Tesco's Business Environment: Impact of Macro Factors & SWOT Analysis

This report provides a comprehensive analysis of Tesco's business environment, focusing on the impact of macro factors and internal strengths and weaknesses. It employs PESTLE analysis to evaluate political, economic, social, technological, environmental, and legal factors affecting Tesco's...Read More

Business and
business
environment

Table of Contents
 INTRODUCTION
 LO3
 P4 Positive and negative impact of macro environment on business
operations.
 LO4
 P.5 Internal and external analysis of organization and identify strength
and weakness.
 P 6. Strengths and weaknesses interrelate with external macro
factors. 6
 Conclusion
 REFERENCES

INTRODUCTION
Business environment is a combination of internal and
external factors that affect to business performance
and its profit. Tesco is a largest grocery multinational
organization in UK. It founded in 1919 by jack Cohen.
This presentation will be covers positive and negative
affect of macro factors and SWOT analysis of
organization. It also includes interrelation between
macro factors and strength and weakness.

P4 Positive and negative impact of macro
environment on business operations.
Macro environment of organization includes external factors that
affect to organization’s performance and it is uncontrollable as
well as it also influences the organisation functions and
operations in both positive and negative manner. Tesco use
pestle analysis tool for evaluate and analyse external factors.
 Political :- this factor includes taxation, tariff and legislations
etc and Tesco majorly affected from this factor because the
operations of Tesco is at global level and it has to follow rules
and regulation of different countries by which the operation
and functions are influenced. For example :- if government put
restrictions on trade, that results unlimited trade with other
countries.

 Economic :- it includes labour cost, inflation rates and
exchange rate. Both rates are very useful in import and export
so if these rates change frequently so these affect to business.
For example :- if the rate of inflation increase it will reduces
the economic growth reduce by which the profitability of firm
will affected. Negative :- if labour cost increases, Tesco has
to pay more cost to labour and if it not pays so labour turnover
increase. Inflation and exchange rate increase so it reduces
export and import. Positive :- labour get right wages through
labour cost and Tesco control import and export with
increasing rates of exchange and inflation.

 Social :- this factor includes choice, needs, fashion and trend
in society of different country that means day by day these
things frequently changing in society and organization also
has to change their products and services according to
demand of customers. For example:- population increasing so
demand also increasing and organization has to segment and
produce products according to age, health and choice. These
things affect to business operations. Negative :- frequently
changing in products and services so it consume more cost
and research also conduct by organization frequently. Positive
:- organization earn more profit through provide products and
services to customers after understand their needs and wants.
It easily earn more profit.

 Technological :- technology increasing day by day and Tesco
has to adopt and establish advance technology. It does
business at global level so it adopts technology and innovation
according to other organization of different countries. For
example organization, research to market at global level and
evaluate and analyse about new innovation and technology.
Negative :- it consumes more cost to install new technology
and innovation because technologies changing frequently.
Positive :- advance technology helps to improve business
functions and operations and increase profit and productivity.

 Environmental :- this factor includes corporate social
responsibilities and CSR is compulsory for all organization.
Tesco also has to follow CSR for sustainable development of
environment and welfare among society. Negative :-
organization can not use to natural resources unlimited
because of scarcity. Further, excessive responsibilities also
creates pressure on the company. Positive :- investors invest
more money if organization follow CSR because this strategy
does care about society and environment. Society also get
products and services according to choice and needs.

P.5 Internal and external analysis of
organization and identify strength and
weakness.
Strength and weakness of organization includes in internal
environment and Tesco use SWOT analysis tool for evaluate and
analyse factors that direct affect to performance of organization.
Strength :-
 Tesco is the largest grocery retailer and its sales and revenue
is high compare than other similar organization.
 Market share is also very high that means maximum sale does
by this organization out of total sale of grocery product in UK.
 Technology and innovations establishment and adoption is a
strength because it produce products through latest
technology and improve its business.

 Tesco follow corporate social responsibility and this
strategy is strength for organization because
investors invest more money and society attract
from organization.
 Laws like discrimination and health and safety law
applicable in Tesco and employees attract. Tesco
does business at global level so this is a major
strength of it. These things improve business and
profitability.

Weakness :-
 Inflation rate increasing so it make Tesco's weakness because
due to inflation it can not does proper and systematic import
and export.
 Its weakness that it reduce their business due to increase tax
rates and it affect business of Tesco.
 Tesco do not invest more money on research and development
program so this weakness affect to profit and sale because
research helps to evaluate market conditions and competition.
 Liability is very highly affect to Tesco because credit card
liability and high debts raise due to financial errors and its
affected to profit of organization.

Opportunity :-
 Tesco has opportunity to expand their business in other
countries because its brand image is very strong.
 It has opportunity to increase and upgrade online services and
home delivery services.
 Political stability of UK is well opportunity for Tesco because if
tax rate, rules and tariffs stable and not change frequently so
organization can easily increase their business.

Threat :-
 Increasing competition is a threat for Tesco because due to
competition organization sales reduce and customers divide
between different organization.
 Currency fluctuation is a major threat of Tesco because if
currency exchange rate fluctuate so that affects on business
operations.
 Pricing strategies and policies is also a threat of Tesco because
if competitors of Tesco provide discounts to customers so this
strategy affect to profit and sale of Tesco.

P 6. Strengths and weaknesses interrelate with
external macro factors.
 Strengths: The major strength of the Tesco plc company is
compliance with the various legal laws, legislations and
standards which helps in long term sustainability growth and
development of the business. Integration of new and
advanced technology like social media platforms, information
technology, helps in increasing the performance of the
company and reaching large number of customers across the
globe.

 Weakness: Limited availability of natural resources leads to
lower operational efficiency for the Tesco plc. Change in
government laws, rules and regulations and non- compliance
with these laws leads to lower operational productivity and can
impose major risk on the functioning of the business.
Technology is changing at a faster pace and integration of new
and advanced technology leads to higher cost and lower profit
margins for the company. Change in tax policy, increase in
inflation and interest rate, import export barrier ate major
weakness for the Tesco plc. company which leads to lower
operational performance.

 Tesco has strength that it use employment law and through this law
they provide protection to employees. Political p[arty of every country
provide support to organization and increase profitability. Tesco
prevent injury and risk from workplace. Customer loyalty increase
and this strength interrelates with political factor.
 Tesco has strength that it has diversified market that means it sales
and reliever more products so if one product not give profit so other
helps to maintain profitability of organization, It majorly sale food
product so Tesco has to Follow many laws and rules of food retail
commission and this strength interrelates with legal factor.

Conclusion
From above study it has been summarized that this
study concluded the positive and negative impact of
macro environment on business operations. This study
includes macro environmental factors like political,
social, technological, environmental, legal, economical
which affect the operational efficiency of the business.
Furthermore, this study will highlight, internal
strengths and weakness in relation with macro-
environmental factors by using SWOT analysis which
helps in effective decision making.

REFERENCES
Books and journal
 Barik, B. and Kumar, S., 2018. Macro Environment of Indian Life Insurance
Business: A PESTLE Analysis. Bimaquest. 18(3).
 Barba, F.C. et.al., 2016. A technical evaluation, performance analysis and
risk assessment of multiple novel oxy-turbine power cycles with complete
CO2 capture. Journal of cleaner production. 133. pp.971-985.
 Widya Yudha, S., Tjahjono, B. and Kolios, A., 2018. A PESTLE policy mapping
and stakeholder analysis of Indonesia’s fossil fuel energy industry. Energies.
11(5). p.1272.
 Venkatachalam, A.M., 2018. Identifying dynamics of growth in a competitive
and transitioning lighting industry using PESTLE and SWOT analysis.
 Song, J., Sun, Y. and Jin, L., 2017. PESTEL analysis of the development of the
waste-to-energy incineration industry in China. Renewable and Sustainable
Energy Reviews. 80. pp.276-