Tesco assignment 3 unit 3 business level 3 extended diploma businessssss PDF

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assignment 3 unit 3 business levee 3 extended diploma distinction example guaranteed about Tesco big British company...

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The effects of the environment on a business

Table of contents

1

Introduction and TESCO

2

business environment and its effects on the company. Internal environment, employees, values etc

2,3 3,4,5,6

External environment, PESTLE Analysis SWOT Analysis and conclusion Porters five forces analysis and conclusion

6,7,8 8,10 11,12

5C’s Analysis and conclusion

12,13,14

The influences on supply and demand and the market structure affecting the pricing and output for TESCO.

14,15

The effects of the business environment on TESCO

15,16,17

How TESCO has responded to changes in the market Bibliography

16,17 18

Introduction It can be assessed after a thorough research of Tesco as a company that it is a highly successful company that is now facing the facts that it must begin to focus on its environmental factors that influence it. The business faces challenges due to continuous technological advances, recession and much more, but they can turn these challenges into possibilities with their strategies and the suggestions made in this report. Tesco is currently one of the UK industry leaders with a 30 percent market share and a third internationally. Tesco also launched a new range of cheaper discount products to stop deserting shoppers, which hit Teso's topline sales as the new items were traded by shoppers. Shoppers are now purchasing an average of two items from the discount range each. It was also a great benefit to launch the Tesco Club card to promote shopper loyalty. The company should concentrate on dealing with the recession and developing new ways to keep up with market share, thereby avoiding any further price cuts. As long as the pros and cons are properly weighed out, taking over supply chains and expanding overseas might also be great opportunities for Tesco to thrive. Throughout this essay I will be assessing and discussing the effects of the internal and external environment on Tesco and how the company has reacted to change. Using a variety of techniques such as PESTLE, SWOT, 5c’s analysis and Porters five forces, this report will include a situational analysis of the business environment. The study will evaluate to which Tesco has responded to past market and business environment changes and indicate how Tesco can respond to future changes. TESCO Tesco is a limited public company established by Jack Cohen in 1919. In the East End of London, he began selling surplus groceries from a stall. Five years later, in 1924, the Tesco brand first appeared when he bought Mr. T.E Stockwell's shipment of tea. And this is how the name of the infamous brand was found, (TES) from the name of the supplier, and the first two letters of Jack's surname (CO), forming the TESCO word. Headquartered in Welwyn garden city, England, it is a British multinational grocery and general goods retailer. It is the third largest retailer measured by gross revenues in the world and the ninth largest retailer measured by revenues in the world. Business Environment and its effects on the Company

The internal Environment The company must ensure that they deal properly with all their internal factors, since they all have the potential to harm the reputation of the company and cause a loss of customers for the company, which is ideally what they want to prevent Employees The employees of a corporation are extremely important because they are the face of the organisation. All interactions between the customer and the company are made through employees, so the way they show themselves is essential to the company’s image. From little things like the way they dress and their posture to more serious and potentially negative areas such as employee demeanour and the level of customer service provided. If this adverse effect happens, then the company will face a weak brand image and a much more adverse reputation that can result in sales and customer loss in the long term. This harm can be prevented and avoided by the organisation by inspiring and motivating its employees. This can be achieved by incentives, events, deals, increases and promotions, etc, and making them feel like they are a part of something. Aims and Objectives The company has very clear aims and objectives that they want to achieve in order to succeed. Tesco aims to become/stay a leading retail supermarket and provide good quality services and products at a low cost to make them cheaper than their rivals.  To boost revenue and raise their profits by doing so. If Tesco were to maximise their sales the second half of the aim which is “increase their profits” will happen on its own. By cutting prices, Tesco may try to maximise their sales, more in store deals, expand existing stores, more stock can be held, and new stores can be built to attract more customers.  To reduce their prices. For the average household, Tesco aims to make shopping cheaper. By cutting prices and offering more in store deals, they aim to do this. In order to reach this goal, they may have many different objectives. One objective they may use is offering customers bargains, like to buy one get one free, by two and get the third free and a percentage off the original price.  In the broad range of groceries they supply, introduce more healthy eating products. The benefit of introducing more healthy living products is that Tesco will attract many more customers interested in healthy eating products, making Tesco

an established company that provides four healthy eating products. Tesco aims to create a wide range of healthy food products, from organic turkeys to ready meals for healthy living.  To supply their local community with jobs. In the local areas where Tesco stores are built, Tesco aims to reduce unemployment.  Tesco aim to develop a large Internet shopping site. Tesco aims to provide online food, electronics and clothing products, as well as a number of its services. If they are successful in doing so, Tesco aims to develop the online shopping experience, they can attract many more customers to help them achieve their objectives. This will help them achieve their aims and objectives, because they will gain more sales by attracting new customers who are unable to shop in store, which means they will maximise profit. TESCO clearly know exactly where they want to go and have developed truly achievable and realistic aims and objectives to get there. Values

 Understand their customers.  Be first to meet their customer’s needs.  Act responsibly for their communities. “At the heart of Tesco is the understanding of people-customers, peers, communities-and what matters to them, and then trying to make those things better. It's about listening to people and talking to them using all the tools we have at our disposal, from club card information to social media, and then acting to meet their needs by changing and innovating.” Tesco treat people how they want to be treated:    

Work as a team. Trust and respect each other. Listen, support and say thank you. Share knowledge and experience.

TESCO know that looking after their colleagues in a culture of trust and respect is essential to the success of Tesco. This leads to more motivation and satisfaction in the employees and therefore leads to

the employees trying and working harder for the store, which then leads to better customer interactions. Every little help makes a big difference    

Helping to reduce food waste globally and ensuring surplus food goes to those in need. Making it easier to live more healthily. Sourcing great quality, affordable and sustainable products. Making a positive contribution to the communities where we operate.

TESCO’s core purpose

“Serving shoppers, a little better every day” Their business was built with a simple mission, that mission was to be the champion for customers. Helping them to enjoy a better quality of life and an easier way of living. This hasn’t changed. Customers want great products at great value which they can buy easily and its TESCO’s job to deliver this in the right way for them. That's why 'Serving shoppers a little better every day' is their core purpose. As a business, serving customers is at the heart of everything they do – from colleagues in their stores to those of them in supporting roles. In the UK, they serve 66 shoppers every second, so it's their goal to ensure every one of those customers experiences just a little better service on each visit Structure TESCO has a tall structure; this is shown because the organisation is large and has multiple layers within the hierarchy. This structure is good for TESCO because the narrow span of control allows for close supervision of employees and it also provides a clear, distinct layers with obvious lines of responsibility, control and a clear promotion structure. However, the chain of command is long making communication slower as instructions take longer to travel through the levels of the organisation.

Figure 1 The Board of Directors of Tesco comprises 10 members and there have been significant changes to the Board during the 2014/15 financial year. These changes include the appointment of John Allan as Chairman of the Board, the appointment of Dave Lewis as Chief Executive Officer and Alan Steward as Chief Financial Officer, the retirement of four Non-Executive Directors and the appointment of three Non-Executive Directors. In 2015, Mr. Lewis announced a 30 percent reduction in costs across headquarters functions, with a direct impact on the management structure. Tesco governance structure comprises five committees reporting to Tesco PLC board. There are 11 members in Tesco Executive Committee led by Group Chief Executive Dave Lewis. Figure 2 It can be argued that within a single store, three or four management layers can create unnecessary bureaucracy with a negative impact on the flow of data across the management layers. Senior level management must therefore consider delaying possibilities, i.e., increasing the flexibility of store operations and changes and accelerating the flow of information by reducing management layers. External Environment PESTLE Analysis A pestle analysis is a tool used to analyse and monitor the macroenvironmental factors that may have a profound impact on an organisation’s performance. Political These factors include tax rates, current and impending legislation, political instability, the unemployment rates and the economic situation of the countries in which it operates. Tesco may be

affected by import duties on products because it imports some inventory from outside the UK, such as China and East Asia. An outspoken person and business leader, Tesco Chairman Johan Allan, said what political variables can influence the company. He added that the EU referendum was a major risk factor for investors and that the British economy was going through difficult times. The tax on large supermarkets known as "Tesco Tax" was proposed by the local council, but the UK government rejected this initiative primarily to prevent price increases. Similar initiatives in the future may have a negative effect on Tesco. Economic The cost of labour is an important economic factor that can influence supermarkets in the UK. For instance, its annual wage bill is GBP 4.5 billion. In 2018, for 25 years old and onward, the UK Minimum Wage Rate has increased by 4.4 percent. In Britain, this upward shift cost Tesco millions of pounds. There are many other variables affecting Tesco, such as costs, prices and profits. The firm should concentrate on the increased cost of borrowing in the UK. Ultimately, it will raise expenses and prices and reduce its profits. It can influence the reputation of the product and the strategy of cost leadership. The two important strategies and reasons for the success of the company in recent years are diversification and presence in the international market. It should be noted that, with a 27.7 percent share in the UK grocery market, Tesco still depends on the UK market. Social Over time, consumer shopping trends are constantly changing. With a flexible goods return policy; people have tough schedules and want the same day and fast delivery. They prefer shopping onestop. Tesco depends on customers in the UK and must understand and provide the services to address these problems. The demand for goods and services, another focused issue, is related to consumer beliefs and attitudes. Another problem in society is obesity and customers are more concerned about their health. Tesco must consider changing biological food behaviour and demand. 65 percent of UK shoppers are faithful shoppers, according to the PWC report. By developing close ties and one-to-one connections with customers, Tesco should take advantage of this opportunity. Technological

Tesco faced problems like poor customer experience and the horsemeat scandal a few years back. Technological progress has provided Tesco with new opportunities to regain the trust of its customers. By adopting available retrial techniques, Tesco embraces technological advancement as an opportunity. They introduced RFID Technology to increase in-store experience for customers. It automatically counts stock and remove it after sales. This information is also helpful for supplier of the store and replenish when required. Now, Tesco has developed its own online mobile payment system called PayQwid. Customers can pay as they want. 524 Tesco stores from London to Edinburgh use this app. The app can be downloaded and linked with Clubcard and NFC technology by the customer. Customers can pay and get loyalty points for shopping. For those who love shopping with friends, they have introduced check points for "scan as you shop." Customers shop products and tag them. It also saves time and labour costs. Legal Do not undermine key areas in a business legal environment where legislation changes that can affect the performance of your business to achieve your goals. In 2016, on the basis of age and gender discrimination, Tesco 17 staff took legal action against the employer. After low pay rates for night, weekend and bank holiday shifts were noticed, workers were extremely frustrated. Tesco was also faced with legal action for accounting fraud and misleading investors, and finally agreed to pay GBP 12 million to settle the lawsuit. Tesco must conduct its operations in accordance with the strict code of practise of the Food Retailing Commission (FRC). Environmental Many businesses face immense pressure from government agencies to deal with environmental problems. Companies are responsible for responding to these questions in order to benefit society. Tesco is now prompting its customers to shop at tesco.com. In addition to using fuel-saving routes, Tesco Van Drivers will also collect unwanted plastic bags from clients and recycle them. Tesco is also committed to making use of renewable sources and generating 100% of its electricity by 2030. By 2020, the company promises to reduce up to 50 percent of its carbon footprint. SWOT Analysis Strengths

 Adaptability - Tesco was able to double its delivery capacity to 1.5 million slots in response to pandemic-triggered restrictions on in-store purchases. A profit of £ 551 million resulted from the upgrade, which is 28.7 percent higher than the figures last year.  Strong performance during the pandemic - Tesco recorded 10.5 percent growth in the last three months to September, despite the pandemic. The development comes from Tesco boosting its sales online. The amount of growth is evident from the hiring of 16,000 people by Tesco to cater to the growth in demand.  Market Share - In Great Britain, Tesco has 27.3 percent of the grocery market share, according to Kantar. The nearest competitor to Tesco, Sainsbury's, has a 14.9% market share. Thus, the dominance of Tesco in the market is unchallenged.  Financial Turnaround - Thanks to the leadership of Dave Lewis, Tesco recovered from an annual loss of £6.4 billion in the annual report of 2015 to an operating profit of £1.9 billion in the annual report of 2020. Weaknesses

 Shortage of products - Tesco is rationing a few of its items to avoid shortages due to panic buying. Tesco assured clients, however, that they are adequately stocked to cater to normal purchasing patterns.  Food Safety Issues - Given the range of food products sold by Tesco, there are major consequences of lapses in adhering to food safety guidelines. Tesco, for example, issued urgent food recalls after discovering safety problems and defects that threaten consumers.  Inventory Management - For displaying products 15 days after their expiry date, Tesco paid £ 175,000 in fines. Tesco removed the items and put systems in place to avoid similar problems upon hearing about the problem. Opportunities

 Growth of online grocery sales - Measures to prevent COVID19 from spreading also prevent individuals from stepping out as much as they used to. The restrictions made online purchasing of groceries popular. That's why Ocado benefited from an online sales increase of 76 percent. The trend can and should be leveraged by Tesco.

 Social supermarket - Social supermarkets stockpile unsold stock that is within its date of use. Then, at very affordable rates, the supermarket sells the inventory, avoiding waste and food poverty. Tesco is passionate about both causes and should engage in this initiative actively.  Rise of meat alternatives - In 2020, the global demand for plant-based protein sources is estimated to be £ 4.1 billion. Switching to meat alternatives encourages sustainable business as well. Tesco is committed to a 300 percent increase in sales of meat alternatives by 2025 in light of this opportunity.  High-unemployment rates - For people aged 16-24 years, an article in the Guardian shows a massive decline in employment numbers. The high unemployment rates could help Tesco gain the numbers to fuel its growth, as supermarkets are one of the few places where people can still find jobs. Threats

 COVID-19 Pandemic - During a period when many major businesses fell, Tesco's fast shift to online service saved Tesco. Corona virus-related costs, however, hit £ 533 million. Also, as the most valued UK retailer, Ocado overtook Tesco. This could signal a change at the industry level.  Competition - Asda's ownership has recently shifted hands from Walmart to the billionaire Issa brothers. The new owners are trying to bring Asda across 10 countries to their 6000 forecourts. Asda's revival poses a severe threat to the market share of Tesco.  Brexit and Supply chain - 80% of the imported food sold at supermarkets will be affected by Brexit. With Brexit imposing port-of-entry restrictions, the stymied flow of imported goods from the EU to the UK will have a negative impact on the supply chain of Tesco. TESCO SWOT Analysis Conclusion The strengths of Tesco are specific to Tesco. However, for other players in the supermarket industry, its weaknesses are common. Tesco will therefore continue to reap the advantages of robust management and management practises that make it stand high among its competitors. In addition, with ongoing challenges imposed by Brexit and COVID, Tesco has demonstrated its resilience by reinventing itself to cater to the rise in online food sales. For

Tesco, tapping this vein could be very profitable. The main take away from the SWOT analysis of Tesco is that any crisis can be turned around by strong leadership. It can also turn a dangerous scenario into a training ground for reinvention and development. Porters Five Forces Analysis In order to find effective sources of competitive advantage, an analysis of the structure of the industry should be carried out. Therefore, Porter's five-force analysis was used to analyse Tesco's competitive environment. Threat of substitute goods In the grocery retail market, the risk of substitutes is considerably low for food products and medium too high for non-food products. The substitutes for major food retailers in the food ...