Business Environment Analysis: TESCO and Organizational Structures

This report provides a comprehensive analysis of TESCO's business environment. It begins by defining the business environment and its importance, followed by an examination of different organizational types: public, private, and voluntary, including their purposes, structures, and examples like TESCO, NHS, and Oxfam. The report then delves into the size and scope of these organizations. It explores the interrelationships between different organizational functions, such as human resources and marketing, and their impact on achieving company objectives. A PESTLE analysis is conducted to identify the positive and negative impacts of macro-environmental factors. Furthermore, an internal and external analysis of TESCO is performed, including a SWOT analysis to determine its strengths, weaknesses, and their relationships with external factors. The report concludes with a summary of key findings and a list of references.

BUSINESS AND BUSINESS
ENVIRONMENT

Contents
INTRODUCTION.....................................................................................................................................4
TASK 1.......................................................................................................................................................4
P1 Different types and purpose of public, private and voluntary organization........................................4
P2 Size and scope of different type of organization.................................................................................6
TASK 2.......................................................................................................................................................7
P3 Inter-relationship between different organizational function and objectives......................................7
TASK 3.......................................................................................................................................................7
P4 Identify positive and negative impact of macro environmental factors...............................................7
TASK 4.......................................................................................................................................................9
P5 Internal and external analysis of TESCO............................................................................................9
P6 State how strength and weakness is inter-related with external macro factors..................................10
CONCLUSION........................................................................................................................................11
REFERENCES........................................................................................................................................12

INTRODUCTION
Business environment can be defined as the surrounding in which firm operates and
practice their business activities. It is the sum total of all internal and external factor that has an
impact on function and operation of the company (Asif, Garvare and Ahmad, 2011). It is
important for every manager to taken into account all such factors that either directly or
indirectly affect the working of business entity. It help in formulating effective policies and plans
and implementation of those. The selected organization for this report is TESCO which is the
UK based Retail Company. The company hold second position in terms of generating revenue
after Walmart. The report includes size, scope, structure and purpose of public, private and
voluntary organization. Interrelationship between different organizational functions and
objectives has also been discussed in this report. In addition to that, impact of all external and
internal factors has examined and SWOT analysis has been conducted in order to determine its
strength and weakness and its interrelationship with external factors.
TASK 1
P1 Different types and purpose of public, private and voluntary organization
Different types of organization exist or working in business environment namely public,
voluntary and private. Each one is having its own distinctive purpose and legal structure. There
are various rules and regulation that has been implemented by government which every business
needs to follow in order to run their business successfully in the market. This help organization
in executing their operations and activities in an effective manner. Following are the purpose and
structure of different types of organization:-
Private sector: These organization are normally owned, controlled and managed by private
individuals. There is less interference or involvement of government in private sector. The sector
is playing key role in contributing towards the growth and development of economy. The main
purpose of privately owned business enterprises is to earn maximum profit and provide large
number of employment opportunities to people so that they can more workforce as compared to
public sector. They are mainly contributing in GDP percentage of the respective country.
Contribution of private companies in gross domestic product of UK is 89%. The run with an aim
of expanding their business operation in overseas market and gain high competitive advantage
over their rivals. Productivity are sales of private sector companies increases at higher rate as
compared to public sector companies. The example of private sector is TESCO.
Company overview:
TESCO is a leading UK based Retail company that mainly offer food and non-food item to
customers. The company has ranked themselves on second position in terms of generating higher
revenues and profits after Walmart (Bhaduri and Ha-Brookshire, 2011).
Purpose of Nestle:
1. The main purpose of TESCO is to earn higher revenue by providing quality products to its
customer.
2. To make strong their customer and market base.
Legal structure of private firm: It further classified as:
Partnership: When two or more person enter into a contract with an aim of start a new business
venture collectively it can be called as a partnership. It is a kind of written document that has

been signed by partners enclosing all terms and conditions regarding their partnership. Partners
who have signed the contract are equally responsible for all profit and loss that has been bear by
respective firm throughout the year. Partnership deed include information related with roles and
responsibility of each partner, share in profit and loss etc.
Sole proprietorship: Such types of companies are normally run and operated by single individual
known as the sole proprietor. The person is solely responsible for all profit and loss that has been
generated by their company during an accounting period. It requires small amount of finance in
order to establish such type of business. Quick decision making is their main advantage because
there is less involvement of partners (Cavusgil and et. al., 2014).
Limited companies: Such type of companies are normally categorized into two types:
Limited by guarantee: Such type of companies do not have shareholder or share capital but
instead they have members who act as guarantors
Limited by share: In such type of companies liability of the shareholder to creditor is limited to
their capital that is originally invested.
Merits and demerits of private organization:-
Merits:
1. There is less interference of government in operation and activities of companies.
2. Effectively satisfy customer needs and wants as per their requirement.
Demerit:
1. Private players cannot issue their shares to general public
2. The only emphasize on maximizing their profitability ratio, however society development is
not their prime area of interest.
Public sector organization:
Such type of firms are normally controlled and regulated by government bodies of respective
country. The main purpose of public sector organization is not only to earn adequate profit but
also promote welfare and development of society and its member. Health care institution,
electricity, education are some of the sector where public sector organizations generally operates.
The example of public sector is NHS.
Company overview:
National Health Services (NHS) is a publically funded healthcare organization, located in
England, UK. It mainly direct healthcare services to UK domestic population at free of cost.
Some of their free facilities includes emergency and infectious disease etc.
Purpose of NHS:
1. Implement innovation in healthcare services.
2. Serve society and its member in an effective manner.
3. Effectively contributing towards the lives of patient.
Legal structure of public enterprise: It encompasses:
1. Central government: This government body regulate the whole country. Their main aim is to
collect tax from private players and general public and print denomination.
2. State government: Function of state government is mainly controlled and supported by central
government. Their main objective is to providing better education facilities to children
(Chetwood, and et. al., 2014).
3. Local government: This authority works for small geographical region such as city, town or
state. Their functions are normally handle by state or central government.
Merits and demerits of public sector organization:
Merits:

Public sector organization carry out their business activities and operation with a purpose of
generating higher revenues and promoting the welfare and development of society.
The main advantage is government is providing financial support to public players so that they
can run their operation smoothly.
Demerit:
Involvement of government is high which sometimes create hindrance in business activities.
Public sector firms are obliged to follow all rules and regulation imposed by government body.
Voluntary sector organization:
Such type of organizations not handled by single body. There are group of volunteers who
collectively run and operate such type of entities. They are nonprofit organization and work only
for the purpose of society welfare (Crane and Matten, 2016). Following are the characteristics of
voluntary firms:
1. Autonomy for States
2. Work for society welfare
3. Unpaid trustees and board governance.
For running their activities and operation in an effective manner, take permission from
government and complete all terms and condition related to it. For example, Oxfam
Company overview:
It is a non-profit organization that run with a purpose of eradicating poverty from the world.
With the help of their volunteers they smoothly run their operation and business activities. Food
and other facilities are also provided by the company in order to support survival of poor people.
Purpose of Oxfam
1. Eradicate poverty from across the world
2. Providing better facilities to poor people
P2 Size and scope of different type of organization
TESCO
Size: It is a British multinational grocery and Retail Company headquarter in England, UK. It is
the second largest retailer all across the world in terms of earning profit and revenue. It mainly
operates in 7 countries across Europe and Asia and it is the market leader of retail and groceries
in UK. The company was founded in 1991. Presently, the company is having 6,553 stores all
across the globe. Number of employees working with TESCO is more than 476,000. The
company mainly deals and providing food and non-food item. From their successful operation in
overseas market, around £55,917(million) is generated in the year 2017.
Scope: It includes detailing about diversified product that has been offered by company to its
target customer. The company mainly deals in selling food and non-food item. They are carrying
out their business practices on international level.
NHS
Size: It is a UK based public sector organization that mainly deals in providing healthcare
services to domestic people. They run and manage their services England, Scotland, Wales, and
Northern Ireland etc. Their main objective is to promote society welfare. Near about 1.6 millions
of employees are currently working with NHS and provide effective services to general public
(Gharajedaghi, 2011).
Scope: It is a company that provide basic healthcare and medical facility to poor people of the
country. They also offer dental and optical services as well. Scope of NHS is mentioned below:
Effective conveying information associated with healthcare facilities among Society.
Management of budget allotted for providing health care facilities to local resident.

Oxfam:
Size: It is a non-profit organization that run with an aim of removing poverty from the country.
They are practicing their business activities all across the world with a purpose of eradicating
poverty from different regions.
Scope: Some of the services provided by Oxfam includes policy research, reduction of poverty
level, pro-migration, advocacy etc. Food relief facility is also being provided by Oxfam.
TASK 2
P3 Inter-relationship between different organizational function and objectives
TESCO is a leading and strong brand that offer large number of product to target
customer all across the world. Their main objective is to increase their profit and generate high
revenues (Gilboy, 2016). Various efforts have been made by company in order to fulfill the
diverse needs and wants of potential buyer in an effective and efficient manner. There are
different departments working in an organization like human resource, sales, marketing etc.
Roles and responsibility of each organizational function is linked with company's objectives. All
department work towards common interest i.e. attain attaining business goals and objectives in a
cost effective and timely manner. Following are the various organizational function that are
performed by Tesco:
Human Resource Department: The main role of this department is to recruit and select most
talented candidate for the company who with their effective skills and knowledge achieve firm's
objectives. HR manager of Tesco assign roles and responsibility to employee on the basis of their
skill, competency and knowledge. The main objective of Tesco is to earn maximum profit which
can only be possible if they have effective personnel. Organizational growth and success depend
upon the performance and efficiency of workers towards accomplished pre-defined objectives.
Marketing Department: It is one of the most important department that play crucial role in
yielding high profitability ration for the company. With the help of functioning of this
department, Tesco can easily seize the attention of target customer which also assist in gaining
high competitive advantage in the market place. There are various promotional tool that are used
by manager in order to advertise their product in overseas market. With the help of marketing
function, Tesco can make their customer and market base stronger.
TASK 3
P4 Identify positive and negative impact of macro environmental factors
PESTLE Analysis: The framework is generally used by business enterprises in order to track
various aspects of environment in which they are operating or thinking to launch new product or
services. Commonly there are two factors that affect business and its performance either in
positive or in negative way. PESTLE stands for political, economic, technological, socio-
cultural, legal and environmental factors that possess an impact on overall company's operation
and function. TESCO is a UK based multinational food and retail company operating all across
the world. It is the second largest retail firm in terms earning profit after Walmart. They gain
popularity for selling both food and non-food item. In addition to that they also deal in offering
mobile, insurance, finance, hardware services etc. For understanding the influence of these above
mentioned factors on TESCO's performance, PESTLE analysis can be used below:
Political Factor: This factor determine the extent to which Government Body of respective
country is allowed to impact the economy or a certain industry (Kian Chong, Shafaghi and Leing
Tan, 2011). Any new tax or duty impose by government may directly impact entire revenue

structure of organizations. Since the retail sector is expand all across the world, there are various
political factors that are present in an economy that either positively or negatively impact
company and its overall functions. Political factors compromises of tax rates, political stability in
the respective country, acts of legislation and many more (Li, and et. al., 2011). Recently UK
Government has adopt a tax measure that might affect TESCO. They have increased their VAT
rate from 20% to 22% with a motive of raising government revenue by £15 million per year.
This increase in tax rate negatively affect customer as their purchasing power gets decrease
which ultimately affect TESCO's sales. Sales revenue is consider as the main source of income
of any organization and it holds significant effect on their profits.
Positive Effect: Due ongoing situation like Brexit, Government sector is encouraging retailer to
create employment for UK domestic population. As a result, TESCO play key role in offering
job to number of people which in return results in increasing the demand for its products and
hence, their overall sales and profits substantially increases.
Negative Effect: When the tax rate of VAT increases it indirectly lower down the buying power
of customers. As a result, sales of TESCO got decline.
Economic: These factors are determinants of an economy performance that possess a direct
impact on company's overall performance and functioning. It include inflation rate, interest rate,
economic growth, exchange rate etc. TESCO is mainly depend upon UK market for their
revenue and profits. Therefore, it is primarily important for them to be aware of any changes that
is related with economic factors. The market share of TESCO in UK is near about 30%. There is
high growth rate and gross domestic product has been forecasted that positively impact TESCO
profitability. As a result, there is a significant increase in the retail sector.
Positive Effect: With high disposable income, customer purchasing power gets increase and as a
result, demand for luxurious products of TESCO increases significantly.
Negative Effect: Opposite of economic growth leads to increase the rate of unemployment in the
country. This result in decreasing the disposable income of customers and as a result, customer
start preferring to buy products that satisfy their needs at lower cost and start ignoring purchase
of such items that are available on available on higher prices.
Socio-cultural: These factors compromises of demographics, cultural trend, and population
analytics etc. of the respective country. There are lot of changes takes place that are related to
social factors. For instance: Consumer in UK have move towards one-stop shopping and bulk
shopping. As a result, TESCO increases the ratio of their non-food item that they offer for sale.
Also UK people are becoming more health conscious which enables TESCO to offer organic
products to its customers.
Positive: By changing the products or services as per customer requirement, TESCO is gaining
high competitive edge in UK market. They were aware of the fact that UK people are becoming
very particular about their health and thus prefer to buy only organic product. As a result,
TESCO introduce their organic product in the market. Thus changing their product line as per
customer needs and wants (López-Gamero, 2016).
Negative: During situation like Inflation, prices of all products gets increases. As a result,
customer shift to some other local brand that is offering same quality product or services but at
comparatively lesser rate. This possess negative impact on the overall functioning and operation
of TESCO.
Technological Factors: These factors are mainly related with high end or innovative technology
that possess direct impact on the functioning and performance of company. The advancement in
technology brings various opportunities for the company and it depend upon the company how

they perceive it. For example: TESCO has effectively utilize high end technology in terms of
introducing its own shopping website along with providing free home-delivery services. They
also develop their self-check out points which makes easier for the customer and it in turn reduce
overall rate of labour.
Positive Effect: By launching its own shopping application, demand of their product increases
and as a result, their overall sales increases that ultimately raise their profitability ratio as well.
Negative Effect: The Company is spending large proportion of their income on adopting high
ends technology. This is the only negatively affect related with this. There is also a possibility
that their employees lack how to use innovative and latest technology (Molina-Azorín and
Claver-Cortés, 2011).
Legal Factors: There are certain laws that every company is obliged to follow such as consumer
safety law, labour law, and safety standards etc. Government legislation and policies have direct
impact on TESCO's performance. For instance: Food Retailing Commission of UK have decided
to introduce code of practices that may ban many current practices prevailing in the market such
as sudden change in price without noticing supplier. To facilitate these policies, the company
decided to reduce the fuel price which they used in order to purchase product or services. Also
there are various promotion offers where prices are lowered.
Positive Effect: Tesco also providing various financial services like credit card, savings, loans
and mortgage that aid in enhancing their brand image in the market. As a result, it help company
in gaining high competitive advantage over others.
Negative Impact: When UK government reform the agricultural policy this result is lowering
down the subsidy given to farmers. As a result, negative perception regarding TESCO arises in
customer mind.
Environment Factors: There are certain factors that exist in the environment that possess direct
on TESCO's overall performance and operation. TESCO has decided to diminish the
consumption of energy and utilization of greenhouse gases.
Positive Effect: By the year 2020, TESCO has decided to reduce the carbon footprints by 52%
that help in improving their brand image and goodwill in the marketplace.
Negative Effect: If company fails to follow laws and regulation concerned with environment it
may negatively impact their overall performance. If any of their business practices is harming the
environment than it negatively impact their brand image.
TASK 4
P5 Internal and external analysis of TESCO
Strength:-
1. TESCO is UK's biggest retailer with a market share of near about 27.9%. The company is
holding second position in terms of generating profit after Walmart. Their core strength is in the
form of its strong customer and market base.
2. The company is getting high competitive advantage in overseas market because of its effective
online sales promotion that has increase the sale of their product immensely. In fact, Tesco was
the first one among other UK retailer to successfully implement online sales Channel (Meiners,
Ringleb and Edwards, 2014). In 2016, the market share of their online grocery is tremendously
increase by 20% which gives them high competitiveness level among other rivals.
3. The company also gained popularity for utilizing innovative business methods such as Tesco
express, Tesco metro etc.
4. Another strength in their global operation include joint venture with China with an aim of

expand their business operation in developing country.
5. Another strength is company is buying product in bulk quality which ultimately benefit the
economy of scale. This allow the company to sell their product at comparatively lower prices
that instantly attracts the attention of customers.
6. They are also creating loyalty packages which help them in retaining customer and build long
term relationship with them.
Weakness:-
1. Tesco's profits was adversely affect by bad debt from credit card and high level of household
insurance claims (Sekaran and Bougie, 2016).
2. Another weakness that company is facing in terms of lack of experience in entering into new
market. The company needs to invest huge proportion of their income in new web technologies
so as to gain high competitive edge in overseas market.
3. Strong Competitive pressure leads to create situation like price war that negatively impact
profit margin of the company.
Another weakness is in the form of high cost of inventory that enable customer to shift to some
local product.
4. The company is highly dependent upon the market a UK and Europe for the sales and has no
time and resources to spent in some developing country which gives them the advantage to grow
and develop business operation in growing economy
Opportunities:
1. Large number of opportunities are available in terms of strategic alliance with other reputed
brands to offer more goods and attract vast customer in certain target markets.
2. There are certain countries, where Tesco is underperforming which can be recover by entering
into joint venture in which local company can them in doing market Intelligence and market
research so that they can effectively improve their performance in those particular areas.
3. There is a significant opportunity for Tesco on terms of growth and development in the field
of online shopping as well as also providing home delivery services target customer.
Several opportunities prevails in private label market as well.
4. Overseas expansion of business activities can help company in making market base stronger.
Threats:
1. Credit crunches and economic recession constantly threaten profitability and market share of
Tesco that ultimately result in reducing the size and number of purchases made by target
customer.
2. Strong competition prevails in the market due to entrant of other global retail giants.
3. There is an increase in the food prices all across the world which negatively affect customer
purchasing patter. As to their customers now prefer to purchase product from local retailer who
also provide same product but at low prices.
4. Another threat that Tesco was facing is in terms of increased wages and benefits that
ultimately pressure on their pricing strategy.
5. Strong stakeholder pressure related to the environment and social responsibility also adversely
influence TESCO's cost bias (Tayur, Ganeshan and Magazine, 2012).
P6 State how strength and weakness is inter-related with external macro factors
Strength and weakness of TESCO is inter-linked with external macro factor that are
available in the market. The biggest strength of TESCO is they are earning vast profit from UK

and Europe (Türetken and et. al., 2011). Almost 45% of their revenue and profits are generated
through these markets. Any political instability in UK and Europe is adversely going to impact
their overall profitability and operation as they are highly depend upon these markets. Situation
like Brexit may lower down the purchasing power of UK people and as a result they start
purchasing goods from local buyers instead of buying from multinational retailer. Another
biggest strength of TESCO is that they are effectively taking the advantage of high end
technology. With the help of innovative and latest technology the company has decided to launch
its own mobile application and official website so to increase the scope of selling products. This
also assist company in gaining high competitive over other rivals. In addition to that they can
now promote their product on extensive level which makes their customer base strong. They
have also decided to expand its business operation in developing countries like China which help
them in attaining high competitive advantage in the market (Vaiman, Sigurjonsson, and
Davidsson, 2011).
However the major weakness of TESCO is their excessive dependability on UK market
which is not good as due to ongoing situation like Brexit, overall profitability ratio and sales
figure can hamper adversely. As a result, target customer shift to some another brand.
CONCLUSION
According to the above mentioned report it can be concluded that both internal and
external factor possess impact on overall performance and functioning of a company. There are
various factors that are available in the market that every company needs to pay attention for
smooth running of its business operation. Different types of organization with their distinct size,
scope, purpose and legal structure have also been discussed in this report. Different types of tools
are there like Pestle Analysis, SWOT analysis etc. that help in measuring the impact of micro
and macro factors on overall performance of the company. Different organizational function are
linked with organization objective with aim of achieving overall business goals in an effective
and efficient manner.

REFERENCES
Books and Journals
Asif, M., Searcy, C., Garvare, R. and Ahmad, N., 2011. Including sustainability in business
excellence models. Total Quality Management & Business Excellence. 22(7). pp.773-
786.
Bhaduri, G. and Ha-Brookshire, J. E., 2011. Do transparent business practices pay? Exploration
of transparency and consumer purchase intention. Clothing and Textiles Research
Journal. 29(2). pp.135-149.
Cavusgil, S. T., and et. al., 2014. International business. Pearson Australia.
Chetwood, M. K.,and et. Al, 2014. Transforming a legacy IT infrastructure into an on-demand
operating environment. U.S. Patent 8,775,232.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Gharajedaghi, J., 2011. Systems thinking: Managing chaos and complexity: A platform for
designing business architecture. Elsevier.
Gilboy, G. J., 2016. The myth behind China's miracle. In SEEKING CHANGES: The Economic
Development in Contemporary China (pp. 1-16).
Kian Chong, W., Shafaghi, M. and Leing Tan, B., 2011. Development of a business-to-business
critical success factors (B2B CSFs) framework for Chinese SMEs. Marketing
Intelligence & Planning. 29(5). pp.517-533.
Li, Q., and et. al., 2011. Towards the business–information technology alignment in cloud
computing environment: anapproach based on collaboration points and agents.
International Journal of Computer Integrated Manufacturing, 24(11) pp.1038-1057.
López-Gamero, M. D., Molina-Azorín, J. F. and Claver-Cortés, E., 2011. Environmental
uncertainty and environmental management perception: A multiple case study. Journal
of Business Research. 64(4). pp.427-435.
Meiners, R. E., Ringleb, A. H. and Edwards, F. L., 2014. The legal environment of business.
Cengage Learning.
Sekaran, U. and Bougie, R., 2016. Research methods for business: A skill building approach.
John Wiley & Sons.
Tayur, S., Ganeshan, R. and Magazine, M. eds., 2012. Quantitative models for supply chain
management (Vol. 17). Springer Science & Business Media.
Türetken, O., and et. al., 2011, June. Enforcing compliance on business processes through the
use of patterns. In ECIS (p. 5).
Vaiman, V., Sigurjonsson, T. O. and Davidsson, P. A., 2011. Weak business culture as an
antecedent of economic crisis: The case of Iceland. Journal of Business Ethics. 98(2).
pp.259-272.

Wack, P., 2017. Shooting the rapids. Historical Evolution of Strategic Management, Volumes I
and II, 1, p.121.
Yu, W. and Ramanathan, R., 2013. Business environment, employee competencies and
operations strategy: anempirical study of retail firms in China. IMA Journal of
Management Mathematics. 24(2). pp.231-252.
Zeng, L., Li, L. and Duan, L., 2012. Business intelligence in enterprise computing environment.
Information Technology and Management. 13(4). pp.297-310.
Zsambok, C.E. and Klein, G. eds., 2014. Naturalistic decision making. Psychology Press.