Analyzing the UK Retail Industry: Tesco Case Study

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Running Head: BUSINESS AND THE BUSINESS ENVIRONMENT
BUSINESS AND THE BUSINESS ENVIRONMENT
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Table of Contents
Section 1:.........................................................................................................................................3
Introduction..................................................................................................................................3
Discussion:...................................................................................................................................3
Conclusion...................................................................................................................................8
Part 2:...............................................................................................................................................9
Introduction..................................................................................................................................9
PESTLE Analysis........................................................................................................................9
SWOT analysis..........................................................................................................................11
Porter’s Five Forces...................................................................................................................13
Uses of the models in decision-making.....................................................................................13
Conclusion.................................................................................................................................14
Reference List:...............................................................................................................................15

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Section 1:
Introduction
Organisations can be described and structure or groups of structure that focuses on achieving a
particular goal or objective. Therefore, the modern business world divides the number of
organisations according to unique purposes for which they operate the size of the structures and
the legal condition (Davis et al., 2018). Most of the common ways of differentiating companies
depend upon the goals and purpose and therefore, the most common way of differentiating
organisations is by segmenting them into the private, public, and non-governmental sector.
Discussion:
The National Health Service is a public organisation based in England and the public funds it. It
is one of the largest healthcare organisations, which has a single-payer system in the world and is
overseen and funded by the Department of Health and Social Care. It is one of the largest
Healthcare companies in England, and it has its headquarters in the Richmond House. The
company employs more than 1.4 million people, and the government of England is responsible
for the jurisdiction (nhs.uk, 2018). This organisation is also a non-profit seeking organisation,
and therefore, it requires many investments from different establishments, especially from the
government of the country and the public so that it can carry on its operations hassle-free.
The British Telecom group belongs to the private sector and is a multinational
telecommunications company, which is based on London, England. The company is currently
operating and more than 180 countries all around the world, and it specialises in providing
services like fixed-line, broadband and mobile services in different countries. It also provides
services like IT and subscription television, and the company was founded in the year 1969. The
current revenue of the company is 23.746 billion pounds, and operating income is nearly 3.381
billion pounds. 106400 employees work for the company currently (Btplc.com, 2019).
Cancer Research UK is a charitable organisation, which is based on England and Wales, and the
focus of the company is especially on Cancer Research and health policies so that they can fight
together against cancer and eradicate it totally. The company was created on February 2002, and

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it is situated and London, England. It is the largest Cancer Research Charity organisation, which
is independent, and it depends totally on the funding from the government and the public. It
helps to carry out research activities in universities, hospitals, and institutions and several
researchers fund it too. The company has nearly 4200 employees and more than 40000
volunteers (Cancerresearchuk.org, 2019). The company is a non-profit seeking organisation;
however; the revenue of the company is nearly 634.81 million pounds.
The profit organisation such as BT Group UK has the purpose of making profits by delivering
competent services and products among the customers. It has an e-commerce channel to
distribute the goods and services in regards to maintaining profits and market share. They supply
and distribute through shareholders among the customers. Private organisations supply their
goods against profits. A non-profit or public organisation like NHS has the purpose of delivering
effective services rather than making a profit. They aim to reinvest the social and environmental
projects generally (Butler and Wilson, 2015). NHS supplies across the UK by trusting their
supply chain. It is practical to focus on technical support as the telecommunication industry.
NHS delivers free services and health check-up towards the needy.
NGOs like Cancer Research UK have the crucial purpose of delivering most of the free service
among the needy. They aim to develop society and political change by promoting citizen
participation. Cancer Research UK is a charity as they gathered funds, and then they utilise the
service for the good of the society. They invest free medical services and other support to them
by establishing business development as keeping no profit (Butler and Wilson, 2015).
British telecommunication (BT) is a multinational company. The company provides leading
communications services with a steady increase in revenue over BT. It holds a total of 32%
market share in the UK in 2015. BT manages to increase its market share by 5% from 2007. BT
has revenue of 5.98bn GBP in 2018 (Statista.com, 2019). It has profit chain regarding higher
revenue share with Openreach trailing and EE. From 2007 to 2018, it has grown and stead
sustainability in the market to increase the total of fixed-line call volumes. As broadband is
developing, BT has the critical opportunity to fix the broadband subscribers in terms of fixed-
line volumes. As broadband subscribers, BT stands out with around 28.4 billion minutes in terms
of sustainability (Statista.com, 2019).

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In the UK, NHS accounts for 7.4% of GDB with expenditure on healthcare settings. It has a
market share of 57%. It is considered as the most significant public employers in the UK. NHS
offers affordable pricing with less profit as being public organisation. NHS is expected to
decrease profit share to 7.1% by 2030/31 (Statista.com, 2019). As NHS is the largest public
sector, it has growth and sustainability regarding corresponding health impact and services
among the customers. Environmental sustainability is adopted in the NHS by developing key
aspects and plan to outline a management plan.
Cancer Research UK has market share with exclusive rights to £350 million as market share.
Last year, it leveraged £20 million in the industry for progressing promising cancer research
(Commercial.cancerresearchuk.org, 2019). As it is NGO, the portfolio contains 200 projects for
co-development and licensing of cancer research and free service among the needy. It has
currently established a partnership with AstraZeneca, Merck and others for benefitting the
patients. It has sustainability promises by providing free services. Their commercial partners
look for generating partial profits and growth that is a unique opportunity for Cancer Research
UK.
Micro Enterprises are the companies that exist everywhere, and they generally belong to a very
small-scale business or a micro shop in the neighbourhood. These businesses have minimal
capital and employees, and therefore, this kind of enterprises usually runs with less than ten
people and the capital deposited is minimal as well. Micro Enterprises are essential to every
developing economy, and most of the companies within these economies belong to the micro-
entrepreneurs (Idris and Saridakis, 2018). These companies are responsible for adding values to
the economy, enhancing the income of the people of the country, and lowering the overall cost of
the business. These companies especially provide the local areas with the products and services
and do not indulge in proper training or formal jobs. Small Enterprises are the companies that
employ a small number of workers but have little more sales than micro-companies. These
companies are independently owned and are very limited in size, and even the revenue of the
companies is quite low as well. Most of the companies belonging to this include partnerships,
sole proprietorships and small corporations (Powell, 2018). They range from manufacturing
plants to small convenience stores and employ more than ten people to nearly 50 people. They

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are also divided according to revenues, regulatory authorisation, and other factors and some of
the businesses require a business license.
Medium-scale enterprises are the companies that are larger in size and scope than the small
enterprises, employ more than 50 employees to nearly 250 employees, and carry on with
operations that are expensive and earn good revenue as well. The small businesses that are
successful and have a steady growth generally end up, as the medium enterprises and the capital
required for these companies are quite extensive, as they require buildings, equipment, and
recruitment of employees. They act as the mode of operation between small businesses and big
corporations (Clarke et al., 2017). The large organisation or large-scale enterprises are
companies that are extensive in size and earns vast revenue, not only within the country but
outside the country as well. The operations of this type of companies are also quite high, and the
employees of the company are nearly above 250. Therefore, most of these companies have a
considerable amount of capital, and they face extensive growth and increased investments at all
times.
The different types of the organisational structure according to the size and scope of the
organisation can be divided into three structures, namely, the functional structure of the
organisation, the divisional structure and the matrix structure. The functional structure is such
that every portion of the organisation is grouped to solve a particular purpose, and this type of
structure is the most suitable for small businesses (Lambie‐Mumford and Green, 2017). This is
because every department within the organisation can rely on the knowledge and talent of the
employees who support in such aspects. One of the drawbacks of this kind of structure is that
communication and coordination are restricted, and the different organisational departments
work separately. The divisional structure of the organisation is used by companies, which
operate in large areas or focuses on its operation in more extensive geographic areas. These
companies operate in different types of market areas and manufacture different types of products.
The large and medium-sized organisations use this type of market structure as needs can be
completed more specifically and rapidly. This allows the different departments to work
independently and allows communication to flow between the employees, as the departments do
not work together (Noe et al., 2017). This type of structure is costly to maintain; however, there

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are ample chances of growth with the help of the same. The matrix structure of the organisation
is a culmination of the functional and the divisional structure, and the large multinational
companies around the world usually use this. This is because this kind of structure helps the
companies to carry operations without conflicts and allows dual management, helping to increase
the performance and allowing proper communication to flow; however, according to hierarchy.
NHS and Cancer Research UK uses divisional structure, whereas BT group uses the matrix
structure.
The international structure belongs to the companies, which have an international business,
especially the exporters and importers and this type of organisation has limited access to
international business, as they have no investment outside their home country. Multinational
companies are somewhat more significant than the international companies, and they invest in
other companies all around the world, but the scope of these companies are restricted to the
product offerings in each country (Bartlett, 2016). These types of companies are much more
focused on the adaptation of a new product and service in a particular market, according to the
demands of the local market. Global companies have a global organisational structure, and these
companies have invested in other countries and are even present in different countries all around
the world. These types of companies use a coordinated brand image in all the different market it
operates in and sells the products in the same way. They have an emphasis on efficiency, cost
management and volume (Bolden, 2016). Finally, the translational structure is a very complex
structure in which the organisations have invested in the foreign operations of different
companies, and these companies have a central corporate facility, which is responsible for
research and development, decision making and marketing in the foreign market.
There is a close link between all the departments within the organisations, and this process helps
in the smooth running of the organisation. The relationship between all the organisations helps to
create proper delivery of information, and no time is wasted in fact-checking. The relationship
between the division helps to increase productivity and improve operational efficiency as
relevant information flows within the organisation. It is essential for every department to
communicate as this can help in the free flow of information from the research and development
team to the manufacturing department so that demands of the customers are met and the
company can excel in the market (Christopher, 2016). The finance department is focused on

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funding and budgeting processes so that every operation can be carried out according to the
budgets. The research and development team helps to focus on the current demands of the
market so that the manufacturing department can create the products and services according to
the current demand. The marketing department helps to sell the product and services provided by
the company and make the customers aware of the same (Fairfield, 2016). Therefore, the
interrelationship helps to bring together different walking styles and help to increase
productivity, increasing divergent ideas for every activity.
Conclusion
The about part has focused on the different organisational structure and the types of organisation,
which can be divided according to the size, scope, market share, profit share, growth and
sustainability. It has also helped to understand organisational structures, functions, and the
different type of structures according to the size and scope of the operations. The complexities of
the international, transactional and global organisational structure have been provided, and it has
been shown how the organisation’s mission and objectives as related to the different functions.

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Part 2:
Introduction
The Retail Industry of the United Kingdom is one of the most excellent industries in the country,
which has been contributing extensively to the GDP and different companies at trying to
establish itself in the same industry due to substantial growth opportunities (Laubach and
Williams, 2016). The demands of the customers are changing, and several factors are affecting
the business within the retail industry in the UK. Therefore, it has been essential to
understanding the external factors that are affecting the Retail Industry within the United
Kingdom, and this can be done with the help of a PESTEL analysis. It will be easy to understand
about the different opportunities that can arise from the same and the way these factors are
affecting the company activities negatively.
PESTLE Analysis
Political: One of the most influential factors has been the changing governmental norms and
regulations, which has been affecting the businesses extensively in the modern market, and many
of the small scale companies have been bound to wound up for the same. Different regulations
related to business activities like the sustainability, the health, and safety of the workers, the
anonymity of the workers, the level of competition, the range of operations, the quality of the
product and services and many others have affected the companies (Moore, 2016). There have
been recent amendments to several regulations like the Health and Safety Act, for which the
companies have to change the style of operations they used to do before. The taxes like the
Goods and Service Tax and charges for export and import have increased recently, which is
affecting the profitability of the businesses. Some of the new trends in shopping and retailing of
the products have been dependent on the national debates, in which the government is illustrating
the process as a political issue (Nguyen and Bug, 2016). Recent terrorist attacks have also caused
a problem in the industry, and the politicians have been able to exercise that power on the
retailing system, allowing them to control the supply chain of different companies.
Environmental regulation and protection laws have caused challenges to the retail sector. The

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current changes in monetary policies, tax policies, employment laws, consumer protection,
enforcement law, and the rights of the employees have affected the business directly.
Economical: The current situation of the UK Retail Industry is good, and even the economic
condition of the country is stable. This has increased the buying power of the individuals and has
allowed a free flow of household articles and retail product recently. Several retail companies,
especially the best players like Tesco, Marks and Spencer, Morrison's, and Sainsbury's, have
been able to maintain smooth business all year round (Rose-Ackerman and Palifka, 2016).
However, the companies have been facing problems with the supply of raw materials, and most
of the business heavily depends on the adequate supply processes. The government conventions
for the supply of retail products are helping different organisations to maintain the economic
structure. Most of the companies can provide the people of the neighbouring areas with jobs,
which are also increasing the standard of living of the people and is having a better effect on the
demand and supply of the retailing products (Rubery et al., 2016). The economic stability of the
country is quite good, and this is directly influencing the retail industry positively. However,
specific changes in the foreign exchange and market period are changing the buying habits of the
customers and are affecting the sales of several companies, who have lower infrastructure and
capital.
Social: The current lifestyle of the people of the United Kingdom has been continuously
changing for the last decade, and several social changes have been noticed in the fields of
shopping and retailing business. It has been seen that the attitude and the demands of the clients
have changed and the buying behaviour is changing continuously, which is evidently hard for the
businesses to meet up to the current demands of the market (Cooke, 2015). The customers are
continuously becoming educated and aware of the products and services, and therefore, they
know more about the changing atmosphere of the retailing business. Most of the people in the
United Kingdom have started to prefer branded products, especially from the multinational
companies; however, they like to buy these products at highly subsidised rates. The customers
have started to reject canned or packaged products and started to buy products that are fresh and
healthy (Gerasimov and Gerasimov, 2015). Different social factors like the demographics, the
age division, the income distribution, the population growth are also changing and are having a
diverse effect on the businesses. Due to the changes in social awareness, career attitudes and

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education, the entrepreneurs have started to look for the current demands of the market and
change the product and services according to those.
Technological: The technology has been updated due to the globalisation and has changed
aspects of life, allowed new inventions and development in the industry. With the help of the
latest technology, the competition has become more intense, and the customers are demanding
products and services that are of high quality but the low cost (Gitman et al., 2015). Most of the
companies in the retail industry has developed websites and have started online ordering. The
advent of technology has helped in the process of buying, advertising, and selling the product
and allowed the people to gather information about the products and services. The customers can
compare the prices and the quality online, and new technologies have changed the mindset of the
customers, which has brought them closer to the industry, helping the business to reach out to
them effortlessly (Gutierrez et al., 2015).
Environmental: According to the rules of the government, the companies will have to use eco-
friendly forms of energy so that the environment can be protected and the operations of the
company do not hinder the health of the people nearby or its employees. It has been seen that the
companies investing more in CSR has relatively more sales of the products (Maduenyi et al.,
2015). The government has also restricted the use of toxic products that can cause various
diseases and impede the natural ecosystem. Some of the regulations are affecting the business
but is helping to keep the environment and the rights of the consumer safe.
Legal: The statutory factors have not affected much but has positively influenced the retail
industry and saved it from the problems of smuggling and manipulation of other products. The
government has imposed implications on illegal trafficking, and the industry has to follow the
rules and regulations of consumer protection and maintain the rights of the labour (Kim et al.,
2014). Environmental regulations have to be followed at all times to ensure the safety and
cleanliness of the environment.
SWOT analysis
Tesco will be taken into consideration as the chosen UK supermarket company. Tesco PLC is
one of the largest retail chains all around the world, which is based on Great Britain and is a

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multinational company that has its headquarters in England, United Kingdom. The company is
currently the ninth-largest retail company internationally, and Jack Cohen founded it. The
company currently employees 450000 people and the current net income of the company is
nearly 1320 million pounds. The revenue of the current, as recorded in 2019, is 63911 million
pounds (Tesco plc, 2019).
Strengths
 Extensive brand image
 Economies of scale
 Long-Time experience in the international
market
 Good market leadership in the United
Kingdom
 Huge market share
 The use of Advanced Technologies to
diversify online operations
 High level of digitalisation
 Good research and development team
 Strong product portfolio
 Large customer base
 A large number of stores
 Efficient supply chain
Weaknesses
 Focus on the UK market
 Infringement controversies
 Falling operating profits
 Bad performance in Japan and the
US
High debts and financial errors
 Bad operational performance in
many markets
 Low-cost strategy
Opportunities
 Strategic acquisitions
 Research and development
 To drive the company
 Expanding the business of Jacks
 Online shopping
 Increasing markets
Threats
 Brexit referendum
 Legal threats of fake farms
 Economic crisis
 Credit crunches
 High competition