Business Environment Analysis of Tesco PLC: A Detailed Report

This report provides a comprehensive analysis of the business environment affecting Tesco PLC, a multinational grocery and retail store. It begins with an introduction to the concept of the business environment and its importance, followed by an examination of macro factors including political, economic, social, technological, environmental, and legal factors and their positive and negative impacts on Tesco's operations. The report then proceeds to a SWOT analysis, evaluating the company's strengths, weaknesses, opportunities, and threats. It also explores the relationship between external macro factors and the internal strengths and weaknesses identified in the SWOT analysis. The report concludes by summarizing the key findings and their implications for Tesco's future strategies, supported by references to relevant academic sources.

Business Environment Analysis

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
Macro Factor Analysis of Tesco PLC..........................................................................................1
LO2..................................................................................................................................................4
SWOT Analysis...........................................................................................................................4
Relationship of External Factor with strength and Weaknesses of organization.........................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
Business Environment is a study of different internal and external factors of organization
and their influence on the business. It is important to study these internal and external factors
because these factors can affect operation and performance of organization in target market. By
considering these factors business organization can make effective plan and strategy to get better
result form market place (Prajogo, 2016). The chosen firm for this report is Tesco which is a
multinational grocery and retail store and it was established by Jack Cohen in year 1919 at
Hackney, London, United Kingdom. Tesco is working on 6800 location around world. This
report is providing brief information of different external and internal factor that can affect the
business of Tesco PLC. Positive and negative impact of external factor on operation of company.
Various internal factors of organization are also evaluated in report and its relation with external
factor are also considered in report.
LO1
Macro Factor Analysis of Tesco PLC
The macro factors of organization includes political factor, economic factor, social factor,
technological factor, environmental factor and legal factors. All these factors are not in control of
organization and these macro factor can influence decisions and procedures of company.
Political Factor
Political factor includes various decisions and policies that are made by government of
country. Mostly the decision and changes in policies are related to taxation policy, foreign
policy, business policy and changes that are related to business organization. Changes in taxation
policy can made the organization to perform or redesign the finance planning of company and it
could be both positive or negative on business of company (Virglerová, Dobeš and Vojtovič,
2016). Foreign policy of country reformed regularly by government through considering benefits
and losses to economy of nation in international market. Reforms in business policy or decisions
are taken by government to control the business organization under certain limits to keep
economy of country stable and this respective changes in policies can influence performance of
Tesco PLC in market place.
Positive Impact-
Supportive and positive changes in foreign policy, taxation policy and business policy
can provide opportunity to improve the profit of Tesco PLC and advantage can be gain by
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making small changes in the procedures and business plans of company. For example
improvement in relationship between two nations can improve scope of company in that
particular nation. Changes in the taxation policy can also help the organization to generate larger
profit form current or new pricing policies.
Negative Impact-
Political factors also reduce the performance and profit by creating adverse condition in
business. Tesco in a multinational organization and performance of organization in international
market is totally depended on the foreign policy of country. If there is any rift between two
nations it can affect the business process of company, because this rift can make the business
procedure difficult for organization.
Economic Factor
Economic factor includes the issues that are related to the economy of national and
international level (Saleem, 2015). The stability of organization is depended on the economic
stability of country. Changes in the economic conditions can affect the organization in both
positive and negative way.
Positive Impact-
Better economic stability in nation can allow the Tesco PLC to perform different
experiment and changes in organization to improve financial condition and earn high profit by
taking advantage of economic situation of country
Negative Impact-
Purpose of business organization is to earn profit by providing product and services to
consumer. Various conditions like economic crisis, inflation and increment in tax rate on import
and export can negatively affect the business of Tesco. Economic crisis can lead the organization
to different problems like unemployment, less accessibility to resources and lack of capital.
Inflation can force the customer to avoid purchasing expensive goods form company and this can
reduce the profit of company.
Social Factor- Social factors are linked to the personal, religious and cultural values of people
that are somehow related to the organization. Organization have to manage its operations as per
the social factor to gain maximum productivity and performance. Social factor consists of
education level of people, population of locality and target market, and average income of
people. There are both positive and negative impact of social factor on organization.
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Positive impact-
High education level of people can allow Tesco PLC to recruit more talented and skilled
employees in organization and this will be good for performance of company in the market
place. Larger population provide higher target audience to company and this creates greater
opportunity for company to improve the profit by providing services to large number of
audience.
Negative Impact
Factor like average income of individual person can force the organization to change the
whole range of product to get better result. But this can reduce the marginal profit of Tesco PLC
and products with average quality can reduce the loyalty of consumer towards the company.
Technological Factors
Technical factors that can influence the business of Tesco PLC includes the three
categories that are- technology used in organization, technology used by competitors and future
changes in technology. Technology is major factor for business of company.
Positive factor
It can provide advantage to company in international market. Technology used by Tesco
PLC is one of most advance in category of retail sector organization and it is compatible with the
technology that is going to implement in the future (Khan and Quaddus, 2015). This can lead the
organization to higher success in business.
Negative Impact
Technology used by competitor is major factor for organization. Main competitors of
Tesco PLC in UK market are M & S and Sainsbury. The any advance change proposed by this
companies can reduce the business and market share of Tesco.
Environmental Factor
Environment factors are also important for business organization without considering this
factor company can not conduct business successfully. Factors like location, weather condition
and diversity of company.
Positive Impact
Factors like geographical diversity and cultural diversity provide better opportunity to
organization to work with high creativity and innovation. Location of Tesco store can provide
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better accessibility to consumer and this high accessibility can improve the number of customer
visit Tesco store every day.
Negative Impact
Negative impact of environmental factor can be explained as high traffic condition and
extreme weather condition can affect the business of company. Situation like heavy rain, snow
fall, extreme winter and high traffic can influence the customers to switch to other retail store.
Legal Factors
Legal factors are most important for Tesco PLC because any breach of legislation may
lead to legal trouble to company. Legal factor for business organization includes the laws made
by legal authority on national and international platform.
Positive Impact
Better laws that support the business organization can improve the conditions for Tesco
PLC. Laws like minimum wages and work hour help the organization to make better and
satisfactory work policy. This suitable policies can improve performance of individual employee
in company.
Negative Impact
Laws that are preventing business of liqueur and various product on different location can
reduce the profit of company and force them to redesign their catalogue of product for specific
location (Dey, 2019). Apart from this company also have to develop new business policy to
conduct business as per the laws made by legal authority.
This is how various external factors affect business of Tesco PLC and force the to reform
their policies and methods to stay stable in market place.
LO2
SWOT Analysis
To evaluate internal factor of organization SWOT analysis is one of best tool and through
this tool various strengths, weaknesses, opportunities and threats of organization are evaluates to
make future plan for better output.
Strengths-
Tesco PLC is one of the biggest retail store in United kingdom. Market share of
organization is highest among other retail store in UK. Geographical diversity of Tesco PLC is
too high and it provides huge target market to company. Geographical diversity also can improve
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knowledge of Organization. Business of company is continuously growing and it can help the
organization to expand on global scale to improve profit and market share. There is most
advance technology is used by Tesco in its stores ant this technology allows the company to
handle huge number of customer at single time. Collaboration of company with supplier is too
good to for company profit. online presence of company is providing flexibility of timing to
customers.
Weaknesses
in new emerging market place performance of organization is weaker and it needs more
improvement to get better result. Market image of company is not good after company have
faced different legal issues for financial fraud in billing. Operational profit of Tesco PLC is Low
and that is reducing overall profit of company. Financial errors is making the business procedure
of company less efficient for organization. Low cost strategy is reducing trust of consumers ion
company.
Opportunities
Company can use new technology for better billing procedure to reduce the failures and
errors in financial matters (Chuang, Sung and Lai, 2017). By using collaboration with other retail
organization in other countries Tesco can improve business in emerging markets. Online
business is also a opportunity for company to earn extra profit and provide higher flexibility of
timing to consumers.
Threats
Major threats to Tesco PLC are competitors in Local market. The rumours about
company in market place is reducing brand value of Tesco in international market. Brexit and
other trade wars are also a threat to business market of Tesco. Conditions like economic crisis
and inflation can reduce the sales of organization.
Relationship of External Factor with strength and Weaknesses of organization
Covered in PPT
CONCLUSION
This report is concluding importance of business environment to evaluate future policies
for Tesco PLC. Various External factors for company has been analysed and evaluated to get
information of current business scenario for Tesco. SWOT analysis of organization has been
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performed to evaluate the internal environment of company. Relation of macro factor and
strengths of organization has been concluded in report.
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REFERENCES
Books and Journals
Chuang, S.Y., Sung, S.H. and Lai, C.H., 2017. Association Between Particulate Matter and
Hospitalization for Heart Failure: Personalized Risk Assessment With Macro-
Environmental Factors. Circulation, 136(suppl_1), pp.A19048-A19048.
Dey, S., 2019. Business environment.
Khan, E.A. and Quaddus, M., 2015. Examining the influence of business environment on socio-
economic performance of informal microenterprises: content analysis and partial least
square approach. International Journal of Sociology and Social Policy, 35(3/4), pp.273-
288.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics, 171,
pp.241-249.
Saleem, S., 2015. BUSINESS ENVIRONMENT, 3/e. Pearson Education India.
Virglerová, Z., Dobeš, K. and Vojtovič, S., 2016. The perception of the state’s influence on its
business environment in the SMEs from Czech Republic. Administratie si Management
Public.
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