BTEC Business UNIT 1 - LEVEL 3 (EXPLORING BUSINESS) Georgia Lokey
ASSIGNMENT 2
Unit 1: Exploring Business
The Effects of the Environment on a Business
1
,BTEC Business UNIT 1 - LEVEL 3 (EXPLORING BUSINESS) Georgia Lokey
CONTENTS –
PESTLE:
1. Political factors that influence your business
2. Economic factors that influence your business
3. Social factors that influence your business
4. Technological factors that influence your business
5. Legal factors that influence your business
6. Environmental and ethical trends factors that influence your business.
7. Complete a thorough SWOT analysis
8. Complete a Porters 5 forces analysis
9. Complete a 5 C’s analysis
EXTERNAL ENVIRONMENT:
1. Cover what is the competitive environment in which they operate
2. What competitive advantage does your company have
3. Is the advantage important
4. How do you think they might maintain it?
INTERNAL ENVIRONMENT:
1. What is the corporate culture
2. What corporate social responsibility does your company have
ENVIRONMENTAL EFFECTS ON YOUR BUSINESS:
1. Assess the market structure
2. Assess the relationship between demand, supply and price for your business
3. How do the market structures influence these issues?
4. How do these factors influence pricing?
5. How has your business reacted to changes in its environment?
6. Evaluate the extent to which the environment effects the business
7. Linked to the situational analysis
8. How well do you think your company can adapt to
change in future?
9. What changes might they have to tackle
10. Will they do better or worse in the future
2
,BTEC Business UNIT 1 - LEVEL 3 (EXPLORING BUSINESS) Georgia Lokey
1/C.P4 Discuss the internal, external and competitive
environment on a given organisation.
SITUATIONAL ANALYSIS –
PESTLE –
PESTLE stands for -
• Political, e.g. Government
• Economic, e.g. Exchange Rates
• Social, e.g. Demographic Trends
• Technological, e.g. Automation
• Legal, e.g. Partnership Act
• Environmental, e.g. Pollution
Political Factors –
The political environment involves the government and their changes to the economy that
influence on the decisions made by businesses.
Tesco is a retailing company, which operates all over the world, in several different
countries within Europe and Asia. As it operates in different countries, there are more
political factors that Tesco need to take into consideration. There are many different
political factors that will affect Tesco and how they run. They can massively influence upon
many of the operations within Tesco including a main factor, which is their performance.
The political factors that may affect Tesco are tax rates, unemployment rate and the acts of
legislation. One of Tesco’s aims is to create as many employment opportunities as possible
and having these political factors may influence upon it.
The Government has one of the biggest impacts upon how every business decides to run
including Tesco. On Thursday 23th June 2016, the UK Government made the choice to
announce that the UK will be withdrawing from the European Union. Tesco’s chairman, John
Allan was discussing about how a range of political factors may affect Tesco. He included
that leaving the European Union will create a range of huge risks for Tesco. He believes that
this decision could have a negative impact upon Tesco. In addition, The Government may
put in place new changes that may affect Tesco. This may include the minimum wage. The
Government may choose to raise or lower it and whichever way they choose, Tesco will
have to follow it, otherwise they have to face consequences such as, being fined etc.
The World Trade Organisation will make sure that the food Tesco are supplying to their
customers is safe. They will also make sure that when Tesco trade with their suppliers it is
fair. Tesco will need to follow the laws and regulations that are put in place by the World
Trade Organisation, as well as, the Government. However, if this does not occur, the
3
, BTEC Business UNIT 1 - LEVEL 3 (EXPLORING BUSINESS) Georgia Lokey
business will have to face consequences that are put into place. This could include a fine, or
it could be taken more seriously and the business could be shut down.
Economic Factors –
The economic environment includes important key economic factors that impact upon the
business’s behaviour as well as the customers behaviour. The economic activity is measured
by gross domestic product. This is the total value of the country’s output per year.
Economic factors may affect Tesco. They are most likely to influence Tesco’s costs, prices,
profits and demand. These factors are the main concern for Tesco. In most businesses, their
profit is the most important asset. This is because if the business had no profit, as a result of
this, the business would fail and not be able to continue. Following on from this, Tesco need
to ensure that they are fully aware of the economic factors. The economic environment
consists of some key economic factors which are Inflation, Exchange rates, Interest rates
and Unemployment levels.
Unemployment Levels –
There is one factor, which has the biggest influence
on the whole of the economy. The country’s
unemployment levels. According to Official Statistics,
last year the unemployment level was estimated to be
4.0%. However, this year the unemployment level
decreased to 3.9%.
The image above shows that gradually overtime the unemployment rate is decreasing.
https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/ti
meseries/mgsx/lms
The higher the unemployment level is, the more it decreases the effective demand for many
goods. It negatively affects the demand required to produce goods. Tesco needs to make
sure they are aware of any changes in the policies when involving economic factors.
Therefore, this could mean that there could be a change in taxation. This would have a huge
impact on Tesco, so they need to be aware so if this was to happen they would be prepared.
Tesco as a business which is growing globally in many different countries, is still dependent
upon the UK market. It has a market share of 30%.
Inflation Rates –
The rate of inflation is the change in prices for goods and
services over an amount of time. The rate of inflation shows the
change of prices based on the same period a year earlier.
https://www.bbc.co.uk/news/business-12196322
4
ASSIGNMENT 2
Unit 1: Exploring Business
The Effects of the Environment on a Business
1
,BTEC Business UNIT 1 - LEVEL 3 (EXPLORING BUSINESS) Georgia Lokey
CONTENTS –
PESTLE:
1. Political factors that influence your business
2. Economic factors that influence your business
3. Social factors that influence your business
4. Technological factors that influence your business
5. Legal factors that influence your business
6. Environmental and ethical trends factors that influence your business.
7. Complete a thorough SWOT analysis
8. Complete a Porters 5 forces analysis
9. Complete a 5 C’s analysis
EXTERNAL ENVIRONMENT:
1. Cover what is the competitive environment in which they operate
2. What competitive advantage does your company have
3. Is the advantage important
4. How do you think they might maintain it?
INTERNAL ENVIRONMENT:
1. What is the corporate culture
2. What corporate social responsibility does your company have
ENVIRONMENTAL EFFECTS ON YOUR BUSINESS:
1. Assess the market structure
2. Assess the relationship between demand, supply and price for your business
3. How do the market structures influence these issues?
4. How do these factors influence pricing?
5. How has your business reacted to changes in its environment?
6. Evaluate the extent to which the environment effects the business
7. Linked to the situational analysis
8. How well do you think your company can adapt to
change in future?
9. What changes might they have to tackle
10. Will they do better or worse in the future
2
,BTEC Business UNIT 1 - LEVEL 3 (EXPLORING BUSINESS) Georgia Lokey
1/C.P4 Discuss the internal, external and competitive
environment on a given organisation.
SITUATIONAL ANALYSIS –
PESTLE –
PESTLE stands for -
• Political, e.g. Government
• Economic, e.g. Exchange Rates
• Social, e.g. Demographic Trends
• Technological, e.g. Automation
• Legal, e.g. Partnership Act
• Environmental, e.g. Pollution
Political Factors –
The political environment involves the government and their changes to the economy that
influence on the decisions made by businesses.
Tesco is a retailing company, which operates all over the world, in several different
countries within Europe and Asia. As it operates in different countries, there are more
political factors that Tesco need to take into consideration. There are many different
political factors that will affect Tesco and how they run. They can massively influence upon
many of the operations within Tesco including a main factor, which is their performance.
The political factors that may affect Tesco are tax rates, unemployment rate and the acts of
legislation. One of Tesco’s aims is to create as many employment opportunities as possible
and having these political factors may influence upon it.
The Government has one of the biggest impacts upon how every business decides to run
including Tesco. On Thursday 23th June 2016, the UK Government made the choice to
announce that the UK will be withdrawing from the European Union. Tesco’s chairman, John
Allan was discussing about how a range of political factors may affect Tesco. He included
that leaving the European Union will create a range of huge risks for Tesco. He believes that
this decision could have a negative impact upon Tesco. In addition, The Government may
put in place new changes that may affect Tesco. This may include the minimum wage. The
Government may choose to raise or lower it and whichever way they choose, Tesco will
have to follow it, otherwise they have to face consequences such as, being fined etc.
The World Trade Organisation will make sure that the food Tesco are supplying to their
customers is safe. They will also make sure that when Tesco trade with their suppliers it is
fair. Tesco will need to follow the laws and regulations that are put in place by the World
Trade Organisation, as well as, the Government. However, if this does not occur, the
3
, BTEC Business UNIT 1 - LEVEL 3 (EXPLORING BUSINESS) Georgia Lokey
business will have to face consequences that are put into place. This could include a fine, or
it could be taken more seriously and the business could be shut down.
Economic Factors –
The economic environment includes important key economic factors that impact upon the
business’s behaviour as well as the customers behaviour. The economic activity is measured
by gross domestic product. This is the total value of the country’s output per year.
Economic factors may affect Tesco. They are most likely to influence Tesco’s costs, prices,
profits and demand. These factors are the main concern for Tesco. In most businesses, their
profit is the most important asset. This is because if the business had no profit, as a result of
this, the business would fail and not be able to continue. Following on from this, Tesco need
to ensure that they are fully aware of the economic factors. The economic environment
consists of some key economic factors which are Inflation, Exchange rates, Interest rates
and Unemployment levels.
Unemployment Levels –
There is one factor, which has the biggest influence
on the whole of the economy. The country’s
unemployment levels. According to Official Statistics,
last year the unemployment level was estimated to be
4.0%. However, this year the unemployment level
decreased to 3.9%.
The image above shows that gradually overtime the unemployment rate is decreasing.
https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/ti
meseries/mgsx/lms
The higher the unemployment level is, the more it decreases the effective demand for many
goods. It negatively affects the demand required to produce goods. Tesco needs to make
sure they are aware of any changes in the policies when involving economic factors.
Therefore, this could mean that there could be a change in taxation. This would have a huge
impact on Tesco, so they need to be aware so if this was to happen they would be prepared.
Tesco as a business which is growing globally in many different countries, is still dependent
upon the UK market. It has a market share of 30%.
Inflation Rates –
The rate of inflation is the change in prices for goods and
services over an amount of time. The rate of inflation shows the
change of prices based on the same period a year earlier.
https://www.bbc.co.uk/news/business-12196322
4
