• Posted on August 29, 2023
• Unique Submission Team

BUS4001 Understanding the Business Environment Assignment Sample

Task 1:

Introduction of the organization:

Tesco is a multinational British groceries and retailer chain headquartered in England with outlets across Europe, USA and Asia. It is the third largest retailer in the world. It was founded by Jack Cohen in 1919. During the year the founder of the organization who was selling groceries from a stall in London bought tea stock from T.E.Stockwell in surplus quantity.

The tea company and Cohen built up the name of the brand by combining their names and formed a brand tea Cohen originally sold as TESCO tea. In 1929, the first Tesco grocery store was opened in London. Since then the organization expanded their business by acquiring more new stores by adapting the needs of the customers. Its primary aim is to act responsibly in all their trading activities (Aiello et. al., 2020).

Identify the legal structure of the organization:

The legal structure followed by the organization is ‘corporate governance’. In this sector, people deal with shareholders. They perform such operations to make sure that Tesco is achieving all the segments that the shareholder wants the company to achieve.
The purpose of Tesco is to sell goods and products to customers, in order to deal with every segment which can be a part of the store they need licenses for certain things such as liquor (Sreenivasan et. al., 2018).

Under the legal framework which is followed by the organization it is stated that some of the company’s shares are raised into the market which are owned by certain people who are known as the shareholder of the organization. The role of the shareholders is to invest their money into the shares of the company and in return they get profits from their shares.

Purpose and objectives of the organization:

The mere purpose of the organization is to make money by the selling activities. Groceries and food products are sold at the stores of the company through offline and online mode of networks. They make money by selling the available products to the customers who show up at the store or place an order and pays them for the purchased stuff.

The other purpose of Tesco is to help the shareholders of the organization to earn good amount of profits from the investment made by them in the form of shares. The major objective of the organization is to provide good customer service with maximum customer retention and to make more new potential customers which leads to more revenue generation for Tesco and its shareholders by selling the products to the consumers at a reasonable cost (Sreenivasan et. al., 2018).

Identify and explain the organization’s market structure under which it operates:

The media stated that Tesco’s market structure is Monopoly which means that the organization is the only one which is dominating the market and generating all the revenues which was strongly opposed by them and it was laid out that the organization operates under Oligopoly. It was exhibited that Tesco is not the only supermarket in the United Kingdom instead it is a dominant shareholder which can-not be considered as Monopoly due to the constant rivals in the market such as Sainsbury and Morrisons.

The competitors in the market are uniform threat to the organization but it dominates the market with maximum shareholders and profit generation which makes the entry and establishment of other companies impossible. As the dominating company has major control over the market with maximum customer retention and more potential customers (Monte, 2021).

Impacts of the market structure over the organization:

Tesco operates its activities under Oligopoly market structure which means that the company acquires the maximum market share. The market structure exhibits that it is a state where the competition is limited and the market constitutes of small producers or sellers.

The market structure which is followed by the organization impacts it in such a way that a large share of market is occupied by the largest groceries retailer store which is Tesco with complete customer retention. Due to the Oligopoly market, the retailer chain helps the company to maintain the dominance by making the survival of small sellers and purchasers impossible which directly results into less competition (Nissinen, Seppälä and Heinonen, 2022).

Due to less rivals in the market the revenue generation is left unaffected and stays constant. This helps the company to develop its goodwill in the market and become the first choice of the customers.

Task 2:

Stakeholder: 

An individuals or an organization that invests interest in a company directly or indirectly and affects their activities, business, decision making and performance is the stakeholder of the company. The primary stakeholders of the organization are the investors, customers, suppliers, employees, government and trade associations.

The term is divided into two types and they are the internal stakeholders and the external stakeholders. The first one are those who works with the organization and directly impacts the business by serving or managing the activities, they are project manager, directors, investors and employees The second one are those who affects the organization indirectly and are the people who are outside the organization such as clients, customers, suppliers, competitors, society, government etc. (Karjaya, Satris and Suspiati, 2019).

Shareholder:  An individual or an organization who is the owner of shares of a company is known as the shareholder. In order to raise the funds for more investment the organizations releases its share in the market and the one who vests their interest in the brand seeks out to own the share by investing their money which helps them to earn profit when the company grows and generates surplus profit so the people who purchases the shares are the investors of the company.

The shareholder when gains maximum number of the shares of the company is then considered as the owner of the company. These entities are considered as the partial owner of the organization.

Stakeholder analysis:

In the organization the individuals or a group of individuals who vests their interest in the company irrespective of the internal and external involvement are the stakeholders.

The process of distinguishing or identifying the people before the inception of the project, grouping them as per their level of participation, interest, their roles and their work at the project while identifying the level of involvement and communicate the planning done in order to achieve desired goals to the people involved in the project (Assibey-Yeboah, 2020).

From suppliers to the directors, the individuals making important involvement in the project which were classified in different categories such as the people affecting the internal functioning and the one who are responsible for the external functioning have a same goal which helps the company to attain the desired result with the help of stakeholder analysis.

The process of identifying company’s stakeholder groups with the use of stakeholder analysis:

In reference to Tesco, the process of identifying the company’s stakeholder’s group is carried out by stating the internal and external factors affecting the business and by following certain steps which helps the individuals who vests their interest by assigning them their jobs according to their level of interest or involvement.

Documenting the stakeholder’s communication is the first part where the stakeholder communication plan is created formally in Tesco by stating their part of jobs which they have to perform. Then the plan and the assigned activities are performed in the organization and provide the status reports of the fulfillment of assigned jobs. The opinions of the individuals are considered in order to make required changes.

Evaluate their needs and influence:

The needs of the shareholders with Tesco is to distribute the profits among the stakeholder’s group which they are worthy of. The revenues generated by the company should also benefit them with good returns. Their expectation with the company is to be transparent and maintain loyalty. They want to be kept well informed of all the activities which affect the business of the company.

Their influence on Tesco is gigantic because all of them irrespective of the internal or external factors are responsible for the uniform functioning of the company. They make significant contribution to achieve targets set by the organization who wants to expand and gain more profits. They are the pillars of the company because of which the company is achieving all the goals (Tahri, 2018).

Task 3:

Importance of Business Environment Analysis:

The term indicates the total factors which affects the business and its activities in order to achieve the desired success of the organization. It is important for analyzing the factors which are threats, strengths, growth opportunities and weakness for the business. For the better and improved functioning of the organization it is important to conduct the analysis. Its importance is as follows:

Identifying opportunities and making first move: It helps the organization to identify the growth opportunities and take initiative to grab them and implement in their business to achieve the desired result.

Identifying the threats to the organization: It helps the organization to foresee the upcoming threats which might influence business activities, proper functioning, revenue generation and eradicate such hurdles with the help of proper strategies and planning.

Continuous learning: Due to the dynamic business environment there are many changes which come up with time and is important to be enforced in order to evolve the business from the traditional one to cope up with the contemporary world. Change is important in order to compete with the rivals in the market and be a step ahead of them (Hoshi et. al., 2018).

PESTEL Analysis: Through this framework the important macro environmental influences can be identified for the Banking and Financial services organization which is HSBC.

• Political factors: HSBC is a banking and financial service provider international company. It is operated in many countries which binds the organization with their certain laws. The Government of the countries abides them with the laws which protects them and helps them to operate their business activities successfully. The organization has their protection strategies against the governmental restrictions. While operating the business in different countries the company has to follow certain rules and laws which differs from place to place and sounds very dynamic (Ievdokymov and Zavalii, 2020).
• Economic factors: The economic growth of HSBC is based on the sustainability of the foreign exchange rates and the stocks market. HSBC expresses that the profits and the performance of the organization increases with the growing rates and more money flow in the market. Their business operation seems to be highly beneficial in rapid developing areas. If the economy of the country where the HSBC is operated grows then the revenue generation of the company increases automatically, but the same gets affected when there is recession in the market (Kang et. al., 2020).
• Social factors: HSBC is affected with the change in social trends and the upcoming social trends which results in high revenue generation. This factor says that if the choices of the people in the society changes due to the present trends which make them attracted towards a luxurious life and prefers to make expenses on the credit basis leads to more profit to the banking and financial service provider. People are encouraged by the government to invest in SME’s which is beneficial to the customers and to HSBC too.
• Technological factors: HSBC is a banking service provider working on an international basis which helps their customers with the e-banking technology. The technological factors might affect the business due to more exposure to cyber attacks. It is beneficial for the customers but on the same hand might be a huge risk due to the infringement of security of the user’s personal data (Cadwalader et. al., 2019).
• Environmental factors: Just like every company, HSBC do have their own responsibilities towards environment like reducing the use of carbon and introducing eco-friendly funds and waste reduction. The company is actively participating to cope up environment friendly methods to manage their business activities (Omoregie and Ndigwe, 2020).
• Legal factors: The Company is operated in many countries and deals with different abiding laws which affect the functioning of the company. HSBC has to follow all the rules and regulations and also has to deal with the dynamic laws which might be in favor the company with good profit or vice-versa of it.

Importance of Porter’s five forces model:

The importances of the model are:

• To identify the competition in the market
• To identify what the new entrants are up to
• Realizing the power of suppliers
• Understanding the customer’s power
• To understand the threat of substitute products

Porter’s five forces model:

• Threat of substitute products and services: HSBC is highly exposed to the threat of substitutes as there are many banking companies which help their customers with the best loan and interest deals which seem to be highly beneficial to the users of the services.
• Threat of new entrants in the industry: The threat of the new entrants is low. In order to enter into the market and establish them on an international basis huge investment is needed which is hard to afford but if the entry is made then the company has to lower down its profits and help the customers with the same services on a reasonable rate (Samudrage and Jayewardene, 2019).
• Bargaining power of suppliers: In the company HSBC the bargaining power of suppliers is high due to their limited number, as they supply the products which are not basic in nature. Due to the high power of suppliers they extract high rates for which the margin of the company is lowered down.
• Bargaining power of customers: In HSBC the respective power is high due to number of companies which offers the same services. If the company doesn’t helps the customers with their needs then they can easily choose another service provider. In this case the company has to lower down their profits to maintain maximum customer retention.
• Rivalry among existing players: The Competition between the competitors is high due to the operations which are held in a very competitive Foreign Money Center Banks Industry. Different companies help the customer with attractive deals which might affect the business profitability of HSBC.

Task 4:

Short term business performance evaluation:

In the annual report of HSBC , the short term business performance evaluation is done by considering the dynamic factors which tends to change every year and affects the business on short term basis such as assets of the company. The assets of the company are considered as the factors which affects the organization on the short term.

The valuation of assets in the year 2019, 2020 and 2021 is displayed in the report which exhibits that in the year 2019 the assets valued 2715152, in the year 2020 it was valued 2984164 and in 2021 the number was 2957939. Through this data it is expressed that in 2019 the assets value was low and then increased in 2020 and then the fall in the numbers of assets value was displayed in 2021. This evaluation stated that the key performance indicators were achieved in the previous year and then resulted in more profit in 2020 but unfortunately the company was not able to achieve the same in the last year and lacked in the performance on a short term basis.

Long term business performance evaluation:

In the annual report of the company, the long term business performance is done by conducting the valuation through preparing an annual report of the company where all the business activities are stated. The report expresses that if the company was capable of achieving the key performance indicators on the long term basis or not.

The shares which are invested by the investors in the company are considered to be the activities which play an important role in growing the business. The shares of the company in the year 2019 were 20,206, then in the year 2020 the valuation was 20,184 and then finally in 2021 the value was 20,073.

This report data expresses that the long term business performance evaluation in the year 2019 was good, in the year 2021. Therefore, it can be said that respective company is performing at a decent pace when contrasting to long term business performance evaluation through the financial KPI mentioned in the annual report of the business firm (Viltard, 2019).

Recommendation:

From the analysis of the above discussion, there are several recommendations that can be drawn with respect to boosting on current performance of the business firm and regulate productive workings of the business form in the contemporary business environment.

• Market research: The managers of the respective firm are recommended to perform required market research. This will help the firm to capture changing consumer trends in the marketplace and derive better competitive advantage to the company. The bank managers by performing frequent market researches can enable better working of the firm and grab the possible near opportunity for the provided operational marketplace.
• Communication: The managers of the respective bank is recommended to take care of effective communication strategy that will facilitate transmission of required data or information from one place to another. It will facilitate long term existence of the business firm as fluctuations in market trends are coordinated with the organization changes with enabling effective communication between the respective departments of the firm.

 References

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