The current assignment critically explores the intricate roles and functions that apply to different types of organizations, employing Tesco PLC, a dominant UK retail supermarket, as an important case study. This assessment is specifically aimed at Tesco's central duties and activities in effectively addressing the differential needs and expectations of its enormous range of stakeholders, a commitment reiterated in Tesco PLC's formal "Stakeholders" reports as well as their 2024 Annual Report. The assignment further explains the wide-reaching implications of the national economic environment, examining the impact of fiscal policy, monetary policy, competition policy, and regulatory regimes on business activities, employing lessons learned from recent financial reports and analyses (Tesco PLC, 2024; NewswireJet, 2024). The last section of this assignment conducts a critical appraisal of a number of international factors that intensely affect Tesco's trading activities, with specific regard to the distinctive implications of EU-UK trade regulations on its international business strategies, as revealed by its recent strategic transformations.
Different organizations have different goals, depending on their respective structures, business policies, strategies, and other critical factors. As members of a top consultancy firm, our first study is dedicated to the investigation of the particular goals of different organizational types, taking into account their fundamental mission, strategic objectives, and operational goals that are specifically designed for their respective industry and ownership type.
Tesco PLC: Tesco has the reputation as a top-ranked public limited company (PLC) in the United Kingdom, having grown from its initial establishment to a retail giant. Its primary objective, as stated in its Annual Report 2024, is to "serve its customers, communities and planet a little better every day," as well as to strengthen its capital structure by issuing shares to shareholders. This two-horizon approach brings together the creation of social value and good financial performance, as evident in the report's reporting of substantial Group sales of £61.5bn in 2024 and a focus on returning value to shareholders (Tesco PLC, 2024).
National Health Services (NHS): NHS is a highly respected not-for-profit entity in the United Kingdom, funded by the public and government sponsorship. Its primary goal is to provide comprehensive and free health care services to all the people living in the UK, prioritizing public health above profit. This focus on public service mostly decides its operational priorities and investment allocation.
ICICI Prudential is a prominent private organization involved in the global insurance sector. The major aim of this organization is to maximize its margins in the insurance sector. It achieves this goal by offering a wide range of insurance products and services to its clients, focusing on market share and profitability as major parameters in the global financial system.
Beehive Giving.Org is a well-known philanthropic organization backed by the United Kingdom government. The primary objective of Beehive Giving.org is to provide a range of social services for the benefit of members of various groups of people, including those whose objective is to combat poverty and enhance society. The organization evidently does not seek to maximize profits, but its success is gauged in terms of society and the achievement of its mission of philanthropy.
The continued growth and development of any enterprise depend solely on the effective management of its stakeholders. It is important that an organization meet the expectations and needs of these stakeholders, an aspect well demonstrated by Tesco. As indicated in Tesco PLC's official "Stakeholders" document, the organization has a clear intention to pay sufficient dividends to its shareholders, who are seen as the financial backbone of the organization, thereby guaranteeing returns on investment (Tesco PLC, n.d.-a). Annual Report 2024 indicates a dividend per share of 12.10p, demonstrating continued returns to shareholders (Tesco PLC, 2024).
Customers, the greatest and most important stakeholders, are always guaranteed quality products at fair prices with outstanding customer service. Customer satisfaction is the overarching aspect of Tesco's strategy, as seen in its positioning as the "Cheapest full-line grocer" and efforts to enhance brand image, increasing +185 basis points year-over-year in the UK by April 2025 (Tesco PLC, 2025b). The company also employs an internal marketing system unique to employee development (colleagues) as internal customers. Care and attention from end-to-end is provided to all employees to support their continuous development and career growth, as seen by a significant increase in UK store colleague pay announced for 2025 (Tesco PLC, 2025b). Furthermore, Tesco firmly adheres to all government policies to conduct its business ethically and transparently, to assist in regulatory compliance and public trust. The company also makes timely payments to its creditors and suppliers, thus ensuring firm and reliable business relationships to enable integrity in its supply chain.
Tesco's responsibility begins with its customers, whose behavior directly affects the company's profit margins and its long-term viability. The company's strategy is based on providing customer satisfaction through quality product consistency and good customer service. This focus guides its operating and marketing strategies, such as mailing Clubcard Challenges to 10 million customers in order to provide personalized rewards (Tesco PLC, 2025b). The company also has a strong sense of responsibility towards its employees, as their daily performance has a decisive impact on influencing the overall performance of operating processes. Tesco aims to create and improve workplace culture in order to maximize individual employee productivity as well as reduce turnover cost-related expenses, thereby investing in human capital to support long-term productivity and well-being. The role of shareholders to Tesco is significant, as they are crucial to raising capital and fundraising; their trust and continued investment are, therefore, critical. The company fulfills its duty to the government authorities by complying with all guidelines set for ethical business practice, with compliance with the law and contribution to the stability of the national economy through tax and policy compliance. As set out in Tesco PLC's "Governance" and "Sustainability Report 2025," these duties are critical to its business model, with full commitment to corporate responsibility, ethical employment practice, and sustainable processes, including the ambition to cut operational emissions by 65% (Tesco PLC, n.d.-b; Tesco PLC, 2025c).
The economic system, being an important structure for the allocation of resources, usually gets classified into three forms: the Planned Economic System, the Free Enterprise Economic System, and the Mixed Economic System. Under a planned economic system, the government exercises complete control over the allocation of resources. Under this, the government fixes certain parameters concerning the distribution of resources by business entities, usually giving importance to social aims rather than the efficiency of the market. For companies like Tesco, working under such a system may create serious problems, resulting in extreme shortages or excesses of important resources like labor, land, and capital. Moreover, under such a form of economic arrangement, it becomes hard for the authorities to possess complete information on all resources, thereby increasing the chances for miscalculation and inefficiencies.
Under a free-enterprise economic System, government intervention in resource allocation is very minimal. In this environment, business organizations enjoy a high degree of autonomy in using resources, prompted primarily by profit margins and market demands, hence encouraging vigorous market competition. Under favorable circumstances, the system encourages innovation and efficiency by virtue of competitive forces. The Mixed Economic System, however, provides great advantages to small and large businessman alike, which facilitate their efficient use of resources such as land, capital, and labor. Consequently, this encourages creativity and maximizes organizational efficiency. Although the system may at times encourage unethical use of resources if left without regulation, it is generally viewed as advantageous to the country as a whole by balancing efficiency and social welfare.
A mixed economic system combines the strength of a free enterprise economy, in which innovation is driven by market forces, and deliberate government intervention in fiscal and monetary policy. Under such a system, the allocation of resources will be efficient since there are guidelines and regulations that are intended to ensure the interests of enterprises as well as the nation. It significantly reduces the likelihood of fraudulent practices and diversion of resources, thereby providing a stable but reactive business environment for enterprises like Tesco.
In the United Kingdom, the government utilizes specific fiscal and monetary policies to ensure the smooth running of the economy and business entities. The policies give the government the power to enhance the economic power of the country while regulating the commercial activities of various businesses. A change in interest rates by the Bank of England is one of the key features of monetary policy. The prevailing economic times, with high discount rates due to increased government bond rates, have impacted the statutory operating profit of Tesco, as evident from its Preliminary Results for 2024/25 (Tesco PLC, 2025b). A rise in interest rates means an increase in the cost of borrowing for Tesco for expansion and operations while simultaneously reducing the purchasing power of customers, which for the most part means reduced spending on discretionary goods and tighter household budgets (NewswireJet, 2024). Conversely, a drop in interest rates usually means an increase in the profit margins of the organization, as borrowing is less expensive and consumer spending can increase.
Volatility of the exchange rate is a critical component of monetary policy, which in turn influences Tesco's cross-border trade operations significantly, particularly considering its foreign operations and international procurement (NewswireJet, 2024). The volatility is likely to make it difficult for Tesco to undertake cross-border trade because the exact value of the pound in foreign currencies is unpredictable, thus influencing import costs and foreign earnings.
In terms of fiscal policies, changes in taxation—e.g., corporation tax or VAT rates—have significant implications. The lowering of taxation permits Tesco to improve product quality, raise spending on advertisement and marketing needs, or reasonably reduce prices to consumers without impacting its profit margins significantly. Additionally, government spending is significant in organizational growth and development; in most cases, the intensity of sales of private sector companies may have a negative correlation with the intensity of government spending in certain industries, where the rise in the government sector can divert funds or consumer spending. The Tesco 2024 Annual Report reflects a satisfactory financial performance, with adjusted operating profit increasing by 12.8% to £2,829 million, showing resilience amidst adversity in the market, partly due to effective cost control amid economic uncertainty (Tesco PLC, 2024; Grocery Doppio, 2024). This resilience includes allowance for inflation, which over the period 2022-2023 significantly influenced pricing action and cost management in the UK retail market (ResearchGate, n.d.).
The United Kingdom retail supermarket industry has high levels of competition, and Tesco must run its business strategically in a fast-changing environment. Tesco's main competitors are the big players like Sainsbury's and Asda, among other smaller retail outlets. Against its large competitors, Tesco must adopt various competitive strategies like cost reduction, aggressive diversification of brands and products, effective customer relationship management, and ongoing innovations in marketing and advertising efforts. Tesco's aspiration to be the "Cheapest full-line grocer" is a reflection of its competitive strategy, and it has persistently expanded its market share to achieve its highest level since 2016 in the UK (28.3%) by early 2025 (Tesco PLC, 2025b). Against smaller competitors in the retail sector, Tesco must adopt innovative competitive strategies, as these smaller competitors would, in most cases, focus on maximizing short-term profitability through the provision of attractive niche products or localized services. Tesco's sensitivity to the competitive strategies of its competitors is critical in expanding its customer base and enhancing profit margins, as shown in the analysis of Tesco's changing business environment, which often includes SWOT and PESTLE analyses (NewswireJet, 2024). The regulatory policies of the UK deeply impact the business activities of Tesco, and stringent adherence to rules and regulations designed by the government is a must.
The key objective of the UK government is to deliver national economic objectives, and therefore, numerous regulatory tools like regional policies, company acts (e.g., Companies Act 2006), industrial policies, training and skill policies, and enterprise strategies are designed. Such legislation has had to be complied with by Tesco in doing business in the country. For example, industrial policies compel Tesco to engage in ethical employment practices and have a respectful work culture, maintaining fair labor standards. Training and skill policies are most useful for Tesco in making the maximum use of its human resources and training and upskilling its staff. Tesco's quick response and flexibility to regulatory shifts are the heart of its operational steadiness, as constant adaptation to new internet shopping and data protection regulations is an ongoing challenge (NewswireJet, 2024).
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Market structures differ in different countries, and Tesco must implement certain strategic strategies to its price and production choices while it undertakes international operations. The major types of market structures are monopoly, perfect competition, monopolistic competition, duopoly, and oligopoly. All of these structures have certain challenges and opportunities for firms concerning their market power and decision-making.
In the monopolistic market, there is a single firm or two firms with great control of the overall market situation. In such a setup, price is usually determined by the leading firm according to its own interest, where maximum profit is the focal point. In this setup, marginal cost and marginal revenue of the product are usually equal at the level of profit-maximizing output, and consumer price preference is usually overlooked as there are no substitutes.
A perfectly competitive market provides the scenario of intense competition among numerous firms operating in the same market, where individual companies have no capacity to control prices. The United Kingdom supermarket business with numerous players provides a context relevant to this scenario imposing high competitiveness on Tesco. Tesco, in this case, cannot control prices independently; rather, it performs the role of a price-taker. Therefore, its strategy towards output becomes the only available choice that can assist in minimizing opportunity costs associated with capital investment while maximizing profit margins. Consumer demand and willingness to pay are central to determining price choice and production in this market scenario, as companies have to respond to the market signals prevailing in the market.
Monopolistic market structure is one in which products are highly differentiated from each other, so that companies making such products can have some control based on their unique brand characteristics or features. In such a market structure, although some substitutes for the uniquely differentiated product may be non-existent, there are substitutes that are equally similar. Pricing policies and production decisions must be in harmony with the uniqueness of the product as well as its perceived demand in the market place. A duopoly market is similar to a monopoly but is characterized by the existence of two dominant firms that in most cases have strategic interaction with each other. Under duopoly, consumer price preference may have a diminishing impact on the strategy of one firm; production decisions are usually made in a coordinated fashion or with consideration of the action of the competitor, mainly for the attainment of joint profit maximization. Finally, in an oligopoly market structure, few firms control the market, leading to sophisticated, high-level competitive pricing policies that are implemented in response to market demand and increased inter-firm rivalry.
Before making any strategic decision, an organization has to conduct a detailed analysis of various market forces, including demand and supply patterns, elasticity of demand and supply, consumer behavior and lifestyle, prices policies, realization of economies of scale, and decisions related to output levels and cost structures. Tesco, being a large retail supermarket, is mainly interested in demand for its products in the market. If the demand for a product is high, the organization needs to increase its supply rate in order to reap opportunities in the market and, in the process, reap maximum profit margin.
Second, customer buying behavior and attitudes towards a product are very significant to Tesco when formulating market expansion strategies and gaining a competitive advantage. Customers are likely to stick with Tesco due to its ongoing provision of quality products and superior customer service. This strategy enables the company to use a flexible price strategy, considering that loyal customers are likely to show willingness to pay a premium to ensure maximum satisfaction of the company's products. Tesco's Clubcard loyalty program, with 22 million UK households as of October 2024, is responsible for building valuable information to personalize offers and enhance the shopping experience, thus depicting a strong customer-focused strategy (Eightception, 2024; Grocery Doppio, 2024).
Demand elasticity is the term used to describe the principle that allows businesses to determine at what point the demand for their goods reacts to price adjustments, which is highly beneficial when designing adaptive price strategies. Similarly, supply elasticity helps businesses make production decisions regarding their goods and services, based on the price and demand patterns of the goods in the market.
Chasing economies of scale has the effect of being greatly advantageous to the organization, enabling it to make the most out of profits by incurring a lower cost per unit with each rising level of production. Tesco uses its extensive network and smart supply chain to capture these advantages, negotiating reduced costs from suppliers and allocating fixed costs effectively (Grocery Doppio, 2024).
Tesco has been seen to place added focus on the quality of its products, with Finest range revenues well over £2.5 billion in FY24/25, reflecting a course of action of targeting premium customers as well as providing value-based offerings (Tesco PLC, 2025b). This strategy also enables reduction in the cost of production, hence generating revenue collection. The broader market context, including both internal factors (such as organizational structure and culture) and external factors (such as competition and PESTEL forces), constitutes another core market force that affects Tesco's strategic responses. Stakeholders in the external environment include customers, while employees, shareholders, suppliers, and creditors constitute the internal environment. Tesco's strategic adoption of AI-driven stock management and the expansion of its Whoosh rapid-delivery service to over 1,500 stores by 2025 also demonstrate its responsive adaptation to shifting consumer behavior as well as technology improvements (Tesco PLC, 2025b; ResearchGate, n.d.-b).
Its commercial and cultural context contributes largely to the development and growth of Tesco. The commercial context is relevant to take into account political aspects (e.g., new internet shopping legislation and data protection acts), social aspects (e.g., increased demand for healthy food and plant-based food), economic aspects (e.g., inflation affecting consumer spending), and technological aspects (e.g., spending on internet shopping and data analysis) (NewswireJet, 2024). In Tesco in the United Kingdom, it often has to deal with challenging situations like labor issues and limitations on resource allocation due to stringent government legislations and regulations on the way of doing business.
The economic determinants that play a major role in influencing Tesco's business environment include the rate of employment (which affects consumers' purchasing power), Gross Domestic Product (as an indicator of overall economic well-being), the inflation rate (impacting costs and prices), and variations in National Income (which influence consumers' discretionary spending). The social determinants include the customers' attitudes, expectations, and perceptions towards the business, as well as dynamic relationships between the business and various stakeholders, such as employees, suppliers, shareholders, creditors, and government authorities. The business is sensitive to social fashions, such as by increasing its range of plant-based foods to meet health-conscious consumer demand (NewswireJet, 2024).
The technological determinants are highly beneficial to the business as it assists to enhance the quality and quantity of its output by spending relatively small amounts of money in a very short space of time, thus considerably reducing the cost of production through automation and digital innovation, as well as focusing on cybersecurity controls to safeguard consumers' data (NewswireJet, 2024). The operations environment of Tesco depends primarily on the internal culture of the organization. It is developed on effective coordination and communication among the management and workers. A strong and adaptive internal culture helps the organization address a variety of key challenges and respond accordingly to the developments in the market while attaining its diversified goals. Tesco's effort to reduce employee turnover by providing a friendly working environment and a desirable benefits package is a reflection of its focus on internal cultural development (Eightception, 2024).
Empirical evidence shows that economic growth of U.K. depends heavily on foreign trade. Tesco, being a leading and globally recognized retail group, plays a major role in economic growth of the UK through international trade operations. Market growth potential in the case of international trade is very high since Tesco operates business processes with companies from various countries. This not only increases the profit margin of the company but also heavily boosts its customer base, thus exploring new markets and demographics.
It has been noted that despite the fact that the government has occasionally taken drastic measures, including the raising of taxes and duties on imports to help domestic businesses, international trade is important to the growth of Gross Domestic Product in the United Kingdom. More specifically, international trade is advantageous to Tesco because it allows the company to realize economies of scale through the operation in multiple countries, thereby enabling it to benefit from higher volumes of purchases and standardized procedures. This situation enables the organization to conduct its operations in a broad market with a significantly high margin of profit. In some instances, international trade leads to low costs of production because the company benefits from the fact that there is cheap labor and cheap resources in foreign nations compared to its home country. The organization is given the opportunity to compete globally, which opens a wide scope for it and overall growth, hence the promotion of innovation and the development of a competitive advantage.
Tesco, being in international trade, has encountered many types of international factors which prevent it from increasing smoothly in the international economy. First of all, there are different types of restrictions imposed by international organizations such as the World Trade Organization (WTO) on international trade. For instance, the import duty and the export duty of some nations are extremely high for which Tesco must bear a tremendous amount of cost in this regard, by which the profit margin is severely damaged.
Secondly, the BRIC Economies (Brazil, Russia, India, and China) emerging markets, where developing nations are prioritizing their own economic growth, are crucial to the trading activities of Tesco. This is due to the fact that the BRIC Economies focus mainly on the growth of small-scale local enterprises and can enforce strict policies guiding the prohibition of the use of cheap labor, thereby promoting local employment.
Thirdly, Tesco must carry out business activities in various nations because the global business environment is inherently strict. The global business environment consists of a complex interdependence of economic components (e.g., global recessions), legal components (e.g., different intellectual property legislations), political components (e.g., geopolitical tensions, trade wars), social components (e.g., cultural differences, consumer activism), and environmental components (e.g., climate change legislation, demands for sustainability). The political tensions between countries can sometimes adversely affect the organization's brand image.
Exchange rate is also a major international factor that hinders the growth of Tesco in the international market. In times of economic downturn, exchange rates are raised by most nations as a means of restricting foreign business and promoting local businesses. This is not good for the UK retail businesses, including Sainsbury's, Asda, Walmart, and Tesco, in operating foreign business. Tesco's decision to exit some foreign markets, like Japan (2011), the United States (2013), South Korea (2015), Thailand, and Malaysia (2020), is an indicator of responsiveness to the intricacies of the international market and focusing on core regions that provide profitability (ResearchGate, n.d.-b). The February 2024 announcement of the disposal of Tesco's banking business is also an example of a strategic move to simplify its operations and rebalance risk exposure, fueled by the changing regulatory landscape (Tesco PLC, 2024).
United Kingdom businesses, for instance, Tesco, had to adhere to numerous EU rules and regulations that were enforced by the European Union in the course of foreign trade operations. Today, even though some direct EU policies are abolished, their legacies and underlying philosophies have a tendency to continue influencing UK regulatory environments and international trade associations. Firstly, the employment policies that were enforced by the European Union were extremely stringent, with the aim of ensuring fair labor standards among its member states. Businesses were obligated to offer minimum wages to employees according to the grade level of experience and expertise that the employees had, while low-cost labor was entirely banned by EU directives.
Second, the European Union has put in place a set of directives in its Regional Policy. As per the regional policy of the European Union, national applicants were to be given priority in the employment process, and the organization was to take necessary action to counter any regional or cultural differences within the workplace so that harmony prevails. The European Union has put in place a set of guidelines with respect to inflation. During a period of high inflation rates, it is only natural that banks' interest rates would increase, thereby reducing the spending power of consumers. During such a scenario, the European Union emphasized the need to strengthen the exchange rate so that international trade can be managed, thereby allowing local businesses to conduct business and maximize their growth potential.
The European Union has emphasized the importance of the Education and Training Policy to enhance the skills and capabilities of local candidates. The policy was essential in response to the impacts of globalization and integration of different cultures, potentially leaving local candidates behind in accessing the best employment opportunities. The EU formulated this policy to foster economic growth and establish local expertise. The European Union has also adopted taxation policies aimed at curbing international trade while encouraging local business. Organizations participate in international trade to enhance the volume of their business, which sometimes negatively impacts local traders and suppliers. The increase in import duties and tariffs reduced the growth of international trade, thus presenting an opportunity for local traders and suppliers to grow in the business market. Despite the withdrawal of the United Kingdom from the EU, import/export duty adjustments and adjustments in trade agreements still impact Tesco's international supply chain and price policy (Tesco PLC, 2024).
The assignment provides a comprehensive examination of the intricate business environment that influences an organization's operations and strategic direction. It explains the different aims of an organization, the critical role of the national context in commercial operations, organizational behavior in the competitive market environment, and the dramatic impacts of global factors on international business. Based on Tesco PLC as a case and detailed study, backed by its Annual Report 2024, Preliminary Results 2024/25, and recent business analysis, this assignment clearly shows how these wide-ranging factors individually and collectively influence and define the business environment of a leading retail organization between the years 2022 to 2024.
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References
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Author’s Bio:
This content was authored by Dr. Evans Taylor, a distinguished academic and business analyst specializing in strategic management and the retail sector. With a Ph.D. in Business Administration from a leading UK university, Dr. Taylor's research focuses on the dynamic interplay of macroeconomic factors, market structures, and corporate strategy. His expertise encompasses PESTEL analysis, stakeholder engagement, and the impact of global trends on multinational corporations. Through his meticulous research and analytical approach, Dr. Taylor provides valuable insights into how organizations like Tesco navigate complex business environments to achieve sustained growth and fulfill their multifaceted responsibilities.
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