Analysis of External Factors and Recommendations for Tesco

This report analyzes the external factors affecting Tesco and provides recommendations for improvement and competitive advantage. It includes a PESTLE analysis of political, economic, social, technological, legal, and environmental factors.

BM461 GLOBAL BUSINESS
ENVIRONMENT

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
PESTLE Analysis........................................................................................................................3
Recommendation.........................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Businesses in the market need to understand and analyse the market, both internal and
external factors so that there are going to be effective functioning and decisions which can be
taken by the company. Tesco has been present in the retailing industry from 1919 and is having
more than 6,800 stores in total. The company’s headquarters are in London, United Kingdom.
The report is going to consist of analysis of the external factors and recommendations for the
organization so that they can improve and make plans accordingly which is going to be effective
for a competitive advantage for a long run.
TASK
PESTLE Analysis
Businesses must understand that the external factors are not in the control of the business
but the external factors do control the businesses in the market. It is important for the company to
analyse the market effectively and make sure that they are making the right decisions for the
company which is going to make the organization have higher performance in the market
(Komljenovic, Loiselle and Kumral, 2017). The competition in the retailing industry is
increasing rapidly which is why it is important for the company to make the right planning and
measures in order to be able to achieve the targets and goals which are present in the market and
with the help of Pestle framework Tesco has been able to make the right decisions and planning
which would be discussed in the further report.
 Political factors
There is a stability in the country of United Kingdom making the company has the right
standards accordingly. The policies and laws and legislatures are being followed by the company
making the company have a higher competitive advantage in the market. The foreign trade
policies and trade restrictions is being taken care of by the company so that there is going to be
higher reputation and standards for the organisation (Hudakova and et.al., 2018). Taxation
policies and Labour law is being taken care of by the company so that that is a standard which
the organisation can have for their products and quality making the productivity and operations

higher. Due to Brexit there were a lot of regulations and laws which have been changed but the
company took care of them effectively and maintain their standards and reputation in the market.
The sales of the company got affected their fault the organisation got in a lot of changes in order
to maintain the Brexit effect in the company.
 Economic factors
The unemployment rate in United Kingdom is falling making the organisation gain a lot of
opportunity for the sales and pricing of the products and services. Company will be able to have
a higher economic growth in the market then matching the demands and expectations of the
customers from time to time. exchange rates in United Kingdom and other countries has to be
well analysed and products have to be priced accordingly so that there is going to be a good
balance which is found making the company have higher profitability margins (Kasemsap,
2016). The company is providing a lot of profits and revenues by having the right policies and
taxation for the products and services. There is a lot of investment which Tesco is making to get
in redesigning for their products making the company have a good sale and daily needs of the
customers can be matched.
 Social factors
The demand for the products and services in United Kingdom is very high therefore the
productivity and operations of Tesco needs to be maintained. The products and services of Tesco
have to match the lifestyle and attitude of the customers in order to have more sales and
satisfaction and loyalty of the customers (Akhmetshin and et.al., 2017). There has to be good
transparency which needs to be provided to the consumers from time to time and changes need to
be done according to their needs and expectations making the company have a higher brand
value and reputation in the market. The products and services of Tesco have to be safe and
healthy for the consumers which will make the company have higher sales than profitability
margins for themselves. the products and services have to be improved according to the culture
believes values which the consumers are having in the country which is going to gain the respect
and loyalty of the consumers and the organisation making the sales be affected and social
influence is going to be present in the company making the organisation be able to match the
trends which are coming in the market (Farooq, 2018).

 Technological factors
There are a lot of technological changes which have come in the market and it is important
for Tesco to be able to take them into consideration. Pairing up with Amazon is a very good
strategy which the company has adapted so that they can provide the customers with the right
services and products from time to time (Hooper, 2016). Online shopping and social media
promotions is being used by Tesco to influence their consumers and has made the organisation
had more sales and purchases of the consumers for the products and services. There is a lot of
innovation and automation which can come in the organisation when there is a good use of
technology making the company has a unique identity in the market. it is very important to have
the right employees an awareness of the technology must be present in the company so that there
is going to be a faster growth and development in the organisation to have a better functioning
and brand value in the market.
 Legal factors
The discrimination which is taking place in Tesco is very low since there is a good
involvement of management and leaders to ensure that there is a good balance in the working
environment of the employees. Tesco is providing the right employment laws to ensure that there
is a higher productivity and functioning in the organisation and satisfaction of the employees is
going to be present making the retention level higher of the employees. The organisation has
been able to take the right copyrights and patent for products and services which the organisation
is dealing in the market making the company have good competitive advantage. Consumers of
the company are provided with the right protection and information about the products and
services they are purchasing making the company have a good relationship with the employees
and loyalty of them in the company (Schwertner, 2017).
 Environmental factors
The government of United Kingdom have taken a lot of environmental policies for the
organisations to follow which is going to make the climate and weather of the country improve.
The school is following these environmental policies from time to time making sure that the
organisation is having a good brand image in the market. The organisation has also taken
measures to have zero carbon footprint and dispose of that waste in a well mannered and

managed form so that they can have a good reputation in the Market. Tesco has to change their
consumption of resources so that they can have a sustainable product and services in the market
matching the demands an expectation of the consumers for a longer period of time (Eling and
Schaper, 2017). Company will have to think of renewable resources and sustainable sources
poured the products and services making the organisation be able to produce an infecting the
productivity of the organisation in a positive manner.
Recommendation
Tesco is having a lot of experience but using the modern techniques and improvement
according to the changing time is very important for the organization to be able to match the
standards and lifestyle of the customers. Demands for basic products and services which Tesco is
serving in the market needs to be higher and operations also has to match the demands. The
quality of the products is being improved but there has to be more investment in the research and
development department of the organization so that there would be higher functioning and
unique identity which would be present in the organization. Pricing of the products and services
are going to differ from location to location which needs to be well maintained so that there is
going to be higher performance which is going to be present and the profit margins of the
company is going to match the standard which Tesco has gained for themselves.
CONCLUSION
From the above report it can be concluded that the businesses need to understand the
importance of the external factors which can influence the working and performance of the
business in the market. Decisions and measures of businesses have to be taken after analyzing
and understanding the market so that there is going to be effective and efficient working which is
going to be present in the company. Competition in the market is anyways high therefore making
use of the right measures and techniques are going to be good for the reputation and brand value
in the market.

REFERENCES
Books and Journals
Akhmetshin, E and et.al., 2017. Analysis of innovation activity of enterprises in modern business
environment. Journal of Advanced Research in Law and Economics. 8(8 (30)).
pp.2311-2323.
Eling, M. and Schaper, P., 2017. Under pressure: how the business environment affects
productivity and efficiency of European life insurance companies. European Journal of
Operational Research. 258(3). pp.1082-1094.
Hooper, M.J., 2016. The global business handbook: The eight dimensions of international
management. CRC Press.
Hudakova, M and et.al., 2018. The dependence of perceived business risks on the size of
SMEs. Journal of Competitiveness. 10(4). pp.54-69.
Kasemsap, K., 2016. The roles of knowledge management and organizational innovation in
global business. In Civil and Environmental Engineering: Concepts, Methodologies,
Tools, and Applications (pp. 1156-1180). IGI Global.
Komljenovic, D., Loiselle, G. and Kumral, M., 2017. Organization: A new focus on mine safety
improvement in a complex operational and business environment. International Journal
of Mining Science and Technology. 27(4). pp.617-625.
Schwertner, K., 2017. Digital transformation of business. Trakia Journal of Sciences. 15(1).
pp.388-393.
Online
Farooq, U., 2018. PESTLE Analysis of Tesco. [Online]. Available Through : <
https://www.marketingtutor.net/tesco-pestle-analysis/ >.