PESTEL Environment Analysis for TESCO

This report provides a PESTEL analysis of the external factors affecting TESCO's business operations and performance. It discusses the political, economic, social, technological, legal, and environmental factors and their opportunities and threats. The analysis helps TESCO identify these factors and use them for its betterment and improve its business operations.

PESTEL ENVIRONMENT
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Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
APPENDIX......................................................................................................................................8
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EXECUTIVE SUMMARY
The report describes the various external factors which effect the business of TESCO.
With the help of PESTEL analysis company can identify these factors and use them for its
betterment and improve its business operations.
INTRODUCTION
PESTEL analysis is very efficient and effective tool used by organisations to analysis
different situations and its external factors impact on the operations and performance of business
(Kula, 2012). The organisation taken for this topic is TESCO. The company is a multinational
retailer and deals in groceries and is one of the most profitable supermarket chain.
MAIN BODY
Political Factor
Factors related to policies and political actions that may effect the operations of business
hence, its important to consider and follow them.
Opportunities
 TESCO is generating employment as it is one of the biggest supermarket so government
is allowing them to conduct their operations at their desire locations.
 Due to easing in employment regulations the company is able to hire large number of
employees in order to make its work process fast and easier.
Threats
 New policies are been formulated by government which are against tax reductions, so
company is facing problem in managing its tax audits and to maintain its good image in
marketplace.
 The restrictions in the import services is creating problem for TESCO as they import few
materials from outside (Yusop, 2018).
Economic factors
The overall economy and changes in the economic forces may effect the functioning of
organisations.
Opportunities
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 By employing large number of people, TESCO is helping in decreasing the rate of
unemployment as hence creating and enhancing its reputation in market.
 Due to fall in inflation rates, the company can provide goods at quite cheap prices in
order to attract more number of customers.
Threats
 The availability of credit has decease due to which company is facing problem in raising
funds and its business might suffer.
 Due to decrease in the disposable income of people, the consumption level has decease
due to which TESCO is facing problem in sales (Susilo, 2020).
Social factors
The social factors, current market trends, attitudes and many other factors could influence
the operations of organisations.
Opportunities
 By using green vehicles company can gain the trust of customers and government.
 People prefer to buy domestic products rather then foreign products so they can capture
large area of UK market.
Threats
 Changes in the market trends such as changes in fashion effect the business of the
TESCO.
 The people are becoming more health concusses so if company want to maintain its
position in market so they should focus on this factor.
Technological factors
Technological changes and up-gradations may effect the distribution and communication
actions of products and services of the organisations (Fosher, 2018).
Opportunities
 The use of new machines with latest technology can reduce the production cost of
TESCO.
 With the use of online platforms company can expand its market in different countries.
Threats
 Due to excessive use of technology the manpower will reduce and lead to intervention of
employee reunions.
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 The employees are not friendly with technology and improper training lead to loss of
employees.
Legal factors
The legal rules and regulations formulated by government and their legal requirements
may impact the functions of business organisations (Taylor, 2013).
Opportunities
 TESCO is conducting its business operations in food sector according to the rules of FRC
so able to gain the trust of government and didn't facing any problem from government
side.
 By following all rules and regulations company can build its good image in the
marketplace.
Threats
 Due to low pay rates and issues related to holidays and night shift, employees may take
legal action against the company under employment act.
 Due to mistakes and frauds of staff members in accounting and audit work, company may
face legal problems and it will effect their goodwill.
Environmental factors
The environmental factors such a changes in weather, laws related to pollution, etc
impact the business operations so its essential to consider them and function accordingly.
Opportunities
 By using renewable sources they can minimise their expenses.
 By using fuel saving routes for home delivery they can reduce the expenses related to
fuel (Graham, 2018).
Threats
 The use of vehicles for delivery purpose is leading to air pollution.
 Company is using more machines and less manpower hence are consuming more
electricity and contributing in increasing the level of pollution.
CONCLUSION
The use of PESTEL analysis helps organisations in identifying the external factors and
their impact on the operations of business. Also helps in formulating business strategies in order
to gain success in the marketplace.
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REFERENCES
Books & Journals
Kula, E., 2012. Economics of natural resources, the environment and policies. Springer Science
& Business Media.
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Yusop, Z.B.M., 2018. PESTEL analysis. COMRAP 2018, p.34.
Susilo, D., 2020. Macro-Regional Analysis of Tourism Entrepreneurship Environment in Bali: A
Descriptive Study. International Journal of Economics, Business, and Entrepreneurship
(IJEBE). 3(1). pp.1-13.
Fosher, H., 2018. Understanding the Marketing and Management of trails using PESTEL
Analysis.
Taylor, P.G., 2013. Understanding the Marketing Environment. Principles of Marketing: A
Value-Based Approach. London: Palgrave Macmillan, pp.25-70.
Graham, D., 2018. PESTEL factors for e-learning revisited: The 4Es of tutoring for value added
learning. E-Learning and Digital Media. 15(1). pp.17-35.
APPENDIX
BASES OPPORTUNITIES THREATS
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POLITICAL
ENVIRONMENT
 Good relations with
government
 Large employee base
 Government policies
 Restrictions on import
facilities
ECONOMIC
ENVIRONMENT
 Decreasing the rate of
unemployment
 Products at affordable
prices
 Credit availability has
deceased.
 Decrease in disposable
income of people.
SOCIAL ENVIRONMENT  Use of green vehicles
 Domestic products
 Changes in the market
trends
 Health concusses
TECHNOLOGICAL
ENVIRONMENT
 Use of new machines
 Use of online platform
 Reduction in
manpower
 Improper training
NATURAL
ENVIRONMENT
 Renewable sources
 Using fuel saving
routes
 Vehicles for delivery
purpose
 Dependency on
machines
LEGAL ENVIRONMENT  Business operations
according to rules of
FRC
 Following all rules and
regulations
 Employees may take
legal action
 Mistakes and frauds of
employees.
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