality products and
services to their customers.
Structure: TESCO has chosen or adopted a formal organisation structure for its overall
business operations.
(b) Public organisation: A company that is run or managed as per government rules and
laws is a public company. Main aim of public sector companies is to fulfil needs and
requirements of general or local people. A business concern chosen in this context is Crown
Prosecution Services which deals in legal matters and issues. Background: CPS came into existence in the year 1986 and has been headquartered in
France and London with around 6000 employees. Products and services: Crown prosecution services is a law based firm that deals in
providing statutory advice to police department as well as other investigating agencies. Size: Size of Crown prosecution services has been rapidly growing and number of
employees has reached to almost 6000. Vision: Vision stated by Crown Prosecution Services is to provide excellent quality
services regarding prosecution and legal matters by means of research and investigation. Mission: Mission of Crown prosecution services is to operate as per laws and also
provide legal advice. Objectives: Crown prosecution services operates with an objective of growth and
welfare of people.
 Structure: CPS operates as per a flat organisational structure.
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(c) Voluntary organisation: Voluntary organisations are basically set up for welfare of
individuals and betterment of society as well. An example of voluntary business concern in the
present context is taken to be Cancer Research. Mission: Mission of Cancer Research is to conduct research while helps in raising
controlling rate of cancer. Vision: Vision of Cancer Research is to make people aware about ways of dealing with
cancer. Products and services: They work towards protecting rights of people and further
improve their quality of life. Size and Scope: It came into existence on 4th Feb, 2009 so as to make people aware about
how to cure cancer.
 Objectives: Main objective of Cancer Research is to create awareness about cancer in
different colleges and institutions.
TASK 2
P3. Relationship between various organisational functions and their relation in achieving
organisational objectives.
Every business venture today should adopt their overall business operations in an
efficient manner. It proves to be quite useful in achieving goals and objectives in a specified
time frame. Hence, it is necessary that managers of TESCO should perform their business
operations in an effective manner. Also a number of organisational functions have been
mentioned as under:
Marketing: Marketing is an important element or function of every business entity.
Marketing department mainly works towards promoting goods and services and attracting higher
number of customers. Marketing department of TESCO is interrelated to its production
department. This provides a better and clear understanding about new and innovative goods and
services. Human resource department is directly related with marketing because they hire staff
members for conducting marketing related activity.
Human resource: Human resource happens to be the lifeblood of every business
venture. Main aim of human resource department is employing skilled and efficient employees in
their company. In context of TESCO, it has been observed that managers of respective company
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timely examine skills of their employees and train them which helps in enhancing their skills and
performance. HR department is further synchronised with finance as managers always require a
certain amount of funds for skill development of their employees.
(Source: Organisational Chart, 2019)
Finance: Finance department of TESCO incorporates issues relating to funds and other
monetary issues. They further help in maintaining effectiveness in business functions. In relation
to TESCO, its finance department is interrelated with a number of departments as money
happens to be a basic requirement. Through finance department other division like human
resource can duct their activities like training and development session because it require proper
funds without this activity cannot be conducted.
This synchronisation further leads to overall achievement of organisational goals and
objectives.
TASK 3
P4 Positive and negative impacts of macro-environmental factors.
All the external factors which affects the operating activities of the organisation comes
under macro environment. For monitoring and analysing the external or macro environment
company uses PESTEL Analysis. TESCO is a multinational supermarket retail store which is
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situated in Germany and working across the world. TESCO's PESTLE analysis has been
explained below:
Political Factors:This factor includes laws and legislations, government and tax policies
which affects the working of the organisation. All these rules and regulations are applied to all
the concerns. Many problems are faced by TESCO after implementing various new laws in the
nation.
Positive Impact: By applying all these laws and regulations company can perform its
operating activities in a lawful way which benefits the organisation.
Negative Impact: Sometimes change in policies can negatively affect the business
because they had to implement new plan of action in the organisation for smooth running of the
activities.
Economic Factors: These factors includes issues related to money and finance. Such as
inflation rate, tax rate, foreign exchange rate and so on, which directly effects the organisation
and its operations. If there is recession in Germany, it will affect the profitability of TECO.
Positive Impact: Economic stability in the country plays a positive role in the
development and growth of the organisation. Along with this, stable economy result in
increasing sale of company because people can afford every range product in easily.
Negative impact: If there is any instability in the nation, it affects the purchasing power
of the people which also affects the profitability of the company.
Social factors: These are the factors which is related to the society. Social factors
includes culture, norms, educational level. For the satisfaction of customers and for promoting
hygiene and safety among society TESCO produces good quality of products.
Positive Impact: This factors helps in improving brand image and goodwill of the
organisation in society.
Negative impact: If the organisation fails in achieving the social factors, then they will
decrease their profitability, market share and goodwill.
Technological factors: This factors refers to innovation in technology which affects the
business operations of the organisation. It involves the use of new, upgraded and innovative
technology for producing goods and providing services to the customers in TESCO.
Positive Impact: By adopting latest technology in the organisation, goals and objectives
can be achieved in an effective and efficient manner.
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Negative impact: It is quite difficult to use new technology in the enterprise, because not
every employee is well trained to use it.
Environmental factors: This factor deals in the protection of the environment. It
includes all the environmental factors such as climate, whether which affects the profitability and
goodwill of the company. By producing healthy and hygiene products TESCO helps in
promoting this factor.
Positive Impact: Environment of the country does not affect if they use eco-friendly
methods for the production of goods. Along with this, company use reducing carbon footprint
packaging material which gives positive impact on environment.
Negative impact: Eco-friendly products are quite expensive and TESCO focuses on
reducing the cost.
Legal factors: There are certain laws in every country which affects the operations of the
business. It includes employees laws, consumers laws, labour laws and many more. TESCO
analyse all these laws and apply them in the organisation to avoid any legal issues (Li and et. al.,
2011).
Positive Impact: Legal factors give positive impact on organisation because they can
import required raw material from another nation easily without any restrictions. Moreover,
company can do market expansion in easy way.
Negative impact: There are various laws which negatively affects the profitability and
operating activities of the organisation.
TASK 4
P5 Internal and external analysis for identify strength and weaknesses.
TESCO is a multinational supermarket chain which is currently working in all over the world.
With the help of SWOT analyses we can examine the strengths and weakness of TESCO:
STRENGTH : TESCO promotes their business on a social media platform which helps
them in attracting large number of customers and increase the profitability and demand of
products produce by them.
For performing better in the competitive market and maintain the growth rate, company
continuously updating their technology.
Strength for a company can be its brand name, image and goodwill in the market.
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WEAKNESSES: Major disadvantage or weakness of TESCO is they have low market
share as compared to other brands.
Continuous change in technology demands large amount of investment, which is not
available all the time.
OPPORTUNITIES: One of the major opportunities for TESCO is that they can open
their retail store anywhere in the world for the expansion of their business.
Social media can be advantage for the company as the world is moving fast and prefer
applications and sites for shopping (Saleem, 2017).
THREATS : For maintaining position in the competitive market rival company's bring
down their price as compared to their competitors.
New entrants can be a threat for the companies which already exists in the market.
Changes in taxation policies or multiplication of laws (Yu and Ramanathan, 2013).
P6 Interrelation of strengths and weakness of macro environment elements.
In the present context, there are a number of macro environmental factors that impact
overall functioning of a business concern both in a positive as well as negative manner. The
strength and weakness of macro-environmental factors discussed below as:
Factors Strengths Weaknesses
Political factors The present regulation in context of
UK is quite stable regarding
supermarkets and their production
activities as well . Also, this will
help TESCO in operating their
business activities in an effective
manner.
The unfavourable or negative
outcomes of Brexit will lead to
overall hampering image of
TESCO which also lays a
significant impact on its
productivity as well.
Economical factors TESCO deals in excellent quality
goods and services to its clients as
per various favourable economic
conditions in UK (Wack, 2017).
During the time of recession,
purchasing power or buying power
of customers in context of TESCO
declined. This has also greatly
affected their productivity and
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profits as well.
Social factors They are providing good quality
and fresh dairy products such as
milk and other substantial products.
This further helps in enhancing
health and lives of people.
Price happens to be a major barrier
here as fresh products are expected
to be comparatively expensive in
comparison to processed and
canned food as well.
Technological factors Technology helps managers in
integrating digital channels which
help in advertising.
Less skilled individuals or skill
deficient people cannot use such
technology.
CONCLUSION
From the above mentioned report it has been concluded that business environment is a
quite vast subject that comprises of all external and internal business factors that have an impact
on business and its overall functionality as well. This report further discusses various macro
environmental factors as well as their impact on overall business environment with the help of
PESTLE analysis. In addition to this inter relationship of various organisational functions such as
marketing, HR, finance etc have been specified. This report also discusses various types of
business concerns along with their legal structure and vision, mission statement as well. Lastly
this report comprises of positive as well as negative impacts external business factors have on
business and its functioning as well.
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