Business Environment: A Comparative Study of Tesco Plc and Oxfam

Desklib provides past papers and solved assignments for students. This report compares Tesco and Oxfam's business environments.

Business Environment
1 | P a g e

Contents
Introduction.................................................................................................................................................3
P1 Describe the type of business, purpose and ownership of two contrasting businesses............................4
P2 Describe the different stakeholders who influence the purpose of two contrasting businesses...............6
P3 Describe how two businesses are organized...........................................................................................8
P4 Explain how their style of organisation helps them to fulfil their purposes..........................................12
P5 Describe the influence of two contrasting economic environments on business activities...................14
P6 Describe how political, legal and social factors are impacting upon the business activities.................16
Conclusion.................................................................................................................................................18
References.................................................................................................................................................19
2 | P a g e

Introduction
Business environment can be described as an atmosphere in which all the activities related to
business are defined. Business environment is affected by many factors. There are different types
of businesses done single ownership, in partnership, profit based business and not-for-profit
business. The organisational structure of the business defines well the way in which activities are
done. Stakeholders play an important role in an organisation. They can increase or decrease the
productivity and profitability of organisations. For this paper, TESCO Plc and Oxfam have been
taken as examples. TESCO Plc is a profit-based business organisation whereas Oxfam is a
charity-based organisation.
3 | P a g e

P1 Describe the type of business, purpose and ownership of two contrasting
businesses
The two contrasting business used in the paper are- 1. Public limited company e.g. TESCO Plc
and 2. A charity e.g. Oxfam
Brief background of the business of TESCO Plc is described as below-
The business done by TESCO Plc is for profit. Its goal is to satisfy its customers and to make
good profit through business. TESCO Plc UK has been ranked as the ninth largest retailer of the
world. Thus, it is a retailing business. It sells products and generate revenue. It is a supermarket
that makes products available under one roof for its customers. The business of TESCO plc
operates worldwide, having more than 6,800 shops across the world. In addition to this, there are
approximately 400,000 employees working with this business (Mollah, 2014).
Features of Public Limited Company like TESCO plc-
A limited company can be a separated legal company that is owned by its founders. The founders
can treat it as their asset. There are different shareholders of such companies and generally run
and managed by the directors. Shareholders do have a share in the company but they do not have
any right on the asset of company and are not liable for any debt.
Limited liability can be explained as a state in which the shareholders of the company are not
responsible for any debt. This is the importance of limited liability. It can have more advantages
too like- is can serve best protection to the shareholders. In any of the worst case, shareholders
loss their investment amount only.
For setting up a public limited company and essential HMRC requirements, it must comprise of
two shareholders. Before the commencement of the business, it must share a fixed value to the
public. The company has to be registered too. It also must comprise of two directors.
There are no restrictions imposed on transfer of shares of a public company. Anyone can
purchase the shares of such companies.
4 | P a g e

Brief background of Oxfam-
Oxfam is a charitable organisation and is a type of international non-governmental organisation.
It is a not-for-profit business that mainly works to provide benefits to the society and to make
profit as well. The purpose of the business is to eradicate the poverty and to give relief to the
disaster victims. Oxfam organisation also works worldwide and serves many countries across the
world (Livingstone, 2015).
For setting a charity, like Oxfam, following given 6 steps are followed-
1. Finding trustees of the charity for at least 3. Trustees of Oxfam are- Caroline Thomson,
Gavin Stewart, Steve Walton, Ken Caldwell and many more..
2. Defining purposes of establishing charity
3. Naming the charity
4. Structure followed within charity
5. Creating a government document
6. Registering the charity
Charity organisations are a legal entity and have their own presence. There also exists limited
liability between trustees of the charity and charity organisation. The trustees or board of
directors are free from any of the debts and obligations of charity. Charities generally make
money by the donations given to them by the people. But there are other ways too for making
money for charities. Many of the volunteers work in the charities and thus, their free services
bring good money. Many times, events are organised by charities to bring money and many
generous people donate in such events. Charities like Oxfam spend their money in solving their
purposes for which they work. As Oxfam’s purpose is to eradicate poverty so it spends money by
providing very low cost food to the poor people. The money spent by the charities must be
agreed upon by all the board of directors, CEO and trustees. For the tax requirements, the
organisation must be known to HMRC. Even they can claim for back tax that is known as Gift
Aid. If the money is spent for charitable purpose, there is no need to pay tax.
Role of Charity Commission- all the charities in England and Wales are regulated by this body.
It provides necessary guidelines to the trustees on spending their money. It has a web portal on
which all necessary information is displayed.
5 | P a g e

P2 Describe the different stakeholders who influence the purpose of two
contrasting businesses
Stakeholder can be an individual or a group of members that affect and can be affected with the
working of the organization. There are different stakeholders associated with a business. Here
given below are stakeholders of TESCO Plc explaining how they affect the business.
Customers- the entire functioning of the TESCO Plc depends upon the customers. The
operational department of the organisation works according to the needs and trends of customers.
The products must be compiled with the taste of customers so that they could be satisfied to
maximum.
Employees- it is rightly said that employees come first before customers. Therefore, TESCO Plc
needs to make certain policies and procedures in order to provide flexible working hours and
healthy conditions for employees. The human resource management of TESCO Plc works its
best to satisfy the employees (Andriof and Waddock, 2017).
Directors- the directors of TESCO Plc have to very carefully design and implement the policies
so that they could yield maximum from the efforts of employees. The directors have to make and
implement strategies so that efficiency could be achieved and targets could be achieved timely.
Supplier- suppliers play an important role in affecting the business. If suppliers of TESCO Plc
supply with required material, targets of the organisation could be met otherwise it would be
difficult to achieve the goals and run the business. They can be considered as the back bone of an
organisation.
Stakeholders listed above affect the behaviour and actions of TESCO Plc to a large potential. Its
impact has been described as below-
Financial influence- the working of TESCO Plc depends entirely on efficiency of its employees.
If they are skilled and effective in their working, it could be a boom for the business. In the same
way, the directors must be very initiative and participative in implementing strategies so that
right action and decision could be taken.
Social impact- technology is the need of the hour. The supplier of TESCO Plc must be very
effective and cooperative in nature so that productivity of business could be enhanced. In
6 | P a g e

addition to this, TESCO Plc must be very careful in implementing any decision in the way that it
does not impact any of its stakeholders in any way.
Stakeholders of Oxfam-
Service users- service users are the individuals that take the services of Oxfam. These are the
persons for whom the charity organisation has been established.
Volunteers- volunteers are the members that give free services to the charity organisations like
Oxfam. They also have a special role in shaping the services of Oxfam. The services of Oxfam
can be enhanced with their role.
Trustees- trustees of Oxfam are responsible in smooth running of the organisation. They have to
give necessary guidelines and instructions so that Oxfam could function properly (Yasmin,
Haniffa and Hudaib, 2014).
Donors- donors can be a single individual or group of members that give donations to the
Oxfam. They also influence the working of Oxfam in a way that their donations could help the
users of charity.
The above listed stakeholders affect the actions of Oxfam in the following ways-
Supporters- volunteers and donors can be regarded as the supporters of Oxfam as they render
free services and are ready to help the individuals at any time.
Enhancement in funding- the above listed stakeholders can help to enhance the funds of
Oxfam. If the funds are raised, more of the users could be served with Oxfam. Thus, helping the
society in other way.
In the end it can be concluded that every stakeholder affects the business in any way. It can be
positive or negative impact. The role of organizations is to understand the needs of these
stakeholders and satisfying in the way that they could help organization to grow and develop.
7 | P a g e

P3 Describe how two businesses are organized
The organisational structure of TESCO Plc is hierarchical in which positions are divided from
top to bottom approach. The power and authority lies maximum with the top level positions.
Figure 1: Organisational Structure of TESCO Plc (Galbraith, 2014)
The lower position in the above chart is responsible to every top level position. The Regional
Manager has the highest authority in delegating power and responsibility to the low positions and
has the power to influence the working of subordinates.
The communicational flow in hierarchical structure is from top to bottom. The information and
guidelines are given from top (Manager) to his subordinates. It is a kind of hard communication
skill in which flow from down to top is somewhat difficult. In hierarchical structure that is
followed at TESCO Plc, communication flow is not that much easy. Sometimes it becomes
difficult for the lowest level employee to communicate with the highest level.
8 | P a g e

Organisational structure of Oxfam-
The organisational structure followed at Oxfam is flat in nature. It is explained with the help
of following figure-
Figure 2: Organisational structure of Oxfam (Yinan, Tang and Zhang, 2014)
The flat organisational structure is easy to follow at Oxfam. It becomes very easy for the low
level employees to share their ideas and views with the top level management. The channel of
communication is also very easy to develop under such structures. The decision implementation
also becomes easy under such structure. The feedback from subordinates helps to improve the
communication flow. In flat structure, it is easy for low level to approach the top management
and discuss their issues with them as levels categorised under this structure ease the
communication flow.
As both TESCO Plc and Oxfam operate globally, so they have offices in different countries. It is
because it lessens the complexity of organisation and divides the work smoothly. One regional
office is made in the participative country and the organisation needs to deal with the respective
office. In this way, all the regional offices are maintained in their functions. There are many
stores of TESCO Plc working in different locations of UK. This is because the business of
TESCO Plc is showing sustainable growth thereby increasing the job creations in different
9 | P a g e

departments as well. On the other hand, while speaking of Oxfam, it is also operating in more
than 90 countries across the world, with partnership in some of the countries. Not only globally,
Oxfam has many locations in UK as well. The purpose behind this is to work best for the needy.
There are many department levels in TESCO Plc that are responsive to their management. For
example, it operates at Finance department, human resources, marketing, production, sales and
administration department. Each department has its own role in shaping the success of TESCO
Plc. On the other hand, Oxfam is structured with departments like IT department, HR department
and Finance department each working at different levels for the smooth functioning of Oxfam.
Benefits and drawbacks of hierarchical organisational structure at TESCO Plc-
Benefits-
 Employees become aware of the leadership level under such structure.
 There is good scope of motivating employees for promotion opportunities.
 As narrow scope is given to the employees here, there is more tendency of becoming
experts.
 Relation of trust with department can be easily formed.
Drawbacks-
 Communication flow is not smooth.
 Department concentration is higher than considering organisation as a whole.
Benefits and drawbacks of flat organisational structure at Oxfam-
Benefits-
 There is less burden of responsibility.
 Very smooth and easy communication flow.
 Easy implementation of decision (Zhang, Zhao and Qi, 2014).
Drawbacks-
 There is struggle for power because of less levels.
 It does not have tendency of forming specialists.
10 | P a g e

 Not applicable for very large organisations.
11 | P a g e

P4 Explain how their style of organisation helps them to fulfil their purposes
As described earlier, the organisational structure of TESCO Plc is categorised into different
compartments that help it to run the business smoothly. The functions of these departments is
described as follows-
Finance department- it is responsible for managing all the finances of the organisation. The
finances like profit gain or margin of loss, any additional cost that is incurred in the organisation.
The revenue is also compared by this department with the previous reports.
Human resources- this is a very important department as it is responsible for staffing and
recruiting the employees that are the most important asset of the organisation.
Marketing- this department works to check the trends of the market so that new strategies could
be adopted to adopt new trends (Wood, Wrigley and Coe, 2016).
Production- it is very important for this department to produce enough goods so that TESCO
Plc could supply these products to the customers and generate revenue.
Sales- this department has to keep a close eye on new trends of the industry so that they could
increase the sales of TESCO Plc products.
Administration- this department manages and coordinates all the activities of other departments
so that overall organisation can work as a whole. It also provides with necessary assistance at the
required time.
Functional departments of Oxfam are explained as below-
IT department- Oxfam displays all its information on its web portal. IT department is
responsible for maintenance of the same.
HR department- this department keeps records of all the volunteers and donors of the
organisation. All the data is kept safe with this department.
Finance department- this department is most vital part of Oxfam as it holds the account of all
financial status of the organisation. All the records of money spent and gained are kept safe here.
12 | P a g e