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How Various Macro-Environmental Factors Affect Tesco Company

University: University of Birmingham

  • Unit No: 3
  • Level: Post Graduate/University
  • Pages: 10 / Words 2459
  • Paper Type: Assignment
  • Course Code: CV84
  • Downloads: 460
Question :

 This assessment will cover following questions:

  • TESCO is the British retail industry in UK. Discuss the various macro-environmental factors that have an impact upon the Tesco.
  • How SWOT or TOWS analysis helps to ascertain strengths and weaknesses of the Tesco.
  • Analyse the impacts that both macro and micro factors have upon business objectives and decision-making.
Answer :
Organization Selected : Tesco

INTRODUCTION

Business environment also known as market environment where analysis of both internal as well as external factors are included which is required by to perform business functions in an effective manner. It is very essential for the management team of the company to examine all these factors before operating their business operations at the marketplace. In this report, TESCO is chosen as the base company which is a well known retail organisation (Abushova, Burova and Suloeva, 2016). This is the company which mainly deals in households and grocery items. Under this report, PESTLE as well as SWOT analysis are going to be conducted which help in examining different factors available at the market which might influence the business functions of the company.

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TASK 1

P1. Positive & negative impacts the macro environment has upon business operations, supported by specific examples

It is said that TESCO is considered as one of the fastest leading business organization deals in groceries as well as general merchandise. It is a British multinational corporation which deals in all over the world where business functions are majorly affected by both internal as well as external factors. Both micro & macro factors are going to be discussed as follows where PESTLE analysis are as follows:  

Political factor: It refers to the element which consist of governmental policies, labor laws, foreign trade policy, environmental laws and many more. All these factors have their own positive & negative impact which might affect the business operations. In reference to TESCO, it has been said that the company deals & operates across the world which includes Japan, USA,  Germany and many more. Changes in governmental policies highly affect the profit margin of the organization (Eigner and et. al., 2019). This is considered as one of the most significant and essential element which affects the functionality of TESCO.

  • Positive impact: It has been identified that political condition of United Kingdom is quite stable & it also support investments which creates positive impact on the business functions of TESCO.
  • Negative impact:There are high number of international wars and terrorist attacks which influences the whole political condition, which leads to impact negatively on the business  functions of TESCO.

Economical factor: Another factor which affects the business functions is economic system of a nation. Some of the factors consist of interest rate, inflation rate, employment rate and so on. In the present context of TESCO, it has been said that economic condition of UK have strong economic position. Which highly affects the profitability and revenue of the company and help them in gaining various opportunities. With the help of developing large number of job opportunities, living standard of individuals will be enhanced (Gupta, Gupta and Gupta,  2019).

  • Positive impact: Strong economic condition of United Kingdom help TESCO for generating more profit and revenue at the competitive marketplace. Therefore, it will assist in generating employment opportunities which leads to increase the standard of living.  
  • Negative impact:Due to rise in labor cost as well as increase in tax rates might affect the reputation and profitability in an adverse way.   

Social factor: Another essential factor is social factor which includes values, beliefs, perception, tradition as well as culture. All these might influence the business operations in a negative manner. Therefore, it is required by the management team of TESCO to identify the needs and wants of individuals before producing goods and services. In reference to TESCO, it has been said that this factor if adopted by the company enhance the brand image and goodwill at the competitive marketplace.  

  • Positive impact :With the help of this element, an organization will be able to satisfy the needs and wants of customers in an effective manner. This as a result increase the brand image of the company (Muhammad Siddique, 2015).
  • Negative impact: Whereas, due to continuous change in requirements of customers needs might affect the profitability of the company. Whereas, many times government force organization in order to implement CSR activities, which affect their profitability of TESCO.  

Technological factor: In the current modern world, it has been said that technology plays significant role in order to attain goals and objectives of the company in an effective manner and within given time frame. In reference to the present organization which is TESCO, managers of the company modify their technologies within every four years so that they can raise quality of products and services in order to remain at the competition. Apart from this, if managers modify their technologies, it is essential to provide training and development sessions to their staff members so positive results will be produced.

  • Positive impact: With the help of adoption of new and upgraded techniques, managers of the company produce high quality of products. Along with this, wastage of goods might be reduced which leads to increase the profitability of the company at the competitive marketplace (Nandonde, 2019).
  • Negative impact: Apart from this, adopting new and innovative techniques on a regular basis minimize the profitability of the company.

Legal factor: In reference to the legal factor, it has been said that there are ample number of legislation which might influences the overall business function of the company. Some of these factors includes health & safety law, equal opportunity act, anti discrimination law and so on, which affects the functionality of the organization. In the present context of TESCO, managers apply such legislation so that they can gain positive advantage. This will assist in providing security to the employees which helps in increasing their efficiency and performance.  

  • Positive impact: This will assist in developing positive environment at the workplace, which might increase the efficiency of individuals working within the organization.
  • Negative impact:Adoption of legalimplications develop complexity within the workplace as if it changes on a continuous basis it might influences the profit margin of the organization.  

Environmental factor: It refers to the element which says that organizations need to perform their business function in such manner that they might not create any kind of harm to the external environment. In reference to TESCO, managers of the company adopt technologies which help in producing eco friendly products and services to maintain their goodwill at the competitive marketplace (PANDEY, 2017).

  • Positive impact: It develop safe, healthy and secure environment to the people which helps in attracting ample number of people towards the organization.
  • Negative impact: Whereas, if the chosen organization implement technologies which produce Eco friendly goods and services will increase the cost of the company.  

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TASK 2

P2. Internal and external analysis of specific organisations in order to identify strengths and weaknesses

TESCO is a British multinational organisation deals in grocery and merchandise products and services. Company was introduced in the year 1919 and is currently having almost 7000 stores across the whole wide world. With the assistance of SWOT analysis, managers of the company will be able to examine their internal strength as well as weakness so that they can develop strategies and policies accordingly (Sarsby, 2016).

Strength

Weakness

  • It has been said that, biggest strength of the company is that it have strong  reputation of the company at the competitive market area. This as a result help them in order to attract large number of individuals in an effective manner.
  • In addition to this, TESCO provide different variety of goods and service which is one of the strongest point of the company.
  • It has also been identified that products and services of the company highly satisfy the requirements of customers which help them in retaining their loyal customers for a longer period of time (Singh and et. al., 2018).
  • In context of TESCO, biggest weakness of the company is that there is high fall in credit rating of the company which might reduce their number of customers. Along with this, it will affect the brand image in a negative manner.
  • Furthermore, it has been said that organisation is facing various issues which might reduce their overall brand image of the organisation.

Opportunity

Threat

  • With the assistance of modified and upgraded technologies, TESCO can provide goods and services through online portals which increases their brand image at the competitive marketplace.  
  • Along with this, with the help of  merger & acquisitions, TESCO can increase their business expansion across the whole wide world in an effective manner.
  • It has been identified that biggest threat for the company is that there is high level of competition within the market which affects their brand name and profitability of the company in a negative manner.  
  • Whereas, due to continuous change in government  regulations, business operations might get affected (Tahseen and Karney, 2017).P6. Strengths and weaknesses interrelated with macro environmental factors

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There are various factors available at the marketplace which might influence the overall business functions of the company in both positive as well as negative manner. There is an interrelationship among the strength & weakness of macro environment, which are going to be discussed as follows:    

Basis

Political

Social

Economical

Strength

TESCO is a well known business organisation mainly adopts all the legal policies, laws as well as legislations formulated by the higher authority or government of the country. By using all the political elements in an effective manner, company will be able to perform their functions and task in an effective and appropriate manner.  

It is also very important for the management team of TESCO to emphasis on the living standards of people so that they can easily attain their goals and objectives at the competitive marketplace (Zahari and Romli,  2019).

As per this factor, it has been said that due to strong economic condition TESCO will be able to gain high profitability at the marketplace by launching new and innovative products.

Weakness

Due to continuous changes in the political factors of UK, cost as well as working condition of TESCO might get affect in a negative way.  

In today's world, major factor for an organisation is that health of customers are more concerned factor which highly affects the business operations of an organisation in an adverse way (Abushova, Burova and Suloeva, 2016).   

It is said that TESCO required to provide their contribution to the economic condition of the country. But sometimes due to modifications in external environment, it might affect the whole performance of th

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