Tesco Plc: Organizational Structure, Functions, and Macro Environment

This report provides a comprehensive analysis of business environments and organizational structures, focusing on Tesco Plc as a case study. It begins by exploring different types of business organizations and their legal structures, including public, private, and voluntary organizations, with examples like BBC and National Health Service. The report then examines the scope and size of businesses, categorizing them based on employee count and annual turnover. It delves into the interrelationship between organizational functions within Tesco, such as finance, production, marketing, and human resources, and how these functions link to the organizational structure and objectives. Furthermore, the report analyzes the positive and negative impacts of the macro environment on Tesco, including factors like political, economic, social, and technological influences. It also conducts an external and internal analysis of Tesco to identify strengths and weaknesses, relating these to the macro factors and demonstrating how SWOT analysis influences decision-making. The report concludes with a critical evaluation of the impact of both micro and macro factors on business decision-making and objectives.

Business and Business
Environment

Contents
INTRODUCTION.......................................................................................................................................3
PART 1.......................................................................................................................................................3
P1. Different types of business organizations and its legal structure.......................................................3
P3 Interrelationship between the organizational functions and they link to the organizational structure
and objectives..........................................................................................................................................8
M2. Merits and Demerits of the inter relationship among organizational functions and its impact on
organizational structure...........................................................................................................................9
D1 critical analysis of complexities of various kinds of structures and inter relationship of these
functions................................................................................................................................................10
PART 2......................................................................................................................................................10
P4 The Positive and negative impact of macro environment on the business........................................10
P5 External and internal analysis of a company to identify weakness and strength...............................11
P6/ M3 How strength and weakness relates to the macro factors..........................................................13
M4 Application of SWOT and how it influences the decision making..................................................14
D2 Critical evaluation of the impact of both micro and macro factors on business decision making and
objectives...............................................................................................................................................15
CONCLUSION.........................................................................................................................................16
REFERENCES..........................................................................................................................................17

INTRODUCTION
The business is a legal entity which is established with an aim to contribute in the
economy. It works with the motive of generating maximum revenues and profitability so that it
can grow and survive in the competitive market. There are various types of business
organizations which are legally formed that may be distinguished on the basis of their size and
scope. It is the environment wherein the organization operates. The business environment
consists of the external institutions, forces and factors which are not in control of the firm. It is
mainly of two kinds of which first is macro environmental factors which affects the decision
making and functioning of the business while second is internal factors which determines the
ability to fight the external factors (Farrukh and et. al., 2020). The organization chosen for this
report is Tesco Plc, a large organization which deals in general merchandise and groceries. This
report shall cover the types of business organization and their legal structure, scope and size of
organizations, inter relationship between organizational function. Further, it will include external
and internal environment analysis and how weakness and strength inter relate with external
factors.
PART 1
P1. Different types of business organizations and its legal structure.
The business is the venture which carries on the commercial purpose of its establishment.
It has a motive of earning of profits and generating maximum revenues. Some businesses work
with the motive to do something for the welfare of the society. Different kinds of business
organizations are narrated thereunder-
Public organizations
These are those businesses which are owned, controlled and managed by the government
and their motive is not to generate maximum profits but to do welfare for society. They carry on
their business activities in order to give benefit to the society. They work by the funded collected
by government by way of taxes (Hillary, 2017). The legal structure of these organizations are
discussed below-

 Central government- These are those business entity that are controlled and managed by
the central government of UK and operates in whole country.
 State government- These are business entities which are managed and controlled by the
central government but their ambit of operation is restricted to a state. There is no state
government in UK so these are also managed by the central government.
 Local government- These business enterprises ware managed, owned and controlled by
local government of UK and operates within the boundary of the local area.
Purpose: the main purpose of public company is to do welfare for the society by improving their
standard of living.
Example: British Broadcasting Corporation (BBC)
Private organizations
These are those business enterprises which are managed, owned and also controlled by
the private person. They operate or functions with the sole motive of earning profits and provide
benefit to the stakeholders. Different types of private businesses are discussed thereunder-
 Sole trader- These are managed and owned by the single entity who has the
responsibility of handling the day to day operations of the business. The owner has daily
responsibilities of handling the working of sole proprietorship. The owner is also
personally liable for the liability of venture. Partnership- It is mainly owned, controlled and managed by two or more person who are
known as partners. They mutually share the responsibility of the firm and share profit,
loss, decision making power and contribution of capital. Companies- These are the artificial personality that are distinct from the owners as the
company has its own status and is a separate entity. They are managed by the broad of
directors who are elected by the shareholders to represent their interest (Alberti and
Garrido, 2017). There are mainly two types of companies, first is private which is owned
by the private individuals while other is public which is owned by general public by
subscribing the share capital of the company.
Purpose: They have a single aim of earning profits and generating maximum revenue.

Example: Tesco Plc
Voluntary organization
These business enterprises are managed and also owned by people who voluntarily
establish it. They are also called as trustees. Their main purpose is to help the society and not to
earn profits. The income which is earned is reinvested in business and their capital is arranged by
way of donation, charity or gift. Types of voluntary organizations are illustrated below-
 Unincorporated association- These are established by two or more of the people who
are aimed to do something for religious, educational, charitable, social or other purpose.
It functions like a partnership and is not the independent enterprise. For example, any
sports club which are not registered.
 Trust- It is a legal arrangement in which the person entrust the asset to other business or
person so that it can be managed for the benefit of community. Its purpose is to provide
legal protection to the trustor’s asset so that it is distributed as per its wish (Jelonek and
et. al., 2019).
Purpose: It is established to do something for the benefit and welfare of the community or
society. It is aimed to create social wealth and not material wealth.
Example: Red Cross
P2/ M1. Explain the scope and size of businesses
There are various types of businesses which comprises of its own size and scope. The
three companies for this report are Tesco, BBC and National Health Service.
Different kinds of business organizations on the basis of size include firstly the Micro
enterprises which involve employment of 0-9 employees and generate the annual turnover of
less than €2 million. Then is Small enterprises which involve employing workforce from the
range of 10-49 and their annual turnover is less than €10 million. Next is Medium sized wherein
employees are employed within the range of 50-250 and has the annual turnover of less than €50
million. Lastly the Large businesses have employees above 250 and have the turnover of more
than €50 million per year (Dockery and Knudsen, 2017)

Background of different business organizations
Tesco Plc
The Background of the company is that it is a legal entity which deals in retail industry. It
was founded in the year 1919 and is headquartered in UK. It serves in more than 7000 locations.
It is the large organization which serves in different countries across the Europe and in some
areas of Asia. It is the multinational retailer which deals in groceries and general merchandise. It
serves food and non- food items in its supermarket chain. The vision statement of Tesco is to
become the highly valued company by the consumers it serves, community it operates in and the
colleagues and stakeholders. They are inspired to earn the loyalty and trust from community,
customer and colleagues. Its mission statement is that it serves what matters to all and is aimed to
make everyone part of its success. It creates an environment by which everyone can achieve its
potential and contribute in growth of business. Its Objectives is to become champion for all
customers and help them to lead a quality of life in an easy manner.Tesco follows hierarchical
organizational structure wherein there is long chain of command and the communication flows
from top to the down. Tesco has approximately more than 4,23,092 employees who are working
for the organization. The owner of Tesco was Jack Cohen and its key personnel include John
Allan, Ken Murphy and many others (Cravo and Piza, 2019).
British Broadcasting Corporation
 Background: It is the national broadcaster in the state of UK that is headquartered in
London at the Broadcasting House. It is statutory corporations which have its Royal
Charter. It was founded in 1922 year by the HM Government.
 Product/ service offered: It serves worldwide and is the oldest broadcaster at national
level in UK. It deals in mass media and offers the latest update and news to people by its
broadcasting.
 Vision: The vision statement states that the nation wants to speak the peace unto the
nation.
 Mission: Its mission statement provides it to act in good faith and public interest wants to
serve the people by impartiality. It offers high quality service and different output that
can educate, entertain and inform all people.

 Objectives: To offer the impartial information and the news to people with an iam to help
them in understanding and wants to engage with the world. It wants o support the
learning of all people.
 Organizational structure: It follows the hierarchical organizational structure in which it
consists of the Board of Governor, executive, creative, Journalism and commercial board.
These journalism, creative and commercial boards are required to report to executive
board.
 Size: It is the public company which has is operations categorized into BBC music, BBC
studio and the BBC sports. It is the large company that serves the people worldwide.
 No. of employees: It has around 22,750 employees at its business who works to uplift the
vision and mission of the enterprise.
 Stakeholders: The first director general of the firm was John Reith and the current
director general is Tim Davie. The chairman is Richard Sharp (Velamuri, Harvey and
Venkataraman, 2017).
National Health Service
 Background: It is the publicly funded system of healthcare in UK. It was funded in the
year 1948 and is funded by the general taxation.
 Product/ service offered: It offers the health care related services to the people of UK
such as emergency and urgent care service, dentist, opticians, sexual health services, etc.
 Vision: Its vision statement is to aspire to highest standards of the professionalism and
excellence. It aspires the patient to put their heart in everything and its works across the
boundaries of organization and in the partnership with other companies for the interest of
local community, patient an population.
 Mission: Its mission is to improve the well-being and health of the people and their
experience. They want to achieve everything which is going to make the lives of people
better.
 Objectives: To reduce the infant mortality rate and maternal mortality rates. To provide
the universal access to the public services relating to health like child, women, water,
hygiene, etc.

 Organizational structure: It is organized in the regional hospital boards who are in-
charge of the administration. There is primary care, dentist, opticians who works as
independent contractors rather than the salaried employees. There are various services
such as vaccination. Ambulance, child welfare, maternity care and many other
community services.
 Size: NHS has more than 100000 doctors, approximately 300000 nurses and the health
visitors. It has many other staff members such as ambulance staff, managers, senior
manager, technical staff, etc.
 No. of employees: It has more than 1.5 million people who put on their effort to achieve
the mission of the organization (Upadhyay and et. al., 2019).
P3 Interrelationship between the organizational functions and they link to the organizational
structure and objectives.
Tesco is a large organization which works with different departments in order to ensure
smooth functioning. These departments work with each other so that it can provide effective
output. The interrelationship of the functional units are discussed below-
 Finance and production- The finance unit of Tesco is entrusted with the task to manage
the funds of the company and it allocate sufficient budget to all so that they can carry out
their functions effectively. On other side, the production unit carry on the manufacturing
for which they require the funds. The finance department provide funds to product so that
it can carry out its working and the production unit provides the inventory to it so that it
can manage it further. They both work together in order to enhance the profitability of the
firm.
 Marketing and human resource- The marketing unit of the Tesco is involved in
promoting the offering of the firm and engaged in making such strategies which can help
in taking the competitive edge over the market. The human resource department is
entrusted with the role to hire the talented workforce into the organization to achieve its
goals. They both work together where the HR functional unit hires creative staff in
marketing so that they can plan the efficient marketing strategy to generate high profit.
 Information technology and Research and development- The IT department has the role
to deploy the advanced technology into the organization so that Tesco can function

effectively and serve customers with enhanced offering while the R&D unit of the firm
conducts the research in order to bring innovation in its working to which the IT unit
implements so that the efficiency of the organization is enhanced (Schaltegger, Hörisch
and Freeman, 2019).
Organizational structure
It is referred to as the system that allows as to how the business activities can be outlined
so that it can be carried on smoothly. It basically outlines the direction of guidance. Various
organizational structure are narrated thereunder-
 Flat structure- This organizational structure involves no or very fewer middle
management among the workforce and executives. The major control rests in the hands
of top level management and has the decision making power. They eliminate the middle
management so that there is direct communication between the employees and top
executives (Künle and Minke, 2020).
 Hierarchical structure- This is a pyramid shaped organizational structure that consists of
the long chain of the command that works from top to down. The employees are
accountable to their immediate supervisors and seniors. Tesco follows the hierarchical
organizational structure due to its large operations and business (Castro and et. al., 2018).
M2. Merits and Demerits of the inter relationship among organizational functions and its impact
on organizational structure.
It is very important for the businesses to work altogether so that they can function
effectively. The main advantage of working in interrelation wherein each of the department
works together is that there is a coordination being maintained among all functional units so that
they can altogether create the positive working environment in the workplace while if the
departments do not work together, there may be increased conflict that may become hurdle to
achieve the business objectives of Tesco. This interrelationship helps in working in the
organizational structure so that a direction can be followed.

D1 critical analysis of complexities of various kinds of structures and inter relationship of these
functions.
Every business organization has its own complexities but these helps in achievement of
objectives. For example, the private businesses has the sole purpose to generate maximum profits
and are owned by the private people while the public companies are established for the purpose
of doing society welfare and are controlled by government and there is high interference of
government too which makes it complex to work. The private organizations are managed by
private individuals so it faces less interference of government.
Tesco has its departments which shares the interrelationship among each other so its
helps in creating the healthy environment in the organization while sometimes it makes the
dependency rate high due to which the functions are delayed.
PART 2
P4 The Positive and negative impact of macro environment on the business.
Pestle analysis helps out to provide a Macro environmental factors through which all the
important areas of the business practices in the competitive market strategy can be implemented
out. The PESTLE of Tesco is as mentioned below:
Political: Due to impact of Brexit, the organization may face issues relating to free trade
in the European Union that may affect its profitability and sales. This may place negative impact
on the working of Tesco while the positive aspect of political factor is that Tesco has its major
business in UK which ha the political stability that supports the functioning of the business. This
political stability involves fewer changes in policies, thereby assuring smooth functions.
Economic: As due to employment rates in UK is low which may influence the demand,
profit, prices and cost. This economic factor may decrease the demand for many products which
may adversely affect sales of Tesco due to less demand. On other side, the diversification and
internationalization are the key strategies for Tesco and reason for its success. Due to less
disposable income, the company shifted its focus to advertising its brand value rather than
luxurious products which offers more sales volume to it.
Social: Due to new trend in the market of bulk or ne stop shopping, Tesco has taken
advantage of this and offered non-food items in its store so that it can attract more customers

who prefer bulk shopping so that its profits are enhanced. While the negative aspect of social
factor is that due to shift of consumer n healthy items, Tesco is required to revise its product
range and eliminate the unhealthy items in order to increase its profitability and sales.
Technology: It is mainly that all the digital medium and platform through which the
production and growth can be enhanced. As Tesco makes use of the technologies in its working
such as Ecommerce in order to provide enhanced customer service to the consumers where they
can shop while sitting at homes. This has increased its chances of sales enhancement while
maintaining ecommerce requires technical staff, time and investment which may affect its cost
and profit.
Legal: As it is all important for the companies to cover all the legal formalities and even
implications that are being made in the legislation. As Tesco is a leading brand do you deals with
a large supermarket chain so cover all the laws and rules that are being led by the government in
a positive approach. Whereas Tesco has to face various regulations regarding to perspective of
organisational services and create a disruption in all the legality in sectors.
Environmental: It covers out all the sustainable changes send him the advancement that
is being led by the company for the protection of environment. As a positive factors Tesco serves
out several campaigns through which they try to promote the protection for environment. But as
a negative approach the leads to have various unwonted plastics and pollution that affects out the
global environment (Tunç, 2018).
P5 External and internal analysis of a company to identify weakness and strength.
Strength Weakness
 Strong performance: TESCO has made
boosting strong performance in
pandemic situations by proper
providing all the important supplies to
the customers and also increase their
sales volume by covering impactful
areas In there covering high demands
 Innovation: TESCO tries to deliver the
 Scarcity of products: TESCO usually
have a shortage in the product areas
which will be create effect on
customers and new values in their
buying patterns.
 Issue regarding qualities: TESCO have
address quality control issues through
which they usually get complaints from

products with an innovative approach
and also Implement new techniques and
ideas by risen demands of the
customers and fulfilling all such
activities in all the competitive edge of
market.
 Strong market share: TESCO used to
have a dominant market share as
compared to other Competitive rival
companies end a remain focused
towards their target.
the customers and also frames incident
of customer feedback regarding poor
quality of such products.
 Financial debt: One such weakness of
Tesco is that it is unable to get rid of
the debts as compared to its competitors
and due to financial crisis; it has to
withdraw a lot of products from market.
(Seklecova, Komarcheva and
Shemchuk, 2020).
Opportunities Threats
 High technical advancement: TESCO
and thereby promotes the productivity
and all the operational facilities in their
super market chains by leading to
growth in technological aspects and
advancement while implementing
strategies.
 Increased online management: TESCO
can thereby increase your sales on the
online stores as in the situation of
COVID-19 most of the customers used
to focus on the online shopping this can
help to lead in generating more digital
platforms.
 Joint ventures: TESCO can thereby
implement a joint ventures in the
company through various market
research in order to improve their
performance in all the sectors and
 Raw material prices: As with the
changing pricing of the raw material it
is a issue for TESCO to maintain the
expanded values in all the supply
networks with raising demands of raw
material.
 Expanded global retail: The
competitive threat is thereby being
increasing by lowering the prices that
can affect TESCO in all their
establishments in global network.
 Political issues: The economic
recession and changes due to Brexit can
thereby affect the market value and also
the profitability of company by
threatening the market share in all the
prices in sizes of purchase for the goods
and services.