Business and the Business Environment: A Report on Tesco

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Business and the Business Environment1
Business and the Business Environment

Business and the Business Environment2
Contents
Section 1: Essay...............................................................................................................................3
Introduction..................................................................................................................................3
Conclusion...................................................................................................................................9
Section 2: Report...........................................................................................................................10
Introduction................................................................................................................................10
P4, M3........................................................................................................................................11
Examine the Macro Environment’s impact over UK Retailer Industry by using PESTLE
analysis..................................................................................................................................11
P5, P6, M4.................................................................................................................................13
SWOT analysis of Tesco Company.......................................................................................13
Porter’s Five Forces Analysis................................................................................................15
Interconnection of strength and weakness with external factors...........................................16
Influence of external and internal factors on decision making process.................................17
Conclusion.....................................................................................................................................18
References......................................................................................................................................19

Business and the Business Environment3
Section 1: Essay
Introduction
This essay is describing the different kinds of scope, size, and structure of numbers of UK
business organizations. This section is describing the interconnection between the different
functions of the business organizations and it is also benefits & drawbacks of these functions on
the business structure.
P1, P2 & M1
Different purposes & categories of Business Organization such as legal structure and
private, voluntary, and public sectors
The business organizations provide the different kinds of services to customers as per the
requests and they are using the different kinds of materials and process to fulfill needs of the
customers on time. The business organizations have the different types of factors i.e. suppliers,
competitors, customers, government activities, trends, distributors, technology development, and
innovations (McNulty and Brewster 2017). In the UK, the different kinds of organizations are
working such as government organizations, profit (private) & public organizations, non profits
(charities, NGO’s,) and Co-operative organizations. For example, the Sainsbury’s is one of most
top private company in the UK and the main purpose of Sainsbury’s is to provide good services
to customers and gain high profit as compared to other competitors. Campbell and Craig, (2012)
has stated that private sectors contains different types i.e. limited companies, sole traders,
partnership & Cooperative companies.
Public organization

Business and the Business Environment4
The public organizations are those companies that are sharing at least £ 50,000 capital in retailer
industry. The public organization is also separate via law from its liabilities and assets. For
example, NHS (National Health Services) is most popular public or government organization in
UK and NHS monitors and controls the operations of public and private sectors.
Profitable Organization
The private sectors have own control on the different activities of business organizations and
these organizations are controlled via private groups. The aim purposes of these organizations
are only profits. It has also found that public sector’s economy is directly controlled via the
government agencies or government. Therefore, the business organizations are performing
different kinds of operations on the behalf of its customer such as the Tesco, Sainsbury’s, ADSA,
etc. are profitable private organizations.
Non-Profitable Organization
Tayuret et al. (2012) have stated that to perform different activities, the voluntary sectors are
including numbers of organizations i.e. business community, voluntary bodies, and charity. The
main purposes of these organizations are to provide best quality services because these
organizations are non-profitable organizations. For example, Cancer Research is most famous
voluntary organization in the UK.
According to Hunter and Werbach (2012), the Ford company is covering different sectors i.e.
resources, management, objectives, and people and working concept of Ford is totally depend on
the technologies, market share, social responsibilities, and company profits. It has also found that
Ford is one of sole trader organization and company is developing its business without legal
formalities (Bryson, 2018). The company management chooses the particular working pattern
and timing for the organizations. But Ford company is facing different competition issues, so to

Business and the Business Environment5
resolve these issues, higher authorizes spend lots of hours for making new business strategies for
organizations.
Scope and Size of different kinds of Organizations
As already said that NGO’s, charities, Cooperative, government and publics is five organizations
whose are working in the UK. It is also found that limited companies are working as the
corporate associations and they have own rights and legal identity. Therefore, company assets
and properties are owned via organization. The limited companies include the micro, medium,
small, and large organization. According to the UK Company Act 2006, the large organizations
must have more than 250 employees and turnover of the organizations must more than £ 25
billion and medium organizations must have less than 250 employees and turnover of the
organizations must less than £ 25 billion. On other side, the small organizations must have 50
employees and £10 million turnover and micro organizations must have 10 employees and £ 2
million. For Example, Sainsbury’s is large business organization and company have 50, 0000
employees and £ 60,000 million turnover. Jason Donervan is medium sized organization and it
has £ 20 billion turnover and 120 employees. Floral and Hardy is small organizations and it has
£ 8 million turnover and 60 employees. AM bid is micro company and it has £ 2.5 million
turnover and 10 employees.
It has also found that the small organizations are facing different issues for sustaining
competition with the large organizations. Therefore, small organization is changing their
marketing and management strategies. The medium organizations are serving large market and
expanding their business in new market, but they are facing competition due to large
organizations. The scope of different business organizations are totally depending on the
company’s products, services, and size. The Coca Cola organization’s scope is to supply and

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produce the soft drinks such as bottled water, ready to drink coffee & tea, fruit juice, energy
drinks, carbonated drinks, etc. On other hand, Oxfam is working as the charity organization and
scope of this organization is to support more resources for protecting company from the new
products and services in market. These organizations are selecting new objectives, goals,
mission, and vision for improving company performance.
Examine different organization’s scope, size & structure and link it to business services,
products, and objectives
Each organization has own objective, services, and products and these things totally depend on
the company’s scope, size and structure. The company’s objective will provide help to manage
company’s operations and functions and it will influence the company operations such as
productions, selling, marketing, etc. (McNulty and Brewster, 2017). For example, if company
has very less employees and these employees have no clear idea about their responsibilities, then
it is very difficult to achieve the company objective and scope on time. Therefore, the size and
scope of company is influencing the company objectives and profits. The large and medium
business organizations are focusing to achieve their companies objectives such as provide good
services to customers, customer satisfaction, gain good profits, etc.
Example:
River Island Fashion is working as the medium sized business organization and it is making the
domestic business and marketing strategy for achieving the company objective (selling company
products and gaining profit) in local market. Whereas, Sainsbury’s is working as large
organizations and it is making the multinational business and marketing strategy for attracting
the global customers by product differentiation and cost leadership.
P3 &M2

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Describe relationship between various organization functions and link these functions with
organization structure and objectives
The structure of organization is totally depending on the organization functions because all
companies are designing company structures and functions on the basis of company objectives &
goals. The business organizations have different operations such as operations & productions,
marketing and selling, customer services, R & D, administration and accounts & finance. These
organization structures are utilizing for achieving the company objectives (Ellison et al., 2012).
For example, IKEA is a multinational company and it is providing different types of services
and adopting new technology. The company is developing company objective and structure for
enhancing the profits and productivity. By using this organizational structure, company is
managing the different functions and operations. The IKEA Company is fulfilling needs of
customers via examine the needs of changing environments and it will affecting the overall
profits and company scope & objectives. The IKEA Company is providing the good quality
products on the low cost. To maintain the company consistency, the IKEA Company is
monitoring and controlling the company structure and operations.
The accounting department of IKEA Company is tracking all daily transactions such as
utilization of resources, selling purchasing, etc. This structural process is managing all
accounting operations of company. The cash flow is ensuring that the IKEA Company must pay
sufficient funds for maintaining company liabilities. The HR department of IKEA Company is
concerning about company policies and legislation rules and maintaining process of company
operations. These all operations and functions are focusing for achieving the IKEA Company
objectives and for achieving these objectives, IKEA Company is utilizing new modern design
and structures.

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The IKEA Company is implementing the corporative objective and it will be supported by the
corporate action plan. The corporate action plan is containing different organization functions
and operations. Then, each company function will use this objective and prepare own functional
action plan with sub objectives and sub tasks. After that, the team leaders and employees will
utilize leadership strategy for managing their operations. It has found that IKEA Company is
achieving the business functionality with the help of team leader, employees, and manager and
they are achieving the company objective by using proper structure. So it can be said that IKEA
Company is developing company objectives and structure for maintaining company functions.
Benefits and Drawbacks of interrelationship between company functions & its impact on
company structure
The interrelationship between company functions are providing different benefits and drawbacks
that are providing below:
Benefits
 It will increase the operational speed of the company.
 It will enhance the operational clarity of the company.
 It will reduce the operational cost of products.
 It will maintain the effective cooperation in business organizations
 It will boost up the profitability of company because each member will share his or her
knowledge with other members (Stadtler, 2015).
 It will enhance the positive connection among all team leaders, employees, and
managers.

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For example, The IKEA Company is utilizing modern interior and design and it is providing
help for achieving company objectives and it is reducing the cost & expanding services in other
countries.
Drawbacks
 It will raise the competition level among different functional department of the IKEA
Company.
 It can enhance the management issues in the IKEA Company.
 Other employees can utilize the information of other department for destructing that
department(Stadtler, 2015).
For example, all these drawbacks can reduce the productivity and company operations of IKEA
Company. This will definitely affect the organization structure. So IKEA Company should
maintain these issues.
Conclusion
It has found that different organizations have set its scope, size and structure on the basis of
organization operations and functions such as products. The companies have also established
interrelationship between company functions.

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Section 2: Report
Introduction
This report is describing the good and bad impact of business environment on the business
process and the Tesco has chosen to complete this task. Tesco is one of most top retailer
company in all over the world. The SWOT and PESTLE analysis has also done for evaluating
the macro business environment in retailer industry.

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P4, M3
Examine the Macro Environment’s impact over UK Retailer Industry by using PESTLE
analysis
Political
The different kinds of political factors are available in the UK that is affecting progress of the
retailer industry in the positive and negative manner. The political stability considers as positive
opportunity for retailer industries. For example, Tesco will continuously earn the same profit via
the home delivery facility or service in whole Scotland and UK. But political instability
considers as negative environment for organizations. The new policies and regulation of the UK
government is putting the negative impacts on operations of the retailer industry for example,
Tesco Company. UK is also leaving European Union that can be reduced the market share of
country in all over world. This process will affect the profit level of small retailer industry for
example, Tesco company because customer base will decrease and it will decrease the sale of
products (Thompson and McLarney, 2017).
Economical
The UK has very low unemployment rate i.e. 3.9 % and it is working as key success point for the
UK in the past years. The retailers industry has reduced the salaries of company’s employees in
UK. UK has left European Union and it has affected the economics of UK for example, Tesco
Company. On the other hand, the UK is importing more than as compared to exporting and it
will put positive impact over the UK economics. For example, in the UK economic, the income
of each citizen has increased that has increased consumer purchasing nature. This effect has
directly enhanced the profits of retailer companies in 2019.

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Social Factors
The social factors are affecting the retailer industry in the UK, because the rates of older persons
or people are increasing with high rate and older persons purchase very less as compared to
younger. So it can be said that the social factors are not favorable for the retailer industry. But
social factors are also putting positive impact over the retailer industry for example, Tesco
Company. Because numbers of office worker & student want to ready meal after work and study
(Eisenberg, 2019). The numbers of females are also joining the office so these situations is
creating high purchasing need of food items and it will enhance the business profit of Tesco
Company in UK. The UK follows high lifestyle and it is helping for enhancing the purchasing
strength of the consumers in retailer industries. Therefore, high purchasing demand is increasing
the productivity of Tesco Company.
Technological
The technological factors are providing the help to decrease the operational cost and maximize
the productivity of the retailer companies. The UK has higher IT infrastructure that is supporting
the operations of Tesco Company and Tesco Company is investing more in this field for
increasing the profits and goodwill of company (Masih et al., 2019). Another factor is R & D
which is reducing the operational cost of Tesco Company. So, the fast development of
technology is enhancing the operational efficiency of Tesco Company. For example, the medium
and small sized retailer companies are utilizing the IT technologies such as mobile and computer
technology for decreasing operational cost of company.
Legal Factor