Running head: BUSINESS ENVIRONMENT

Table of Contents
Introduction................................................................................................................. 2
Part 1...........................................................................................................................2
Kinds of organisations.................................................................................................2
Analysis of organisational structure.............................................................................3
Part 2...........................................................................................................................5
Positive and negative effect of macro-environment on business operations of
TESCO........................................................................................................................5
PESTEL and SWOT analysis of TESCO....................................................................5
Inter-relationship of strength and weakness and external macro-environmental
factors......................................................................................................................... 6
Application of SWOT to decision-making....................................................................6
Conclusion.................................................................................................................. 6
References..................................................................................................................8
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Introduction
Organisational structure refers to a system that helps in defining hierarchy in a
company and it is developed so that it can aid in operating an organisation which can
help it in attaining its goals. The poor organisational design can create the way for
role confusion and lack of coordination that can bear a negative effect on the overall
performance of a company. The business environment can help in bringing threats
and opportunities for a business and understanding of the environment can aid the
managers in the aspect of future planning and decision-making. Environmental
awareness can help in providing intellectual stimulation to the organisational
planners which can help them in making crucial decisions that can help in the
effective functioning of a company. This report throws light on various kinds of
organisations which is prevalent in present times and their different aspects like
scope, nature and objectives. This report elucidates the relationship which exists
between organisational functions and their objectives. This report elaborates on the
effect left by the macro-environment on operations of a business, business
objectives and their decision-making.

Part 1

Kinds of organisations
The private sector companies are run by individuals and the companies for
the sake of profit and they are not controlled by the state. It encompasses the for-
profit businesses which are not operated by the government. The scope of the
private sector is immense as it is a crucial player in the economy owing to input that
is made by it to national income. It plays a crucial role in the creation of employment
opportunities which helps in bringing about industrialisation and community
improvement. The objective of the private sector is to earn profits so that it can
evolve to be a leading organisation. The goal of the private sector is to expand the
market niche by penetrating the international market so that it can increase the sales
and profits of a company. For example, TESCO Plc is the largest private-sector
retailer in the world and it operates more than 2300 supermarkets and convenience
stores. The immense size of the private employer has helped them to negotiate
bargains with the biggest manufacturers that have helped in providing a diverse
range of products to the customer. The company is the largest private-sector
employer within the United Kingdom and it is the largest food retailer which is
instrumental in operating around 1900 stores (Tesco.com 2021). The company
belongs to the tertiary sector as it is not involved in manufacturing products but it
provides valuable service to the customers. The scope of TESCO can be said to be
immense as it has branches in more than 14 countries which is inclusive of China,
Japan, Mexico, Thailand and Malaysia. The nature of TESCO is to provide retailing
services and the company has also developed a non-food business which has
ensured the popularity of the company in the market (Waddington et al. 2018). The
advantages of a private company lie in the fact that total control lies in hands of
those people who own capital which helps in ensuring the efficiency of operations of
the company. The disadvantages of a private firm exist in the fact that they restrict
the transfer of the shares and shares cannot be quoted within the stock exchange.
The companies in the public sector are generally funded out of the general
taxation and it helps in providing a comprehensive range of health services for the
people. The scope of the public service sector lies in the fact that it helps in providing
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health care for the citizens of the UK on the basis of their need for medical care
instead of their ability to pay for it. The staffs in the public sector are provided with
training so that they gain new skills by taking part in the training programmes
(Miskiewicz 2017). It has ensured service of superior quality which have made a
difference in the society and helped business in achieving its objectives of
contributing to societal welfare. For example, National Health Service (NHS) refers to
the healthcare system of the United Kingdom which is funded by the public. The
foundation trusts public sector organisations that provide care to people that are
commissioned by Clinical Commissioning Groups (CCG) and it includes different
kinds of services like primary care, mental health and social care services. The
nature of public sector organisations is that it is made up of various organisations
having different roles and specialities (Steyn 2020). The people who possess
advanced knowledge and skills get involved at the group level and they have a say
regarding health services. The objective of public sector organisations is to bring
about improvements in care quality so that it can aid in providing the highest quality
health services to the people. The advantages of public sector organisations lie in
the fact that they can make benefits with the aid of economies of scale which
includes cheaper pricing and providing a better quality of the service. The
disadvantages of public sector organisations lie in the fact that they cannot be
managed easily and there exists political interference in these companies.
Voluntary organisations refer to the charity organisation of the United
Kingdom which helps in funding research so that it can improve the quality of life of
people. The structure of voluntary organisations is headed by the trustee board at
the helm and the priorities and goals are coordinated with the CEO (Raziq et al.
2020). The CEO with the help of volunteers provides unique services to people and it
caters to the need of the target audience and service users. There exist regulators
like Charity Commissions that oversees the practices and policies being followed in
voluntary organisations so that it can attain its business objective of serving the
people. The nature of voluntary sector organisations is to envision a world that is free
of heart diseases so that it can help people in enjoying a better quality of life. It wants
to provide reliable information regarding heart diseases so that it can help people in
managing their condition. The objective of voluntary sector organisations is to assess
the risk factors which increases the chances of developing heart and circulatory
diseases. The advantages of voluntary sector organisations exist in the fact that they
are widely recognised as they cater to the well-being of the people. Its
disadvantages exist in the fact that they have to adhere to the regulatory
requirements which are set by governments and political authorities. It can be said to
be a third sector organisation as it caters to the well-being and needs of the people.

Analysis of the organisational structure

TESCO follows the hierarchical organisational structure and positions are
divided into various parts which help in ensuring that work is being carried out
efficiently. The organisational structure of TESCO comprises five committees and
they have to report to the PLC Board of TESCO (Nene and Pillay 2019). There exist
11 members within TESCO Executive Committee and they are led with the help of
the Group Chief Executive. The organisational structure in the company can be said
to be highly hierarchical and it reveals the wide business scope of the company.
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Figure: Corporate Governance Structure of TESCO

Source: (Tesco.com 2021)
The Board of Directors of the company comprises 10 members and crucial
changes have been brought about in the board so that it can move the company in
the right direction. John Allan has been appointed as Chairman of Board, Dave
Lewis has been assigned as CEO and Alan Steward has been made new Chief
Financial Officer.
There exist four layers of management at the store level of TESCO which
helps in generating bureaucracy which leaves a bad effect on collaboration and
coordination among the managers (Raziq et al. 2020).

Figure: Organisational structure of TESCO at store level

Source: (Tesco.com 2021)
TESCO has a functional structure and it emphasizes different departments of
the business. They make use of the hierarchical structure as the organisation has
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multiple layers which aid in managing employees in different countries. It helps them
in the management of the different department, stores and people which helps the
customers in getting the best care from the business (Miskiewicz 2017).
There exists a relationship between the different business functions of
TESCO and it has helped the company in achieving its objectives. There are
different departments in TESCO like finance, sales, customer service and human
resources which are interrelated to each other and maximise the potential of the
company customer (Steyn 2020). There exists a link between the sales and finance
function as the sales department is responsible for selling products and they have to
furnish information to the finance department for recording money earned from the
sales. Its advantages exist in the fact that it aids finance function in understanding its
profits which can ensure the success of TESCO. The sales function and customer
service function can be said to be related to each other as sales staff have to provide
excellent service to customers so that they become loyal customers (Hood et al.
2020). The relationship between sales function and customer service function can
provide advantages as it can help in meeting expectations of customers that can
retain the customers. The human resources function can be said to be related to
customer service as human resources train staff so that they provide excellent
customer service.

Part 2
The macro-environment is indicative of external forces that leaves an effect
on the decision-making of a firm. It helps in determining the performance of
companies so that they can perform effectively under the present conditions.

The positive and negative effect of macro-environment on business operations

of TESCO
The financial instability is taking place in the United Kingdom and it will bear a
negative effect on the business operations of TESCO. The customers in the present
times have the tendency of moving towards bulk shopping which can prove to be
favourable for the operations of TESCO as they offer a variety of grocery products
which can lead to improved business operations of the organisation (Waddington et
al. 2018). The customers in the present times are becoming aware of health issues
and TESCO has launched a new brand called TESCO Healthy Living which would
have a positive impact on the performance of TESCO in the competitive
environment. It would be able to provide customers with an appealing way which can
help them in controlling the amount of salt and sugar which will help them in winning
the favour of customers. The Healthy Living branded products have a controlled
amount of salt and sugar which are of great nutritional value and this will have a
positive effect on the operations of the UK retailer (Tesco.com 2021). There exist
self-service checkout points in the present times which can help in furnishing
opportunities in the path of TESCO. It will be able to reduce the labour costs and
provide ease to the customers which can lead to the company profitability.
PESTEL analysis helps in portraying information regarding external factors which
determines the place and position of a business.

PESTEL and SWOT analysis of TESCO

The companies in the UK are subject to the UK corporation tax in regard to
income profits and capital profits. The corporation tax rate is 17 % which can help in
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providing an impetus to the groceries retailer which operates in United Kingdom

(Taxsummaries.pwc.com 2021). The economy of the United Kingdom has
undergone a decline since the referendum that took place in the year 2016 which
would bear a negative effect on the growth of TESCO. The people in the United
Kingdom prefer to choose from abundant products in the supermarkets and they
prefer vast product range which can create a positive effect on the supermarkets
which operate in the UK. They prefer a variety of brands and aisles which are freshly
stocked with fruits and vegetables which would strengthen the overall performance
of grocery retailers in the country (Kanakaratne, Bray and Robson 2020). The
technological advancement in the UK has helped in bringing about automation in the
retail sector which can help the companies in ensuring cost optimisation by the aid of
optimisation of inventory usage (Balaji et al. 2018). The customers in the UK have
different legal rights at the time of buying goods and services which can bear a
negative effect on the growth of the supermarkets in the UK.
SWOT analysis of TESCO
STRENGTH WEAKNESS

The strength of TESCO exists in The weakness of TESCO exists in

the fact that it has emerged to become the fact that it adopts a low-cost strategy
the leading grocery retailer in the UK which has reduced the profit margins of the
which has helped it in winning the trust of company (Hood et al. 2020).
customers.

OPPORTUNITY THREATS

The opportunity of TESCO exists The threats lie in the path of TESCO as
in the fact that it has formed joint there exist other supermarkets like Walmart
purchasing alliances in the supermarket and Aldi which can challenge the privileged
business which have proved to be of position that is presently enjoyed by TESCO.
benefit for the company.

Inter-relationship of strength and weakness and external macro-environmental

factors
TESCO has emerged to increase its relevance for the people which have
helped the company in rising above the competitive pressures which exist in the
global environment. The reputation of the organisation has increased in recent times
which have helped it in getting an edge above the other competitors present in the
market. The company has decided to embark ‘Big Price Drop’ strategy so that it can
pursue a strategy of market penetration so that it can help in increasing sales of the
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company during times of slow economic growth (Alam and Raut-Roy 2019). It has
been found that there has been a decline in the economic growth of the United
Kingdom and its low-cost strategy would be able to attract customers. TESCO has
capitalised on technological advancement taking place in the UK and they have
launched an online network for improving relationship with the suppliers. TESCO
Supplier Network has helped in providing a forum and it has enabled people to make
connection thus improving relationship with the suppliers (Sparks 2019). The
formation of a new purchasing alliance between Carrefour and TESCO have proved
to be useful for them to demand better terms from suppliers as it can help them to
adhere to legal laws that are crucial in recent times. It can help in ensuring effective
marketing and data collection that can provide better service to customers. Because
the organisation may be impacted by outside forces in some circumstances, the
organization's strengths and weaknesses are related to external macro issues. The
organisation is unable to identify several elements that impact management decision
making both directly and indirectly. These macro variables can be found via external
macro factor analysis. The opposing factors that give the organisation power and
weakness are strength and weakness. By analysing these two criteria, the business
is carried out in an acceptable manner. Both aspects are interrelated and have the
potential to raise the risk of an external organization's macro variables (Functional
Structure Organization Strength & Weakness, 2021). TESCO has created a name as
a leading grocery brand in the UK however the decline in the economic growth of the
UK can threaten the growth of the organisation and can weaken the fortunes of the
retail company. The economic condition will affect the disposable income of
customers affecting the profitability of TESCO under the present market condition in
the UK. The efficient network of suppliers of TESCO will help them to produce a
diverse range of products thus appealing to the customers. TESCO makes use of a
low-cost strategy however the technological development in the UK can help in
harnessing the power of automation that can ensure inventory usage optimisation at
minimal cost (Sparks 2019). It can hence be useful in altering its weak factor into a
source of potential strength for the organisation. Technological development can
help in manufacturing products at a lower pricing range that can catapult the growth
of the supermarket.

Application of SWOT to decision-making

Technology adoption can be said to be a strategic imperative for retailers in
the UK as it can be useful for them to stay relevant in the market. The future retail
experience would be propelled by advanced analytics so that they can meet
changing expectations of customers. It has made TESCO involve itself in crucial
decision-making and they have invested in the field of online shopping and built
online-only stores so that it can help in the growth of the company. The company
have integrated online and physical channels so that it can provide a superior
experience to the customers (Kanakaratne, Bray and Robson 2020). The UK retailer
has to produce lower-cost items and they have increased the efficiency of their
supply chain so that it can attest to the needs of customers. The organisation has
closed its distribution centres within Welham Green and Chesterfield for ensuring the
cost-effectiveness of its services. TESCO has entered a deal with Carrefour which
have helped them in demanding better terms for the suppliers which have helped in
strengthening the growth of the company (Rosnizam et al. 2020). The companies
have carried out work together which have helped them in making the best usage of
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collective product expertise and the sourcing capability which have helped the
organisation in achieving its marketing objectives. The alliance has ensured joint-
purchasing of own-brand products and the goods that have helped in providing a
diverse range of products that are desired by customers in recent times. TESCO has
brought out electronic shelf edge labels which have helped in ensuring the
operational efficiency of the company. It has helped in providing pertinent information
regarding the goods that have helped the company in adhering to legal laws in the
UK. The company have also launched an app that has helped them in getting up-to-
date information regarding the location of the goods and in-store product availability
which have helped them in challenging the rivals present in the market (Evans and
Mason 2018). The company has opened new distribution centres so that it can help
in the arena of online orders which can prove to be of benefit for the company.
TESCO works with the communities which have helped them in creating
opportunities for a large number of young people which have helped them in
contributing positively to the community and environment. The company have
developed its own-label brands like F & F clothing which have provided the
customers with great quality products at the competitive pricing range (Wood,
Wrigley and Coe 2017). The company has provided training to effective leaders so
that it can increase the capabilities of the workforce that can lead to company growth
(Zissis, Aktas and Bourlakis 2018). TESCO has made use of warehouse automation
which have helped the company in the area of sorting, scanning and tracking the
products.

Conclusion
TESCO has a hierarchical organisational structure which has helped in
ensuring efficient work in the organisation. There exist five committees in TESCO
and they have to make a report to the PLC board which have helped in coordinating
different functions in the organisation. Technological advancement has been brought
about in the UK which has created the way for automation of the retail sector that
can create the way for cost optimisation. The economic conditions have deteriorated
in the UK that has disrupted services of NHS and it would bear negative effect on the
profitability of the healthcare sector. The strategic alliances have been made by NHS
at the local and national level that have helped it ineffective delivery of its services.
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