Positive and Negative Impacts of Brexit on Tesco: A PESTLE Analysis

This report analyzes the impact of Brexit on Tesco's external environment through a PESTLE analysis. It discusses the positive and negative effects of Brexit on political, economic, social, technological, legal, and environmental factors. The report also highlights the key challenges faced by Tesco due to Brexit, such as labor issues, supply chain disruptions, customs tariffs, and economic issues. Additionally, it explains how Tesco is responding to these challenges through effective business strategies. Finally, the report provides recommendations to Tesco to manage the impact of Brexit on their business.

International Business

Table of Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
The positive and negative impacts of the PESTLE environmental factors on Tesco..................2
Some key challenges faced by Tesco due to Brexit....................................................................4
How Tesco is responding to such challenges in relation to its business strategy........................4
Recommendations........................................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
Books and Journal........................................................................................................................7

INTRODUCTION
Brexit refers to an abbreviation which means British exit. This has soon the departure of United
Kingdom from European Union with the help of a contract which has been named as Brexit.
United Kingdom and European Union has decided mutually to end their trade relations which
has a great impact on the business of many countries especially in United Kingdom (Ratten,
2020). There are so many business organizations who are dependent on European Union for their
business workforce and supply chain management. Tesco is an organization in retail industry
which is also impacted due to Brexit in various manner. Tesco is a British grocery and general
merchandise organization who has their headquarters in Welwyn garden city, England, United
Kingdom. The company has their major of the revenues from the market of United Kingdom
which is greatly impacted by the decision of Brexit in United Kingdom. This report is going to
explain about the positive and negative impacts of Brexit on various factors of external
environment of Tesco and also explain about the challenges that has been faced by Tesco due to
Brexit. Apart from this the report also contains the way Tesco has decided to respond to these
challenges with the help of their business strategy.
MAIN BODY
The positive and negative impacts of the PESTLE environmental factors on Tesco
Pestle analysis helps an organization to analyze six different external environmental
factors which have a great impact on the business of Tesco. The positive and negative impacts of
Brexit on various external environmental factors are explained below in relation to Tesco:
Political Factors: Brexit has caused a great political instability in the environment of
United Kingdom which has a great impact on the business of Tesco. The pandemic of covid-19
and Brexit happen simultaneously and United Kingdom which has impacted the business of
Tesco in the country. The political factors includes tax rates stability of the country and acts of
legislation which has completely affected both in positive and negative sense in the country. The
financial instability created by covid-19 has forced government to encourage various retailers so
that they can be able to create job in the domestic population which is the positive impact of
Brexit on the business of United Kingdom as they are able to get less diverse employees whereas

the increased tax rates change of legislation and instability in the political factors has a great
challenge and negative impact of Brexit on the business of Tesco (Verbeke, and Yuan, 2021).
Economic Factors: The economic factors are the factors which affects the economic condition
of country like demand profit prices change in taxation rates and many more. In order to achieve
success Tesco is required to analyze the possible changes of Brexit that has been faced by the
company so that they can be able to effectively manage their strategic decisions. The positive
impact of Brexit on the economic factors of environment for Tesco is the changes in taxation
policies whereas the decrease of demands and increase of cost of the product has greatly impact
the economic factors for the company Tesco.
Social Factors: Social factors are the trains that has been followed by the society by the
customers in the market. Brexit has also impacted the variety of social changes and societal
friends and also has both positive and negative impact on the external environmental factors of
the market.
Technological Factors: The advancement of technology is a great opportunity for Tesco and
this Brexit has a positive impact on the business of Tesco as the company have an opportunity to
use their online shopping to provide delivery in the European Union (Hult, Gonzalez-Perez, and
Lagerström, 2020). Apart from this the checkout service will also provide convenience and is
their customers with the help of advance went and technology which will help Tesco tu provides
significant amount to be spend on efficient projects.
Legal Factors: Brexit had changes various legislations in the market of UK which has to be
followed by the company Tesco. These legislations have a great impact on the company such as
the labor policies for which the company has issued a legislation to not allow any recruitment of
employees who have resident ship of European Union. This has a negative impact on talent
management of the company.
Environmental Factors: Environmental factors are the factors which are connected with the
reasons to be taken to save the environment in which the company's operating (Torsello, and
Winkler, 2020). Has committed a reduction of carbon footprint by 50% till the year 2020 which
is a great initiative by the company to save the environment and has positive impact on their
business due to increased social consigns in their customers.

Some key challenges faced by Tesco due to Brexit
The Brexit was came into force from January 2020 whereas the country was already
facing the pandemic due to covid-19 at that time which has impacted the political environment
and economic situation of the country. Being part of United Kingdom Tesco has faced several
challenges due to Brexit. The important challenges that are faced by Tesco due to the Brexit are
given below:
Labor issues: Brexit has declined all the trade relations between any organization that are
operating in European Union and United Kingdom (Lindner, Puck, and Verbeke, 2020). Due to
which all the employees who are working in United Kingdom from European Union is required
to quit their jobs and settle themselves in European Union again. This has affected the work
force of Tesco as the company is not able to retain their talented employees that are from
European Union. This is the major challenge which has been faced by human resource
department of the company.
Supply Chain: The supply chain of the company is completely disrupted due to the terms and
conditions of Brexit which has been decided between European Union and United Kingdom.
Tesco's images of lies in the market of Northern Ireland and Brexit has interested the supply fore
in Northern Ireland.
Customs Tariffs: Tesco required to pay various terrace due to increase custom between
European Union and United Kingdom which has increased the cost of products in the company
and ultimately as increased their prices (Gholipour, and Foroughi, 2020). This requires the
company to face the challenge of custom tariff and requires a strategic the season to manage the
challenge of this custom tariff.
Economic Issues: The increased cost of products has affected the sales of the company which
created an economic crisis for them. Apart from this increase of tariff charges has also impacted
the supply chain of the company which gives losses to the organization. All this matter has
created and economic crisis for the company which is also a great challenge to be dealt with.
How Tesco is responding to such challenges in relation to its business strategy
Tesco is a large organization which has greatly impacted by the decision of Brexit of
Government and providing a great response to such a challenge by formulating effective

business strategies in the market. Tesco has their business operations in many countries and a lot
of revenue among which largest amount came from United Kingdom (Fellmeth, 2020). In order
to respond to this business challenge the company has decided to formulate effective strategies
such as more offer on their products and services that are purchased by the company from the
market of United Kingdom and other nearby markets apart from European Union. The company
has also formulate an effective strategy to provide effective offers to their customers on the
products and services which are locally purchased to attract them on different products and
services to distract them from the products that has their supply from European union. Apart
from this Tesco is also involved in online business to provide there UK facilities in European
Union adding the custom charges so that they can have a good profit on their products and
services. The strategies has been formulated in the organization in their various departments with
the help of which Tesco is able to respond on the challenges due to Brexit (Uzhegova, Torkkeli,
and Ivanova-Gongne, 2020). The various functions for which Tesco has formulated effective
strategies to face the challenge are explained below:
Human Resource function: Brexit has a major impact on talent management of the
organization and the company has formulated various strategies to effectively manage the
challenge. The human resource department of the company has formulated strategies to recruit
more talented employees so that they can fulfill the vacancies that has been caused due to Brexit.
Financial Management: To manage finance of the organization the company has also
formulated effective strategies so that they can manage the losses which has been occurred due
to Brexit in the company. The company has found several sources of fund that are profitable for
the company so that they can manage their financial crisis in the company. Tesco was facing
economic crisis due to Brexit as their supply to the European countries of European Union has
declined which has affected their profitability and causes financial losses to them. In order to
manage this the company has formulated effective strategies to manage their finance and find
some sources to have more funds for their financial management.
Recommendations
It has been analyzed that situation of Brexit is not under the control of Tesco and it is
required by the company to manage the situation. Tesco has their major of the revenue from the
UK market and Brexit has impacted their business in United Kingdom (Amankwah-Amoah,

Khan, and Osabutey, 2021). In order to manage the situation Tesco is recommended various
techniques which will help them to make a strategic decisions in their organization. These
recommendations to Tesco given below:
 The companies required to start focusing on their online business so that they can be able to
deliver their products in the Northern Ireland with the help of online orders will stop it will help
the company to deliver their products in the Northern Ireland with good facilities and customers
will be able to get their products from their loyal stores.
 It has also been recommended to the company to make strategic decision to control their prices
which has been increased due to the implication of Brexit in the United Kingdom.
 The company is recommended to identify various impact on the business in prior manner in order
to formulate effective strategies.
 In the last the company is recommended to recruit their workflows from the market of United
Kingdom so that they can be able to manage this situation (Amankwah-Amoah, Khan, and
Osabutey, 2021).
CONCLUSION
The above discussion helps to conclude that Brexit has greatly impacted the business of
many organization in United Kingdom. Tesco is a part of United Kingdom is majorly dependent
on the market of the country. There are various external factors which are impacted with the
decision of Brexit in United Kingdom and ultimately have their impact on the business of Tesco.
The company has faced several challenges which are overcome with the help of strategic
decisions that are made by the company. Tesco has a great response to the challenges with the
help of their strategies but requires some recommendation to manage their challenges due to
Brexit.

REFERENCES
Books and Journal
Ratten, V., 2020. Coronavirus and international business: An entrepreneurial ecosystem
perspective. Thunderbird International Business Review, 62(5), pp.629-634.
Verbeke, A. and Yuan, W., 2021. A few implications of the covid-19 pandemic for international
business strategy research. Journal of Management Studies, 58(2), pp.597-601.
Hult, G.T.M., Gonzalez-Perez, M.A. and Lagerström, K., 2020. The theoretical evolution and
use of the Uppsala Model of internationalization in the international business
ecosystem. Journal of International Business Studies, 51(1), pp.38-49.
Torsello, M. and Winkler, M.M., 2020. Coronavirus-infected international business transactions:
A preliminary diagnosis. European Journal of Risk Regulation, 11(2), pp.396-401.
Lindner, T., Puck, J. and Verbeke, A., 2020. Misconceptions about multicollinearity in
international business research: Identification, consequences, and remedies.
Gholipour, H.F. and Foroughi, B., 2020. Business sentiment and international business travels: a
cross-country analysis. Journal of Travel Research, 59(6), pp.1061-1072.
Fellmeth, A.X., 2020. Introduction to international business transactions. Edward Elgar
Publishing.
Uzhegova, M., Torkkeli, L. and Ivanova-Gongne, M., 2020. The role of responsible business
practices in international business relationships between SMEs from developed and
emerging economies. In International Business and Emerging Economy Firms (pp. 17-
59). Palgrave Macmillan, Cham.
Amankwah-Amoah, J., Khan, Z. and Osabutey, E.L., 2021. COVID-19 and business renewal:
Lessons and insights from the global airline industry. International Business
Review, 30(3), p.101802.