Unit 1 Micro and Macro Business Environment Assignment
Unit 1 Micro and Macro Business Environment Assignment delves with the aspect of business environment for the biggest retail organization in UK named TESCO where there will occur the exploration of the relationships that the retail organization is having with the different stakeholders as well as the ways by which the wider external environment will be influencing as well as shaping the decision-making aspect of the business. There is also the aspect of analyzing the relation between the structural as well as functional aspect of the retail organization.
b) Various organizational functions and explain how these connect to the organization’s objectives and structures.
For answering this scenario, the selection of TESCO PLC has been done. The different organizations functions comprise of design and production, finance, human resource, sales and marketing, administration, research and development.
- Design and production – This is associated with the aspect of attaining resources towards the production of good that will assist in providing different services. There is also the need to organize the resources for actualizing the targets in a way that is considered very cost effective.
- Finance – This is associated with the aspect of preparing the accounts, paying the remunerations, collection of resources as well as allocating the budgets. (Johnson, 2011)
- Human resources – This is associated with the aspect of recruitment, retention as well as terminating the staffs. There is also the function associated with training, developing, and promoting the staffs. There is also the existence of the aspect of monitoring as well as maintain improved working conditions as well as having connections with the trade unions.
- Sales and marketing – This is associated with the aspect of conducting market research that takes into consideration both primary as well as secondary research. There is also the consideration of the marketing mix having the involvement of the 4Ps that comprises of the product, price, place as well as promotion. There also occurs the performance of sales promotion techniques with the help of various advertising campaigns. (Jenkins, 2011)
- Administration – This is associated with the aspect of performing clerical work in association with the aspect to handle mails, producing documents as well as organization of meetings. It plays a pivotal role in respect of security, health and safety, as well as maintenance.
- Organizational objective: The objective of TESCO is to be the champion in respect of the customers, assisting them towards enjoying an improved standard of life. Since, customers aspire for high quality products at a less price that they are able to easily purchase it is TESCO’s job in delivering this in the correct manner for the customers. As a business establishment, the sole objective of TESCO is to serve the customers in an effective way. The other core objectives of TESCO are associated with understanding the customers, being the first in meeting their requirements and acting in a responsible manner in respect of their communities. (Iqbal, 2011)
- Organizational structure: The organizational structure of TESCO is considered to be hierarchical that is reflecting its large business size. There exist four layers of management at the store level in certain big stores of TESCO. TESCO is mainly following the tall hierarchical structure, to be more precise. The reason for this is that TESCO is a very big organization that comprises of different layers of hierarchy. (Furnham, 2012) The benefit associated with the hierarchical structure is mainly in relation to its productiveness. With the assistance of this organisational structure, TESCO is functioning without facing any major hindrances. There is strong connection amongst the organisational structure as well as organisational function of TESCO that states that for the effective working of TESCO’s various operations there is the requirement for a planned structure that will be in sync with TESCO’s functions.
a) Develop an in-depth understanding of the impact of the macro-environment.
TESCO’s PESTLE Analysis:
- Political (P) – As TESCO is functioning on a global scale, international political factors hugely impacts TESCO’s performance that constitutes of tax rates, legislation acts as well as the country’s stability where TESCO is having its base. Because of the continuous unstable conditions globally, various governments are encouraging the retailers in creating jobs in respect of the local population. Since, TESCO is playing a crucial role in the creation of scope for employment, it is also simultaneously, increasing the product’s demand as well as workforce diversity. (Furnham, 2012)
- Economical (E) – The economic factors are associated with the aspects of leveraging costs, demand, profits as well as prices. As a result, there should be awareness in TESCO regarding various changing scenarios regarding policies that includes changing scenarios regarding taxation or other factors that are influencing the financial convenience. There is the requirement towards mentioning the fact that even though there is occurring a global growth in the business of TESCO, the company is still having a strong dependence on the market in UK having a market share of almost 30%. In this respect, globalizations as well as diversification are the two major strategic aspects that the organization pursues for a longer period of time.
- Social (S) – Because of different changes regarding the social aspects, trends are indicating that UK’s customers are moving towards mass shopping as well as one-stop shopping. TESCO did the increasing of various non-food products in respect of sale. (Frydman, 2013) Since, customers are getting more health conscious, TESCO has did the adaptation of these changing aspects through the accommodation of the demand regarding products that are made of organic materials.
- Technological (T) – Technological advancements have helped TESCO in having different new scopes. The aspect of developing as well as introducing facilities regarding online shopping in respect of home delivery is considered to be one of the aspects and the other aspect will be including the self-service checkpoints that are offering convenient aspects as well as effortlessness in respect of customers that as a result, will do the reduction of the cost of labor. For the fulfillment of its long-term goals regarding the reduction of the carbon footprint, TESCO did a major amount of investment in respect of projects that are associated with energy efficiency. (Lussier, 2011)
- Legal (L) – The performance of TESCO are also directly influenced by the policies of the government as well as legislations. For the aspect of facilitating the various policies, TESCO is providing its customers with reduction of prices in respect of the fuel that they are purchasing in relation to the amount that they are spending on their grocery stores.
- Environmental (E) – In respect of the growing pressure on the organizations in respect of addressing issues related to the environment as well as for adopting functional methods that will be beneficial to the society, TESCO is having clear commitment for the reduction of its carbon footprint by 50% till 2020. (Boone, 2015)
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TESCO’s SWOT Analysis:
- Strengths (S) – TESCO is considered to be the biggest UK retailer having a 27.9% market share. The two competitors of TESCO are not even close to the market leader. Sainsbury, one of its competitors is having the market share of 16.6% and ASDA, another competitor of TESCO is having the market share of 16.4%. To have the biggest market share is allowing TESCO towards the generation of considerable revenues. Moreover, TESCO is using online sales channel that is having an increased level of effectiveness. For instance, TESCO’s online grocery market in 2015, grew ahead of the market at 20% even though the organization did the posting of pre-tax loss of GBP 6.37 billion in the same year. TESCO is deriving considerable benefits from its Clubcard in varied levels. Primarily, it can be sated that Clubcard is efficiently utilized as a tool for increasing the retention of the customers as well as customer satisfaction and loyalty, and secondly, the Clubcard is playing a pivotal part for the collection of significant data in respect of behavioral aspect of the customers which is then used by the organization towards the improvement of its contribution of value. (Berger, 2011)
- Weaknesses (W) – In 2015, TESCO faced a major loss of GBP 6.4 billion, pushing the company’s net debt amount to GBP 8.5 billion. In addition to this, the company’s total leverage debt has increased to GBP 22 billion. There were cases related to the wrong declaration of accounting statements that included an overstatement of commercial income by GBP 208 million as well as there were also cases of mistreating the suppliers.
- Opportunities (O) – There are the options of forming a strategic alliance with the other organizations, there is the scope of opening new stores, of having joint ventures. There is also the scope of rebranding the champion stores with the help of pioneering digital media advertisements as well as promotional aspects. There is the opportunity for entering into emerging markets with the help of acquiring smaller chains as well as tie-ups. Also, there is the scope towards focusing on the aspect of boosting the selling of non-food products as well as the growth of private label. (Barden, 2015)
- Threats (T) – Tax fluctuations are considered to be a threat that is impacting the financials of TESCO. The growing cost of raw materials from both food as well as non-food items will be influencing the overall margin of profit. There is also the threat associated with the maintenance of low-cost operational aspects as well as low prices regarding the circumstance associated with economic recession. There is also the occurrence of threat from growing competition from the arrangement of other retail stores as well as organizations. (Lussier, 2011)Three major competitors of TESCO that can be a significant threat for TESCO are Walmart, Carrefour as well as Debenhams.
b) Reflective statement on the impact of the micro and macro factors
Impact of the micro factors:
- Suppliers – I believe that, to source products that are utilized regarding production or resale as well as to distribute the inventory of TESCO to the customers, it is considered to be a significant aspect. TESCO is relying on the suppliers for materials and to function in a profitable manner, I feel TESCO requires getting efficient product value regarding the supplied materials and in return they will be offering better quality products to the customers.
- Resellers – According to me, the resellers will influence the marketing success when TESCO’s products will be brought to the market with help of the 3rd party resellers that are also described as the market intermediaries such as the retailers, wholesalers and many more. (Baker, 2010)
- Customers – According to me, the customers are having the most direct microeconomic influence in respect of a business. The main reason for that is TESCO will not be able to successfully function without attracting the right customers that are being targeted. So, it is very essential to have the knowledge of the appropriate type of customers as well as doing the development of efficient marketing communication planning.
- Competition – I believe that the competition level will be impacting the economical aspect as well. A large section of competitors in the retail industry will be signifying huge product demand whereas, when there is absence of competition, TESCO might not be having sufficient demand for getting success in the long run. (Baines, 2012)
- General public - I feel that the domestic community as well as the media will also be influencing the continuing image of the business at TESCO. Communities are time and again providing assistance in respect of TESCO that is offering job opportunities, paying taxes, as well as functioning with social as well as environmental accountabilities.
Impact of the macro factors:
- Political impact – For conducting effective decision making process in respect of marketing, I believe, there is a need for considering the political developments and also the legal scenarios regarding TESCO and also the market for the organization.
- Economical impact – According to me, the economic impact states that the economic environment will be affecting the organizational production and the process of making decisions in respect of the customers. (Armstrong, 2014)
- Social impact – According to me, the influence regarding the products and services that is being brought to the market by TESCO in respect of the societal aspects needs to be considered.
- Technological impact – According to me, the skills that are applied in respect of production and technological aspects and also the materials that are needed regarding the production of various substances and also services will be influencing the hassle-free operation of business in respect of TESCO. (Lussier, 2011)
This assignment mainly focuses on the different aspects of business environment that delves with the purpose of explaining the major differences between their types as well as purposes and also various functional aspects and explaining the ways by which these will be connecting to the objectives as well as structural aspects of TESCO. There has also been the application of analysis models such as PESTEL as well as SWOT for the development of an in-depth understanding of the impact of the macro environment on the decision making process of TESCO.
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Frydman, R (2013). Rethinking Expectations: The Way forward for Macroeconomics. Princeton University Press.
Furnham, A (2012). The Psychology of Behaviour at Work: The Individual in the Organization. Psychology Press
Iqbal, T (2011). The Impact of Leadership Styles on Organizational Effectiveness. GRIN Verlag.
Jenkins, D (2011). Managing Empowerment. Random House.
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Lussier, R (2011). Management Fundamentals: Concepts, Applications, Skill Development. CENGAGE Learning