Farhaan Muhammad BTEC Level 3
Pearson BTEC Level 3 national Foundation Diploma in Business
Unit 1: Exploring Business- Assignment 2
Learning Aim:
C: Explore the environment in which businesses operate
D: Examine business markets
Assessor: Suzanne Sharples
Assessment Title: The Effects of the Environment on a Business
operate
BTEC Level 3 National Extended Business Studies | Unit 1: Exploring Businesses C.P4 –
Discuss the Internal, External and Competitive Environment on a Given Business.
In this Task, I will research a PLC: Public Limited Company, I will examine and address the internal-
external and competitive environment. I will include a study that discusses these environmental
factors in a company and how the company reacts.
Tesco PLC
Tesco is a PLC Limited Public Company and is the leading brand in the grocery chain
supermarket and merchandising. It is located un 12 countries including Ireland, Poland and
Thailand
The company was founded by John Edward Cohen in 1919. The first Tesco store opened in
1931. His business grew massively, and he had over 100 shops throughout the country
within the next decade.
Tesco currently has a £ 14.3bn market capitalization as of 2019. Making Tesco PLC the 26th
largest corporation, the 77th largest corporation in terms of its sales and the 632nd largest
in the world.
External Environment
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,Farhaan Muhammad BTEC Level 3
External environment has multiple factors on companies and does have a impact. PESTLE
Analysis is used to determine when and why they will succeed
• Political: for example. Tax policies, restrictions on trade, tariffs
• Economic: for example. Economy, interest rates, economic growth, rate of inflation
• Social: for example. Age distribution, language, education, demographic patterns
• Technological: e.g. Research and development, the advancement of engineering
• Legal: e.g. Health and safety, laws, regulations for consumers
• Environment: e.g. Recycling, laws, environmental protection, waste
Political
Operating in a globalised environment with stores around the world, Tesco has highly
influenced political and legislative circumstances set on its Quality
Tax Plan was introduced by the government in the UK which had an impact on Tesco. The
Thailand government increased the VAT from 17.5% to 20%. This increased Tesco’s Cost of
sales and affected Tesco a lot. This led to a decrease in revenue and profits for Tesco.
UK Government introduces Fat Tax which effected Tesco. The Fat Tax was introduced to
lower obesity on certain products. However, Tesco did introduce Healthy Food Section
afterwards in the late 2014
Economic
Economic factors are of great concern to Tesco PLC, as they are likely to influence the
following: Product
Cost Demand for Goods
Employment
Pricing Overall
Profits
These economic factors aren't in the control of the company and can have adverse effects.
However, even if Tesco is predicted to grow bigger and bigger in the UK Food market any
downturn on the food will have Tesco to be affected by it.
Tesco is without a doubt growing significantly. There is an increasing rate of unemployment
with economic recession. Due to this, many people have minimum wages or even access to
disposable income. Hence why Tesco is offering food at lower price at lower quality which
ends up decreasing company's overall profits. the decrease in the workforce is ultimately
hurting the profits and lowering the numbers of dividends that shareholders receive.
Social
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,Farhaan Muhammad BTEC Level 3
Demographic changes such as ageing population and growth of the female workforce and
reduction in home cooking made UK retailers concentrate on products and services which
contained added value
Tesco introduced online shopping to focus on elderly and people with mobility issue. Tesco
has gotten very successful doing this.
Social changes have led to trends that have indicated that UK customers having move
forward to bulk shopping or one-time grocery shopping. This led Tesco put an increase in
non-food items in sale in stores as well as the online store platform.
Technological
Technology has a major factor on many developments of products and services which Tesco
offers. Technology helps Tesco reach its potential by offering customer service through
online and reaching out to customers on long distant areas. The following Tech are not
bieng used by Tesco:
Intelligent Scales
Electronic Shelf Labelling
Self-Checkout achiness
Radio-Frequency Identification
Wireless Connection
Legal
Laws and Policies have impacted results and the UK government is changing Common
Agriculture Policy which is a great example of this impact on agriculture products. The
government wants to review how to distribute subsidies to farmers therefore, these
initiatives may result in lower subsidies which impacts the farmers. This therefore, can cause
Tesco massive fines if violated.
Tesco PLC is engaged outside grocery stores in financial service services such as credit cards,
debit cards, deposits, loans and mortgages. The Prudential Regulatory Authority aims to
reduce the negative effects of disruption on the continuity of financial services that may be
influenced by how financial services organisations, such as Tesco PLC, operate.
Environmental
Environmental issues have been one of the major societies-based issues that threaten food
retailers, a key area to address this is for companies to act in a socially responsible manner.
Tesco's corporate social responsibility includes the aspects in which a corporate social
responsibility.
Organization exceeds the minimum obligations imposed by regulations and corporate
governance on stakeholders. The government intends to launch a new strategy to reduce
waste, reduce resource consumption and mitigate damage to the environment. A new tax
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,Farhaan Muhammad BTEC Level 3
on highly processed and fatty foods was imposed by the current legislation. The so-called'
fat tax' directly affected the subsequently modified Tesco brand lines, impacting both
manufacturers and consumers ' relationships.
SWOT Analysis
SWOT Analysis is a structured planning method, evaluating four key elements of a business:
strengths: business characteristics that give an advantage over other businesses
Weaknesses: business characteristics that put a business at a disadvantage
Opportunities: Environmental elements that could take advantage of Advantages
Threats: Environmental elements that could cause problems for the business
A SWOT Analysis involves specifying an Organization's goals and objectives and identifying
internal factors and external factors that are either beneficial or unfavourable to the
Organization's goals and objectives.
Strengths
Tesco is the leading market of grocery which offers a value of money like their motto “Every
little Help.” Tesco has 7,000 stores worldwide. It has also opened subsidiaries such as Tesco
Extra, Tesco Local and Tesco Express. Tesco uses loyalty cards to help maintain customer
loyalty
Weakness
Tesco experience in some of the market they entered such as own branded smart devices.
A lot of cash is needed to be invested in web tech and IT. Therefore, this can affect sales
from Teso PLC. Debts has also affected Tesco as the utilising of the credit cards as well as
high insurance claims from households.
Opportunities
Many opportunities for Tesco as it can expand In the digital entertainment. It can invest in
Blink Box and have 80% of its ownership and it can aim foreign markets where the product
is the most viable.
Online shopping offers customers flexibility. This is by expanding sectors operations.
Families which have financial struggles or maybe too busy to cook can be accommodated by
Tesco's value depending on their needs. Overseas expansion such as Australia will offer an
increase in profits
Threats
Tesco PLC is faced with a lot of market threats, which is further emphasised with it being an
obvious target for other bigger consumer good grocery supermarket chains like Morrison's,
Sainsbury's, Aldi, Waitrose and so on. One danger Tesco tries to fight is Walmart's purchase
of Asda. In the UK, branding for shops like Asda Walmart has expanded, reflecting a
weakening of customer dislike for Walmart. Walmart, the ninth most valued organisation in
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, Farhaan Muhammad BTEC Level 3
the world, is the largest global competitor of Tesco and therefore has the necessary skills,
resources, experience and funds to cause problems for Tesco.
Conclusion
SWOT Analysis helps the organisation to find the opportunities and threats they then find a
way to enhance probability after doing this. Once the threats are detected, they are
analysed. However, the assessments do change the time. Tesco is constantly developing
experiencing flexibility to optimise success with failures kept to a minimum possibility
Tesco PLC tailors their resources to potential market opportunities to improve their financial
plans further, allowing specific targets and priorities to be set. Tesco PLC is well secure for
its future through the philosophy of proactive planning and economic understanding, as it
has a diversified market strategy that accommodates a growing number of consumers
online shopping, digital products, grocery stores and other services or improving financial
plans T
BTEC Level 3 National Extended Business Studies | Unit 1: Exploring Businesses C.P5-
Select a variety of techniques to undertake a situational analysis of a given organisation
Situation Analysis of businesses
In this task, I will report the reasons for the success of Tesco PLC. I will explain the
Organisational Structure, as well as the Relationship and Communication between External
and Internal Stakeholders, will support the Organizations in helping them achieve their goals
and goals, thereby making them successful.
Porter’s 5 Forces of Competition
Porters 5 Competitive Forces is for determining and analysing competitive strengths.
The System of the Porters 5 Forces is a tool to evaluate a company's competition. It extracts
five distinctive parameters (known as the' forces' in this instinct) that assist in assessing
competitive strength, thereby providing an industry's attractiveness (or probably lack of
attractiveness) concerning its overall profitability.
Sometimes, Strategic Analysts use Porter's 5 Forces of Competition to fully understand and
provide themselves with an overall picture of a certain business location that defines the
potential future profitability of certain products and services. The principle can also be used
to identify areas of strength, strengthen vulnerabilities, and help avoid errors.
Porter’s Five forces of competition include
The Supplier's Power: This is an evaluation of how easy it is for suppliers to drive up prices.
This is driven by several key factors including the number of suppliers, the uniqueness of
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