From: Business Manager – HNC in Business
Subject: Influence/Impact the macro environment has
on business operations
This memo contains information
about influence/impact the macro environment has on business operations and
internal strengths and weaknesses of the specific
business and their relationship with external macro factors.
The report informs Mr. Daniel Thomas about negative and
positive influence/impact the macro environment has on business operations supported
by specific examples.
The factors of the macro environment – can influence the organization activity to affect its performance
and strategy. The macro environment factors can be economic, demographic,
legal, political and social and technological, (PEST or PESTLE Analysis).
Macro environment – contain external factors that a business can’t
Microenvironment – or
internal factors that show the organization can control these factors in
To identify the macro environment
factors or external factors, the organization
must conduct a PEST Analysis. These analysis help organization to decide if the
business is successfully or not.
the positive and negative impacts the macro environment has on business
operations I have decided to do PEST Analysis UK for Tesco PLC.
Tesco PLC is a British
multinational grocery and general merchandise retailer. It is the 3rd
largest retailer in the world measured by profit.
1. PEST Analysis UK for Tesco PLC
The UK Government in 2011 increase the VAT rate
from 17.5 to 20%.
The Government proposes
a fat tax to control obesity.
The UK economy shows a growth.
Increasing the number of elderly people in the UK.
Population growth and healthy lifestyle.
Encourage Internet shopping.
Tesco has accused in 2013 of selling horsemeat.
The organization was accused of providing not
good quality products.
Mobile app – encourage online shopping.
New ways of producing goods and services.
New ways of distribution of goods and services.
1. Political factors
can influence Tesco activity in a positive or negative way. By increasing the
VAT and to propose a fat tax can influence in a negative way Tesco revenue,
generating low demands and people are
looking for healthy food.
2. Economic factors
– all types of businesses, including Tesco are affected by the national and global economy, not only by the
local one (interest rate, demand, offer). A weak economy will have high
unemployment, less money to spend.
3. Social factors –
the 3rd factor that can influence Tesco activity. The society, such
as family, friends, colleagues, media, can affect the interest, opinion about
Tesco activity or about other business. In 2013, Tesco was accused of selling horsemeat, and to convince customer
or potential customer that it’s not true
they have to find a quick market plan. For this, Tesco decided to create a
strong advertising campaign to encourage people that they products respect the
law and Tesco offer good quality products.
4. Technological factors –
can influence the activity of Tesco in a positive way – technological system
that can advertise the business profile easily (Smartphone, Android, website).
Logistics and warehousing functions use forklifts and lorries, tracking technology and software. These factors can be considered a threat to business because can reduce the labor. The customer service department can use the performant communication system to talk to the customer.
Sometimes, the analysis can offer
information about Legal and Environmental factors.
5. Environmental factors
– in the last 15 years, this factor
became an important one, because they pay attention to raw materials, pollution.
6. Legal factors –
include Health and Safety law, advertising strategies and standards, consumer
rights and laws, products safety.
External and internal macro
environment factors affect the business activity. Before taking any decisions
the organization must conduct an internal (SWOT analysis) and external analysis
External environment analyzes PEST factors (Political, Economic,
Social and Technological environment) in which business operates, and the internal analysis provides
information about SWOT factors (Strengths,
Weaknesses, Opportunities, and Threats). The internal analysis shows if Tesco
or other organization respect the criteria of organization vision, mission,
objectives, and marketing strategies.
2.1. Strengths and Weaknesses of Tesco
Powerful retail brand globally
Offer a wide range of products
Tesco has 6.784 stores, 433 more since 2012
Opened small stores in local neighborhood
Tesco buy in bulk, think that permit the company
to keep lower prices and be competitive
Creating Clubcard, vouchers
Creating their own branded phones and tablets
Tesco offer a wide range of products and services,
such as food, drinks, clothing, furniture, insurance, petrol and financial
Tesco profit has been reduced by bad debt from
credit cards and high level of household insurance claims
Bad idea to sell
its own brand phones and tablets
strengths and weaknesses are linked with the macro (external) environment were
Tesco PLC operates.
Economic factors – Tesco PLC is a
powerful retail brand globally. The activity of Tesco is affected by the global economy not only by the local one,
(interest rate, inflation rate exchange). Tesco weaknesses are straight connected with the economic factor
– Tesco tries to sell their own branded phones and tablets, to offer Credit Cards
and home insurance. These weaknesses
affect Tesco revenue, because too many
household insurances claim, bad debts on credit cards.
Political and legal factors don’t affect Tesco activity, the organization
has to follow the health and safety law, consumer rights and laws, advertising
strategies and standards.
Social and cultural factors – Tesco
adapt its products and services according to
with British people demand and lifestyle.
Tesco introduces on the market healthy
and organic food, good quality products at
a reasonable price.
a conclusion, Tesco PLC has to identify strengths and weaknesses to be a
successful business. If Tesco fails to identify strengths and weaknesses, which are
connected one with each other, Tesco will fail in taking the right
decisions, to create a good marketing
strategy. Weaknesses influence negatively
Tesco activity and Tesco will fail to fulfill customer demands.