Analysis of Tesco's Governance, Structure, and External Environment

This report provides a comprehensive analysis of Tesco, a multinational retail giant, examining its governance structure, organizational framework, and the influence of external environmental factors. The report begins by exploring Tesco's history, vision, and mission, followed by an in-depth examination of its organizational structure, including the roles of key personnel like the CEO, board members, and stakeholders. It delves into the relationships between stakeholders, particularly shareholders and employees, and the Board of Directors, highlighting the importance of trust, understanding, and motivation. The core of the report focuses on analyzing the effects of external environmental factors on Tesco, utilizing the PESTEL framework to assess political, economic, social, technological, environmental, and legal influences. It discusses how these factors impact Tesco's operations, strategies, and overall business performance, providing insights into the challenges and opportunities the company faces in a dynamic global market. The report emphasizes the importance of adapting to changes in government policies, economic fluctuations, and social trends to ensure the long-term success of the business.

BUSINESS ENVIRONMENT

Table of Contents
1INTRODUCTION..............................................................................................................................3
2TASK..................................................................................................................................................3
11. Examine how Tesco company is governed and structured...................................................3
2. Analyse the effects of external environment factors on Tesco...............................................5
CONCLUSION....................................................................................................................................9
REFERENCES...................................................................................................................................10
1 INTRODUCTION
Business environment is played an important part to maintain and build successful business
and client relationship. Business environment identify the external and internal factors and how they
get affected in organisation functions and also for employees, client, and other management
functions (Agbolade Obasan, 2014). There are three types of business environment, Micro
environment, Internal environment, and Macro environment. Positive environment impact on the
growth of the business. Tesco is a British multinational groceries and retailing industry.
Supermarket, hypermarket and superstore etc. is the products of this organisation. They establish
their headquarter successful in England, kestrel park and the other place or country. This unit

examine how Tesco company is governed and structured. It also analyses all the external
environment factors get effects on the organisation.
2 TASK
1 1. Examine how Tesco company is governed and structured
Tesco is among one of the most famous retailing industry. It established their headquarter in
England, United Kingdom, and Hertfordshire. Tesco provide their products in form of books,
clothing, furniture, toys, petrol, electronics etc. They spread their groceries business largely. Teco
vision is to be a world best retailing company (Bah and Fang, 2015). They want to give their best
performance by supply their good services and products to customers. Tesco is an international
relating industry. They want to earn long time loyalty of their customers, it gives various type of
products and services such as household products, travel insurance etc. The mission of company is
to achieve goal and create many innovations in their product to give best services to the customer,
according to their needs and requirement. Tesco established extra shops, hypermarket, in many
forms such as Tesco superstore, Tesco Express, Tesco metro etc.
History of the tesco is explained through table form: history means to explain all the work
had done in present or lost years. Tesco experience of establishing their work is very difficult
(Dockalikova, and Klozikova, 2014). They are successfully grown in their business year per year,
with some innovation in products and services.
Years Work of Tesco
In 1919 Tesco is founded by Jack Cohen, the son of
Jewish migrants.
During 1956 and 1960s The first Tesco self service shop opened.
During 2010 and 2013 Tesco established many shops and internet
groceries services.
During 2000 to 2014 Organisation spread their work in many various
form, they provide their best groceries and
relating services or products to the customers
by supply all the basic things of life in
supermarket.

In 2017 The organisation conformed to opened a new
business which is Vision Express. In this recent
time Tesco also explore their business format in
various types such as Tesco Extra, Tesco
superstore, Tesco metro etc.
Organisational structure of Tesco: organisational structure is based on various
responsibilities of department, controlling the business and work environment etc. It is used to
describe an inside hierarchy of organisation. Thus, the structure is developed to operate the work of
organisation, and also helps to achieve their goals for the growth of business in the future.
Organisational structure is based on four pillars which is divisional, functional and geographical and
matrix. Tesco organisation structure is divided in different layers (Fernández-Gago, Cabeza-García,
and Nieto, 2016.). They follow hierarchical organisational structure. It organised the over all
structure in various level, between managers and their employees. Thus, hierarchy level is divided
into two parts higher level and lower level.
How Tesco governed: Tesco is governed by the government. They have to follow all the
rules and regulations according to the policy of government. Tesco organisational structure is base
on their directors and Board members. The members of this department is 11 leads by Chief
Executive Dave Lewis he is the CEO of Tesco (1 September 2014). They follow hierarchy structure
to describe all the levels of persons. John Allan is the chairman of the Board he appointed on 1
March 2015 and Alan Steward is the Chief financial officer in the organisation. In 2014 to 2015 the
company appoint 4 non executive and 3 executive directors.
Store manager, food trading manager, non food trading manager and personnel manager
handle the work of company and also help in managing the environment of the firm. Tesco is an

international company, they expanded its transaction outside the UK within 11 other countries.
Stakeholders: Stakeholders is a group or organisation which get affected by the company
actions, objectives and policies. Tesco stakeholders are customers, shareholders, employees and
employers etc. In this process they have to view how the customer, employees and business partners
impact on organisation and business. Local community and National government etc. are the most
important stakeholders of Tesco. Stakeholders work individually or in a group, the person who is
capable to invest money in business to make it successful, is called stakeholder.
Shareholders and their relationship between BoD: Shareholder is the owner of the
organisation.BoD and shareholder work together for the growth of company. Thus, the frim divide
their responsibility between both of them equally. The relation of BoD and shareholders is based on
different points such as price sharing, financial breakdown, cash flow, profit, and dividends. They
both share their price equally in business. In Tesco company Board members and shareholder
relationship is based on trust and understanding. BoD have the power to make decision for business,
but shareholder can not done this things, they managed their work equally. The relationship is base
on their financial breakdown, it get affected in business growth, financial breakdown decrease the
productivity of products and services. Tesco shareholder invest money in business. Cash flow or
loose is the biggest issue in the growth of company.
Employee relationship between BoD: Employee and BoD relationship is based on trust and
understanding. The responsibility of Board of director is to motivate their workers to work hard
through giving incentives. They has to pay their employee according to their work and effort in
Tesco. Workers work in organisation for increasing growth of business. Lots of company does not
give any reward to their employees for their work. In Tesco the BoD give bonuses to workers for
the effort which they give in workplace. They also provide some facilities to decrease employee
turnover. They make a lot of new schemes according to the government policies. Through feedback
they get all the information of business, it help to make improvement in work area. Motivation is
the best way to developed strong relationship between the Board members and workers.
2. Analyse the effects of external environment factors on Tesco
Good relationship is the base of successful business. The relationship between the public
and board of director is played an important in growth of business. It based on commitment,
satisfaction and trust. Teso Board of director make plans according needs and satisfaction of public.
They make innovation in their product and services. strong relationship is based on good
communication, feedback and awards. High authority members communicate people to solve their
problems according to their satisfaction. Through sponsorships they build their strong bond.

Advertise of business is the way to communicate people effectively. Feedback is the best option to
solve the issues of public regarding their products. All the effort get impact on business and
organisation of Tesco. The members of Tesco work to give satisfaction to the customers through
providing their best product.
In every organisation business environment played an important role in increasing or
decreasing business. PESTEL is the best way to get all the knowledge of business. PESTEL is an
external factor of business environment, this process help to analyse about the situation of their
market business. Political factors, economic factors, social factors, technological factors,
environmental factors, and legal factors are the full meaning of PESTEL. It is used to know threats
and weakness of business (Vidyarthi, Anand, and Liden, 2014). It gets effect on the performance
of business in organisation. PESTEL goal is to know the influence of business activities by all these
factors. The advantage of pestel is to help in reducing the impact and efforts of potential threats of
Tesco. Disadvantage of pestle is to oversimplify the detail which is used for making decision. All
these factors is help to know the strength, opportunities, weakness and threats of company.
1. Political factor: Tesco is an international company. It follows the rules and
regulation (trade agreement) strategy that help to influence to global countries to do
business with them. Government is the important part of business world, if the
government rule and regulation are favourable to the global company such as Tesco
that will help to built their business at Worldwide, but on the other side if they can't
follow the all policies of government they can not work properly. External factor can
affect business properly. The role of the manager in organisation to make better
decision for the growth of business. Firm also analysis the environment, legal,
economic factors. Political factor is very important in business. They have the power
to change the business environment, it also gets affected on government policy. The
Board members is always ready to deal with the all international and local external
outcomes through politics. Economic, legal and social changes is the main reason of
changes in policy of government. Tax is the main issue to supply product or services
in another country. Tesco face issues for decreasing or increasing tax according to
the changes in the political environment and policies. For example, Change in
Government is one of the reason which effect the Tesco business. Its quiet heavy to
impact the business, as per changes in policy, rules and tax. In that situation the
organisation has to analysis the environment has been created by the changes of
government and make new strategies and policy to get deal with all the issues. Thus,
all the changes affect the operations of Tesco. In the company government changes
impact overall business and their production. After the changes there are some

difficulty to manage the work in organisation, because these changes affect
employee turn over, management sector, productivity and growth of business.
2. Economic factors: Economic factors key elements are labour cost, interest rate,
government taxes and policy and all the management of company. This factor make
work harder for Tesco, it impacts on the business and products for a long time. For
example, company sell groceries product in country but all the products in the world
start rot exclude Tesco, this rotting process make firm stock go up, the rate of
groceries and other products will go up and that make profit in business. Natural
resource is kind of economic factor. Human resource, freedom in politics, technical
expertise etc. are non economic factors. Thus, this point also describe the macro
economic factors that are unemployment, savings and investments etc. Economic
factor is based on High rate inflation which means expansion of money in
circulation. If the company does not have a budget to extend their business will
decrease the productivity and growth of business. Increasing economy inflation, is
the result that people has to spend money for the products. This factor effects the
growth of business in Tesco. High rate inflation is the reason for employee turn
over, customer deduction and many others, this will also affect the overall work of
company and their various department.
3. Social culture: Social factor is one of the part of analysis function. This culture
describes particular group and society and there interest in same way to share. They
affect lifestyle on the base of religion, wealth and family reasons. Education level
and income (Based) is the social factor reason which affect well bing of individuals.
This factor impact on the success of Tesco business. If the person is educated they
can participate in such kind of programs in order to develop their understanding but
due to poor education level in many people do not pay much attention and they can
not focus on which product they buy, and also does not attend on such activities that
affects success rate of Tesco company. Changes in culture aspects make changes in
the growth of business and their perception of population. Growth of population due
to immigration. Increase rate of immigration impact social factor. If the rate get
higher uneducated people can not buy the product of Tesco because they can't have
the source of earning and buying something which is not under there budget. People
education is very important to understand the things which they get used in their
daily basic routine. Education affects the business of Tesco and also increase or
decrease their productivity of groceries products and services which they provide to
people through supermarket, shops etc.

4. Technological factors: Tesco make innovation in their products it will impact on
business. Use of advance technology may enhance communication with BoD, that
will help in getting more success in business. But due to change in technology entity
has to modify its entire operations according to new technique that enhance cost of
company. Tesco understand the needs of people and try to fill their requirement
according to products. Technological factor greatly affect business, on some bases'
computer calculation speed and power, automation etc. Tesco used the latest
technology to attract their customers toward the product and services such as DXC
technology to improve people shopping experience. They used stock counter
technology, advanced m- commerce, mobile payments' app etc. all these
technologies effect the business growth.
5. Environmental factors: temperature, amount of sunlight, flood, climate change etc.
are the reason of environment changes. This factor makes big impact on the product
of Tesco and business in playing out areas. Abiotic and biotic factor effect
environmental factor. Some reasons can not be seen by the people. Internal and
external both factors affect business. Climate change impact on Tesco business
growth. Tesco provide groceries product to the people, for some climate changes
such as flood, so they can not be able to supply their products in countries. It will
decrease the productivity of business and stop the process of increasing successful
business.
6. Legal factors: employment, competition and safety and health are included in legal
factors. It can impact on decision making of higher authority, negatively or
positively. Tesco follow the laws made by the government. Law helps to control all
over the work of organisation and their employees. Company is based on legal
structure, they send all the report of profit and loss to higher authority. In this factor
employment and their safety is very important for the organisation. Changes in law
get effect the company and their product supply process. It also impacts in positive
or negative manner. Law changes has to be followed by tesco, after the hole
changing process they make new policies and structure according to it.
CONCLUSION
Above the further study it has been concluded that business environment get impact on
overall business activities such as the growth and success of company. It also describes
who they effect the efficiency of Board of director and stakeholders. They explain the

history of company and also the making of structure and their work in chronological
order. It also identifies how they governed by the government and what is the role of
chairman and their work. All the study is based on PESTEL analysis and their impact in
making business successful. Further more how political, economical and technological
factors impact on business briefly.
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