Summary Unit 1: Exploring Business - Assignment 2 Understanding Business (University of Greenwich)

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Unit 1: Exploring Business -
Assignment 2

Understanding Business (University of Greenwich)

, lOMoARcPSD|11837912




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
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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.
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