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Negative Impact Of Macro Environment On Business Operation

Task 1

Use of contemporary example to demonstrate the positive and negative influence of macro environment on business operation

1.1 Identification of positive and negative impact of macro environment on business operation

The Macro environment in the business includes all the Economic And Political protocol that is being implemented within the market. One of the major positive impacts of the Macro environment is due to the fact that economic policies of a nation that are implemented by the government can help to encourage and expand the business of large scale multinational corporations (Artiga & Martínez, 2016). The society can also impose a positive impact, which can ultimately help to improve upon the popularity of a business in an area.

Nevertheless, one of the major negative impacts of macro environment can be due to the unstable political scenario. In some market, there are even strict business laws that do not allow free trade policy to be implemented by a business organisation (Kwon et al., 2017).

 

As intended by Kahn et al. (2017), in case of a macro-environment, the new risks tends to be always appearing, and has become very harder in order to recognize the organization. In case of the retail sector, it is not very much possible for any type of organisation to reject change as they might rise to adapt the changes. According to Fan et al. (2013), the macro environments would include mainly the technological, governmental and the societal influences, and this would have an active change following the business operations.

In other ways, it is essential that the advancements provide the business opportunities to the companies that they could take it. Besides, the technology also opens on the home shopping networks, web-based retailers, online market and the new-retail markets. This ........

Macro environment in the business includes all the Economic And Political protocol that is being implemented within the market. One of the major positive impacts of the Macro environment is due to the fact that economic policies of a nation that are implemented by the government can help to encourage and expand the business of large scale multinational corporations (Artiga & Martínez, 2016). The society can also impose a positive impact, which can ultimately help to improve upon the popularity of a business in an area.

Nevertheless, one of the major negative impacts of macro environment can be due to the unstable political scenario. In some market, there are even strict business laws that do not allow free trade policy to be implemented by a business organisation (Kwon et al., 2017).

 

As intended by Kahn et al. (2017), in case of a macro-environment, the new risks tends to be always appearing, and has become very harder in order to recognize the organization. In case of the retail sector, it is not very much possible for any type of organisation to reject change as they might rise to adapt the changes. According to Fan et al. (2013), the macro environments would include mainly the technological, governmental and the societal influences, and this would have an active change following the business operations.

In other ways, it is essential that the advancements provide the business opportunities to the companies that they could take it. Besides, the technology also opens on the home shopping networks, web-based retailers, online market and the new-retail markets. This would help in to provide increase in point-of-sale to increase allowing organisation to process the credit card system, debt and cash. Regardless to it, the online customers also select the organisation that has real proficiencies in technologies Ashkenas et al. (2015). In terms of competitive advancements, the diverse governmental regulations of business helps associated companies like ASDA or Tesco to provide effective governmental assistance, loan and subsidiaries, and try to assist them by establishing the organisation a positive role to guide the organisation. On the other hand, in terms of the taxes, any of the corporate organisations may also affect the organisation negatively.

Besides, a robust economy may also increase disposal of income for the customers that increases sales and help to sell more services and goods. As opined by O'Neill, Beauvais & Scholl (2016), the lethargic economy might decrease disposal income and cause in fewer amounts for spending in the market. After all, this could also lead to decline in sales and forces the retailers to lower the pricing strategy. However, the retail industry might be in pressure to become reliable as most of the organisations sell the environmental products that are friendly but these have wide controversies in terms of market place or the warranties (Wu & Chiu, 2015). Thus, these cases could overlap with the government and social factors in diverse areas and may harm the organisation as well.

1.2 Application of the Pestel model to support the detailed analysis of macro environment of Tesco

The Pestel analysis tool is believed to be one of the effective components of analysing the external macro environment of business (Prajogo, 2016).

The stable political environment in UK is believed to be one of the major advantages of Tesco that is gained from external market environment. The strong economic background of the nation also supports the financial stability of the multinational organisation. There is also the social factor, which helps to increase the product demand of Tesco in UK market (Cai & Yang, 2014).

There is also the factor related to highly Advanced Technological infrastructure in UK, which help the business of Tesco to expand in the new sectors. The business laws that are implemented by the government also help to ensure that there are no illegal or unethical practices adopted by the business of Tesco. This is believed to be one of the major causes of high brand value of the organisation (Bah & Fang, 2015).

 

Political factors: As associated by Companies such as Tesco and ASDA, the operating area is quite competitive in countries such as Europe, Africa, China, Portugal, Spain, Belgium and US such that the performance of those could be influenced highly by legislation and politics. In order to employ all the labours, the government have encouraged the organisations to hire the employees that could help in to provide flexible and average paid jobs (Russell et al. 2015). Along this, it is quite iterative that the UK government has developed a tax that may affect operations of many companies that are associated there. In 2011, VAT rate of Tesco became 20% from 17.5%, which has increases the revenue by 13 billion pounds in order to decrease profit of diverse organisations.

Socio-cultural factors: At recent times, demand for customers is also changed and they have started of buying organic and fresh foods. It is very important to fill the store with the organic products because a recent survey has intended that the number of elderly people is rising and because of the mobility issues, they would buy the groceries online from these companies. However, companies in UK must have a productive online strategy that could meet the British needs in order to earn huge profits (Neubert, Hunter, & Tolentino, 2014). However, this could also help in to develop good catalogue of major product ranges.

Economical factors: It is seen that the UK economy is showing good signs of inflation to economic crisis, and at recent times, it is witnessed that the GDP is estimated to be 2.7% higher to previous (Levinthal & Workiewicz, 2017). Hence, the results in this growth of the companies would take tome to increase monthly disposal income for citizens where time to increase growth will equalize with revenue.

Technological factors: The customers have given high value to the new technology, and it is very important for companies such as Tesco to give good attention towards these effective technologies. It is readily viable that increase e-shoppers are very imperative to develop internet activity for attracting the customers (Lawrence & Perrigot, 2015). However, this could also help in to utilize diverse technologies from wireless devices to the RFID.

Legal factors: Some of the legislative factors, which affect operations of Tesco, are like retailing operation defined by the commission, which suggests codes of practice and the bans in food retailing (Cai & Yang, 2014). This might harm the organisation directly.

Environmental factors: In order to be responsible environmentally, the associated companies like ASDA and Tesco must reduce the carbon footprint and the ejection of the diverse Greenhouse gases.

Task 2

2.1 Internal and external analysis of Tesco to identify strength and weakness

One of the major strength of Tesco is due to the fact that it is one of the leading retail unit in UK and has been able to capture a significant part of the industry for a longer period of time (Alam, 2013). The strong organisational structure within the company is able to provide and implement effective business decision, which is needed to maintain the property portfolio. In the recent days the major strength of the company is due to the fact that they are able to properly use the advancement of Technology and introduce new section in the form of e commerce business.

On the other hand, the major weakness of the company is due to the weak financial performance in many of the areas outside UK. This has resulted in the loss of total revenue earned by the company. In many instances, the brand reputation of the company is at stake due to the fact that it has not been able to control the internal scam (Rahman, 2015). There also has been report about poor employee management in the company, which has not allowed them to provide high quality of customer service.

 

Strengths

 

  • Leading market player having diversified range in terms of product
  • Geographical diversification
  • Company having a good corporate culture to increase loyalty of employees and customers
  • Have loyal base for customers

 

Weaknesses

 

  • Investing huge amount of money in own business but has less amount of the investments to suffer in a lifecycle of business (Alomuna& Chima, 2016).
  • Suffering because of the limited position in liquidity
  • Facing problems in order to implement norms and the standards, as it does not follow national culture

 

2.2 Connection of the strength and weakness of Tesco in relation to Macro business environment

The effective business policy that are implemented by the government in UK has allowed Tesco capture a significant part of the UK market share Retail Industry. It is also due to the fact that the people of UK society prefers high quality of retail product, which made it possible for the company to improve their popularity among the UK market.

The high level of technological infrastructure that and implemented within the company is possible due to advanced level of technological policy that are implemented by the UK Government (Bah & Fang, 2015).

 

It is analyzed that the strengths and the weaknesses have a direct contact with the ongoing business and have good potential to affect it. Rather, it is important that macro-environmental factors affecting performances, decisions and working successfully in a business could be termed as productive (Ashkenas, Ulrich, Jick, & Kerr, 2015). Besides, if the firm will not perform productively in the home country, it might have the weaknesses to face up the major difficulties internationally. Likewise, the organisation should make up an internationalized strategy in order to review the strengths and the weaknesses.

 

2.3 Application of SWOT analysis in order to justify the decision making process of Tesco

According to Alam, (2013) the swot analysis tool is believed to be one of the effective way to identify the internal strength and weakness and other type of internal business environment. As company like Tesco is able to identify their internal strengths and weaknesses, it is possible for the company to change and modify the organisational policies. One of the major in of the organisational policies of Tesco is to ensure that the company is properly able to utilise the major strength, which is due to the fact that they are one of the leading retail unit in UK market (Rahman, 2015). Additionally, in order to deal with the weakness of poor employee performance, the company has implemented decision of effective human resource policy that can also help them to provide better quality of customer service.

 

On making up the application, the decision making process of Tesco is tabulated in a SWOT analysis form:

Strengths

  • They are regarded as the brands having high customer loyalty.
  • Have wide business operations
  • Leading market player
  • Strong tradition in business to silhouette commercial culture for organisation, and develop loyalty for employees and customers

Weaknesses

  • Some problems because of limited liquidity
  • High instalments in allied bakeries for reducing investments in business sub-division
  • Have problems for implementing common ethics because of the norms ascends due to lack of the cultures on various geographical areas.

 

Opportunities

  • Capitalize on the future growth
  • Invests highly on the bio-fuel production, as there is no high possibility in terms of growth
  • Numerable growth in new markets
  • Entering in new market to enlarge steadiness of revenues and sales
  • Steady enlargement on brand through acquisition and the mergers to define the service and product diversification

 

Threats

  • Enlarged consolidation level
  • Change in the demand for financial crisis and the customers
  • Faces threat because of growing rivalry level
  • International developments because of the MNCs
  • Diminution of performance in the market