TESCO's Business Environment: Macro Factors and SWOT Analysis

This report delves into the business environment of TESCO, a major player in the retail industry. The analysis begins with an introduction to the dynamic nature of business environments, emphasizing the impact of internal and external factors. The report is divided into two primary tasks: a PESTEL analysis, which examines the political, economic, social, technological, environmental, and legal factors affecting TESCO's operations, and a SWOT analysis, which assesses the company's strengths, weaknesses, opportunities, and threats. The PESTEL analysis explores both the positive and negative impacts of each macro-environmental factor, providing a comprehensive understanding of the external forces shaping TESCO's strategies. The SWOT analysis identifies TESCO's internal capabilities and vulnerabilities while also linking these aspects to the broader macro-environmental context. The report concludes by highlighting the importance of market research and analysis for business survival and growth, summarizing the interplay between internal and external factors in TESCO's strategic decision-making process. The references section includes a list of books and journals used in the report.

Business and The Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P4 Positive and negative impact of macro environment on business operation ........................1
TASK 2 ...........................................................................................................................................3
P5 Conduct internal and external analysis of the company........................................................3
P6 How strength and weakness are interrelate with macro factors.............................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Topic of this report is business and the business environment from this it is
understandable that the surrounding of organisations are changeable because of external and
internal factors (Chavis, Klapper and Love,2011). And gives huge impact on development and
growth although for remain in this competitive market companies have to do market analysis and
research on continuous basis so they can satisfy needs and wants of their customers. This entire
is based on TESCO which is retail industry products are serving by them is supermarket,
hypermarket and superstores. Founded by Jack Cohen in 1919. Below mention project is divided
in two task: first do PESTEL of TESCO which is an retail industry and their optimistic as well
pessimistic effect are also given this help in analysis external factors. Second includes SWOT
analysis for internal element and strength as well weakness are interrelated with macro factors.
TASK 1
P4 Positive and negative impact of macro environment on business operation
An organization or a business executes the operations for a certain a objective. That derives some
business activities or operations to get outcome (Chow,and et.al., 2012). A business is attained
through two kind of environments, that is- Macro environment and micro environment.
The term macro environment defined as external factors that are not in direct controls of
the organization. These factors infects the performance, planning, strategies, decision making
capabilities of an organization. It is that factor in which external elements of business
environment are involved.
It comprises political, economic, social, technological, environment, and legal aspects.
Although these factors impacts in positive and negative manner to pursue the business
operations. PESTEL analysis is a form of market research which assist business in taking
decision and identifying the factors that can affect organisation of TESCO is given below:-
Political - Political aspect has a foremost affect on business operations, that include
political conceptualization of government with a country. It covers to regulate the legislation,
market regulation, trade agreement, tariffs (Weske, 2012). This can lead to positive condition
and conversely to the negative conditions both. These gives major impact when changed by
government and because of that working of companies require modification.

For example, if the government poses some market regulation, laws, taxes, that can be
positive, if the government has stability within a country (Storey,2016). This will be beneficial
for the business in terms of import that a business need to import the raw material from other
companies, and on the other hand, it can be negative if the government place some obligations
and duties on export, that will be a huge expense on a business. Business need to pay the taxes,
duties, to get the it financial stability but this will be excess burden for the business.
Economic aspects – Economic aspect is the second important factor. All business
activities are affected by the national and international economic environment. This assists
determine interest rate and financial policies for the fiscal year. TESCO contributes in economic
development as well in stability also by providing employment opportunities to the people who
are not employed (Wheelen and et.al., 2017). This also gives it positive and negative impact.
For example, if an organization is successful it will respond to economic conditions and
stakeholders. If consumers, suppliers, organization stakeholders, creditors are in demand within
society then the rates can slow down that will help to increase the supply depending on demand.
On contrary basis, if the stakeholders, consumers, suppliers and creditors not greet the
society then economy policies will be define with some strict laws that may incline the tax rates
globally and that can be harmful for the economy of a business.
Social aspects – This is the third factor, which steer with society assuming people such
as friends, neighbours, relatives, colleagues and media. Because society is influenced by one
another, that has an effective impression (Schaltegger, Lüdeke-Freund and Hansen,2012). It
considers interest, attitude, opinions.
For example, in the UK people are conscious about their health, so health drinks, gyms,
and health equipment like fit bit is in demands. It will encourage the business operations. On the
other hand, in Africa society has demand for food so there is no market for health conscious
things.
Technological aspect - As the name indicates, technology has a great imitation on
business environment. It aid to change the environment of business in which is operated. Fast
and quick response it the unique feature of every business (Becker, Kugeler and
Rosemann2013). Considering the quick response internet is become very powerful. In hardly
have any consequences regarding a business, though every organization cop-up with technology
whether it is about a handheld computer devices, smartphones, conference calling, Xerox

machines,or anything else. technology play wide role in retail industry because it change overall
working of it like distribution channel, customers reaching, logistics and environment. In this
competitive business environment every company have to adopt creative and innovative
technology for raising value of their share in market (Ballard and et.al., 2012). Its positive impact
is when new and latest are implemented in company then it will attract customer and even
working of retail sector is getting easy. Whereas every thing have its both optimistic and
pessimistic impacts so its negative is because of this cyber c rime is raising day by day like
hacking accounts and also to data. Best example of this is cyber attacks, hacking etc. as well
purchasing new equipment is not easy because these may be expensive and sometimes it is not
affordable by every king of company.
Environment aspect – Environment aspect is one of the crucial factor. Environment
factor can be determine in terms of surroundings of a particular area. In distinct atmosphere
different kind of goods and services are admire. A business can't promote same items in
dissimilar geographical area (ZengLi and Duan, 2012).
For example, middle countries have divergent atmosphere whereas western countries
also have disparate atmosphere, so that the needs of the consumers are different.
Legal aspects- these can be some rules and regulation given for specific sector and the
companies working in it have to follow these it also have their positive and negative aspects.
Negative is that owner of firms cannot do anything outside the boundaries they have to
follow all these laws and legislation. If these are changed then they have to do modification
according to that in their current working. On the other hand positive is that everyone do work
according to laws given by government so on the basis of it customers cannot differentiate
particular enterprise.
TASK 2
P5 Conduct internal and external analysis of the company
Company analyse internal and external factors which gives them idea about area of
improvements. To analyse these factors, they conduct SWOT analysis which help them to know
about their strengths, weaknesses, opportunities and threats. Managers formulate effective
strategies so that they can maintain their position in market and maximise their productivity. This

assist TESCO in improving their issues and in grabbing future opportunities as well finding
solution to the threats that can affect business in future (Li and et.al., 2011).
TESCO is a multinational grocery store and has a leading market in UK. It also deals in
various product range such as books, clothing, electronic, toys etc. Following is the SWOT
analysis of TESCO company.
STRENGTH WEAKNESS
 Increase in market share.
 Strong brand image in the market.
 Economies of scale.
 Customer services and shopping
experience are excellent.
 Give strong competition to others.
 Number of stores providing items
according to local and cultural needs.
 Use recent technologies in its
operations.
 Wide range of products including
books, food, furniture, insurance, petrol
and financial services.
 Satisfied and loyal customers.
 TESCO is the most famous and popular
19th leading brand in retail sector.
 Lack of experience in some areas where
they tend to enter.
 Lot of cost investment is required in
new web technologies and IT.
 Some subsidiaries are not working
properly and are vulnerable to external
factors.
 Competitive pressures has led to price
wars.
 Highly dependent on UK and Europe
market for their sales and not focusing
on other market where they operate.
 Have weak financial performance.
 Employee morale is diminishing.
 Difficult to manage every department.
 Tight regulation.
OPPORTUNITIES THREAT
 Expansion in new markets like digital
entertainment.
 Online shopping offer great flexibility
to customers who are busy in their life.
 Opportunities for strategic alliance with
other companies for more profits.
 Number of competitors in market
which can affect the sales.
 Walmart is major competitor as they
have necessary skills, resources,
experience and funds which can cause
problems to TESCO.

 Promote home delivery services to
provide more convenience to
customers.
 Opportunities in private label market.
 Pursuing international market
expansion strategy.
 Increasing effectiveness of marketing
strategy.
 Expansion in non- food retail range.
 Expansion in financial service industry.
 Credit crunches and economic
recession threat market share and
profitability all round the world.
 Affordable prices of other stores causes
shifting of customers to other retail
store.
 Food prices keeps on fluctuating all
round the world so customers can buy
where products are available at more
affordable price.
 Threats from labour in terms of
increasing wages and benefits.
 Rising raw material costs cause threat
to profitability.
 Government threat to change their
operating style.
 Unable to sustain cost leadership
competitive advantage.
Above mention is the SWOT analysis of the TESCO which is retail industry serving
variety of products and services.
P6 How strength and weakness are interrelate with macro factors
Macro factors have their strength and weakness and these are interrelated with each other
and these gives impact on decision making of the company which is important. TESCO
organisation is dealing in many products and services at domestic, international market. For this
it is necessary for firm to identify need and wants of market as well as of customers (Tayur,
Ganeshan and Magazine,2012). In United Kingdom political factors are not stable because of
that enterprises cannot perform their work in effective manner, as they have to follow laws and
legislation although if they are change then TESCO also have to made modification on this. For
instance- if government of UK alter their taxes or trading policies then respective business
cannot expand in other area outside of their boundaries.

As per current scenario, when modification in technologies take place and these used in
organisation then it results in smooth working specially in production department. It assist them
in achieving their pre determined goals and objectives. Apart from this implementing new
technologies is expensive which is not affordable by every company and if they don't do this
then for them it is not possible to sustain in competitive market and earn profit. Because
customers want that products which is produces by using of updated equipments (Weiss,2014).
Thus it simply states that external or macro environment affected strength and weakness of
TESCO.

CONCLUSION
As the above discussion, it is analysed that environment in which companies exist is
flexible and gives direct impact on working of business. It is of two types external and internal
i.e. internal can be analysis with the help of SWOT(strength, weakness, opportunities and
threats) whereas, external are examined by PESTEL(political, economical, social, technological,
environmental and legal). These assist enterprises in decision making as well in grabbing
opportunities from market. Instead of the positive and negative impact of both are given in the
report. So it simply state the market research and analysis is necessary for survival and growth of
business.

REFERENCES
Books and Journals
Chavis, L. W., Klapper, L. F. and Love, I., 2011. The impact of the business environment
on young firm financing. The world bank economic review, 25(3), pp.486-507.
Chow, A.T. and et.al., 2012. Computer readable medium with embedded instructions for
providing communication services between a broadband network and an
enterprise wireless communication platform within a residential or business
environment. U.S. Patent 8,155,155.
Weske, M., 2012. Business process management architectures. In Business Process
Management (pp. 333-371). Springer, Berlin, Heidelberg.
Storey, D. J., 2016. Understanding the small business sector. Routledge.
Wheelen, T. L. and et.al., 2017. Strategic management and business policy. Pearson.
Schaltegger, S., Lüdeke-Freund, F. and Hansen, E. G., 2012. Business cases for
sustainability: the role of business model innovation for corporate
sustainability. International Journal of Innovation and Sustainable
Development, 6(2), pp.95-119.
Becker, J., Kugeler, M. and Rosemann, M. eds., 2013. Process management: a guide for
the design of business processes. Springer Science & Business Media.
Ballard, C. and et.al., 2012. Dimensional Modeling: In a Business Intelligence
Environment. IBM Redbooks.
Zeng, L., Li, L. and Duan, L., 2012. Business intelligence in enterprise computing
environment. Information Technology and Management, 13(4), pp.297-310.
Li, Q. and et.al., 2011. Towards the business–information technology alignment in cloud
computing environment: anapproach based on collaboration points and
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pp.1038-1057.
Tayur, S., Ganeshan, R. and Magazine, M. eds., 2012. Quantitative models for supply
chain management (Vol. 17). Springer Science & Business Media.
Weiss, J.W., 2014. Business ethics: A stakeholder and issues management approach.
Berrett-Koehler Publishers.