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Unit 1: Exploring Business - Assignment 2 Understanding Business (University of Greenwich)
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Unit 1: Exploring Business- Assignment 2 Learning Aim: C: Explore the environment in which businesses operate D: Examine business markets Assessment Title: The Effects of the Environment on a Business operate
C.P4 – Discuss the Internal, External and Competitive Environment on a Given Business . I will research a 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 in 12 countries such as Ireland and Thailand. The company was founded in 1919. The business grew massively and had over 100 shops throughout the country within the next decade. Tesco currently has a £ 14.3bn market capitalization as of 2019. Tesco PLC is the 26th largest corporation, the 77th largest corporation in terms of its sales and the 632nd largest in the world.
External Environment 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 1
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• 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 Tesco has highly influenced political and legislative circumstances set on its Quality in its globalised environment with stores around the world. 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 do have concern to Tesco PLC, as these are to influence the following: Product
Cost Demand for Goods Employment Pricing Overall Profits
The economic factors are not in the control of the company and can have unfavorable 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 Demographic always changes such as ageing population and reduction in home cooking made United Kingdom 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 therefore led to trends that have indicated that UK customers having move forward to bulk shopping or one-time grocery shopping. Therefore, this has led Tesco put an increase in non-food items in sale in stores as well as the online store platform. 2
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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 being used by Tesco:
Intelligent Scales Electronic Shelf Labelling Self-Checkout achiness Wireless Connection
Legal Laws and Policies have impacted results and the UK government is changing Common Agriculture Policy which is a terrific example of this impact on agriculture products. The government does want to examine how to deliver subsidies to farmers therefore, these initiatives may result in lower subsidies which influence the farmers. This, therefore, can cause Tesco fines if breached. Tesco PLC is engaged outside grocery stores in financial service services such as credit cards, loans and mortgages. The Prudential Regulatory Authority wants to ease the negative effects of disruption on the continuity of financial. 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 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-found tax on extremely processed and full of fat foods was imposed by the current legislation, this 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 attributes that give an benefit over other businesses Weaknesses: business attributes that put a business at a weakness Opportunities: Environmental elements that could take advantage of Advantages 3
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Threats: Environmental elements that could cause problems for the business A SWOT Analysis involves an Organization's goals and objectives and classifying internal factors and external factors that are either advantageous or harmful to the Organization's main aim 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 has a lot of market threats, clearly for being an obvious target for other bigger consumer food grocery supermarket chains like Aldi, Waitrose and so on. One threat Tesco tries to struggle is Walmart's purchase of Asda. In the UK, branding for shops like Asda Walmart has increased, reflecting a weakening of customer dislike for Walmart. Walmart, being the ninth most respected organisation in the world, is the leading global competitor of Tesco and therefore has the necessary abilities, resources 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 4
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