Assessment -1: Tesco Company Overview, Pestle Analysis, SWOT Analysis

This assessment provides an overview of Tesco, including its history, market share, and revenue. It also includes a Pestle analysis of the company's external environment, examining political, economic, social, technological, environmental, and legal factors. Additionally, a SWOT analysis is conducted to identify Tesco's strengths, weaknesses, opportunities, and threats. The assessment concludes with a discussion on how Tesco has addressed these macro environmental issues to sustain its market position and customer loyalty.

Assessment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
ASSESSMENT -1...........................................................................................................................3
Section one: Company Overview................................................................................................3
Section two: Main body...............................................................................................................3
Pestle analysis..............................................................................................................................4
SWOT analysis............................................................................................................................5
Section third- CONCLUSION.....................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
There are various changes in macro environment that have adverse impact on
performance and strategy of organisation. Due to drastic change and innovation in external
environment companies have to face challenge of growth and sustainability of business. Tesco is
one of the largest British groceries and retailers public limited company that has huge market
share in UK. This report has divided into three sections such as one is about company overview,
second is analysis of external environment using models and third is conclusion about the way
company have addressed the issue.
ASSESSMENT -1
Section one: Company Overview
Tesco was initially started by Jack Cohen in 1919 as a group of market stalls in Hackney,
London. Company have expanded its business rapidly as it have more than 100 Tesco stores by
1939 and it plan to enter into international market since 1990 thus having operation in more than
11 countries. It is market leaders in UK having approximately £63.911 billion revenue and 6800
shops operating in different parts of country for earning more profitability. In terms of revenue it
is nine largest companies in world having 450000 employees that are working together for
growth and success of enterprise in retail industry. Tesco deals in varieties of products and
services such as food, clothes, furniture’s, toys, internet and financial service to meet
requirements of each individual living in society. Company have meet customers expectancy and
earned huge profit margin by providing products and services at lower cost (Gong, Liu and Zhu,
2019). Tesco have covered 28% market share of retail sectors in UK thus it have strong brand
image and customers satisfaction.
Section two: Main body
Macro environment is wider terms that include various factors such as taste and
preferences of customers, policies and rules, regulation of government, economic condition of
country and technological development. All such external factors impact on Tesco strategy and
market performance so managers have to take appropriate decision to cope up with changes so
that firm can grow and sustain its business for longer time frame (Vaiman and et.al., 2018).
Pestle analysis is best model that is used to analysis external factors that influence business
strategy of firm. Such as:
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Pestle analysis
Political factor: Tesco operates its business globally so it needs to considered tax rates,
government regulation of each country for effective operation of business. One of the main
challenges that have been faced by companies is uncertain policies of government such as brexit
that have resulted in lower sales volume and profit margin. But Tesco in order to reposition itself
in market have changed strategy to deliver products at lower cost to customers so that they can
be motivated to make purchase for satisfaction of their respective requirements (Kennedy, 2016).
Economical factor: United Kingdom is facing situation of recession since it have decided to
leave European Union as main trade of company was with member countries of EU. So, it leads
to increase in unemployment level, over cost of production, interest rates and decrease in sales
volume of firm. Thus, government is forcing many organisations to generate employment due to
economic instability so Tesco by hiring employees have build its brand image and increased its
sales volume (Economic factors affecting Tesco, 2020). Company have also decided to bring
economic of scale in order to provide more valuable products to end customers for huge market
share and profitability.
Social factor: From the research it have been found that most of the people in UK likes to have
one-stop and bulk shopping that have lead to increase sales of non food products. Needs and
preferences of customers keeps on changing such as due to decreasing in disposable income of
people they are mostly like to have more valuable products at reasonable rates. At the same time
due to increasing number of diseases and health problem people of UK have become more
concerned about their health and safety thus demand of organic products have increased
(PESTLE AND SWOT ANALYSIS OF TESCO 2016-17, 2017). So, Tesco have adapted these
changes and includes more organic and hygiene food products to meet requirements of customer
beyond their expectancy.
Technological factor: People are becoming more and more aware about recent technologies or
making use of digital media such as facebook, Instragram and twitter. Digital media have
contributed in more connection between people, ease and comfort to compare products and
services of one company with another. Thus, Tesco in order to communicate and build strong
relationship with customers have increased its online presences on various online sites (Pan,
Chen and Ning, 2018). Tesco have make use of innovative technology for superfast delivery of
products to end customers that is within one hour that have contributed in retention of customers
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loyalty. Mobile application has provided customers convince to easily make payments of
products and services rather than standing in ques.
Environmental factor: It have been founded that clothing sectors is generating lot of pollution
in recent era that have affected on health and safety of individual as well as animals. Government
is also making efforts to reduce wastage of amount of resources so that products can be available
for customers for future satisfaction of their respective needs. Thus, it has increases overall cost
of company as Tesco in order to take steps to prevent resources and undertake CSR activities has
make optimum utilisation of resources (Kennedy, 2016). Tesco by undertaking CSR activities
and reducing wastage of amount is able to provide maximum value to customers by reducing
prices to lower level so that each individual is motivated to make purchased for satisfaction of its
requirements.
Legal Factor: Company have been found guilty for less showing profit margin that was against
government rules and regulation so it has impacted reputation and customers satisfaction level.
Tesco also need to incur extra cost in term of penalty or fine which it have to pay for not abiding
to rules and regulation (Nemlioglu and Mallick, 2017). While company have followed other
rules and regulation made by government that is health and safety of people, discrimination,
equality, working hours and leave provide to employees. Thus, Tesco by considering all legal
laws is able to motivate employees to work hard and effective to fulfil customer’s requirements
in better manner.
SWOT analysis
It is another model that can be used to analysis market positioning of firm in competitive
market condition by identifying strength and weakness of enterprise. SWOT analysis model also
helps in finding available opportunities and threats in external environment that can affect grow
and expansion of business in long runs (TESCO SWOT Analysis, 2020). Therefore, in order to
identify key strength and weakness of Tesco SWOT model can be used such as:
Strength: It is one of the biggest grocery stores and supermarket in United kingdom so large
number of individuals are motivated to have products and services of Tesco brand as compared
to others. 63,911 million pounds was overall revenue of firm in 2018-19 in both Ireland and UK
thus profit has approximately risen by 11%. Other strength of company lies in its supply chain
that contributed in delivery of products within limited time frame and cost. At last it have
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maximum market share and strong brand image that inspired each individual to be part of firm
for fulfilment of their requirements (Jones and et.al., 2017).
Weakness: Company was unable to manage its business outside UK that is in Japan and US
thus it resulted in close down of several stores. Due to improper market research and marketing
strategies Tesco have to shut down its operation in different countries thus it needs to improve its
management. Financial errors and accounting fraud scandal have resulted negative impact on
overall performance and profitability of firm (Leheza, Konovalenko and Demchuk, 2018). For
example: court has found Tesco guilt for under showing profit margin in order to avoid tax that
has resulted in additional cost.
Opportunities: There are several opportunities that are available for Tesco which can be
utilised by it in order to further increase profit margin and sales volume of firm. Company have
recently opened new discount stores that are knows as jack which have been performing
excellent. So, Tesco needs to invest more in jack stores for further grow and success of firms and
give more competition to two main discount provider that is ALDI and LIDL. At the same time
Tesco have opportunity to expand its business in emerging markets that have potential grow and
expansion in future circumstances such as Indonesia, Turkey and South Korea. It can also form
joint ventures or form alliance with other companies or brand in order to enter into new market
and earn more profitability (Hood and Waters, 2017). Tesco needs to invest more in online
presences in order to provide ease to customers to order products while staying safe and secure at
their homes.
Threats: There are certain threats that can cause harm to grow and smooth operation of Tesco
such as Brexit is such an uncertain policy that have resulted in decrease in sales volume of most
of the firm. Increasing competition level such as Walmart,. ALDI and Marks and spencer and
changes in customers preferences are two others factors that can affect market share and overall
profitability of firm (Pavliuk and Noda, 2020). Tesco mainly depended on UK market for
profitability so instability and uncertain condition of country can impact its future growth. So,
company in order to grow in future have to enter into global markets, innovates its products and
services so that customers are motivated to be part of organisation.
Section third- CONCLUSION
It can be concluded from above report that there are various issue that are faced by
company such as political instability, changes in customers preferences, increase in competition
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level and legal implication that have influence overall brand image or reputation of firm. It can
also be stated that Tesco by deciding to introduce jack stores to offers products to customers at
relative low prices has contributed in inspiring individual to make purchase even in uncertain
situation. Company have paid penalty for not abiding to legal regulation and have decided to
follow ethical practices in future in order to sustain its operation in competitive market. Tesco
have gained maximum market share and provide tough competition to other supermarket by
increasing its presence in online sites. Launch of organic products and more presences in online
sites have contributed in better satisfaction of customer’s requirements and increase in overall
profitability of firm. Therefore, in this way Tesco have resolved its various macro environmental
issues and retained its market position, customer’s loyalty for long term growth of firm.
REFERENCES
Books and Journals
De Marchi, V and et.al., 2019. Environmental upgrading in global value chains. In Handbook on
global value chains. Edward Elgar Publishing.
Erickson, G. S., 2017. New methods of market research and analysis. Edward Elgar Publishing.
Gong, Y., Liu, J. and Zhu, J., 2019. When to increase firms’ sustainable operations for
efficiency? A data envelopment analysis in the retailing industry. European Journal of
Operational Research, 277(3). pp.1010-1026.
Hood, A. and Waters, T., 2017. Living standards, poverty and inequality in the UK: 2016-2017
to 2021-2022 (No. R127). IFS Report.
Hübner, A and et.al., 2019. Distribution in Omnichannel Grocery Retailing: An Analysis of
Concepts Realized. In Operations in an Omnichannel World (pp. 283-310). Springer,
Cham.
Jones, P and et.al., 2017. Sustainability, materiality and independent external assurance: An
exploratory study of the UK's leading food retailers. Sustainability challenges in the
Agrofood sector, p.227.
Kennedy, A. M., 2016. Macro-social marketing. Journal of Macromarketing, 36(3). pp.354-365.
Leheza, D., Konovalenko, A. and Demchuk, O., 2018. Factors of the marketing macro system
effecting children’s food production.
Nemlioglu, I. and Mallick, S. K., 2017. Do managerial practices matter in innovation and firm
performance relations? New evidence from the UK. European Financial
Management, 23(5). pp.1016-1061.
Pan, X., Chen, X. and Ning, L., 2018. The roles of macro and micro institutions in corporate
social responsibility (CSR). Management Decision.
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Pavliuk, T. and Noda, V., 2020. Analysis of competitiveness and competitive advantages in
today's market conditions. Management and Entrepreneurship: Trends of
Development, 2(12). pp.91-104.
Vaiman, V and et.al., 2018. Macro talent management: A global perspective on managing talent
in developed markets. Routledge.
Online
Economic factors affecting Tesco, 2020, [Online].Available Through: <
https://www.thestrategywatch.com/economic-factors-affecting-tesco/>.
PESTLE AND SWOT ANALYSIS OF TESCO 2016-17, 2017, [Online].Available Through:
<https://pestleanalysis.com/pestle-analysis-tesco/>.
TESCO SWOT Analysis, 2020, [Online]. Available Through:
<https://www.marketingtutor.net/tesco-swot-analysis/>.
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Appendix
Pestle analysis of Tesco
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SWOT analysis of Tesco
Porter five forces of Tesco
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