Report on Tesco: Business Functions, External Analysis, and Strategy

This report provides a comprehensive analysis of Tesco's business environment, focusing on its organizational structure, key business functions, and the impact of external factors. The first part introduces different types of organizations, including public limited companies (PLCs) like Tesco, private limited organizations, and community interest companies (CICs). It then delves into Tesco's background, supply range, vision, mission, and stakeholders. An organizational chart illustrates the interrelation of various business functions within Tesco, highlighting the advantages and disadvantages of their impact. The second part employs PESTLE and SWOT analyses to examine the macro-environmental factors affecting Tesco's operations, identifying both positive and negative influences. Finally, the report critically reflects on the key findings and their implications for decision-making within the company. Desklib offers a wealth of similar solved assignments and study resources for students.

BUSINESS AND BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION................................................................................................................................3
MAIN BODY.......................................................................................................................................3
PART 1..................................................................................................................................................3
1.1 Introduction to provide an overview of different types of organizations and the growth of the
international business environment..................................................................................................3
1.2 Explanation of chosen organizations': background details, supply range, size and scope,
vision, mission, business objectives, company and legal structure, and stakeholders information. 4
1.3 Examine different business functions of Tesco using an organizational chart to show inter-
relations and analyze advantages and drawbacks of their impact on the company..........................6
Part 2.....................................................................................................................................................7
2.1 Pestle analysis of the firm with the positive and negative impacts in the context of “Tesco”:. .7
2.2 Swot analysis of the firm “Tesco”:.............................................................................................9
2.3 Critical reflection of key findings and how they influence the decision-making process........10
CONCLUSION...................................................................................................................................11
REFERENCES...................................................................................................................................12

INTRODUCTION
An organization refers to an associational setting where people at different levels of
hierarchical structures play their part to the fulfill various business functions. Business environment
is defined as the corporate entity in which various commercial activities take place for revenue
generation and brand expansion (Cherunilam, 2021). There are numerous kinds of organizations
where these business elements are situated. The following report in first part, will precisely cover
this by explaining 3 different types of organizations, their sizes, visions, and scopes. It will illustrate
the interrelationship of various business functions in the context of a particular one out of the three
firms through an organizational chart (portfolio of factsheets). The second part of the report will
display positive and negative impacts of macro-environmental factors on the chosen business'
operations. The reasearch study will also determine the internal-external aspects of it through
different models followed by a critical reflection of the findings of the report.

MAIN BODY
PART 1
1.1 Introduction to provide an overview of different types of organizations and the growth of the
international business environment
Public limited company/organization (plc)
The public limited business organization or company is that type of corporate firm where the
sole ownership of the entity is conferred to the public in general. Those people who have a personal
inclination towards buying market shares in this kind of company can easily purchase their portion
in it. The person investing in a public limited organization as a key stakeholder in it is
himself/herself liable for the gains or risks since the amount invested is restricted to the same sum.
One prime example of this kind of organization is UK based Tesco company. It is a plc in the retail
sector with an impressive listing on the LSE market (JENKINSON, 2020).
Private limited organization (pvt. Ltd.)
Unlike the publicly owned company, the private limited organization is defined as the exact
opposite of it as the total ownership of this organizational type lies in the hands of only a few
selected individuals. These kind of business firms are never enlisted on stock markets because they
are specifically owned by the private sector. As the title itself suggests, the commercial liability and
number of company shareholders are also limited in nature in this case. For instance, the British
multinational consumer goods company Unilever is a privately owned organization in the retail
industrial market. Headquartered in Leeds, England, Unilever primarily deals in hygiene &
wellbeing, consumer care merchandise with a widespread business and consumer reach. This
organization expanded swiftly as its decision-making capacity lies with limited people (Murphy and
Murphy, 2018).
Community interest company (CIC)
As the name itself suggests, community interest companies are those companies that rae set
up for the sole purpose of contributing towards the benefit of the larger surrounding communities
without any profit making concerns. These organizations exist so that the collected funds from its
business can be distributed among the society members who are in actual need of help. One such
example is that of UK based CIC 'Blues and Beers'. It is a community-based company that uses its
organizational returns for charitable reasons. Once started as a weekend start-up, now it has been
converted into a CIC in Wallingford that serves local brewries and plays blues music for customers

and then donates the funds for community support (Mason, 2020).
1.2 Explanation of chosen organizations': background details, supply range, size and scope, vision,
mission, business objectives, company and legal structure, and stakeholders information
Tesco public limited organization –
Tesco, it is a food retailing company, its headquartered is situated in UK. It has 12 stores all
around the world. Tesco is famous for selling food products. In recent scenario, Tesco has started so
many services too like hardware, insurance, finance, etc. The vision of the company is to serve its
customers' best interests, to contribute towards a cleaner planet and increasing brand awareness. Its
mission strategy can be seen in its statement ''We make what matters better, together''. Tesco PLC
holds 22.7% market share in UK and over the years Tesco has launched extensive Euro-centric
programs using foreen market strategies that has registered gradual reductions ineconomic growth
slippages.
Tesco has a wide range of market placement opportunities which can be seen with its more
than 7000 stores in multiple countries. Tesco's pricing strategy follows the dimension of cost
leadership wherein product procurement channels work within low prices that reduces the
production costs. Tesco's implementation of distributing products through the approaches of NGOs
and service help organizations proves best in reaching out to the specific target consumer market
segments. It follows a legislative structure of a public limites company (Tesco plc) in which the
general population can heavily invest through stocks which the firm advertises and sells. Its key
stakeholders are employees, customers, managers, shareholders, suppliers, government and local
communities (Awadari and Kanwal, 2019).
Unilever private limited organization –
The Unilever organization is a multinational consumer goods giant producing a broad range
of consumer goods from household products to foods and beverages. It was founded in 1930 in the
UK is among the world’s leading FMCG Company and operates in more than 190 countries (Jose,
2021). The vision of this consumer goods company is to create a common living sphere for all
keeping in consideration the sustainable goals. Its mission statement is ''to add vitality (importance)
to life'' which means meeting its nutritional, hygiene and personal care goals. Unilever's business
objectives include health improvement, livelihood management, and reduce the carbon footprints of
its market supply chain.
Blues and Beers community interest company
There exist organizations that not only keeps their customers engaged but also serves the

greater purpose of humanity by extending their main services to those in need of monetary support.
The Blues and Beers company started as a small weekend gathering fundraiser in Oxfordshire
village in England where John Curry, its chairman, raised it from a community festival group to
serving a larger cause. In 2006, it became a Community-interest organization with the vison of
providing financial security of more than € 30,000 for local charities. Its mission is to dedicatedly
support disability homes and to raise enough money for the growth and development of youth
centers. Its business objectives include provision of beneficial incentives to the local community
shelters and its key stakeholders comprise the people of Wallingford, the trustees of charitable
organizations such as Home Start, etc. and the board members.
1.3 Examine different business functions of Tesco using an organizational chart to show inter-
relations and analyze advantages and drawbacks of their impact on the company
There are various functions within an organization that play an interdisciplinar rle in the working of
its business evironement. These functions might range from the Human resource department to the
finance or advertising segment (Xinyun, 2018, December). Organizations like Tesco has several
internal and external business functions that interact with one another as is shown below –
Production
Function
HRD/HRM
Function
R&D Sector
Function
Finance &
Accounts
Sales &
Marketing
1. Tesco
organizations'
production
function is based
on the lean
manufacturing
model and it
produces its edible
goods in its own
factories.
1. The human
resource
mangement
function at Tesco
deliberately deals
with hiring and
recruiting a
diverse workforce
personnel and
categorizes its job
positions as per
individual talents.
1. The research
and development
team of the retail
company is
involved with the
task of constantly
upgrading its
technologies.
1. The accounting
and finance
department is
employed with the
task of
maintaining
record statements
of the business
transactions.
1. Tesco's
marketing sector
primarily focuses
on its promotional
sales aspects along
with giving it a
competitve edge
through its low-
pricing sales
strategy.
2. For instance,
products like
dairy, organic and
perishable food
2. Tesco's HR
team plays a vital
role in the
organization's
2. This business
segment is vital as
it consistently
searches and
2. More
importantly, this
section functions
in key areas where
2. Another
interactive role of
this function is to
devise different

items are made
and stored in its
production centers
and silos which
reduces
operational costs.
business units by
instructing
directive meaures
to the employees.
investigates
applicable techno-
savvy elements to
determine whether
they will can be
productively used
or not.
it collaborates
with other
departments such
as PR, sales and
advertising to
ascertain their
income flow
statements and tax
returns.
prices for
categorized
products that can
be marketed as per
the targeted
consumers.
Benefits and drawbacks of interrelation and influence of functions on the organization:
ADVANTAGES DISADVANTAGES
1. The interrelationship among the different
business functions of Tesco eliminates inter-
departmental discord.
There are times when all these functions overlap
and result in workplace complexities.
2. It promotes good interpersonal
communication.
In some instances issues of time
mismanagement occur due to simultaneous
process completions.
3. One of the major benefits of interactive
functions of Tesco's business is the creation of
problem-solving skills.
Incidences of miscommunication, faulty hearing,
etc might also take place that affects colleagues
and their productivity.
Part 2
2.1 Pestle analysis of the firm with the positive and negative impacts in the context of “Tesco”:
Pestle analysis is the study of the external factor influencing the organization. The factors
included in the pestle analysis are political, economic, sociological, technological legal and
environmental factors. The pestle analysis of the firm is as under:
Political factor: Tesco is the second world largest super market store in UK, and company mainly
operates in United Kingdom, it is not affected by the economic slowdown in the other nations. But

UK has existed from Europe, then it will have certain impact on firm's business. Tesco's
performance will be affected by political factors. Government and the consumer debt are high there
in the country, and in order to impact on position of the customers because of business conditions is
experienced on higher rates (Adamyk, 2019). Political factors includes governmental policies, tax
policies, environmental law and regulations, political stability and instability that will affect the
organization's business functions. Example: when the government bring new trading rules and
restriction leading the organization to change their process of operations. The positive political
factor is more widespread for the economy. So, this treads of integrating is enhanced and increase
industry for the development. The country by operating in the stable economy then it gives positive
impact on the firm. But if the country is not stable then it gives negative impact on company
growth.
Economic factors: the economic factors include the interest rates, inflation rates, foreign exchange
rates, saving rates, aggregate demand and investments in the country. With the efficient market in
the United Kingdom, the firm can have the easy access in to the markets and To spread out globally
in the future. The exchange rate of the country could impact company's investments plans including
the short term as well as long term plans. Inflation rate in the market in recession during the
different years will result in increases inflation rate in United Kingdom's economy which affect
organization too. Skill level of the employees in local market is good which will give positive
impact on the company business operations. The fast growing economy has contributed more in the
development of the company. But on the basis of rising price rates, it will give impact to the market
share of Tesco's products (Yusof, 2019). Unemployment rate and High inflation rate are the two
main element of the economic factors that affect company significantly and on regular basis. Here,
the demand of the company's products and services decreases because of the high prices of
products. So in this type of critical situation the company can expand their business in new global
markets to take the business on different levels.
Sociological factors: the factor includes the cultural expectations and norms, age, population,
health and safety needs of the local peoples, etc. these factors help the firm to understand the market
conditions in the global markets and develop the strategies according to the market conditions of the
international markets. The population of the country by shifting towards the healthy trends, healthy
foods and drinks so the different fast food items are not included in the product list of the firm. In
the modern days the individuals like the places that can give them all the products under the same
roof. Thus, the organization by offering the complete product line in the same stores have the
benefits of the customer attraction and brand loyalty in the customer. Other social factor is increase
female in workplace has result in decrease in the domestic meal making. Here the demand of

product is increase. Tesco's has marketing theme that is a brand with the purpose which generally
promotes products which focus on local community to attract the customers.
Technological factors: this factor focus on the development and adoption of the new technology
that helps the firm in working innovatively. The firm by launching the company's E-commerce store
is helpful towards business to focus on current technologically friendly generation and this will help
to attract them towards the business. Still, company have many aspects of bran improvement of the
better customer experience and the customer retention. If the brand start use of modern data based
system like artificial intelligence, block chain, IOT and big data then they will able to understand
better the demographical needs of customers. Theses also help company by increasing sales and
better marketing strategies of the firm (Alanzi, 2018). The Latest technology that is based on
innovation implementation by the competitors of the company so, the organization also have to
focus on innovation to cover the whole market place. By the time, the company is using the latest
technology then it will give positive impact on the company's business success and growth. But, if
the business is not using or adopting new technology then it will give negative impact on success
and growth of the business. Also, by developing the online food delivery system as it is expanding
widely it will give positive impact on Tesco's business operations.
Environmental factors: these factor is influenced by the surrounding and the environmental
aspects by providing both the negative and positive impacts on the firm's business operations. The
firm mainly focus on saving the environment and keeping the things healthy. The firm has to
respond in the liable way to benefit the society. In the context of Tesco environmental factors may
put positive impact on the business as organization may already take sustainable actions by
following the CSR concept.
Legal factors: The legal factors include quotas, export and imports, changes of legislation and
taxation laws of the country. The legal factors also affect company in achieving the objective
aligned even if a small part of it abiding the rules. The policies and legislation made by the
government influence performance of Tesco's business operations (Moura, 2021). Example: when
the law introduced as new tax on advertisement for fast foods or unhealthy foods, this has been
native by the firm by modifying their products and services provided. Legal factors also affect
organization, if the export for a particular product is banned that the business export that will affect
the business functions and reduce the revenue generation.
2.2 Swot analysis of the firm “Tesco”:
Some strengths, weakness, opportunities and threats of the firm are as under:
Strengths of the Tesco:

 Leading market share: in the biggest market leader of the supermarket the firm is the leader
in the market share of the all four it is around 28%.
 Geographically diversified: the firm has the intense global presence as working as the
market leader having around 4673 stores in around 14 countries.
Weaknesses of the Tesco:
 Low cost strategy: even though operating as the price leader in the market but the strategy of
having low cost must lead the firm's reduction in the revenue (Teoli, and et.al., 2019).
 Poor operational performance in the specific markets: few of the store of the firm and outlets
does not perform well in some countries. The experts of the markets suggested that the
Tesco is not sufficiently carrying out the operations before entering in to the new markets.
Opportunities of theTesco:
 Strategic alliance with other brands: development of the strategic partnership with different
brands their will be good opportunity for the firm to develop the brand image on another
level.
 Joint ventures: the company can develop the joint venture with other big firms in the areas
where the stores of the firm are not performing till the good extent (Puyt, and et.al., 2020). It
will help the firm by offering more products and attract more of the customers towards the
business.
Threat of the Tesco:
 Brexit's referendum: as Britain no more part of the European region the trade deals and the
costly matters of the firm have created the threats to the firm.
 Competition with the supermarket giants: with the rising growth of the Walmart, carrefour,
aldi, etc. the market position of the firm can be affected and threatened because of the
giants.
2.3 Critical reflection of key findings and how they influence the decision-making process
From the above report it has been analysed that the business environment including both, the
macro and micro environmental factors have a very significant impact on the entire structure of
TESCO. The factors and there affecting power has lead to the entire mending of the inner and outer
structure of the company, be it in the context of size or in context of scope. Here at the time of

deriving the information i observed that, despite being the 9th largest multinational company in the
world with a huge portfolio of products and establishments across the globe, there are still
numerous opportunities standing in front of the company which when taken into consideration, will
take the business to new heights (Rosnizam and et.al., 2020). I also got to know that there exist
different types of businesses with distinct production scales and functions in each of the
organization. But from the above done comparison of TESCO with the other 2 companies made me
understand that there is a prominent inter relationship with inversely related functions that exist
between these businesses. For example the above written report clearly stretches a line amongst the
differentiators of the organizations types such as the legal size, scope, structure and stakeholders.
Furthermore, I also came to know that the strategic planning of the business gets directly
and enormously influenced by the external environmental factors like the funding, economic trends,
demographic trends and partnerships. These factors also affect the company's management
techniques which also again influence the decision-making process related to the potential and
existing customers. Here I also observed that Tesco's product making was also affecting the
environment as it was causing deforestation, food wastage, packagings wastage etc. so for that, the
company is also planning to become more environment oriented and is thinking to announce itself
as the zero carbon generating business by the 2050s (Bayne, Purchase and Soutar, 2021). This is the
step and aim which is taken by the company in order to reformulate strategies and improve its
customer loyalty base.
Later, I also learnt that there is an extreme competition in the market in which Tesco
operates, between the companies related to the distribution channels, general customers and supplier
networks which is leading to a little declination of the company's sales and its brand image. This has
also made the company to raise its pricing of the 1000 products because of the continuous pressure
from the rivalry companies on the products like cheese, banana, chocolates etc. But in context to
this issue I also saw that, Tesco is also taking care of these things and is also planning on the new
strategies to take control over the factors which are causing this declination. Here, I personally
believe that the company can also rise again and stand even stronger by taking care of these external
existing factors such as the economic stability, cultural factors of a place in which the business is
operating, social factors of the place and stable demography.
CONCLUSION
The above report based on the business and business environment the report have concluded
about the types, size, and the scope of the organization. The report have also shown about the inter-

relationship of the various functions with in the organization and how they are linked with the
organizational structure. The report will also show about the portfolio of fact sheets and
organizational chart of the firm. Further, in the report positive and negative impact of the macro
environmental factors and the strengths and weakness of the firm is being shown in the report.
REFERENCES
Books and Journals
Adamyk, K., 2019. PESTLE Analysis on Tesco PLC.
Alanzi, S., 2018. PESTLE Analysis. Project Management.
Awadari, A.C. and Kanwal, S., 2019. Employee participation in organizational change: A case of
Tesco PLC. International Journal of Financial, Accounting, and Management. 1(2). pp.91-
99.
Bayne, L., Purchase, S. and Soutar, G.N., 2021. Network change processes for environmental
practices. Journal of Business & Industrial Marketing.
Cherunilam, F., 2021. Business environment. Himalaya Publishing House Pvt. Ltd.
JENKINSON, M.W., 2020. THE AUDIT OF A PUBLIC LIMITED COMPANY. In The Evolution
of Audit Thought and Practice (pp. 218-231). Routledge.
Jose, J., 2021. Analyzing the necessity and impacts of organizational culture on the performance of
Unilever UK Ltd (Doctoral dissertation, Dublin, National College of Ireland).
Mason, P.R., 2020. The community interest company. Social Business. 10(1). pp.65-84.
Moura, M.B.L.D., 2021. Equity Research in Food & Retail Industry-TESCO PLC (Doctoral
dissertation, Instituto Superior de Economia e Gestão).
Murphy, P.E. and Murphy, C.E., 2018. Sustainable living: unilever. In Progressive Business Models
(pp. 263-286). Palgrave Macmillan, Cham.
Puyt, and et.al., 2020. Origins of SWOT analysis. In Academy of Management Proceedings(Vol.
2020, No. 1, p. 17416). Briarcliff Manor, NY 10510: Academy of Management.