Business Environment Analysis: Tesco's Internal and External Factors

This report provides a comprehensive analysis of Tesco's business environment. It begins with an introduction highlighting the importance of understanding internal and external factors for business strategy. The report then delves into Porter's value chain model, explaining its primary and supporting activities, such as inbound logistics, operations, outbound logistics, marketing, and service, along with procurement, technology development, human resource management, and firm infrastructure. The report applies this model to Tesco, examining its operations, market position, and strategies. It discusses Tesco's expansion, technological adoption, and business model. The internal environment section focuses on how Tesco utilizes the value chain to gain a competitive advantage, detailing its inbound and outbound logistics, operations, marketing and sales, and customer service. The reflection section emphasizes the value chain analysis's role in understanding competitive advantages, efficiency, and profitability. The report concludes by summarizing the key findings and the effectiveness of the value chain analysis in assessing Tesco's business environment. The report provides a detailed overview of Tesco's internal and external environment, offering a clear understanding of its business strategies and market position.

Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Value chain Model......................................................................................................................3
TASK 2............................................................................................................................................4
Tesco...........................................................................................................................................4
TASK 3............................................................................................................................................5
Internal environment ..................................................................................................................5
REFLECTION.................................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
It is very important for every business to understand the overall environment & various
factors which are related to business, in which they are functioning. This is very important so
that strategies can be formed based on that research (Ammar, Shobaki and Abu-Naser, 2017).
This is a report which is a essay, involves understanding of the external and internal environment
of a business. Tesco is a multinational brand which is having its headquarters in England, United
sates. It is third largest retailer across world measured by its gross revenue. This is a important
tool which is helping in achievement of business objectives by forming of various strategies by
the concerned authorities. There is discussion of value chain analysis which is a part of this
report used for understanding the factor of external and internal environment of Tesco.
TASK 1
Value chain Model
Figure 1Porter's value chain

This is a model which is related with the analytical framework and is assisting in
identification of various business activities which can help in creation of value & a competitive
advantage for a business. There are certain activities which are part of this model which are
helping in developing a understanding of various aspects of this model. This model is divided
into two parts first part is Primary activities and second part is secondary activities which is
related with supporting activities. Primary activities consist of various aspects such as Inbound
logistics which is related with this is related with receiving of raw materials storing them and
then distributing them so that tit can be used in the production process. Another stage in this
activity is Operations which is related with raw materials usage which is processed and then
final product is made from it (Brzezinska and Markowski, 2017). Another aspects of is
outbound logistics which is distributing the final product to customers when usage of raw
material is done in the production process and a final product is developed. Marketing and sales
is related with promotions, advertising and organisation of sales distribution channels which is
helping in distribution of final product to their target segment of customers. Last aspect of the
primary activity is the service which is associated with maintaining the overall performance of a
product after it has been produced this is related with maintenance, repairs and providing after
sale services to their customers.
Supporting activities includes certain activities such as procurement which is having a
relation with how raw materials gave to be obtained for production finished products.
Technology development which is used in the stage of research and development so that new
products can be designed and developed by usage of automation of various process. Another
aspect is the human resource management which is including various activities of hiring of
employees and retaining them which can help in building, designing and market the finished
product (Choi, and Park, 2016). Last factor of this part is the infrastructure of the firm which is
related with the organisation overall structure and management and other functions includes
finance, accounting & mechanisms which are related with quality. This model is effectively used
by many companies so that they are able to understand what are the major functions which are
taking place in their organisation and its basic impact on achievement of laid objectives.

TASK 2
Tesco
This is a Tesco is a multinational general merchandise retailer and its headquarters are
present in Garden City. This is one of largest retailers of world according to gross revenue which
this company is earning. This is a business which expanded very quickly and there were approx
100 stores of Tesco in the year 1939. this is listed on the London stock exchange. They have all
types of stores ranging from small convenience stores to large hyper markets. There are around
3000 stores in UK. This is also one of first stores from which people used to buy stuff. There are
many rivals of Tesco who are helping in. this is largest retailer of UK. This is having largest
retailer and they are having profits growth of around 28%. Since 2008, this brand has been
expanding themselves and they are having a high share in markets of Asia. They have
successfully launched different types of stores such as Tesco Extra, Tesco Home plus, Tesco
super stores, Tecso Metro and many other innovative type which are helping them in having a
large share in the market. They are using a superior technology and have a best way so that they
are able to enhance the shopping experience of their customers (Durakovic 2016). Such as they
have adopted technologies such as RFID and various M-Commertce facilities. This is a retailer
chain which is also having a very simplified business model as they have been have to reduce
their overall cost and adopted efficiency in their waste management policies. They have also
introduced a new store which is named as Jacks which is offering discount and this is big
opportunity for this brand which can help them in growing and expansion with low cost
investment (Ferdyn-Grygierek and Baranowski, 2015). They have also made plans for formation
of various strategic alliances with various other brands by forming strategic partnerships with
already established companies so that they are able to form a monopoly in the market and
remove the unwanted competition.
TASK 3
Internal environment
This can be understood with the help of Value chain analysis given by Porter. In this it is
divided into two parts Primary activities and supporting activities.

Primary activities:
Inbound logistics this is related with complex operation's which is involving supplying
of approx large variety of products to all the stores of Tesco which are present across globe.
Economies of scale are very large as this is a major source of creation of value for Tesco. This
company is making investments regularly so that they are able to increase their capacity of
logistics and economies of scale can be exploited by this company up to a larger extent.
Operation this is basically divided into three segments such as retail which is the core business
of Tesco PLC (Khan, Alam, and Alam, 2015). Another is manufacturing which is related with
the grocery chains in which this brand is selling their own products and third is banking in which
there is a wholly owned bank of Tesco PLC. Outbound logistics is another aspect which is
related with how cost effective and flexible deliveries of value are in Tesco outbound logistics.
This is a supermarket chain which is offering home delivery options for various purchases which
are made online from Teco Direct. They also offer home delivery from various outlets physical
stores of Tesco. Marketing and sales is used as a main marketing tool for communication of
message of the chain of supermarket. The marketing strategy of TESCO is attempted to associate
with various competitive prices by offering wide variety and best quality of products. Tesco is
also aiming to restore the trust of their shareholders so that various damages can be addressed
which is affecting their brand image which is caused by various commercial and poor supplier
treatment. Service which is related with customer loyalty and this is focussing on reduction of
cost so that customer service can be provided without any additional cost (Neven, Nawrotand
Bollati, 2017). Service which is related to loyalty of customers based on their frequency of
shopping from Tesco stores. This is helping in achievement of various business objectives.
Secondary activities also play a very important part in facilitation and coordination of
various activities in the primary value chain activities. This can be understood with the help of
various factors such as firm infrastructure which is denoting to various activities such as quality
management, financing, planning and strategic management. Effective management of
infrastructure is required in Tesco so that overall value chain can be optimised. Various
infrastructure activities have to be strengthen so that they can attain competitive positioning in
external market (Kraja, and Osmani, 2015). Human resource management is also analysed in
Tesco so that various aspect of HR such as recruitment, selecting, training can be analysed and
managed in Tesco which can help in reduction of competitive pressure which is based on

analysing of hiring cost of employees in organisation. Technology development is part of value
chain which is helping in integration of production, distribution and other activities such as
marketing, human resource which is helping in development of technology in this organisation.
Procurement in value chain is denoting the process of purchasing of inputs which can be
machinery, raw material and other items which are helping in having cost efficiency and
differentiation in the company.
REFLECTION
Value chain analysis is very helpful in understanding of the competitive advantage of a
company. this is related with the way companies can strengthen Themselves in achievement of
various business objectives. Companies are using value chain analysis so that they are able to
deliver increased value to their customers. This is very important for creation of efficiency by
analysis of various activities which are part of primary activities of value chain. This is helping
in boosting of overall profitability of company and then helping in reducing the negative impact
of competitors present in the market. There is a major advantage of this analysis there are five
activities which have been mentioned in this report which is helping in developing a overall
understanding of what a value chain is all about in a organisation and how it is helping
companies such as Tesco. It is related to creation of efficiency in the overall process which is
used by Tesco in their manufacturing process. Value chain analysis has two divisions the
primary activities which has been discussed with reference to Tesco help in overall
understanding of various activities which are very important for starting of the manufacturing
process. Such a inbound logistics help in raw materials to be at the desired place so that further
operation's can be conducted and then finished products can be made. After that it includes
marketing and sales aspects which is helping in promotion of the product an dinacrtesi9ng its
sales as making of products is not enough but the major target of Tecso is to maximise their
profitability which can be achieved only if their sales are maximized.
Another very important aspect of this value chain analysis is the supporting activities
which are helping the primary activities to take place in a effective manner. This includes the
infrastructure of the firm which is most crucial for conducting of all the functions in a
organisation. Another aspect is the human resource or employees working at various different
levels in the company, who are solely responsible for performing all the functions. Procurement
is also a aspect which is helping the organisation in arrangement if various necessary resources

without which no function can take place in and organisation. At last this includes technology
which has started playing a major role as new technologies help in adoption of methods which
could simplify complex process.
It can be said that primary activities is very helpful for TECSO in addition of value to the
production process. Competitive advantage can be derived by Tesco from various technological
advancements and innovation taking place in a business process. Various support activities such
as 'information system' and management of a company are also a effective sources which can
lead to generation of differentiation advantage for a company like Tesco.

CONCLUSION
From above Essay it can be concluded that Value chain analysis is a model which can
help in making a internal analysis of a organisation in a more effective manner. This is a tool
which is developed by Porter and is playing a very crucial role in understanding the impact of
various primary & secondary activities taking place in every organisation.

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