BTEC Business- Exploring Business Assignment 2. Includes P4, P5, P6, M3, M4, D2, D3 criteria's. This assignment explores and examines the environment and markets in which a business operates within. The business chosen for this essay is Tesco PLC. First page provides description of criteria's; how...
Assignment 2: Learning Aim C and D
Title: The Effects of the Environment on a Business
Aim C- Examine the environment in which businesses operate.
Aim D- Examine business markets.
Criteria How to achieve the given criteria
C.P4 Discuss the internal, external and competitive environment on
a given organisation.
C.P5 Select a variety of techniques to undertake a situational
analysis of a given organisation.
C.M3 Assess the effects of the business environment on a given
organisation.
C.D2 Evaluate the extent to which the business environment affects
a given organisation, using situational analysis techniques.
D.P6 Explore how the market structure and influences on supply and
demand affect pricing and output decisions for a given
business.
D.M4 Assess how a given business has responded to changes on the
market.
D.D3 Evaluate how changes in the market have impacted on a given
business and how this business may react to future changes.
Introduction
In this given assignment I will investigate and evaluate the effects of the internal
environment and external environment on a business based within the United Kingdom that
is trading within the EU (European Union).
Tesco is the business that will be investigated for this task, Tesco is a British business that is
within the food, clothing and financial industry. This business is a public limited company
which participates in international retail and other related services. In the UK it is one of the
leading supermarket chains in the UK, one of the market share leaders with 30 % of the UK
population mainly shopping at Tesco. However, Tesco is also a supermarket leader across
the world as it operates in 13 countries with nearly 6,000 stores worldwide. For example,
they operate in countries such as Czech Republic, Hungary and Thailand and is known as The
Food Company across Europe.
Market structure and influences
The term Market structure is the characteristics, nature and organisation of a particular
place where goods and services are sold to consumers. There are many characteristics in a
certain market place; some of these characteristics may affect many market factors such as
price, competition and the demands upon the market. Market structure may also mean the
degree of competition within a market for goods and services.
1
, EXPLORING BUSINESS ASSIGNMENT 2
In a Perfect Competition market there are a large number of sellers looking to sell their
products to the consumers of the. All the businesses within the market produce and supply
a homogeneous product, meaning all the market competitors offer exactly the same
product. This gives consumers no preferred choice of where to buy from as prices cannot be
altered much due to not being unable to increase manufacturing costs thus the businesses
are known as price takers (take what price they get). However, all the sellers use their own
brand or sell at a different locale as another means of increasing market share.
The characteristic of Imperfect Competition is completely different to a Perfect Competition
market. In this type of market there are less producers of a certain product and the products
produced by a company are not always the same as their competitors thus a complete
contrast to perfect competition. Therefore, consumers can not only find a substitute
product but can always have a lot to choose from.
The imperfect competition structure applies to my business, Tesco Plc. I highly consider
Tesco as part of this market due to a number of factors: 1. They are not dominating the
supermarket’s market as they share the market share with competitors who are part of ‘The
Big Four’- Asda, Sainsburys, Morrison’s excluding Tesco. Secondly, the market is made up of
a few businesses who can offer customers with a range of differing substitutes when it
comes to their products.
In a marketplace, factors such as supply and demand effects price; this is because price,
supply and demand are three interconnected parts which go in relation together. If the
supply on a product is quite less, the price remains high (less is available so customers will
more likely pay more) but the higher the supply, the lower the price becomes. Nonetheless,
demand has an opposite concept to this (supply): if there lots of demand for a product, its
prices remain high but less demand means a product will cost less.
If a product is coming off the shelf at a reasonable rate, then Tesco would keep the prices
the same. This is because customers do not mind paying a certain amount for a product
they would consider as a necessity or if they really want the product. On the other hand, if
items at Tesco’s stores do not come of the shelf, then the store would do something about
this. The manager at Tesco would decide to change the price by most likely putting the price
down so customers would buy it without hesitation. As a result, the stock is not put too
waste and the business (Tesco) would make enough gross profit to avoid any losses in cash
as they would profit from paying for logistics.
Supply and Demand
Demand
For my chosen business (Tesco) there are many factors which influence the demand for
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