BTEC Business Level 3 National Diploma in Business
Unit 1 – Exploring Business
Learning aim C: Examine the environment in which businesses operate
Assignment 2
Introduction
In this report I will analyze a large business that trades in the European Union and I will
evaluate the effects of the environment on that business. The business I will be researching is
Tesco.
Tesco has stores in 7 countries across Europe, Asia and is the market leader in the 4 countries:
UK, Hungary, Thailand and Ireland. Tesco PLC is a multinational grocery and general
merchandise retailer. The company is headquartered in Hertfordshire, United Kingdom and
employs over 500,000 people worldwide. Tesco operates almost 7,000 stores around the world.
External Environment
Tesco's business environment is variable as it could change at any time. Since Tesco is a big
organization, they always must keep external factors in mind as it can have a huge impact on
business activities. This could either be a negative or positive impact for instance the
government increases grants which is beneficial or a company, however the negative impact will
be an increase in tax. Using Swot analysis and Pestle companies can evaluate the external
changes and try to reduce as much damage the impact creates.
Pestle:
Political
Tesco is running in 12 countries including Asia and Europe. This means it is likely to be
exposed to many political factors that can affect the operations of Tesco. These factors include
Tax rates, current and impending legislation, political instability, unemployment rate, economic
condition of the countries where it is operating.
For example, import duty on products may affect Tesco because it imports some inventory from
outside UK such as China and East Asia.
The government could impact Tesco’s operations by introducing new legislations. This can
cause vast impacts. For instance, the new legislation introduced in 2016 where medium and
large businesses must sell plastic bags.
The Government offers different support schemes to assist businesses to become successful.
These include grants, loans, finance, mentoring, funding and consultancy.
, The Tesco chairman quoted the EU referendum is greatly creating a risk factor for investors and
the British Economy is passing through hard times.
The tax on large supermarkets known as “Tesco Tax” was proposed by the local council
however the government refused this in order to dodge price hike. Similar scenarios in the
future can affect Tesco negatively.
Economic
Credit crunch and recession on 9/8/2007, the credit crunch took place. The credit crunch is
when there is an immediate lack funds for borrowing, which leads to a decline in loans available.
A credit crunch is caused when banks haphazardly lend money. This eventually leads to a
recession - a decline in financial activity. Tesco was dramatically affected during the recession.
Their sales growth got halved and they were lost consumers to their competitors. Aldis sales
highly increased as well as Lidl's sales increase by 12.8% which was above Tesco’s by a lot.
This was due to Aldi and Lidl being a lot more cost-efficient. As a result, Tesco introduced a
discount range in order to gain customers back and come back from this disadvantage.
Tesco lost approximately around 20 million from customers who stopped shopping at Tesco.
However, Aldi and Morrisons made a profit of around 10 million. As you can see economic
factors can high impact your business.
Fiscal Policy
The government makes use of financial which include tax and government spending - to
manipulate the economic system in the ideal path by expanding or diminishing the demand and
accessibility of products and services. Fiscal policy can increase investments, create jobs and
contribute to an economic increase. For retail agencies, like Tesco, financial policy impacts
consumer demands, investment decisions, and opposition. This is because of tax-related fiscal
policy modifications the quantity of disposable profits the purchasers have to spend. If the
Government comes to a decision to boom the taxes, then the customers would possibly decide
to begin saving and spending less on the products provided through Tesco. For instance, when
VAT raised in 2010, Sir Terry Leahy (Tesco’s leader government) warned that raising VAT from
17.5pc to 20pc will hit purchaser spending. This turned into proved to be real as a survey of
2000 human beings cautioned that the VAT upward push should price each family within the UK
almost £500 every 12 months, with decreased spending considerably on computing and
electronic devices, vacations and consuming out.
Supply side policy
These are measures that have the aim to enhance element productivity and assist the economic
system to grow. This may be executed by way of lowering tax quotes, as an example, income
and company tax. Bringing down the profits tax will pass about as a motivating pressure for
unemployed human beings to enroll in the body of workers, or for present people to paintings
Unit 1 – Exploring Business
Learning aim C: Examine the environment in which businesses operate
Assignment 2
Introduction
In this report I will analyze a large business that trades in the European Union and I will
evaluate the effects of the environment on that business. The business I will be researching is
Tesco.
Tesco has stores in 7 countries across Europe, Asia and is the market leader in the 4 countries:
UK, Hungary, Thailand and Ireland. Tesco PLC is a multinational grocery and general
merchandise retailer. The company is headquartered in Hertfordshire, United Kingdom and
employs over 500,000 people worldwide. Tesco operates almost 7,000 stores around the world.
External Environment
Tesco's business environment is variable as it could change at any time. Since Tesco is a big
organization, they always must keep external factors in mind as it can have a huge impact on
business activities. This could either be a negative or positive impact for instance the
government increases grants which is beneficial or a company, however the negative impact will
be an increase in tax. Using Swot analysis and Pestle companies can evaluate the external
changes and try to reduce as much damage the impact creates.
Pestle:
Political
Tesco is running in 12 countries including Asia and Europe. This means it is likely to be
exposed to many political factors that can affect the operations of Tesco. These factors include
Tax rates, current and impending legislation, political instability, unemployment rate, economic
condition of the countries where it is operating.
For example, import duty on products may affect Tesco because it imports some inventory from
outside UK such as China and East Asia.
The government could impact Tesco’s operations by introducing new legislations. This can
cause vast impacts. For instance, the new legislation introduced in 2016 where medium and
large businesses must sell plastic bags.
The Government offers different support schemes to assist businesses to become successful.
These include grants, loans, finance, mentoring, funding and consultancy.
, The Tesco chairman quoted the EU referendum is greatly creating a risk factor for investors and
the British Economy is passing through hard times.
The tax on large supermarkets known as “Tesco Tax” was proposed by the local council
however the government refused this in order to dodge price hike. Similar scenarios in the
future can affect Tesco negatively.
Economic
Credit crunch and recession on 9/8/2007, the credit crunch took place. The credit crunch is
when there is an immediate lack funds for borrowing, which leads to a decline in loans available.
A credit crunch is caused when banks haphazardly lend money. This eventually leads to a
recession - a decline in financial activity. Tesco was dramatically affected during the recession.
Their sales growth got halved and they were lost consumers to their competitors. Aldis sales
highly increased as well as Lidl's sales increase by 12.8% which was above Tesco’s by a lot.
This was due to Aldi and Lidl being a lot more cost-efficient. As a result, Tesco introduced a
discount range in order to gain customers back and come back from this disadvantage.
Tesco lost approximately around 20 million from customers who stopped shopping at Tesco.
However, Aldi and Morrisons made a profit of around 10 million. As you can see economic
factors can high impact your business.
Fiscal Policy
The government makes use of financial which include tax and government spending - to
manipulate the economic system in the ideal path by expanding or diminishing the demand and
accessibility of products and services. Fiscal policy can increase investments, create jobs and
contribute to an economic increase. For retail agencies, like Tesco, financial policy impacts
consumer demands, investment decisions, and opposition. This is because of tax-related fiscal
policy modifications the quantity of disposable profits the purchasers have to spend. If the
Government comes to a decision to boom the taxes, then the customers would possibly decide
to begin saving and spending less on the products provided through Tesco. For instance, when
VAT raised in 2010, Sir Terry Leahy (Tesco’s leader government) warned that raising VAT from
17.5pc to 20pc will hit purchaser spending. This turned into proved to be real as a survey of
2000 human beings cautioned that the VAT upward push should price each family within the UK
almost £500 every 12 months, with decreased spending considerably on computing and
electronic devices, vacations and consuming out.
Supply side policy
These are measures that have the aim to enhance element productivity and assist the economic
system to grow. This may be executed by way of lowering tax quotes, as an example, income
and company tax. Bringing down the profits tax will pass about as a motivating pressure for
unemployed human beings to enroll in the body of workers, or for present people to paintings
