Unit 1 Business Environment Assignment - Tesco Plc

Introduction

The assignment primarily discusses about various responsibility and purposes of different types of organization and Tesco Plc a leading retail supermarket in UK is undertaken as an example to highlight such circumstances. The assignment explains about various roles and responsibilities of Tesco Plc regarding satisfying the needs and requirements of different stakeholders (Palmer & Hartley, 2008). The assignment also shed light over the role of national environment and the impact of the fiscal policy, monetary policy, competition policy and regulatory mechanism over the business activities of an organization has been discussed in this section. In the last segment of this assignment the various global factors that have huge impact over the trading activities of Tesco and the impact of the EU regulations over the trading activities of Tesco has been conversed

Task 1

1.1 Describe the aims and objectives of various sorts of organizations

The purposes of different organizations are separate in accordance to their structure, business policies, strategies and various other factors. North Highland Consulting is a leading consultancy organization in UK and we as the member of the team primarily researches over the particular purposes of different sort of organizations.

Tesco PLC: Tesco is identified as a leading public limited organization in UK but initially it was formed as a sole proprietorship firm (Worthington & Britton, 2015).  Initially when the organization was sole proprietorship firm the scope of the organization was small so the prime focus of the organization is to enhance its profit margin. By the advent of time as the organization is formed into public limited organization the main purpose of the organization is to enhance its fund by issuing more shares to the stockholders in the capital market.

National Health Services (NHS): NHS is a highly recognized nonprofit seeking organization in UK funded by the public and government. The main purpose of the organization is to provide free health facilities and services to the citizen of UK.

ICICI Prudential: It is a leading private organization deals with various types of insurance all across the globe. The purpose of the organization is to enhance its volume of profit in the market of insurance sector (Hazlina Ahmad et al, 2010). The organization enhances its profit margin by providing various sorts of insurance to the customers.     

Beehivegiving. Org: It is a leading government charitable organization in UK. The main purpose of the organization is to carry out various sorts of social services for different sorts of individuals. Profit earning is not the motive of the organization.

1.2 Explain the degree to which the goals of various stakeholders are fulfilled by Tesco Plc

The growth and development of an organization is primarily based on its stakeholders. It is highly required for an organization to fulfill the needs and requirements of stakeholders as we see in case of Tesco. Tesco is highly particular about paying proper dividend to the shareholders who are considered as significant stakeholders of the organization. The customers identified as the primary and most significant stakeholder are provided quality products at proper price along with excellent customer service by the organization (Muhammad et al, 2010). The organization has employed internal marketing system for the betterment of the employees who are considered as the internal customers. Proper care is provided to each of the employees for their betterment and career growth. Tesco also maintain all the rules and regulations framed by the government in order to carry out its business in an ethical way. The organization is also very particular about paying all the dues to the supplier and creditors at proper time.

1.3 Describe the accountabilities of Tesco along with the strategies implemented by an organization to fulfill them

Initially Tesco is significantly responsible to the customers who determine the profit margin of the organization. The organization emphasizes over satisfying the customers at maximum volume by providing quality product and excellent customer service. Secondly the organization is highly accountable to the employees because their daily performance determines the overall operational activities of the organization (Klapper et al, 2011). The organization emphasizes on improving and innovating the working culture of the organization in order to extract maximum output from individual employees and reduce the cost of employee turnover. The organization provides huge significance to the shareholders because they are highly crucial regarding raising funds and capital. The organization maintains all the responsibilities towards the government by maintaining all the rules and regulations framed by government in order to carry out its business activities.   

Task 2

2.1 Describe the procedure of an effective allocation of resources by economic system

The economic system is generally categorized into Planned Economic System, Free Enterprise Economic System and Mixed Economic System. In planed economic system the government holds the full authority of the allocation of the resources. In planned economic system various sorts of boundation has been made by the government regarding allocation of resources by the business enterprise (Xue et al, 2010). In this sort of economic setup it proves very critical and difficult for organization like Tesco to carry out its business in an effective manner since the organization has to face various sorts of severe circumstances like shortage and surplus of resources like labour, soil, capital and various other things while utilizing resources. In this sort of economic system it is not possible for the authority to keep full knowledge over the various sorts of resources so there is a huge possibility of misutilization of resources.

In Free Enterprise Economic System the interference of government is very limited regarding the allocation of resources. In this sort of economic setup the business organizations get the full freedom regarding the utilization of resources so the competition is very high in the market. Mixed economic system is highly beneficial for both the small scale entrepreneur and the large scale entrepreneur to effectively utilize the resources like land, capital, labour and various other factors which in return enhance the creativity and output of the organization (Hajkova et al, 2006). But in certain circumstances this sort of economic setup is not beneficial for the nation since there is a huge possibility of unethical utilization of resources.  

 Mixed economic system is highly beneficial for both the small business enterprise and the overall nation since it includes the facilities of the free enterprise economic system along with the intervention of the government regarding fiscal policy and the monetary policies. In this sort of economic setup the resources are properly allocated since various sorts of rules and regulations has been framed by the government for the beneficiary of both the business enterprise and overall nation. In this sort of economic setup the possibility of fraud and misutilization of resource is very less.

2.2 Evaluate how Tesco and activities of Tesco gets influenced by monetary and fiscal policy

In UK various sorts of fiscal and monetary policies has been made by the government so that the economy and the business organizations are being operated in a proper manner. It enables the government to solidify the economic strength of the nation and to control the various business activities of different business enterprises (Chi et al, 2009). Change of interest rate is categorized as one of the most significant monetary policy made by the government according to the requirement. It has been found that the profit margin of Tesco reduces when interest rate is increased by the government. It is because cost of capital has increase and the purchasing power of the customer gets reduced. On the other hand when the rate of interest is decreased the volume of profit of the organization gets increased. Change of exchange rate is another significant monetary policy which has deep impact over the business activities of Tesco since it has to carry out various sorts of international trade. It is found that when there is fluctuation in exchange rate it proves very difficult for the organization to carry out oversees trade since the organization does not get the exact value of the pound. Change in the requirement of reserve is another significant monetary policy by which the business activities of Tesco get deeply impacted since the rate of interest get enhanced and consumers prefer to make more deposit instead of consuming the products of the organization (Botha et al, 2014).  Change of tax is categorized as one of the most significant fiscal policy by which the business activities of Tesco get deeply impacted. Reduction of tax enables the organization to improve its quality of products and spend more amounts over advertising and marketing essentials without bringing any changes in the price of the product. The spending of government is highly significant for the growth and development of the organization. The sales volume of the private sector organization is inversely proportional to the spending of the government.  

2.3 Assess how the activities of Tesco gets influenced by the competition policy and other regulatory mechanisms

In UK there is huge competition in the retail supermarket. The prime competitors of Tesco are Sainsbury, Asda, and various other small scale retail organizations. While competing with the large scale retail organizations like Asda and Sainsbury the organization has to emphasize over various completion policies like price minimization, diversification of brands and products, effective customer relationship management, innovation in marketing and advertisement and various other tools (Wu, 2009). It has been found that the organization has to adopt various sorts of innovative competitive policies while dealing with the small scale business organization since the prime focus of the small scale retail organizations is to earn maximum profit at a very small scale of time by providing various sorts of fascinating offers to the customers. Tesco is highly vigilant regarding the competition policies of its rival organization since it enables the organization to enhance its customer base and the profit margin of the organization.

Regulatory policy of UK has deep impact over the business activities of Tesco and it is highly obligatory for Tesco to follow all the rules and regulations framed by the government in order to carry out its business. The government of UK primarily emphasizes on accomplishing the economic goals of the nation so various regulatory mechanisms has been framed by the government like regional policies, companies act, industrial policies, training and skill policies, enterprise strategies (Unit, 2009). Tesco has to comply with the various sorts of laws while carrying out its business in a nation. According to the industrial policy Tesco has to emphasize over the ethical employment of manpower and maintaining proper work culture in workplace. Training and skill policy is highly beneficial for Tesco in proper utilization of human resource.

Task 3

3.1 Describe how the pricing and output decisions of businesses gets determined by market structures

The market structure is of dissimilar types in different nations so Tesco has to adopt strategical measures regarding making pricing and output decision while carrying out its business in the overseas nations. The different sorts of market structure include monopoly market, perfect competition market, monopolistic market, duopoly market, and oligopoly market. In monopoly market one or two organization dominates the overall market. In this market structure the price is generally fixed by the organization in accordance to its own willingness and profit maximization is the prime aim of the organization (Aterido et al, 2011). In this sort of market structure it is found that marginal cost of the product and marginal revenue remains same and the customer’s preference about price is given no significance. Perfect competition market symbolises a huge competition among several sorts of organization in a same industry. In UK there is a huge competition in the supermarket so Tesco has to operate its business in the perfect competition market. Tesco does not have the option to structure the price of its products so the output strategy is the only choice of the organization in order to enhance opportunity cost over its capital investment and to maximize the volume of profit.  In this sort of market structure the demand and willingness of the customer about a product plays very significant role regarding undertaking any pricing strategy and output decision (Klapper & Love, 2010). Monopolistic market structure is described as a market structure where the products are highly different from one another and the business organizations selling such products have their command over that product on the basis of their brand.  In this market there is no substitute so the pricing strategy and output decision has to be made by the organization in accordance to the uniqueness of the product and the demand of the product in the market. Duopoly market is nearly same as monopoly market. In duopoly market the consumers’ preference about price is not given any significance by the organization while implementing price strategy. The output decision is made by the organization on the basis of profit maximization. In oligopoly market structure the market is dominated by small number of organizations and top level competitive pricing strategies is implemented by the organization in accordance to the demand of the market (Beck & Demirguc-Kunt, 2006).

3.2 Demonstrate the approach in which Tesco Plc responses are shaped by market forces using a range of examples

Before undertaking any strategic decision an organization has to come across various sorts of market forces which include demand and supply, demand and supply elasticity, actions and perceptions of the consumers, decision of pricing, economies of scale, decision regarding output and cost and various other factors. Tesco as a leading retail supermarket has to primarily emphasize over the demand of its products in the market. If the demand of the product is high in the market then the organization has to enhance the rate of supply of its products in the market in order to enhance its margin of profit. Secondly the buying behaviour and perception of the customer about a product is highly significant for Tesco in undertaking various sorts of strategies for its market growth. It has been observed that consumers become loyal to the organization due to its quality products and its excellent customer service (Lambsdorff, 2007). This approach enables the organization to develop its pricing strategy since the customers are willing to pay more for the maximum satisfaction derived from its products. Elasticity of demand enables the organization to determine the ratio of change in demand of its products in the market in accordance to the change in price. It is highly beneficial for the organization to undertake pricing strategy. The elasticity of supply enables the organization to determine and undertake output decision regarding any products and services. The price and demand of the product in the market determines the supply elasticity of a product in the market. The economies of scale are highly beneficial for the organization to maximize its profit by investing less amount of money. It has been observed that Tesco emphasizes over the quality of the products instead of quantity in order to attract high profiled customers. It enables the organization to cut down its cost of production and earn more revenue (Weismann, 2009). Business environment is another significant market force that structures the responses of Tesco. It includes both internal and external environment. The stakeholders constituting the external environment comprises of customers while the internal environment comprises of employees, shareholders, suppliers and creditors. The organization structure and culture enables the business organization to combat with the various sorts of marketing forces in order to maximize the profit.

3.3 Give your opinion about how the behaviour of Tesco is shaped by the cultural and business environment

The growth and development of Tesco is significantly relying on its business and cultural environment. Business environment is highly significant in the process of an assessment of political factors, social factors, economic factors and technological factors. In UK Tesco has to face various sorts critical situations like labour problem, allocation of resources and various other problems while carrying out its business due to various sorts of laws and regulations framed by the government in carrying out business activities (Ayyagari et al, 2007). The economic factors that impacts the business environment of Tesco comprises of the employment rate, Gross Domestic Products, inflation rate, fluctuation in National Income and various other factors. The social factors comprises the perception, expectation and approach of the customers to the organization along with the relation of the organization with other stakeholders like employees, suppliers, shareholders, creditors and the government. The technological factors are highly beneficial for the organization in maximizing the quality and quantity of its output by investing fewer amounts in a very small span of time. It reduces the cost of production to huge margin.

The business environment of Tesco largely depends on the culture of the organization. The culture of the organization is totally based on an effective coordination between the management and the workforce of the organization (Ferreira et al, 2009). The internal culture enables the organization to undertake various sorts of critical challenges while accomplishing various sorts of goals of the organization.  

Task 4

4.1 Explain the importance of international trade to Tesco Plc

It has been found that the economic development of UK is significantly based on international trade. Tesco as a significant globally recognized retail organization plays very important role in strengthening the economic development of UK by carrying out overseas trade. The market opportunities are very high regarding international trade since Tesco gets the opportunity of carrying out business deals with organizations of different types of nations (Morrison, 2006). It not only enables the organization to enhance its margin of profit but also enabling the organization to increase its customer base. It has been observed that government has undertaken necessary steps like increasing tax and duties over import in order to secure domestic organization but foreign trade is highly necessary in the enhancement of Gross Domestic Product in UK. International Trade is highly beneficial for Tesco in getting the facility of economies of large scale by operating in various nations. It enables the organization to operate its business over large market at a very high margin of profit. In certain circumstances international trade reduces the cost of production since the organization gets the facility of cheap labour and low cost resources in different nation in comparison to the nation where it belongs (Kang & Han, 2008). The organization gets the facility to take part in the competition of the global market by which the scope and development of the organization gets enhance over a large scale.

4.2 Investigate how Tesco Plc gets impacted by global factors

Tesco while carrying out international trade has come across various sorts of global factors that deteriorate the smooth growth of the organization in the global market. Initially there are various sorts of restrictions made by World Trade Organization regarding international trade. For instance the import duties and the export duties in some nations are very high for which Tesco has to incur huge sum of money in this process by which the margin of profit gets badly deteriorated. Secondly the emerging markets like BRIC Economies where developing nations like Brazil, India, Russia and China are emphasizing over the economic development of the developing nation it proves very critical for Tesco to carry out trade in such economies (Palmer & Hartley, 2008). It is because BRIC Economies primarily emphasizes over the development of the small scale organization and adopts severe measure against employing labour at a very low cost. Thirdly it is very critical for Tesco to carry out its business in different nation due to strict global business environment in different nations. The global business environment comprises of economic factors, legal factors, political factors, social factors and environmental factors. The political disputes among the nations sometimes create a very bad impact over the brand image of the organization. The Exchange Rate is one of the most significant global factors that restrict the growth of Tesco in the global market. Due to economic crisis various nations like Europe, France, Germany, India, Bangladesh has increased the Exchange Rate in order to restrict foreign trade and uplift the local nations. It has very bad impact over UK retail organizations like Sainsbury, Asda, Walmart, and Tesco in carrying out its overseas operations (Worthington & Britton, 2015). The EU policies and regulations plays very significant role over the growth and development of international trade of retail organizations like Tesco but several restrictions are also being imposed on the retail organizations regarding international trade regarding employment, inflation, training development of the employees, taxation and several other factors

4.3 Assess how the Tesco Plc gets impacted by policies of the European Union

The organizations in UK has to comply with various rules and regulations formulated by the European Union while carrying out international trade. Initially the policy of employment made by European Union is very strict. An organization has to pay minimum remuneration to its employees as fixed by European Union in accordance to the skill and experience of the candidate. The employment of cheap labour is totally restricted by the guidelines of the European Union. Secondly European Union has stated various guidelines in its Regional Policy (Hazlina Ahmad et al, 2010). According to the regional policy of European Union the candidates of the nation will be given first preference in the process of employment and necessary measures have to be undertaken by the organization regarding any regional or cultural disputes in the workplace. European Union has formulated various guidelines regarding inflation. During inflation the bank rates are generally gets enhanced and the purchasing power of the consumers gets reduced. In such circumstances the European Union emphasizes over enhancing the exchange rate in order to bring control over the international trade. By this approach the local organizations gets the opportunity to carry out trade and maximize their growth.  European Union emphasizes over the Education and Training Policy in order to enhance the skill and competencies of the local candidates. It has been observed that by the impact of globalization and intermix of different culture the local candidates are being neglected and the candidates of different nation and different culture are being appointed for the best job (Muhammad et al, 2010). This policy has been formulated by the organization for the economic development and the growth of the local candidates. European Union has imposed taxation policies in order to restrict international trade and enhance domestic business. Most of the organizations in order to enhance their business volume carries out international trade by which the local traders and suppliers gets suffered. The enhancement of the import duties and tariffs restricts the growth of the international trade and provide opportunity to the small traders and suppliers to carry out their growth in the business sector. The several policies of European Union have both positive and negative impact over the business activities of Tesco (Klapper et al, 2011).  It enables Tesco to carry out overseas trade in several nations along with providing the organization the opportunity to move forward towards the economic development of the nation.

Conclusion

The assignment provides through information about the business environment of an organization. It shed light over various purposes of an organization, role of national environment over business activities, organizational behaviour in the market environment and the global factors influencing international trade of an organization (Xue et al, 2010). In this assignment Tesco Plc is undertaken as an example in order comprehend the impact of the above factors over the business environment of an organization.  

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