To: Mr.Daniel Thomas From: Business Manager – HNC in BusinessManagementDate: 7/12/2017Subject: Influence/Impact the macro environment hason business operations This memo contains informationabout influence/impact the macro environment has on business operations andinternal strengths and weaknesses of the specificbusiness and their relationship with external macro factors. The report informs Mr. Daniel Thomas about negative andpositive influence/impact the macro environment has on business operations supportedby specific examples.
The factors of the macro environment – can influence the organization activity to affect its performanceand 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’tdirectly control. Microenvironment – orinternal factors that show the organization can control these factors inorganization advantages. To identify the macro environmentfactors or external factors, the organizationmust conduct a PEST Analysis. These analysis help organization to decide if thebusiness is successfully or not.
To identifythe positive and negative impacts the macro environment has on businessoperations I have decided to do PEST Analysis UK for Tesco PLC. Tesco PLC is a Britishmultinational grocery and general merchandise retailer. It is the 3rdlargest retailer in the world measured by profit.
Table1. PEST Analysis UK for Tesco PLC Political Economic · 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. Social Technological · 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 factorscan influence Tesco activity in a positive or negative way. By increasing theVAT and to propose a fat tax can influence in a negative way Tesco revenue,generating low demands and people arelooking for healthy food. 2. Economic factors– all types of businesses, including Tesco are affected by the national and global economy, not only by thelocal one (interest rate, demand, offer).
A weak economy will have highunemployment, less money to spend.3. Social factors –the 3rd factor that can influence Tesco activity. The society, suchas family, friends, colleagues, media, can affect the interest, opinion aboutTesco activity or about other business.
In 2013, Tesco was accused of selling horsemeat, and to convince customeror potential customer that it’s not truethey have to find a quick market plan. For this, Tesco decided to create astrong advertising campaign to encourage people that they products respect thelaw and Tesco offer good quality products. 4.
Technological factors -can influence the activity of Tesco in a positive way – technological systemthat 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 offerinformation about Legal and Environmental factors. 5. Environmental factors– in the last 15 years, this factorbecame an important one, because they pay attention to raw materials, pollution.
6. Legal factors –include Health and Safety law, advertising strategies and standards, consumerrights and laws, products safety. TASK2 P.2.1. External and internal macroenvironment factors affect the business activity.
Before taking any decisionsthe organization must conduct an internal (SWOT analysis) and external analysis(PEST analysis). External environment analyzes PEST factors (Political, Economic,Social and Technological environment) in which business operates, and the internal analysis providesinformation about SWOT factors (Strengths,Weaknesses, Opportunities, and Threats). The internal analysis shows if Tescoor other organization respect the criteria of organization vision, mission,objectives, and marketing strategies. Table2.1. Strengths and Weaknesses of TescoPLC Strengths Weaknesses · 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 · Online shopping · 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 services · 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 P.2.2.
Thestrengths and weaknesses are linked with the macro (external) environment wereTesco PLC operates. Economic factors – Tesco PLC is apowerful 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 Cardsand home insurance. These weaknessesaffect Tesco revenue, because too manyhousehold insurances claim, bad debts on credit cards. Political and legal factors don’t affect Tesco activity, the organizationhas to follow the health and safety law, consumer rights and laws, advertisingstrategies and standards. Social and cultural factors – Tescoadapt its products and services according towith British people demand and lifestyle.Tesco introduces on the market healthyand organic food, good quality products ata reasonable price.
Asa conclusion, Tesco PLC has to identify strengths and weaknesses to be asuccessful business. If Tesco fails to identify strengths and weaknesses, which areconnected one with each other, Tesco will fail in taking the rightdecisions, to create a good marketingstrategy. Weaknesses influence negativelyTesco activity and Tesco will fail to fulfill customer demands.