Tesco: Macro Environmental Factors, SWOT Analysis, and Strategies

This report provides a comprehensive analysis of Tesco's business operations, focusing on the impact of the macro-environment. It examines various factors, including political, economic, social, technological, environmental, and legal aspects, and their influence on Tesco's strategies. The report includes a detailed SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis to assess Tesco's internal capabilities and external challenges. It further explores the relationship between Tesco's strengths and weaknesses and the macro-environmental factors, highlighting how the company leverages its strengths to mitigate threats and capitalize on opportunities. The report concludes by emphasizing the importance of adapting to environmental changes and the significance of strategic planning for sustained success in the competitive retail market. The references include various books and journals that support the findings and analysis.

INTRODUCTION
The organisational structure is influenced by many factors of internal and external
environment directly or indirectly. Different departments of the organisation is affected by the
size of organisation and different organisation structure. The forms of ownership and business
offering in various sector affected by macro environment to the large extent. The strength and the
weaknesses of the company decides the strategy implementation in the organisation by different
structure of the organisation. The organisation environment compromise of micro and macro
factor affecting different functionality of the organisation (Wild, Wild and Han, 2014).
Tesco is multinational business entity which is affected by different regional markets and
the economical changes of the external environment. These changes affects the strategy
implementation of the organisation to the larger extent. The different legal factors influence the
organisation strategy to the large extent. The policies implemented by the government related to
the tax, VAT and the wages of the employee affects the organisation cost and the profit margin
of the company. Tesco is the food retailer operating their services in many countries affected by
government policies of the various countries.
TASK 1
P4 Impact of macro environment on the business operation of the organisation
The Tesco is the second largest food retailer company offering their services in more than
12 countries of the word. To attain better understanding about the functionality of the Tesco the
factors affecting the organisation at macro and micro level should be considered in the report.
The factors affecting the business can be divided into two parts macro and micro
environmental factor. The factors affecting the business at micro level affects the business
directly while the macro environment factor influence the company operations indirectly.
The factors affecting the Tesco company at macro level are political factors, legal factors,
economic factors, social factors, technological factors and environmental factors (Lankes, 2011).
1. Political factors: Tesco is operating their services globally. Hence the global political
factors influence the operations of the Tesco to the large extent. Tesco is affected by the
political stability of the country. The different tax rates, the import and export excise
duties affects the cost and the revenue generation of the Tesco business. Financial
insatiability leads to the implementation of strategies by the government which results in

the creating jobs within the country. Tesco is large organisation which contribute in
enhancing employment rate within the country to the large extent.
2. Economic factors: The country facing with low economical growth and recession affects
the Tesco business to the large extent. The consumer are not able to spend their money in
purchasing luxurious goods provided by the Tesco company. The customers prefer the
house food instead of spending money outside. The Tesco company is focuses in the
enhancing the quality of the services related to the packaged food and the home delivery
services.
3. Social Factors: The perception of the society is continuously changing with the time. The
consumers are becoming more conscious about the health. So, Tesco is implementing in
changes their operations and more focused about ensuring availability of organisation
food for the customers. Now a days the customers are preferring window shopping and
the one point -purchase of product (Bryman and Bell, 2015). This leads to the Tesco
company providing the opportunity of non food items sale in large no at same location.
4. Technological factors: The up gradation in technology helps the Tesco to grab new
opportunity in expanding their business to the large market. The software related to the
Just In Time approach helps the Tesco to establishment of efficient supply chain
management system within the organisation. Development of online shopping websites
by the Tesco helps the company to capture wide variety of customers and new markets
globally. The self service checkpoint reduced the Tesco company labour cost to large
extent. These check out points helps the customers to involved in time saving activities
leading to increased satisfaction level.
5. Environmental factors: the company are following the strategies to reduce the
environmental damage in their activities. The company like Tesco is developed strategies
to reduce carbon footprint working with agenda reducing it to the 50% till 2020. Tseco is
also involved in spreading awareness between the customers about the environmental
issues.
6. Legal factors: The legal factors influence the strategies of the Tesco to the large extent.
The Food Retailing commission passed an law of selling food items with its code of
practice that ensures the fixed pricing strategies to the company and for customers. In

relation to this the Tesco company is offering low price on the purchase of fuel in relation
with the purchase made by the customers in grocery shop.
TASK 2
P5 Strength and weakness of the Tesco organisation
The strength and weakness of the Tesco company influence the business strategy to the
large extent. The swot analysis of tesco company comprises of strength and weakness of the
tesco and the threats an the opportunities can be defined by the capabilities of the company.
Tesco is largest food retailer of the next to the Wal-mart (Osterwalder and Pigneur, 2010). Asda
is the competitor brand to the Tesco services.
Strength:
 Tesco is offering their services since 90 years history. This results in building an
brand name in mind of customers.
 Tesco achieved many awards in their overall shopping career experience.
 Tesco is the most revenue generating retail business in comparison to its competitors.
 During the all phases of economy the Tesco not have to face recession ever because
high financial reserves and the availability of wide range of property.
Weaknesses:
 Some of the retail outlet of Tesco is not performing well in the recent global crisis
due to impact of the external factors in their operations.
 Competitors is affecting the pricing strategy of the Tesco to the large extent.
Which results in the reduction in profit margin of the company.
 The supply chain management with the availability of stock and the demand of
product is the major weakness of the Tesco company in some of the subsidiaries.
Opportunities:
 The strategic alliance can be better development opportunity for the tesco for
involved in different production line and catering with new markets.
 The Joint ventures with the local company helps the Tesco company to perform
proper market research and capturing the market effectively.
 The online shopping provides a better opportunity for capturing the global market
with providing satisfactory services to the large no. of customers.

Threats:
 The economic recession can be major threat for the operations of the Tesco
company.
 Large no. of competitors in the market can be threat for the business development
of the Tesco.
 The availability of product substitutes at lower prices can be threat for the tesco
profitability and the pricing strategy of the company.
 Change in the government policies and the regulation can be threat for the
development of the Tesco in new market.
P6 Relationship of the strength and the weakness of the Tesco with macro environment factors
The strength and the capabilities of an organisation reduce the negative effects of the
environmental factors influencing at the macro level. After concurring the weakness of the
Tesco the company can maximize profit by reducing the effect of political and social factors.
Due to high amount of availability of funds reserves with the company it is an good opportunity
for the company enhancing their activities at the time of the economic recession (Teece, 2010).
This helps in attaining the competitive advantages with respect to their competitors in capturing
the target market.
With the development of 90 years history of tesco company can do better even in changing
social preferences of the organisation. The social changes related to the preferences of customer
can be more beneficial because of brand image built in past years. Implementation of upgraded
technology helps the organisation concur the technological changes and the smooths the
operations of the Tesco company. The weakness and the threat from the product substitutes
affects the marketing strategies of the company and affect f the external environment influence
the strategy of organisation to the large extent. The economic recession affects the strategies
developed by the Tesco related to the price selection and the cost incurred in carrying out the
operations effectively. At the time of recession the organisation sales is also affected by the
preferences and purchase behaviour of the consumers.
CONCLUSION
The organisation structure influence the various type of ownership of the organisation.
The organisation if affected buy various internal and external factors. Business is an organisation

which are developed with some missions and goals and provides goods and services to the
consumers. The business can be for profit or not for profit. The company Tesco have developed
many strength to avoid thread from the macro level factors affecting the working of the
organisation.

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