Impact and Influence of Macro Environment on Tesco

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
Impact and influence of the macro environment on Tesco..........................................................3
Analyse the internal environment and capabilities of Tesco.......................................................5
Application of Porter’s Five Forces.............................................................................................9
PART B.........................................................................................................................................11
Strategic planning for Tesco......................................................................................................11
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Business strategy can be defined as set of actions that are taken by business organisations
to achieve goals and objectives of the organisation. Business strategy involves considering
several factors and their impact and influence on organisation and its objectives. These factors
are within external, internal and competitive environment of the company. This report will
contextualise Tesco, British multinational groceries and general merchandise retailer. Founded in
1919 by Jack Cohen Tesco is headquartered at Hertfordshire, England and products of Tesco are
available in around 10 countries and it operates at 6800 locations. On the basis of gross revenues
Tesco is third largest retailer in world and on the basis of revenue it is ninth largest retailer in
world. Tesco has employed around 450000 employees to carry out all functions of the
organisation and has products like supermarket, hypermarket, superstore, and convenience shop.
This report will discuss about impact of macro environment on Tesco and will involve analysis
of internal environment and its capabilities. This report will also involve analysis of competitive
environment by application of porter’s five forces. Analysis of environment will lead to
determination of strategic directions available along with developing strategic plan for Tesco.
PART A
Impact and influence of the macro environment on Tesco
Macro environment has significant impact on business and its strategies. In order to
understand impact of macro environment on Tesco Pestle Framework is utilised
Political
Political factor involves influence that political conditions of a country or region where
business operates on strategic decisions of the company. Tesco gets influenced by several
political conditions because it is a multinational organisation and become subject to international
political condition (Perera, 2017). Brexit is one of the important elements to influence strategic
decisions of Tesco. Other factors influencing Tesco in political environment involve elements
like taxation policies, different legislations because these are certain elements that differentiate in

every country. Along with this, Tesco also gets influenced by political stability of the countries
where it is operating.
Economical
Economic conditions involve and influence strategic decisions and actions of Tesco
involving finance. This involves impact on cost, profitability and productivity of Tesco. This
involves cost of operations, GDP, per capita income, employment rate, and interest rate in a
country that has direct influence on the strategic decisions of the country. Increasing cost of
operations and raw material has influence on cost of operations of Tesco. GDP and per capita
income has influence on demand of Tesco products and its price strategies in a country.
Increasing middle class income has positive influence on Tesco as this increase their disposable
income and enables them to buy high quality products. However recession has negative influence
on Tesco because this has negatively influenced income and purchasing power of customers.
Social
This factor involves influence and impact of changes in customer and consumer shopping trends
and their product preferences. Tesco offers food items and in this demand has increased for
vegan and natural products that are healthy for customers. The reason behind increasing demand
for healthy food is awareness of people towards health issues and approach towards food is also
changing (Rastogi and Trivedi, 2016). Increasing online shopping also has impact on Tesco as it
requires offering effective online shopping experience to customers. Increasing concern of
customers towards experience while shopping is also requiring that Tesco provide effective
experience to customers in-store, this involve facilitated check-out and other processes important
for ensuring positive customer experience. This is one of the most crucial factor to influence long
term success of organisation and in relation with Tesco it gets influenced by social conditions
and consumer trends of different countries. This means that European customers are different
from Asian and in order to be successful in both markets it requires giving adequate importance
to trends of each market.
Technological