LO1 Provide an understanding on the main elements of the internal environment of organizations and the interaction with the external environment
LO2 in what way does market economy functions and the role of government in same
LO3 Discuss the economic environment in which Tesco operate in UK
LO4 the reason that benefit is generated from trading with other countries
LO5 Create an awareness of the growing impact of European Union on British Business
The report will be prepared in 3000 words
In what way does business, cultural and natural environment design the behavior of Tesco
No doubt that the culture and environment of business have a significant impact on the behavior of organization. Business environment can be economic and non-economic. When it is economic environment it includes economic system, economic policies and economic condition. On the other hand, non-economic environment consists of natural, demographic, technological, legal, political, and social environment. Adding on, the natural environment comprises of geographical and ecological factors that influence the organizational behavior. Factors involve availability of natural resources, weather and climatic condition, location aspect, topographical factors etc. It is imperative that these factors have direct impact on the business environment of Tesco.
- Introduction (400 words)
- Body of the report- How do the Business, Cultural, Natural Environments shape the behavior of your chosen organization? (1500 words)
- PESTLE and SWOT analysis and example (600 words)
- Conclusion (500 words)
Business environment comprises of economic and non-economic environments. Economic environment factor includes, economic policies, economic condition and economic environment (Amankwah-Amoah and Wang, 2019). Whereas, non-economic environment involves, technological, legal, demographic, natural, social and political environment. All theses factors directly or indirectly affect the business activities in the open market place. This assist the firm to gain competitive advantages against competitors which is a positive mark for the organization. By scanning the business environment effectively top level management is able to plan long term objectives so that business can be in the leading position among other. For the completion of this report Tesco is selected. It is a multinational retailer in United Kingdom. This leading organization is located in Hertfordshire, UK.
The first store of Tesco grocery was opened in the year 1931 near London, England. The founder is jack Cohen and the CEO is Dave Lewis. Business provide distinguish subsidiaries such as, Tesco bank, Tesco Ireland, Tesco Mobile and many more. In the competitive market place Tesco's main purpose is to create value for customers in order to build loyal customers for longer time duration (About Tesco, 2020). There are 6,800 shops worldwide which are serving those goods and services which are meeting the emerging needs of customers. There are 450, 000 employees working day and night to full-fill- the set goals and objectives in the specified time duration. company is able to gain huge revenue in the cut throat competitive world because a wide range of high quality product such as, clothing, grocery related products, travel insurance, household products and so on is offered by the firm. This assignment covers, how business, cultural, and natural environment shape behaviour of Tesco.
Changes in the climate is a major concern for every business because they need to come up innovative idea which is friendlily in nature. By this organization is able to survive and sustain in the market over the years. Additionally, Pestle analysis (political, economical, social, technological,environmental and legal factor) is determined in order to make necessary improvements in the loop holes so that business can survive for longer time duration. By doing so business is able to compete with rivalry prevailing in the global market. SWOT analysis is evaluated by the company operating in the open market place in order to identify the opportunities prevailing in the global market (Black, 2019) . On the other hand through this analysis management is able to determine the future threats which will be impacting the business activities greatly. It helps Tesco to make strong strategies so that impact of uncontrollable and controllable threats can be reduced on company functions. Additionally, organization's strengths and weaknesses are classified accordingly which guide the firm to grow and develop their business accordingly in the intense competitive world.
How business, cultural and natural environment shape the behaviour or attributes of Tesco
In the open market place behaviour of Tesco is influenced by many factor like, cultural, business and natural environment. All these affect the smooth functioning of the business in the global market due to which set goals and objectives are not meet in the desire time frame. Below are the brief expatiation of the aspects which shape the behaviour of Tesco which are illustrated as under:
Business culture environment shaping the behaviour of Tesco:
Business culture and environment and environment greatly influence organizational behaviour. In the open market place there are two types of business environment which are, economic environment and non-economic environment. Economic environment covers, economic policies, economic conditions and economic environment. While, non-economic environment involves, legal, technological, demographic, social and political environment. Cultural environment involves, customs, practices, behaviour and beliefs which are commonly identified in the people living within certain population. It influence the Tesco regarding how staff members are effectively managed and tackled based on their priorities and values. On the other hand cultural environment is also impact organizations decision making process and guide management regarding how to enter a new market successfully in the intense competitive world. Business culture environment shape the behaviour of Tesco in positive way.
Economic policies: This impact the behaviour of the Tesco because long term plans need to be changed accordingly. It shapes the behaviour of the employees working day and night for the attainment of the set objectives because they are provided with trained according to the new economic policies. It includes, redistribution of income from rich to poor, taxation, circulation of money and decisions made about government investment (Blahova and Haghirian, 2017).
From the above graph it can be summarized that economic plays a vital role in shaping behaviour of the organization. The main role of economic policy is to upgrade economic growth . Pink colour refers to as rate of change of Gross Domestic Product (GDP) and OECD since 1961. In order to accomplish theses goals governing bodies adopts certain tools that under the supervision of the government. Tesco need to work effectively in order to operate the business smoothly.
Economic conditions: In the dynamic environment economic conditions shape the behaviour of the Tesco because they need to frame strong strategies in order to overcome the challenges created by conditions of the economic. Management conduct appropriate sessions regarding the economic conditions taking place in the nation in order to shape the behaviour of the workers respectively. Some of the examples are, fiscal policy, inflation, unemployment rate, monetary policy orientations and many more. By effectively following economic conditions in an organization the chances of survival raises tremendously. It shapes the behaviour of Tesco in positive way.
Economic environment: It is another aspects which is shaping the behaviour of Tesco in the cut throat competitive world. Interest rates, business cycle, debt and savings, labour market, inflation and deflation, consumer confidence and many more. The behaviour of Tesco is shaped because top level management need to work day to day operation activity. By this skilled and potential employees can be retained for longer time duration in the working premises. It helps the company to gain desire outcomes smoothly in short time duration (Domanović and Janjić, 2018)
From the above data it can be concluded that how business environment is shaping behaviour of firm. The GDP% is 500 out of 900 which is stating that management of Tesco need to work more hard in to other to be in the leading position.
Natural environment shaping the behaviour of Tesco:
Natural environment are uncontrollable in nature but greatly contribute in shaping behaviour of Tesco. Top level management of organization prepare policies by scanning the external environment in order to reduce their influence on business behaviour. Business associates keep eye on the natural environment in order to mould their business activities accordingly.
Availability of natural resources: Resources are limited in number so organization need to utilize them effectively and efficiently. This helps in shaping the behaviour of Tesco because they will motivate and train their staff members to used them wisely. Also, various sessions will be conducted where employees will be taught how to come up with productive outcomes with minimum resources in the intense competitive world. It will the organization to compete with the rivalry prevailing in the open market place which is a positive mark for the business (Grant, 2016)
Climatic condition: The raising global warming a major concern for everyone. Organization need to come up with innovative idea which is ozone-friendly in nature. Also, workers who are are the part of Tesco should be encouraged to come up with creative idea which is safeguarding the surrounding. The raising climate temperature is a major concern and firm need to look into it as soon as possible. All the long term plans and innovation idea should be designed by keeping in minds the raising climate change which is occurring day by day.
Location aspects: The behaviour of Tesco is shaped by location aspects as well. Location of the organisation plays a significant role in making the business successful (Yassin and Guindy, 2017). Business located in prose area gather more revenue as compare to business associated located in out area. The demand of the goods is more in local area so employees are motivated to mould their behaviour accordingly so that customers needs preferences and demand can be ascertained accordingly. By this set goals and objectives of the
Illustrate PESTEL and SWOT analysis
Pestel analysis is deeply studied in order to better understand the external forces impact on the business. By doing so business is able to compete with the external rivalry present in the open market place. On the other hand business is able top grow and develop successfully in the cut throat competitive world. This is because organization is well aware about the external forces and strategies are prepared to overcome them. Pestle analysis directly or indirectly assist the business associates to accomplish their set goals and objectives in the specified time duration. Political, social, economical, technological and so on are stated as under:
Political factor: Foreign trade policy, corruption, labour law, trade policy etc. are examples of political factor. Example: UK political factor is stable so Tesco business can be expanded easily and huge revenue can be maximized (Hamilton and Webster, 2018) .
Illustration 1: Pestle analysis, 2018
Source: Pestle analysis
Economical factor: Some of the examples of economic factor are, tax rates, policies, governmental activity etc. Examples: Tesco is able to attain set standards because economic factor influence organization involving all essential trends in the economy (Temelkova, 2018) .
Social factor: It covers, education level, wealth, religion, purchasing habit so on. Example: Tesco is able to compete with the rivalry prevailing in the market because management is fulfilling society people expectation level on priority level.
Technological factor: It impact the business both positively and negatively depending on the situation.Example: UK is technologically advance in nature people of this nation welcome innovative goods and services more. Tesco come up with innovative goods in the market due to which loyal customers can be build for the the years.
Environmental factor: Raising climate, pollution, etc. are sample of environmental factor. Example: It impact Tesco because they need to use the limited resources in effective manner. As well as need to come up with ozone-friendly goods which is not depleting the environment. It will help the company to survive for longer time duration (Harris, and Roach, 2017) .
Legal factor: Consumer law, labour law, safety law and so on are involved in legal factor. Example: Tesco's day to day operation is influenced by legal factor because adaption of legal factor helps to retain skilled and potential employees for longer time duration in the intense competitive world.
Organization is adopting SWOT analysis because it helps to examine both positive and negative side of individual analysis as well as guide the how to compete in large open market place (Rosenbach, 2018) . On the other hand it helps to business associates in designing a business model particular to the company. Brief illustration of the SWOT analysis is done as follows:
- Huge brand reorganization: Example: Tesco has huge brand recognition across the globe as it has received many awards for its best customer services, shopping experience and retail excellence.
- Maximize huge revenue: Example: Tesco is the biggest retailer in UK due to which organization is able to gain huge profit in the intense competitive world.
- Loyal customers: Example: Organization is able to build loyal customers for their goods and services because of their efficient supply chain network. This helps Teco to full-fill customers demand and preferences in the set time frame.
- Creating job opportunity: Example: Tesco is the Europe's largest private company who is offering 743K job opportunities and is raising the living standard of the people to a large extent (Kurtz and Berston, 2019) .
llustration 2: SWOT analysis, 2019
Source: SWOT analysis
- Close stores: Example: Organization has to close down their stores from japan and US because they failed in export operations (Prowle and Lucas, 2016) . Due to which heavy financial loss need to be beard by Tesco in the global market.
- Reduces goodwill: Example: The goodwill of the organization reduced because of showing wrong accounting in the book. They presented misrepresentation of revenue due to which Tesco's market value reduced tremendously.
- Wrong pricing tactics: Example: The pricing strategy adopted by Tesco for its goods and services is creating tough challenges for them because low cost pricing strategy has cut-down their profit margins (Namada, 2018)
- New stores: Example: Tesco has huge growth opportunity in the market because recently management has come up with jacks Discount Store which is capable enough to compete with Aldi and Lidl. This is because it is providing high quality product at low price to its targeted customers.
- Joining hands with other firm: Example: Tieing up with other top multinational companies is a better growth opportunity for them. By doing so sales ratio of the Tesco's product can be raised rapidly in the market.
- Grow business in other nation: Example: Another growth opportunity for Tesco is that it can expand their business in other countries such as, Turkey, Indonesia and South Korea. This particular step will help the company to raise customer base for their goods and services tremendously.
- Brexit referendum: Example: Brexit eferendum is impacting trade deals and cost which is a emerging threats for Tesco in the open market place (Okeyo and Peter, 2016).
- Economic crises and credit crunches: Example: Instability in economy has greatly influenced Tesco's operational efficiency and overall performance in critical region.
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From the above report it can be concluded that business environment plays a vital role in the growth of the organization in the intense competitive world. Business environment comprises of economic and non-economic environment which influenced the business day to day working style tremendously in the intense competitive world. By identifying economic environment factor which includes, economic policies, economic condition and economic environment and non-economic environment that covers technological, legal, demographic, natural, social and political environmental factor organization frame strategies accordingly in order to over come the challenges created by them. By doing so set goals and objectives of the firm can be attained in the specified time duration.
By determining the environmental factor organization is able to flourish in the international market and are able to gain huge profit. However, these factor covers weather, climatic, location, natural resources, topographical factor and many more. Natural environment covers ecological and geographical factors that directly impact attributes of the business. Organization behaviour aid in better management of the business functions as well as upgrade employees skill. Through this productive results are attained as compare to competitors. However, organisation behaviour helps to management to become more flexible in nature and assist them easily adopt to the dynamic environment. Moreover, it helps to implement the company on global scale. In order to conduct smooth functioning of the business in the working premises it is important to study firm's behaviour.
There are distinguish factor which are impacting the behaviour of the organization which are, ethical code of the company, legislation, government rules and regulations, social pressure and so on. SWOT (strengths, weaknesses. Opportunity and threats) analysis is the most essential aspects which need to be performed by the organization. By doing so business is able to train their staff members to that they overcome the threats which is prevailing in the international market. The another benefit which is gained by organization through SWOT analysis is that they are able to capture opportunities present on the market for the betterment of the business in the intense competitive world. It also helps management to work on the loop holes in order to attain better results as compare to previous benchmark. Additionally, strengths are measured so that business can work effectively and efficiently in order to sustain in the market for longer time duration. Pestle analysis is another aspect which is important for the business associates to study briefly. In order to grow the business successfully in the international market firm should be aware about the political, social, economical and so on condition. By doing so less government interference take place and business is able to capture huge market ratio. However, it provide strategic planning to expand their business smoothly worldwide.
You also check out:-
Books and Journals
Amankwah-Amoah, J. and Wang, X., 2019. Opening editorial: Contemporary business risks: An overview and new research agenda.
Black, K. U., 2019. Business statistics: for contemporary decision making. Wiley.
Blahova, M., Palka, P. and Haghirian, P., 2017. Remastering contemporary enterprise performance management systems. Measuring Business Excellence.