Analysis of Tesco's Business Operations and Macro Environment

This report provides a comprehensive analysis of Tesco, a multinational retail company, examining its organizational structure, which includes a flat hierarchy to foster employee involvement. It explores different types of organizations such as private, public, and social companies, and their respective purposes, with examples like BBC and John Lewis. The report delves into the size and scope of Tesco, comparing it with other organizations like the BBC and the Welcome Trust, highlighting their objectives, products, and legal structures. It also explains the interrelation between different organizational functions, specifically marketing, human resources, finance, and production, emphasizing their roles in achieving business objectives. Furthermore, the report discusses the positive and negative impacts of the macro environment, including political, economic, social, technological, legal, and environmental factors, on Tesco's business operations. The analysis includes internal and external factor analysis, and the relationship between strengths, weaknesses, and external factors. The report concludes by summarizing the key findings and providing relevant references.

Buisness and business
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 different types of organisation and its purpose......................................................................1
P2 explain in the size and the scope of the different types of organization...............................2
P3 explain about the relationship in different organizational function with different objectives
and structure. ..............................................................................................................................4
P4 Explain the positive and negative impact of the macro environment on the business
operation......................................................................................................................................5
P5 to explain the internal and external factors analysis in the terms of specific organstion......8
P6 Relationship between strength weakness and external factors of business...........................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Tesco is a British multinational company and merchandize retailer. Headquarters of
Tesco is established in Welwyn garden city, England and UK. it has covered large area in global
marketing. Through global marketing it operates in many countries like china, Poland , Malaysia,
Thailand and Poland etc. the main aim of Tesco is to increase profit and provides goods or
services in reasonable price to consumers and mission to take competitive advantage in
supermarkets through prices. Vision of Tesco to expand their subsidiaries through their sales and
profit. Tesco follows flat structure. Flat organizational structure leads no levels of management
and staff employees, this type of hierarchy promoting their employees involvement in decision-
making process. It assists to improve the coordination and communication between employees.
It promotes employees for level of responsibilities in the organization. Through this structure
Tesco increase productivity of company and employees.
P1 different types of organisation and its purpose
Private, public, social are several types of organization that works in different direction and
for different purposes:
 Private companies: This is the organization that has government intervention and board
of director takes all the necessary decision by considering views of shareholders of
business unit. These companies can easily list its shares into stock exchange and sell
shares in the market. This is the major income source for public companies. These
companies work for best interest of shareholders and their purpose is to satisfy
stakeholder and meet their requirements successfully. Ownership and control always
remain in the hand of government. It is essential for such firms to publish their annual
reports annually. BBC is the example of public company in UK.
 Public companies: This is another type of organization that works privately and there is
no control of government, all the necessary decision are taken by owner as considering
the legal guidance. These types of firms are unable to sell their shares in market, and they
are limited by liability that means owner will have to repay all the liability if company
fails to get profit and meet the stakeholder needs. Purpose of private business is to raise
capital, expand business and gain competitive advantage. John Lewis is the firm that
works as private organization in United Kingdom.
1

 Social companies: this is another type of organization that works to serve the people in
the country and improve their well-being. These companies have no specific legal
structure as all the volunteers come together and work together to serve the nation. Trust
is the social firms that gets funds from trustees. There are no special legal boundaries.
Red cross the working as social company, its agenda is to improve well-being of people
in the country. It provides blood and other health facilities to citizens.
P2 explain in the size and the scope of the different types of organization
particulars British broadcasting
corporation.
Tesco Welcome trust
size It is the public service
organization having the
recognition of world oldest
broadcasting service
organization. The company
is working with more than
25000 employees along
with 35000 employees who
are working under the part-
time, flexible and the fixed
contract staff members.
The company have the
broadcasting in worldwide
with 28 languages which is
comprehensive to TV, radio
and the online services.
The company is one of
the British multi-national
companies under the
groceries and general
merchandize. The
company have the
diversified area of the
such as the books
retailing, clothing,
electronic along with the
inclusion of financial
services and internet
services. The company is
having up to 450000
employees in different
subsidiaries. The company
is operating in more the
13 counties having all
about the 4000 store al
over the world.
It is one of the
research society which
is having the legacies
from the
pharmaceutical
magnate to have the
provenance of fund to
improve the health of
human and animals.
The company has been
renowned as the
worked 4th wealthiest
charitable foundation.
scope The company is lying mush The company has been the The scope of the firm
2

more on the scale of
broadcasting as it plays an
important role in the
economy both as the
employee and goods
exporter. The company also
acts a standard better in
enhancing the term of audio
visual sector in enhancing
the terms of quality
diversity and innovation.
extension to market
having the offering of
product and service as to
have the maintenance f
world largest retailer with
wide market in Europe
and Asia.
is all about having the
proper research
analysis such as the
meta research as
working
collaboratively with the
scientific community to
have the development
and support in open
source computational
software while having
perpetration ans the
structuring
phenotypical data.
Objectives The objective of the
company is to have the
maintenance of the mass
apparel along with pursuing
the accessibility of new
platforms along with pace
in new consumption
behaviours. The company
also moves in objectives to
have reflection of
differentiations, regions and
their community.
The company is
accelerating the aim of
making the shopping
experience cheaper for
average household
facility. The company is
having the objectives of
introducing more of
healthy products along
with the wide range of the
supply by creating the
value of for customer and
earning the lifetime value.
The company is
working with the
objectives in have the
improvement and
introduction of new
strategy with main
aims of having
creation, strengthening
research capability by
using the efficiency of
knowledge. The
company is trying to
have the innovative
projects in the creative
industries.
Product and The company is termed as The company has been The company is having
3

services the commercial arm having
the providence other
broadcasting services
which have the inclusion of
new, national and
international speeches. They
use about the many of
digital services that is
software platform,
podcasting along with
internet, satellite and
platforms.
diversifies in the different
areas of the books
retailing, clothing,
electronic along with the
inclusion of financial
services and internet
services. The company
has been identifies as the
global super market.
the service in
biomedical science,
technology
transferability along
with public
engagement and the
medical humanities.
The company also have
the supportive research
into the ethical
dilemmas for the
development and the
delivery of health care.
Legal
structure
The company is the
statutory corporation,
independent with the direct
government interventions.
The company is also having
the oldest legal independent
radio channels.
The legal structure of
Tesco is the corporate
governance as the people
in this sector have the
dealing with shareholders
is making the assurance of
achieving the strategies to
be achieved by the
shareholders.
The company is the
independent, global
charitable structure
foundation which has
been regulated by the
charity commission
P3 explain about the relationship in different organizational function with different objectives
and structure.
Interrelation marketing and HR department:
Human resource management(HRM) plays vital role in marketing department. Demand of
marketer. HR department organizes recruitment process of employees and conducts interview
and selection process of candidates. HR department provides training of employees across
organization. Thus, HRM department ensures marketers to provide appropriate skills and staffing
level in Tesco. For example R&D department where new employees recruitment, selection and
4

training process are accomplished by HRM department, so employees become eligible to giving
new product ideas to marketer. Thus HRM creates an wishful and capable sales team for
marketing
Interrelation between finance and marketing department:
finance department also an essential element for marketing. Here marketing department centring
on selling opportunities and enhance market share, sales in comparison to competitors,
advertising and publicity. of Tesco. Marketer always wishes to spend more if marketer is getting
profitable opportunity while finance department focuses on financial aspects like cash flow,
cover costs, profit, feasibility of projects, sales growth and financial performance end of the year.
Finance department allocate budget for marketing department. They ensure marketing
department to allot budget for promotion and distribution. In allot budget marketer have to
manage promotion an distribution of product. Thus, Finance department allot budget for whole
department so-that overspend cost comes in control. Thus both department in Tesco work
together and helps company to achieving goals.
Interrelation between production and marketing department:
Production department plays a important role in marketing. Both department needs to work
closely so that product development and sales target both outcomes with profit. marketer main
goals to takes competitive advantage and increase sale value and generate profitable
opportunities in market. While production department main goal to develop product in good
quality so that consumers meet health and safety recruitment. R&D department main purpose to
satisfy current and future customers through production of product according to their needs.
Marketing department aware production department about demand of product where they gives
deadline to production department to stretch the capabilities of production department in Tesco.
Marketer generates volume of orders through marketing and tries to delivery product ASAP to
customer. Thus marketer and production department leads profitability and creates positive
image in global market.
P4 Explain the positive and negative impact of the macro environment on the business operation.
Macro environment factors are defined as the uncontrollable or external business variables which
affects decision making in business operations to a great extent. These factors have great impact
upon business strategies and performance of organisation. These factors includes cultural
5

preferences and taste, government regulations as well as competitive environment for the
organisation.
Political:
The political environment has great control over the business activities. These factors
involves government agencies, laws, pressure groups and regulations. Thus while executing any
business decision it is important for the organisation to taken this factor into consideration. For
instance if Tesco plans to enter into a new foreign market then it must be aware about political
environment of the target country. The knowledge will help organisation to take better decisions
regarding product safety, pricing, legal regulations related to firms and environment laws
(Lyulyov and Palienko, 2018). The failure to gain this knowledge can serve as one of the prime
reason for failure of organisation. The ideologies and political beliefs of the ruling parties can
interfere the business operations and thus prior entering into any market organisation must have
complete knowledge regarding it so that failure risks can be minimised. On the other hand the
well understanding and incorporation of political factors brings stability and increased
profitability in business.
Economic:
There is close relationship between business performance and economy because all the
business inputs or resources used in production and distribution depends upon economy. The
stability in economy also benefits organisation as there will be easy availability of raw materials
and supply networks. In addition to this in improved economy customers also have higher
purchasing power which can increase the success possibility of business (Alomari and Azzam,
2017). Contrary to this it becomes challenging for organisation to operate in unstable
environment because in such situations customers will try to minimise their expenditure on
products. Economic factors also affect wages and pricing issues which are critical. For instance
in economic crisis it can be difficult for Tesco to raise its prices because in such situation
irrespective of excellent product quality customers will tend to avoid expensive purchasing.
Social:
The social aspects and cultural values affect functioning as well as probability of success
of organisation. These attributes affects the organisational culture and approaches to perform
operational activities. For example the time shift, work flexibility, tradition vary from one culture
6

to another (Akhtar, 2017). The organisation is required to consider these elements into their
practices so that strong cultural influences does not affect the productivity and goal achievement
process. Contrary to this if organisation will integrate cultural aspects in their functions such as
marketing or human resource then its employees will work with improved productivity and more
satisfactory and quality services will be provided to the consumers.
Technology:
With the advanced technology factors business organisations are able to enhance their
scope, service accessibility and quality. For example Tesco uses digital technology to interact
with its customers and to provide them quick services. However these factors also have certain
negative impact upon functions. This can be illustrated by the examples such as use of digital
technology and monitoring systems within business (Garcia and Hinayon, 2018). These
technologies are beneficial for increasing productivity but they adds extra burden in terms of
implementation and maintenance cost. The failure to do so can results in privacy concerns and
cyber threats which is significant concerns for most of the technology based organisations. If
Tesco does not provide attention to these issues then network threats or privacy concerns can
affect their customers loyalty and competitive advantage.
Environmental:
Ecological or environmental factors also influences business decisions. These are
associated with the natural resources and environmental changes. Natural resources provides raw
material for the business thus if Tesco does not find suitability in terms of raw material and other
natural sources then it may affect its decision related to business continuity. Similarly with
globalisation and increasing development trends of sustainable practices. Sustainability is not
important from cost reduction and efficiency perspective but is also important from the brand
perspective. The issue has been becoming one of the influential factor in the strategic
management. For example if Tesco operates in an environment with shortage of natural
resources or region suffering from natural disasters then it will definitely increase the production
cost for company.
Legal:
7

Legal factors governs the ways in which organisation is expected to perform and execute
its functional activities. The laws, legislations and government regulations are mandatory for the
company to achieve customer trust and supportive environment (Kirithiga, Thiyagarajan and
Naresh, 2019). For instance if Tesco does not follow employment legislation then it may face
legal conflicts resulting in financial penalties as well as damage to its brand value. The legal
considerations are also beneficial to ensure that organisation provides its services in an ethical
manner so that its services does not cause harm to interest of its employees or customers
P5 to explain the internal and external factors analysis in the terms of specific organstion.
Tesco Porter five forces
Threats of new entrants
New entrance bring innovation in retail market, it is an new source of thing are to be done
where the pressure are put on the Tesco through an reduce in pricing strategy, lowering the cost
and try to provide the fresh value of proposition to their buyers. Where the company Tesco has to
manage all this challenges & try to build effective barriers that to safeguard to an competitive
edge (Bentham, 2018). Tesco handle the threats of new entrance by innovating the fresh services
and products as it help the buyer to get retain to its product and also attract the new buyer's and
also by lowering the fixed cost on per unit by building the economic of an scale.
Bargaining power of suppliers
As mostly all firms are bye its raw material from the different suppliers in the market.
Where supplier in the dominant position that can reduce the margin of an Tesco that can earn in
the market. Costumer service sector of an powerful suppliers that can use the negotiating power
that to extract the greater rates from an company in the retail field. Where the overall impact that
greater the supplier an bargaining power that can lower profitability of an retail. Such threats can
be overcome by the company(Reuer, 2019). Through building an effective chain with an
multiple suppliers. And also by using the different material it experiment with an product design
as if the price of raw material raise in one material firm may use the other material that reduce
the bargaining power of the suppliers.
Bargaining power of buyers
As buyers are demanding a lot. Customer always want an best offer with an minimum
price. It create pressure over the Tesco company for long run business. As the smaller and high
powerful buyer base of Tesco that greater an bargaining power of an buyer and have greater
8

ability that try to raise offers and discounts. Tesco need to handle the bargaining power as an
customers by innovating the new products faster and providing the offers and discount to the
customer for an establishment of the products of the company. Tesco continuously keep on
raising up by an new products which limits an bargaining power of the customer(Phadermrod,
Crowder and Wills, 2019) .
Threats substitute of services and products
Thus new products provide fulfil the same needs of the customer of an unique way in
such case the company profitability suffers. The threats substitute an services that greater if offer
an value proposition that differently unique from current offering of Tesco. Tesco by becoming
an service oriented instead of product oriented and also try to understand the value needs of the
buyer instead desire of the customer purchasing.
Rivalry of the existing Competitors
As competitors among an existing players of an company that can drive down the price &
reduce the overall industrial profitability. Such competition take an overall long period
profitability of company. It overcome such Rivalry among competitors by making an scale that
compare better than the competitors and mixing with competitors to raise market size instead of
competing of small market(Abdel-Basset, Mohamed and Smarandache, 2018).
SWOT of Tesco
Strength
 Huge diversified buyer base- Tesco serve wide area and try to diversified on the basis of
buyers that include equipment brokers, drilling contractors, oil & gas firm.
 On such diversities Tesco not depend on single segment of an revenue.
 Product portfolio- Tesco has powerful product portfolio specially that top drive an
segment that sells an equipment & give service towards segment throughout an world.
Weaknesses
 It has weak financial performance this has huge impact on the working of the enterprise.
 Due to the accounting scandals in 2015, the Quoted enterprise has serious damage over
the brand and it has affected the profitability and productivity of the enterprise.
 The whole Tesco activities is highly relay over the market of United Kingdom.
 Thus, ineffective performance and productivity has highly impacted the moral of
employees(Bentham, 2018).
9

Opportunity
 Tesco increase the use of technological advancement so that things can be done timely.
 It also using the international business market expansion tactics for more betterment of it
business in the market.
 Tesco increasing and bringing the effectiveness of the marketing strategy to compite with
an competitor.
Threats
 Tesco company faces different markets like various laws & regularly flow fluction
regarding the product of an standard in business markets(Reuer, 2019).
 Not continuous supply of an innovative products over an year. Tesco has also develop an
numerous products but often response to develop by another players.
 Changing in the behaviour of the consumer by an online network that can be threat an
existing physical facilities drive through an supply chain model.
 As the new methods and technologies are used by the competitors that can be an serious
threats for an company from medium to long period future (Phadermrod, Crowder and
Wills, 2019).
P6 Relationship between strength weakness and external factors of business
Tesco is the leading firm which has developed its amazing brand image in the market. Firm
has good market share in the market which is the strength of firm. This strength is highly related
with economic factor, as if economic condition of nation gets down then company would be in
position to sustain in the market. If it does not have such position then at the time of economic
slowdown Tesco might face complications to run business successfully. Another strength of
Tesco is that it offers variety of products to consumers that satisfy needs of buyers. This strength
of business is interlinked with the social factor. Each consumer has different needs and belong to
different class. In such condition companies are required to offer such products which can be
afford by each person and can satisfy them. Tesco look upon the variety of needs of buyers and
serve them accordingly. That is the reason that it has become the leading brand globally. If taste
of consumers gets changed, or new trends come in the market then Tesco is in the positon to
meet that requirement. This relationship has supported business unit in gaining competitive
advantage and sustaining in the market for longer duration.
10

Strength of Tesco is that its diversification strategy is very popular, as Tesco enters into
new market and develop its products as well. By this way it can deal with foreign consumers and
can attract mass audience towards the brand. This strength of the organisation is highly
interrelated with political factor. As trade arrangements are flexible where company get
advantage to enter into the new markets. By this way Tesco can spread its presence across the
world and can serve mass audience towards the brand (SWOT Analysis of TESCO, 2019).
Weakness of Tesco is that it has high dependency over UK market, this is major
drawback to business unit because if economic condition of the nation get down then Tesco
would not be able to manage its operations. Due to high dependency if suppliers make changes
in prices then Tesco would have no option which may affect its profitability to great extent.
Another weakness of Tesco is that employees are not satisfied with the operations of Tesco, as
their moral is very low. They want to switch the firm frequently. In such condition overall
productivity of business get affected. It is related with social factor, as Tesco is unable to
understand need of its consumers which create problem for the Tesco. That is the major reason
that company has to invest huge amount in hiring new candidates and giving them training as
well which affect its overall performance and productivity both. Hence Tesco is required to
continuously look upon the needs of consumers and have to ensure that it makes them satisfy. By
this way issue of high staff turnover can be resolved easily.
CONCLUSION
Above study can be summarised as business environment involves internal and external.
Internal environment of company reflects the existing positon of business whereas external
environment shows the positon of company in external market. Both these elements influence the
overall working of business unit to great extent. Each company has to ensure that it takes care of
economic, social element of market and turn the operations accordingly. It may help in
sustaining in the market for longer duration. Strength and weakness of companies are
interrelated. Enterprise has to utilise their strength in appropriate manner and have to work to
minimise the weakness as well. By implementing correct strategies firm can manage the work
effectively and can gain competitive advantage.
11

REFERENCES
Bashir, M. and Verma, R., 2017. Why business model innovation is the new competitive
advantage. IUP Journal of Business Strategy. 14(1) p.7.
Belás, J and et.al., 2015. The business environment of small and medium-sized enterprises in
selected regions of the Czech Republic and Slovakia. E+ M Ekonomie a Management.
Deasy, Sand et.al., 2016. Controlling use of a business environment on a mobile device. U.S.
Patent 9,247,042.
Evans, S and et.al., 2017. Business model innovation for sustainability: Towards a unified
perspective for creation of sustainable business models. Business Strategy and the
Environment. 26(5). pp.597-608.
Grewal, R and et.al., 2015. Business-to-business buying: Challenges and opportunities.
Customer needs and Solutions. 2(3). pp.193-208.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Papilaya, J., Soisa, T.R. and Akib, H., 2015. The influence of implementing the strategic policy
in creating business climate, business environment and providing support facilities
towards business empowerment on small medium craft enterprises in Ambon Indonesia.
International Review of Management and Marketing. 5(2). pp.85-93.
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, M.A., 2017. The impact of socio-economic factors on small business success.
Geografia-Malaysian Journal of society and space. 8(1).
Surin, E.F and et.al., 2016. Recognising The Importance Of Strategic Business Network On
Business Performance Of SME Manufacturing Firms In Malaysia: Analysing The
Moderating Influence Of Human Capital And Business Environment. International
Journal of Arts & Sciences.9(4). p.31.
Bentham, J., 2018. Business and Economics in the News–Sainsbury's and Asda-the decade's
mega-merger. Teaching Business & Economics. 22(3). pp.11-12.
Reuer, J., 2019. Small retailers surviving in a world influenced by global players and
digitalization.
Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis based
SWOT analysis. International Journal of Information Management. 44. pp.194-203.
Abdel-Basset, M., Mohamed, M. and Smarandache, F., 2018. An extension of neutrosophic
AHP–SWOT analysis for strategic planning and decision-making. Symmetry. 10(4). p.116.
12

13