Questions- This assessment will cover the following questions:
- Tesco is a British supermarket chain of the United Kingdom. Examine the macro environment which may have positive and negative impact on the operation of a business.
- How internal and external factor affects the performance of the organisation.
- Identify the relevancy of SWOT analysis to influence the decision-making process of the Tesco.
Business environment is sum of total of all external and internal factors that are outside the control of a business. It is affected the business's performance and sustainability that depend on the company (Apăvăloaie, 2014). The business environment can include elements like improvement in technology, clients and suppliers, laws and government activities, its competition and owners, and social and economic trends. In the context selected the company Tesco PLC, together with its subsidiaries, operates as a grocery retailer. The company also provides insurance services and retail banking. It has operations in the United Kingdom, Thailand, Poland, Slovakia, and Malaysia.
In this report covers Different types, size and scope of organization, identify the interrelationship of various functions of organisation context and link to structure of organisations. Define positive and negative impact on macro environments of business operations. Determinate the internal strength and weakness of specific business to explain of interrelationship with external macro factors.
P1 Different types and purposes of the organizations
An Organisations is an entity comprising by aggregate people, such as an association, an institution that has a particular purpose. There are variety of legal types of organisations, are as follows -
Public company – It is a business whose stocks can be freely traded on a stock exchange or over the counter. The stocks of this type company related to members of the pensions funds as well as general public and other large investing organizations (Armstrong and et. al., 2015). A public company contracts with a private company that is not listed in stock exchange. Mainly this type of company regulated by government and also control. For example – National health services, is the publicly healthcare system for England. It is the biggest single money handler healthcare system in the world, that are funded through the general taxation system and overseen by the department of health.
Purpose – The purpose of the NHS is provide medical facility and comprehensive range of services. It is fulfil to services of individuals patients and their families and their carers.
Private company – A private company is different from a public company that are not traded in stock exchange like that Newyork stock exchange, American stock exchange and Nasdaq. It is the private firm that are regulated and controlled by private individuals (Baesens and et. al., 2014). This company shares are offered, owned and traded in privately because they are not invited to public for theses activities. For example – Tesco PLC is private company based on UK that are retail store providing banking and insurance services. The company serves its customers through 6809 stores as well as online. Tesco PLC was founded in 1919 and is based in Welwyn garden city, the United Kingdom.
Purpose – Tesco PLC wants to be champion for customers and helping them to enjoy better quality of life and an easily way of living.
Voluntary sectors – In this including that companies are relating to community sector, is the duty to provide social activity that are undertaken by organizations. These sectors called non profit, non governmental and third sectors. For example – Amnesty international, is London based non governmental organizations that are focused on human rights of the organization. They have more than 7 million for claim on the members and supports aver all the world.
Purpose – They have to develop a campaign to a world which every persons enjoys all the human rights and other international instruments (Bah and Fang, 2015).
Legal Structure of Tesco PLC – Tesco is a large company would have legal structure to make sure that business is operative correctly. One legal structure of Tesco describe as corporate governance. The people in this sector deal with shareholders of the company. It is make sure Tesco is achieving the strategies that the shareholders want them to achieve.
The legal services deal with any business legal matter that Tesco would have to deal with. The licensing team makes sure that every store has alcohol license and to make sure that it is legal.
P2 Size and scope of different types of organisations
According to different types of the organizations so they have different size and scopes of the organization, they are as follows -
National health services (Public sector) – Size of national health service is world's biggest employers and compiling a list of the top 10, the NHS revealed to be the fifth largest with 1.7 million workers across England, Wales, Scotland and northern Ireland. McDonald's make it into fourth position with 1.9 million employees.
Scope – It's scope is provide services to individuals, affiliated health and social care in different countries to provide health care services (Botha, Kourie and Snyman, 2014).
Tesco PLC (Private sector) – It is a third largest retailer in the world that are measured on the basis of gross revenues and it is ninth largest retailer in the world basis on revenues. It has shops in seven countries across Asia, Europe is the market leader of groceries in the UK, Ireland and hungry. It is basis on market share around 28.4%.
Scope – This company scope is to market leader in worldwide in groceries that are extended to retail store in other countries. It also taking broad level of its subsidiaries.
Amnesty international (voluntary sector) – It is non profit NGO that are services to protecting human rights. Size of the company that they have more than seven million supporters and members.
Scope – Amnesty international, scope is violation is constantly changing and aware to people for human rights to enjoy their rights.
P3 Relationship between different types of organisational functions and link to the objectives
In order to run a business in an effective manner there are numerous department that perform their activities so that company can gain profits (Cai and Yang, 2014). Each department are important and accordingly they assign roles and responsibilities. Therefore, in relation with TESCO, company is gaining profits because the entire department are having better relation with each other. Hence, in order to understand the same in a better way relationship amongst various departments are explained below:
Size and Scope of Organisations- Tesco PLCThis division work with the purpose of providing all the required elements that are important for companies in executing their plans. HRM department assist company in recruiting new and fresh candidates who are eligible for performing activities. In relation with TESCO, Human Resource Department maintains a better relation with other division because before hiring new employees managers consider all the departments in order to know which section have vacant post and require new recruitments.
Operation Department/Production: Research and development can be directly linked with operation and production department because R&D provides operation department with customer’s feedback so that on the basis of this they can make strategies and deliver goods and services (Cascio, 2018). Apart from this, department of research and development after analysing market area provides company with information related to the tools and technologies that are present in the market area. Thus, in relation with the company TESCO, with the help of R&D they are providing services as per the needs and wants of customers.
Sales and Marketing: Company’s profit depends upon the sales and for this it is important that firm should make appropriate strategies and adopt appropriate tools and technologies so that customer can know about the products and services firm is providing. Therefore, it can be said that sales and marketing so hand in hand. For instances: TESCO, is using effective marketing strategies than it will ultimately improve or increase sales of the company. This department can be linked with production and operation department because they can take information related to sales a so that they Operations and production department can have an idea whether they should continue manufacturing goods according to needs and wants of customers (Congleton, C., Hölzel and Lazar, 2015).
Finance Department: In every company this is determined as one of the crucial and important department as each division depends upon finance. Bu this is not the end as if finance department is giving funds than they should also keep an eye on the activities other departments are performing like utilising money in right direction for the betterment of the company. Thus, this will minimise the access of resources but yet manufacturing best product which is of superior quality for its customers.
P4 Positive and negative impacts on macro environment upon business operations
Macro environment factors are those which cannot be controlled by company and it is having both positive and negative impact on business operations. Therefore, it is crucial that manager and leaders of the firm have a capability of anticipating these changes and apply effective strategies for the betterment of the company (Doh, McGuire and Ozaki, 2015). Thus, in order to know positive and negative impact all the factors are explained below:
Political Factor: This factor greatly puts an impact on business of a company and in relation with TESCO it is operating its business worldwide political factor influence the performance of the firm. These may includes laws and legislations, tax rates etc., and there might be a possibility that due to financial instability government can take such kind of action which can force firm in changing their policies and strategies. Other than this, for increasing company’s revenues regulatory bodies can encourage small and medium organisation for providing more job opportunities (PESTLE analysis of TESCO, 2018).
Positive: In United Kingdom, there is a political stability because of which companies doesn’t have to make any kind of changes in their strategies and this is putting a positive impact on business operations of TESCO.
Negative: Implementing new taxation policies such as increase in VAT rate can have a negative impact on sales and revenues. Therefore, there might be a probability that customer lower their spending as a result, sales will decrease and company has to face losses (Huang-Horowitz, 2015).
Economical Factor: This is one of the important factor which is to be looked after by TESCO because this can increase or decrease sales and profitability. Thus, firm should know about the changes and modification done by regulatory bodies like taxation policies, increase in VAT rate etc., as this will assist company in making strategies and policies according to the economical condition and market environment.
Positive: TESCOs’ presence and its diversification in international market is providing success to the company. Due to the annual wage bill of around GBP 4.5 billion United Kingdom’s Minimum Wage Rate rise to around 4.4 percent.
Negative: Although most of the companies in United Kingdom are growing internationally but still they are quite dependent on the market of UK and these firms have a market share of 30 percent in the same. Other than this, economic recession can have a great impact or work as a negative factor this can increase rate of unemployment in a country (Klapper, Love and Randall, 2015).
Social Factor: With the change in course of time fashions and trends are changing because of which perception and choices of customers are also changing. According to the current trends consumers are choosing one-stop shopping therefore, TESCO, after considering this factor they are providing services and facilities as per the needs and requirements.
Positive: For the convenient of people and because of mobility issue of old aged people TESCO, developed online applications and web portals from where people can easily place their order and get their stuffs.
Negative: As trends are changing so the working is, due to online applications it has given different perspectives of shopping but it has decreased rates of employment (Menychtas and et. al., 2014). Other than this, TESCOs, involvement in scandals have adversely affected the image of the company.
Technological Factor: TESCO is a retail company and as time passed technology has provided various opportunities to the firm first it has given opportunity of introduction of online application so that shopping can be made easier. Secondly, self service which has ultimately reduced the labour cost.
Positive: New technologies have increased the sales and profitability along with this it has improved the proficiency of company in providing better services and facilities to its customers. Other than this, it has provided competitive advancement to the organisation.
Negative: Although latest technology is providing benefits to the company but during its initial years of instalment it can create problem for employees to understand the system and work accordingly. As a result, this can decrease the sales and profitability of the company (Moroni, Arruda and Araujo, 2015).
Students also like to read about: Unit 18 Global Business Environment Regent College
Environmental Factor: Most of the companies are now considering this factor and using raw materials which are eco-friendly and doesn’t harm environment. Thus, it can be said that TESCO is adopting numerous measures in order to protect environment. For example: company will reduce its carbon foot printing to 50 percent by 2020.
Positive: This will minimise the wastage of raw materials along with this it will increase conscience of using stuffs that are eco-friendly amongst customers.
Negative: Implementing technologies that are related to eco-friendly activities can cost company little costlier which may require a large amount of money.
Legal Factor: Government formulate rules and regulations so that every company enjoy equal right and nobody is favoured or provided benefits. Therefore, in order to run business in an effective manner it is crucial that all these rules and regulations are followed for greater success.
Positive: Some legal factors can help company in increasing their profit for example: agriculture policies formulated by regulated bodies can directly provided subsidies to farmers.
Negative: Due to some legal factors company might have to change their strategies and action plan which can hamper business operations (Niemann-Struweg, 2014). Thus, sales can be affected so as the brand image.
P5 Internal and external analysis of specific organisations
Every company has some positive and negative factors which can put a positive or a negative impact on business. So, to understand the internal as well as external factors of TESCO SWOT analysis is being done.
P6 Strengths and weaknesses interrelate with external macros factors
External factors are those factors which cannot be controlled by the firm but puts a great impact on business activities (Apăvăloaie, 2014). In addition to this, there are some factors which can act as a strengths and negative for the company. Therefore, some of them are explained below in relation with TESCO.
- Political Factor:
Strengths: In United Kingdom, they have stable government which come up as a strengths for companies and in terms of TESCO it is giving equal chance of implementing new and innovative ideas.
Weaknesses: Current change sin policies or implement of new taxation policies can work as weaknesses for companies because it may change the entire procedure of operating business for the organisation
You can also check other services: Write My Essay
- Economical Factor:
Strengths: Rise in the level of the economy will provides job opportunities for citizens who are living in particular locations. As a result, TESCO is getting eligible employees who are best in performing their activities and it is increasing their sales and profitability in a speculated time frame.
Weaknesses: Recession can put a control on customers in terms of purchasing goods and products. This will ultimately leads to decrease in sales and profitability for the company (Bah and Fang, 2015).
- Social Factor:
Strengths: TESCO is one of the companies that is providing services and facilities according to the needs and requirements of customers. Thus, it is assisting company in improving its brand image in front of consumers.
Weaknesses:As the time changes choice and preferences of customers also changes which for companies can work as a weaknesses. Therefore, companies should identify current trends so that loss can be eliminated.
- Technological Factor:
Strengths:With the help of new technologies company enables themselves in providing best services and facilities. Other than this, it helps company in maintain a better relationship with customers.
Weaknesses: In some cases technologies that are introduced are complicated to understand thus employees can feel frustrated as a result company performance can be hampered (Cai and Yang, 2014).
From the above report it has been evaluated that, providing a better business environment is very important for the growth of a company. As it provides a better working environment to employees so that workers can perform their activities in an effective manner. With the help of this assignment, it has been evaluated that there are basically three types of sectors which are further classified into private, public and voluntary sector. Companies that come under these sectors can be different in terms of their size: some can be large, medium or small, purpose etc., For instance: large companies might establish its business for having maximum profits where as if it compared with voluntary organisation than, voluntary organisation works with the motive of providing better services and facilities to people. Apart from this, while operating business it is crucial that all departments of company has better relation with different departments such as for executing action plan it is important that entire division of a firm maintains a better relation with finance department because without funds no activities can be done. Other than this, with the help of SWOT and PESTLE analysis, both external and external factors which can affect business environment has been understood.
- Apăvăloaie, E. I., 2014. The impact of the internet on the business environment. Procedia Economics and finance. 15. pp.951-958.
- Armstrong, G. and et. al., 2015. Marketing: an introduction. Pearson Education.
- Baesens, B. and et. al., 2014. Transformational issues of big data and analytics in networked business. MIS quarterly. 38(2). pp.629-631.
- Bah, E. H. and Fang, L., 2015. Impact of the business environment on output and productivity in Africa. Journal of Development Economics. 114. pp.159-171.
- Botha, A., Kourie, D. and Snyman, R., 2014. Coping with continuous change in the business environment: Knowledge management and knowledge management technology. Elsevier.