Analyzing Tesco's Business Environment in UK and Global Markets

This report provides a comprehensive analysis of Tesco's business environment, focusing on the interplay of internal and external factors that influence its operations. It delves into the impact of monetary and fiscal policies in the UK, highlighting how these government interventions affect the retail giant's performance and market strategies. The report examines the objectives of these policies, such as maintaining low inflation and fostering a strong economy, and how they create both challenges and opportunities for businesses like Tesco. Furthermore, it explores how global and regional developments, including globalization and the UK's separation from the European Union, shape Tesco's activities, from supply chain management to market expansion. The analysis also touches upon various market structures, competitive advantages, and the company's responses to socio-economic and technological changes. The report concludes by emphasizing the importance of adapting to evolving consumer demands, governmental regulations, and the dynamic global landscape to ensure Tesco's continued success.

Business Environment

INTRODUCTION
 Business Environment is defined as the factors including internal and external, which affects the business.
 Both factors influence each other that affect the organisation and these external and internal factors work
together to accomplish the business objective.
 For example external factors like political condition, economic condition of the country and internal factors
like organisational culture both affect the company.
 Tesco is the leading brand name in the UK in the retail and supermarket industry which grows faster, it
operates largest range of groceries stores and supermarket in UK.
 Organisation suffers from the fiscal and monetary policies which affects its development in UK and in
Global market. Further it discusses the regional and global developments reflect the business activities.

Impact of the monetary and fiscal policies on the business
activities in UK.
 UK has the largest economy in the world which is on sixth place globally. It exhibits
wide range of trading all around the world.
 As it possess the strong economy just because of its good policies in terms of the
monetary and fiscal terms.
 UK has the stability in their government after Brexit as the EU has suffered a lot.
Discusses on the impact of such governmental policies.
 These policies helps to regulate the country’s economy and it easier the survival of
the people.
 People improves their living standard, their businesses and thinks innovatively.

Cont..
Monetary Policy
 These policies conclude the interest charges and cash flow in the country, its uses and their supply of
money which helps the country to achieve their objective in economy senses.
 This monetary policy is handled by the Bank of England which circulates the money and make decision
on the interest charges since 1997.
 Objective of this monetary policy in UK is to keep the inflation stable and lower. In this way the Bank
try to keep the economy growth stable.
 If there is stability in the economic condition of the country, it supports the country to target for large
economy.
 2% inflation is targeted by the government. Setting the interest rates, it is about the rising in the
inflation rate if the inflation rate is higher than the interest rates also higher.

Cont..
Fiscal Policy
 Fiscal Policy is about the changing tax amount and government spending
which directly influence the level of economic activities of the country.
 Fiscal policy affect the levels of the government borrowings.
 It is not frequently used while government uses it to moderate the economic
condition.
 There are lots of political difficulties to change the rates of the tax, it just
reduce the inflation pressures.
 The government have to leave the economic management to monetary policy
and the Bank of England.

Objectives of Monetary and Fiscal Policies
 Low inflation
 Strong economy
 Lower the unemployment
 Maintain sustainable public finance.

Cont..
 Changes in the fiscal and monetary policies affect the businesses. These policies directly
affect the business and their operations. As the monetary policy impact the supply of
money, perform the role for regulating the inflation rate, cash reserve ratios, and bank
requirements. Fiscal policies which refers to collection of the revenue and spend by the
government. As explained it affects the taxation rates throughout the economy. So there is
deep impact on the businesses of these policies. It creates the competition among the
organisations mainly in supermarkets or airport operators which leads to the monopolies
in these industries. Competition policies try to keep the fair decisions in the market and
which open the unfair activities are not considered by the market competitors.

Cont..
 So the Tesco supermarket chain affected by this. it has tried to cooperate or merging the
operations in businesses senses with other organisations. Also it franchises the super market in
the market, so in this situation it creates thee monopoly in the market.
 As there are different market structures which has to be followed by the company like the perfect
competition, monopolistic competition, monopoly, oligopoly, etc. In the perfect competition there
are many suppliers and number of consumers. In monopolistic competition, there is only one
supplier is present to supply the raw material while there are other suppliers are present. So
basically it depends on the cost of the product. In monopoly, the price set by the supplier it is
fixed. In perfect competition, the prices of the products are average in market.

Cont..
 So Tesco set the prices as lower as they can afford the productivity costs. So that Tesco is monopolistic
competition in UK. In stepping to the market Tesco have to meet the standard criteria that has set by the
government like the quality of the product, and prices which are according to the financial condition of the
consumers. The perfect competition in market, is about the perfect demand and supply. In which the
previously accepted the norms by the government should be accepted by the organisation. Quality of the
products, and prices are competitively lower than the others in the market, it becomes successful in this
criteria.
 Development of the supermarket in the market is very easier when they have opened the local stores which
help them to increase their reach towards people. It creates the space for more suppliers and they must be cost
efficient and good quality of products which are according to market and match the criteria for the target
segment.

Cont..
 For example there is interconnectivity between he global economies which leads to the recession all over
the world. Also there is the effect of the shortage in the supplies of the raw material which should be cost
efficient, and those businesses which relies on the import of the goods from other countries. International
exposure had influences the market to be diversified and intensified due to the market demand (Sims,
2016). Tesco had a great advantage of the international exposure they provide the goods or groceries at
minimum cost and quality products. As they have their own productivity range they have profit in it. As
they have no expenditure for importing the raw materials
 Tesco has competitive advantages form these policies as they have invested to increase their local and
supermarket store in UK for generating more revenue. So the government implies less taxation o them as
they provide the products at affordable prices to their consumers

Cont..
 People get help from the government which lowers the taxes on the food products and so
consumers have increases the credibility. These policies possesses great impact on the
country’s economic condition, it stabilises the economy to enhance their growth. It creates
more options in the market for the small businesses. As people can utilise their talent and
innovative ideas which again help the people to raise their standards. Tesco have the profit
from these policies as the country relies on these policies, company can get more profits by
the implementation of the monetary and fiscal policy as they create new franchises, new
suppliers and new consumer (Afonso, Jalles and Kazemi, 2019). Company have the profit to
enter into the global market. This helps in business expansion for the Tesco.

Analyse how development in global and regional aspects
shape business activities.
Different countries of the world are connecting with each other for their own purposes like they want to enhance
their reach towards world. So in this way the people connected to each other for businesses purposes.
Development in Global Aspects
 Globalisation leads the businesses to increase and enter into the global market which again help the country for
increasing their economy. As it has three main aspects which are political, socio-cultural, economic. So all
these factors affects the businesses at global level in which socio- cultural factors influence the countries to
exchange their culture, tradition, languages, fashion, food etc. Social and cultural changes affects the business
of the particular country. It increases the demands in the public for other things which may not available in
their country, so they have import from other countries. Political factors of the country affects the condition of
the country in many senses like they have to follow the rules and regulations in the country.