External Business Environment Analysis †Free Samples to Students

Question: Discuss about the External Business Environment Analysis. Answer: Introduction: In case of operating a business, certain strategies are required. These strategies help to gain competitive benefits for the company. The success of a business is very much depended on these strategies a lot. The potentiality and threats regarding the company can be understood by these strategies. It informs about both the internal and external environment. Many strategies are taken by the companies to secure their future. However, in this report, SWOT, Porters 5 model and PESTEL of Tesco has been discussed (Tesco.com. 2018). In this report, the competitive advantages of the company can be understood. One of the most interesting essential of competitive strategy is that it helps to identify the strength, weakness, opportunities and threat for the company (TESCO). All these things are important to make profit for the company. If the strength of the company can be identified, capitalizing the resources can be possible for the company and the company earns profit from the same (Bohari, Hin and Fuad 2017). Concurrently, it is important to identify the weakness of the company so that the company can avoid all the weak points and can establish the base of the company on firm stand. TESCO is an international grocery store and if the weak points of the company can be making over, the company will gain much profit from their business. The position of the company will also get secure. Proper identification of the opportunities is very essential for any company so that overall performance of the company can be shunned. Production line and soft corners of the market can be identified in a pro per manner and the company can be benefitted from the same. In case of international companies like TESCO, identification of threats is quite important (Brooks, Heffner and Henderson 2014). The production capacity of the grocery goods can be increased and profit can be gained for uniqueness of the company. An overall study on the SWOT analysis will help to identify all the strong points of a company and the profounder of the company could make all the profit oriented plans for the best interest of the company. The internal environment of a business could be attracted by the SWOT analysis. PESTEL analysis: Environment plays an important role in the case of development of business. it is a well-known principle of the business strategy that development of a business is depended on the Political, Economic, Social, Technological, Legal and Environmental factors of a country. Therefore, a critical analysis regarding the same is required. The overall performance of the company is evolved with these factors. This is important for the overall growth of an international company (Kolios, Read and Ioannou 2016). When a company wants to relocate its business or opens outlets in another country, political analysis of the country helps the company to understand the policies and procedures of the country. no business can be developed until there is a demand regarding the product and until the economic condition of the country is good. Therefore, economical analysis will help to understand the profit scenario of the country. The main business of Tesco is to supply grocery products to the customers and therefore, the company is required to understand the social criteria of every country so that the products can be sold accordingly. The modern world is based on technical innovations and therefore, it is important to use technical assistance for the development of the business. The production of the market can be well understood by the technological analysis made by the company. Legal analysis is one of the inevitable criteria for an international company like Tesco. Legal assistance can be required for operating business on universal basis. Further, legal analysis will provide sufficient advice to the company so that they can operate their business ethically. It is no doubt to state that every company has certain duties to the environment. Therefore, environment analysis is important in this case. the company should not harm the environment at any cost. Porters five model: The competitive position of a company can better be understood by porters model and therefore, a critical analysis regarding the same is necessary to this effect. The five models are bargaining power of the suppliers, threat of substitutes, bargaining power of the buyers, threat of new entrants and industry rivalry (Sun et al. 2014). All these models will help to identify the real position of the company in case of the business criteria. Further, these models will help the company to identify the rivalries of the company so that the company can chalk out proper plan for the company. Further, the marketing position of the supplier will help the company to identify the demand of their product. The product costing is depending on the quality and quantity of the substitutes. It has further been stated that Tesco is required to set the price of the product based on the power of the buyers. Product purchasing power of the buyer will help to gain overall profit for the company (E. Dobbs 201 4). The product selling capacity of Tesco will be incremented if the company can identify the competitors of the company. According to the product marketing analysis, it can be stated that ASDA, Sainsburys and Morrison are certain competitors of the company. This will help to make proper plan for the company. The productivity of those companies can hamper the selling capacities of the company. In this case, it can be stated that the company is required to make certain unique product so that the competition among those companies could not harm the profitability of the company. Further, price of the products is an effective system for increasing the selling capacities of a product. However, the quality of the products should not be cheap or it will affect the reputation of the company. Tesco should take certain methods so that the threats of the company can be identified and the company can gain profit and reputation in the global market. Conclusion: Therefore, the importance of all the strategic tools has been observed and it can be stated that these models help to identify the fuelling model of a business. All these models help to make a company strong, both from the internal and external side. The external side of a business is supervised by the porters five model and PESTEL analysis and the internal portion of the business is dealt by SWOT analysis. Therefore it can be stated that the growth of the business is depending on all these strategies. Reference: Bohari, A.M., Hin, C.W. and Fuad, N., 2017. The competitiveness of halal food industry in Malaysia: A SWOT-ICT analysis.Geografia-Malaysian Journal of Society and Space,9(1). Brooks, G., Heffner, A. and Henderson, D., 2014. A SWOT analysis of competitive knowledge from social media for a small start-up business.The Review of Business Information Systems (Online),18(1), p.23. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis templates.Competitiveness Review,24(1), pp.32-45. Kolios, A., Read, G. and Ioannou, A., 2016. Application of multi-criteria decision-making to risk prioritisation in tidal energy developments.International Journal of Sustainable Energy,35(1), pp.59-74. Makos, J., 2015. What is pest analysis and why it's useful.PESTLE Analysis. Sun, Y., Guo, P., Ma, Z., Li, T. and Dang, S., 2014, November. UK-based external business environment analysis of outdoor adventure clothing using the PESTEL tool and its future outlook. InInformation Technology Systems and Innovation (ICITSI), 2014 International Conference on(pp. 306-309). Tesco.com. (2018).Tesco - Online Groceries, Homeware, Electricals Clothing. [online] Available at: https://www.tesco.com/ [Accessed 19 Apr. 2018].