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TABLE OF CONTENTS
Introduction................................................................................................................................ 3
2. LO1 Understand the organisational purposes of businesses.....................................................................4
2.1 purposes of different types of organisation (P1.1)............................................................................4
2.2 Extent to which Tesco Plc meets the objectives of different stakeholders (P 1.2).....................................5
2.3 Various responsibilities of Tesco Plc as an organisation and the strategies it employs to meet the objectives of
the stakeholders (P1.3)................................................................................................................ 6
3. Nature of the national environment in which business operates (LO2)......................................................9
3.1 How different economic systems attempt to allocate resources effectively (P 2.1)...................................9
3.2 Impact of Fiscal and monetary policy on the activities of Tesco PLC (P 2.2)........................................10
3.3 Impact of competition policy and other regulatory mechanisms on the activities of Tesco Plc (P 2.3).........11
3.3.1 Impact of competition policy ON THE ACTIVITIES OF TESCO PLC........................................11
3.3.2 Impact of regulatory mechanisms on the activities of Tesco Plc..................................................12
4. Understand the behaviour of the organizations in their market environment (LO3).....................................13
4.1 explain how market structures determine the pricing and output decisions of TEsco plc (P 3.1)...............13
4.2 How market forces shape Tesco PLC UK responses using a range of examples (P 3.2)...........................14
4.3 Explain how the business and cultural environments shape the behaviour of Tesco PLC UK (P 3.3)...........15
5. Significance of the global factors that shape national business activities (LO4).........................................16
5.1 SIGNIFICANCE of international trade to Tescos PLC UK ( P 4.1)....................................................16
5.2 impact of global factors on Tescos PLC UK (P 4.2).......................................................................16
5.3 impact of polciies of the European Union on Tescos PLC UK (P 4.3)..................................................17
6. Conclusions and Recommendations.............................................................................................. 18
7. Reference.............................................................................................................................. 19
8. Bibliography.......................................................................................................................... 21
INTRODUCTION
In this report, different organizations purpose and responsibility will be discussed specifically the
purposes of Tesco PLC that is an UK based public limited company. There are different
stakeholders of Tesco so the responsibilities and strategies of Tesco PLC will be shown to meet
the objectives of these stakeholders. On the other hand, national environment of UK will be
shown to find out how different national factors affect the activities of Tesco PLC. Along with
the national factors how global factors affect the business strategies of Tesco will be analysed. At
the end of the report it will be discussed how Tesco is affected by the EU regulations among the
member countries.
d) National Health services (NHS) UK: NHS is a publicly funded non-profit company
established in UK to provide free health services for the citizen of the country. This is a
non-profit public company established in the purposes of providing free services. So, there
are no strict rules of making profit and the organization is operated by the government fund
((Radebaugh, et al., 2010).
e) A corner shop near where you live: Light Shop is a small shop near my house that is
established by a sole proprietor. The purpose of such kind of sole proprietorship business is
to get full freedom while doing the business for the own capital maximization. Such kind of
business organization is established so that the proprietor can utilize all of his knowledge in
his own way taking a lot of risk and higher earnings.
These are the purposes of the different types of organization where every organization has its own
specific purposes and rules in the organization.
Employees: Tesco has more than 537,000 employees all over the world. This large
number of employees expects a good opportunities and remuneration from the company.
Besides that employees are interested in the free flow of information to assess the
prospect of the organization considering the remuneration, retirement benefits and
employment opportunities (Gitman & McDaniel, 2009).
Government: Government provides specific rules and guidelines regarding tax payment,
licensing, standardization and protection of consumer welfare that Tesco has to abide by.
So, here Tesco has these responsibilities to meet the objectives of the government.
Suppliers and other trade creditors: Tesco has many suppliers as the company has
diversified products for the customers. These suppliers want good payment systems,
flexible terms of credit and business agreement and the behaviour of the organization.
So, these are the major fields or extent that Tesco has to consider to meet the objectives of the
stakeholders. Every stakeholder should be given priority regarding their position and expectation
from the organization.
2.3 VARIOUS RESPONSIBILITIES OF TESCO PLC AS AN ORGANISATION AND
THE STRATEGIES IT EMPLOYS TO MEET THE OBJECTIVES OF THE
STAKEHOLDERS (P1.3)
An organization has different responsibilities to the stakeholders to meet the objectives and
expectation of these stakeholders discussed above. Different responsibilities and strategies of
Tesco PLC are shown below;
Responsibilities to Customers: Tesco has to provide a good customer service and quality
products for the customers. For these reasons Tesco maintains an efficient CRM policy to
provide the best service for the customers as satisfied customers become the loyal that
has a positive impact on the profitability of the company.
Responsibilities to the Shareholders: Responsibilities to the shareholders are to make the
information available for the shareholders, to maximize the growth of the organization
through good profitability and to help the stockholders providing the reliable financial
statements (Burnes, 2009). Tesco has its own website through which the stockholders can
know everything for the investment decision making.
Responsibilities to employees: Tesco has the responsibility of providing a good
environment and opportunities for the employees. For these reasons, Tesco has efficient
HRM policies that work for the objectives of the employees. According to (French and
Bell, 2005) customer service profit chain model implies that if employees are satisfied
then it will have a good impact on the performance and profitability of the organization.
So, Tesco maintains a structured policy where all employees are cared to participate in
the decision making.
Responsibilities to Society or CSR of Tesco: The corporate social responsibilities of the
organization like Tesco PLC are shown in the following figure;
But in the long run, discretionary responsibilities of the organization have an effect on the brand
image of the organization (Scaner, et al., 2009).
On the other hand, If Interest rate reduces then Tesco will be able to get more financing at
lower cost. This will help Tesco operate the business activities.
Changes in the reserve requirements: if monetary policy changes the reserve requirement
then it will also have an impact on the overall business activities. High reserve
requirement will push the interest rate high that will influence the consumers to deposit
more rather than consumption. So Tesco has to change the business activities as its sales
volume will reduce (Stoudmann, et al., 2006).
Changes in the exchange rates: If exchange rate changes then it will also affect the
activities of Tesco.
operating in other countries will face problems while home country sales will increase
more value for Tesco.
Changes in the tax rate: If government changes the tax rate through the fiscal policy then
it will affect the business activities from different perspective (Edgar, 1992). If tax rate is
reduced then Tesco will be benefited and company may increase the quality of the
products without considering the changes in the price. Or Tesco can increase more
expenses on the advertisement or other sector as reduction in the tax rate has made the
company more profitable.
Changes in the government spending: If government increase the government spending in
different sector than a business organization will face reduction in the sales volume. On
the other hand, reduction in the government spending will increase the demand for the
private sector so is it for Tesco PLC (Tescoplc, 2012).
3.3
IMPACT
OF
COMPETITION
POLICY
AND
OTHER
REGULATORY
organization changes the policy to stay in the competitive position then Tesco has to change the
business policy. Tesco normally made competition policy considering the cost and product
diversification.
3.3.2 IMPACT OF REGULATORY MECHANISMS ON THE ACTIVITIES OF
TESCO PLC
UK government makes different regulatory policies that have a direct impact on the activities of
Tesco PLC and these impacts may be both positive and negative considering the type of the
mechanism (Tescoplc, 2012). As operating in the EU zone, Tesco PLC also has to follow some
regulations made by the EU while operating in EU countries. So, any changes in the regulations
will affect the activities of Tesco PLC in different ways. For Example; If government impose a
standard quality that Tesco has to maintain, then to produce within that guidelines the cost of
Tesco may rise. SO, in this case Tesco PLC has to change the policy like to increase the price or
reduce the cost.
This is how in a perfect competition market, Tesco makes the pricing strategy considering
different ways. So, Tesco normally focus on the demand of the products and the price is
determined considering the customers willingness to pay and the competitive position of the
price (Burnes, 2009).
4.2 HOW MARKET FORCES SHAPE TESCO PLC UK RESPONSES USING A
RANGE OF EXAMPLES (P 3.2).
There are different market forces that an organization has to consider to make strategic decision
and other purposes. The major market forces are the supply and demand, elasticity of demand
and supply, perceptions and actions of customers, economic of scale, and cost and output
decisions (Scaner, et al., 2009). How Tesco PLC will respond to these market forces are
discussed below;
Supply and demand: Tesco PLC has to make supply decisions considering the demand of
the market. So, if the demand is high then Tesco PLC produces the goods at high volume.
So, in this case any company like Tesco PLC will always has to make the supply
available considering the demand position of the market (Denison & Daniel, 1990).
Customers perception and actions: Tesco considers what the perception of the customers
is and what actions customers take before buying the products. If customers are highly
sensitive to the price change and they emphasize on the product quality then Tesco finds
the way of increasing the product quality keeping the price level under the control
(Scaner, et al., 2009).
Economic of Scale: Before going to produce high volume products, a company has to
consider the economics of scale as it has a direct impact on the decision of producing the
large volume product. Here, Tesco PLC has a good economic of scale and company can
produce a large volume if the demand is high. So, if demand is high then Tesco can
produce large amount of products.
Cost and output: If cost of products rise when Tesco produce large amount of products
then Tesco consider whether the products is profitable.
An organization has to consider the business and cultural environment before making any
decision as these environmental factors have a direct impact on the business organization (Slack,
et al., 2000). Here, the business environment is analysed through the PEST analysis;
Political factors: In UK political situation is more stable and the government makes
different supportive regulations for the business organizations. Tesco PLC can make
policy considering this inductive political situation.
Economic Factors: The economic factors are the interest rate, GDP, employment rate,
inflation rate. All of these factors are good position in UK that made the activities of
Tesco easier.
Social Factors: The behaviour of the customers, their expectations, perceptions and
actions are determined by the social norm and environment that has to be considered by
Tesco for the business activities.
Technological factors: As technology is changing fast, Tesco has to adjust the operational
activities with the changed technology to increase the product quality and reduce the cost
of the products.
Besides these business environments, Tesco also consider the cultural issues of the UK. The
culture of a country directly impacts the behaviour of the organization. Tesco makes their
marketing policies incorporating the culture of UK. So, the behaviour of the organization is
highly affected by the business and cultural environment of the organization (Heizer and Render,
2003).
that have a direct impact on the organization (Heizer and Render, 2000). So, Tesco PLC
has to consider these factors while operating in the international market.
Tariff and tax: If the global markets tax and tariff rate is high then Tesco face difficulties
to compete with that countries company though in EU this is not applicable.
Exchanger rates: exchange rate is another important global factor for which companys
ultimate revenue is affected. So, sudden huge change in the Exchange rate of UK with
other countries is a great threat for Tesco PLC.
5.3 IMPACT OF POLCIIES OF THE EUROPEAN UNION ON TESCOS PLC UK (P
4.3)
EUROPEAN UNION has some rules and regulations that the member countries have to maintain
while operating different business activities within and outside the home country (Burnes, 2009).
Here the major policies taken by EU are;
Employment policy
Regional policy
Inflation policy
Education and training policy
Taxation policy
International policy
Establishing the 'rules of the game' policy
All of these policies have a direct impact on the business activities of the member country. Here,
Tesco PLC has to consider whether there is any regulation and policy that may limit the business
activities. So, while doing the business Tesco has to consider the all policies imposed by EU
otherwise the company will be faced under the common law of violating the agreement of EU
member countries. As Tesco PLC is also operating in different EU countries the company has to
maintain these regulations though as a company of EU member country Tesco is getting more
facilities in EU countries (Galloway, et al., 2000).
From the report and analysis of different issues it is found that an organization has to consider
different internal and external factors very carefully as these factors have a direct or indirect
impact on the business activities. Here Tesco PLC is a Public limited company operating the
business activities meeting all the objectives of the stakeholders more effectively. Tesco PLC has
successfully met all the responsibilities to the stakeholders through different strategies like Better
customer services, employment policies, and making the information available to all the parties.
The super market industry in UK is actively perfectively competitive where Tesco PLC has to
adjust the policies considering the other competitors policies and other economic factors like
Fiscal or monetary policies. On the other hand, it is found that Tesco is operating business in the
perfect competition market structure where the company consider the demand of the customers
and their willingness for the pricing strategy. Besides that, Tesco PLC is operating in UK so the
company should follow the regulations of EU along with the UK government regulations. As
Super market or retail industry is getting more competitive Tesco should focus more on the price
and product diversification considering all the international and local factors.
7. REFERENCE
international publication.
Allen M., (2001). Analysing the Organisational Environment. Select Knowledge Limited:
New York.
Gitman L. J.,& McDaniel C., (2009). The Future of Business: The Essentials. SouthWestern Cengage Learning: Mason, OH.
Martins, E.G. and Terblanche, F. (2003). Building organizational culture that stimulates
creativity and innovation. European Journal of Innovation Management, 6 (1), 64-74.
Scaner, D., et al., 2009, Introduction to business, 9 th Ed. London: McGraw-hill international
publication.
Shein, Edgar (1992). Organizational Culture and Leadership: A Dynamic View. San
factors
http://www.tescoplc.com/?pageid=7,
affecting
business,
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on
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Slack N et al., 2000.Operations Management. Pitman : UK
Heizer J and Render B., 2003. Operations Management. Prentice Hall: India
Galloway L et al., 2000. Operations Management in Context. Butterworth :Heinemann
8. BIBLIOGRAPHY
Daniels, J., Radebaugh, L., Sullivan, D. (2007). International Business: environment and
operations, 11th edition. Prentice Hall.