Contemporary Business Environment: SWOT and PESTEL Analysis of TESCO

This document provides an overview of the contemporary business environment and analyzes the SWOT and PESTEL factors affecting TESCO. It discusses the strengths, weaknesses, opportunities, and threats of TESCO and explores the political, economic, social, technological, environmental, and legal factors impacting its operations. The document also delves into the pricing strategies and effects of Brexit on TESCO and the UK economy.

Contemporary Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
TASK 2............................................................................................................................................6
CONCLUSION................................................................................................................................9
REFRENCES.................................................................................................................................10

INTRODUCTION
Contemporary Business Environment is the environment for the business where the vast
competition is present in the market place and which can be rapidly changed. So the owner of the
business should be eligible enough to understand the requirement and development for the
business which are necessarily to be implemented by the business for the future growth and
development of businesses.
TESCO is the leading multinational general; merchandise and groceries retailers. Its
headquarter is situated at Welwyn Garden City, Hertfordshire, England, United Kingdom. It was
founded by Jack Cohen in 1919 as group market stall. The above report include the analyzation
of external and internal environment of the TESCO which are observed with the use of SWOT
Analysis and PESTEL. Explaining the factors which can influence pricing of products and goods
with the help of different theories. The study further carried forward with the providing the
overview of present position in context of Brexit. Mentioning the obstacles which are rendered
by the UK due to Brexit. The report ends with evaluation of different effects of Brexit at present
or in near future.
TASK 1
As per the Du Plessis, Hargovan and Harris, (2018) SWOT analysis is helpful for a firm
to identify factors which are to be considered while developing corporate and marketing strategy.
With the help of SWOT analysis the company can avail through strengths and weaknesses of
them along with they can also access through various opportunities and threats which are
associated with the business. A SWOT Analysis is also helpful in detecting effectiveness of
corporate plan. The SWOT Analysis of TESCO has been described below -
Strengths of the TESCO are- TESCO is one of the biggest grocery retailer and No.1
supermarket in United Kingdom. The company's sales and revenues are higher as compare to
other super market chains. TESCO is also emerging itself globally and had 6800 stores 14
countries. It is the Europe's largest private employer which offers more than 743k job
opportunities for employees worldwide.
Weakness of the is that TESCO has failed operation in Japan and US and had to exit from
these countries in 2012. Due to the false declaration of accounting and misrepresentation of
profits in 2017, company was charged with fines. In October 2018, the operating profit of

TESCO has been declined by 9%. Low cost strategy leads the company to have low profit
margins on the sale of the products.
TESCO has opportunities that Recently launched new discount store named as Jack by
TESCO is getting significant growth. Thus, it is helpful for the company to compete with low
cost rivals Lidl and Aldi. The strategic partnership with reputed companies avail through
excellent opportunities for the TESCO. By upgrading and growing its online shopping
businesses along with home deliver services.
Major threats of TESCO are as Britain will no longer the part of European Union, the
trade cost and deals are so much affected because of that. Competition with other supermarket
rivals that are the biggest competitors in the market are Walmart, Aldi and Carrefour. Legal and
tax matters, economic upheavals, government regulations, and credit crunches can directly
affects the operational performance and efficiency of TESCO stores in critical regions.
As noted by Jakulin, (2016 ) PESTEL Analysis is the tool for analyzing unpredictable
environment of business in which TESCO Plc operates business as that directly affects
performance and operation. The PESTEL Analysis of TESCO is discussed below -
TESCO is exposed to many political factor which affects the operation of company. As
import duty on the good can directly affects the company as they import some inventory from
East Asia and China. The EU referendum is also the great risk factor for investors and TESCO as
the economy of UK is passing by hard times. The “Tesco Tax” for large supermarkets which is
proposed by local council but refused by the UK government as to avoid hike in the price.
The important economic factor that affect the UK supermarkets are Labor cost. The
minimum wage rate is raised by 4.4% for 25 years old and onward. Thus, this hike in wage rate
has costed a million of pounds to TESCO in UK. The post Brexit economic fallout has a negative
impact on the TESCO as sale of the company due to inflation in the market so lesser consumers
are wiling to buy products.
The major social factors that affects the TESCO are people's fashion, lifestyle,
composition, labor, and any other demographic trend which have a potential to be opportunities
or threats for the businesses. There is the biggest lifestyle change in the UK as more and more
people are moving towards healthy lifestyle by focusing on healthy food and beverage. Thus, the
53% of the individual are trying to reduce the sugar from their diet thus this will affect the
TESCO as the stock of processed drink and food which content high sugar in it and artificial

sweetener. So, the company won't be able to offer healthy food to the consumer so the sale
would be decreased.
Technological factor plays a major role in the growth of the TESCO , few years back the
company was facing poor customer experience and horesemat scandal but with the help of
technological advancement the new opportunities are developed by them to again retain the trust
of the consumer. RIFD technology is introduced y TESCO which is helpful in increasing the
store experience for customers. It automatically counts the stock and remove that after sale.
Company has also launched won mobile payment system as well.
Environment factors are the major issues are to be considered by each companies
nowadays TESCO encourages customers to shop at their website tesco.com. The TESCO Van
Drivers will use fuel saving routes along with it also collect the unwanted plastic bags from their
customers and recycle them. The company is committed to use renewable sources and thus
generate 100% of their electricity by 2030.
The legal factor which affect the TESCO are the new “sugar tax” which is levied y
government has a negative impact on the sale of the company as the had stocked the high sugar
content, and so they won't be able to offer a sugar fewer products to consumer. The new rule is
also imposed n which the advertising of high fat, sugar and salt (HFSS) for food and drink
product for children unto 16 years, which restricts promotion and marketing of the company.
According to Zefinescu and et.al., (2015) The various theories which are helpful in
influencing the pricing of services and goods which are to be given by TESCO as follows -
Cost-based pricing is the model in which the production costing is done on the basis of
final pricing which is seen by customer at the time of purchasing. The pricing multiple are
depended on the industry in which the business is conducted. Where some industries take
multiple of around 2-3 times of production costing or that can be 5 times as well. As TESCO
offer the products at low margin they can set discount for the customers along with that.
Market pricing is the model where all things are depended on market conditions which
are found in marketplace. At the internet age it is very easy to determine the price of any product
and services easily. Thus, with the quick internet searching TESCO can avail through with the
competitive price for the products and service by comparing the pricing with other similar
competitive products and service which are present in the market. The pricing of product and
services must be appropriate according to the market strategies which are formed for reaching to

consumers easily. As TESCO can go through different pricing and can offer best low possible
price to customer and compete with rivals.
TASK 2
Overview of present position and debate on the situation of Brexit -
Brexit is most significant shake-up in the constitution of UK which is being known since
it was the part of European Economic Community of six nations in 1973. The pessimism
political and constitutional crisis which has been lead by this process in United Kingdom since
Second World War. The country has decided to leave the European Union March 29,2019, but it
was revised again to be done on 31 October because of gridlock in parliament. Agreement was
also not passed on the 31 October and thus delayed by the UK parliament till 31 January. The
parliament of the UK are not passing the bill due to the hike in price. But the prime minister had
said that it is the last chance of agreement approval if it will not be done then serious action will
be taken by them further regarding this(Malik, 2015).
The national leaders of the European Union has agreed upon that but the parliament of
the UK and Britain has also to be agreed on that. The outcome such is till uncertain and so it is
armed resistance in House of Commons. For leaving European Union the voting has been done
over 52% to 48 % peoples have voted in favor of leaving EU in June 2016. Because of these
strains has been arrived in United Kingdom and thus voting from individual countries for leaving
EU are — For England it is 53%, for Wales it is 52.5%, Scotland is 62% and Northern Ireland is
56% and respectively other remaining will stay with European Union. There is an economic
crisis in the UK as value of pound has also been reduced from its last 30 years of record. Due to
this all businesses in the UK are adversely affected and thus it can have a situation of inflation in
marketplace. So, the purchasing power of consumer have been decreased significantly(Fenwick
and Wrbka, 2016).
Obstacles and opinions which are faced by UK due to Brexit -
The main obstacles which are faced by United Kingdom due to Brexit are – New UK and
new EU trade arrangements are established because of Brexit. This can be started within two-
years of negotiation period of withdrawal. The deal of free trade with 59 countries have been
negotiated by European Union, including Singapore, Canada and South Korea is not applied in
the United Kingdom. After the approval of Brexit it will be difficult for United Kingdom to

access through single marketplace of European Union which is the largest free trade area of
world consisting of more than 500 million customers(Bešić, 2019).
The farmer of the UK has also been suffered due to this as at the time when UK was with
EU direct payment of £2.4bn has been given to farmer for the fulfillment of the needs and
encouraging them for their contribution to the country's economy. Further if the government of
UK has been decided to give direct payment to farmer then it won't yet decide that how much of
the amount will be paid to them. Immigration form by EU will be further reduced by the United
Kingdom(Sakai and Fauzia, 2016). Most of the job-seekers from European union were told to
leaved out as the government of United Kingdom will employ instead of low skilled people they
will appoint high skilled individuals at their businesses. This will bound the EU countries to
employ their individual in their countries thus the job seekers who are working in the Eu
countries were also forced to leave the job and thus the large number of individual will be
affected by this. There are 2 million nationals of UK who are living in the EU countries for the
source of employment there thus if the British measures targets European Union workers this can
have the worst impact on the relation among United Kingdom's national abroad(Singh, Manrai
and Manrai, 2015).
Effects of Brexit now and that in near future -
Brexit had a various impact on the UK's economy whereas along with it can have in near
future. The Brexit had a negative impact on the public finance and economy of United Kingdom
till date and may can have an adverse effect in the near future. The value of the pound has also
been decreased which has been from last 30 years. This has caused a situation of inflation among
the market thus all businesses are adversely affected as the buying power of consumer has
decreased thus the sale of the product and services has been declined and the profit maximization
of the firm has been reduced(Raziq and Maulabakhsh, 2015). In the context of fairness it has
mixed impact on the UK till date but could assume its impact for future. Fair Brexit is helpful for
those whose performance is worst in the recent decades. The rate of pound sterling has declined
raises the price of the supporting exports directly. So thus it had a mixed impact on the economy
thus the rate of import has also been raised due to that which balance both of the factors(Groff
and Duhovnik, 2017).
In context to control it has a negative impact on United Kingdom whereas it can be
positive in the future prospectus. This could have given a citizen to individual control on their

lives. The post-Brexit in the United Kingdom have a more control on the various policies for
regulations, trade and migration which are at present. The government of UK thus have a
separate rules and regulation, trade policies which can be further regulated by the government.
United Kingdom then will run their economy separately as well it is already the largest financial
strong county among the EU(Tapanjeh and Singh, 2015). For the context of openness it has an
effect till date but it's early for the future assumption. It has become more open as UK can trade
with any of the country excluding EU membership countries and so the United Kingdom has
signed a new trade agreement with Japan which is helpful in providing more relaxation to the
UK on non- EU immigration rule, which is the satisfactory for United Kingdom(Nienaber,
2019).
Conclusion –
Whole-fully Brexit has a negative impact on the economy of the United Kingdom. As the
value of the pound had declined significantly which had an adverse effect on the economy thus
all businesses are affected adversely due to that as the financial crises have been arrived in the
UK which had result in to decrease in consumer purchasing power thus all the individuals are
affected due to that. This directly affects the economy of UK. The trade barriers could raise in
future and bound EU countries to trade and employ with United Kingdom. This also bounds the
businesses who are performing their business activities across different countries(Argento,
Grossi and Dobjia, 2018). The businesses will face many problems while conducting business
within the EU countries and couldn't easily assist their business activities. The job seekers are
also bounded due to that as the Job seekers from EU countries are forced to leave and highly
skilled peoples will be employed in the UK. Till now, it had an adverse effect on the economy
and thus the government of UK must comply with all limitations and drawbacks of this situation
and then the decision must be taken for further procedure. The free trade policy by UK
government is the good sign of Brexit as this could allow the UK to freely trade with any country
excluding the EU countries which can be very helpful for the UK's businesses to explore through
different countries which in return profitable for the growth of the United Kingdom's economy.

Recommendations -
It is recommended that the UK government can make slide changes for managing the
adverse effect of the Brexit on the economy of the UK at present or in near future that can be -
 The fixed direct payment must be offered to the farmers as they are devotedly working
for the country and have a huge contribution in the economy of United Kingdom. This
could be helpful in encouraging them and helpful for them in fulfilling their needs.
 The employment restriction can also be removed and the employees from across world
could work in the United Kingdom whether they are low skilled or high skilled no
restriction on the employment should be levied in the policies(Groff, Pietra and Sitar,
2016).
 The inundation of new trade policy must also not be accessed thus this could have a
negative impact on the business and the economy of the UK as many of the UK
businesses are trading with the EU countries there should be free to trade with EU
countries as well as other countries globally which can helpful for the businesses thus
they are restricted for trading across the world and if businesses will be successfully run
then it will be fruitful for the growth of the UK's economy(Kužnin and Walker, 2017).
CONCLUSION
From the above study it is concluded that contemporary business environment plays a
major role in the businesses to perform the business activities. With the help of contemporary
business environment businesses can access through the situation of Brexit and form the business
strategies and policies according to that they can perform the business operation very well and
attain the profit margin in the time period of inflation. Thus, the businesses should comply with
all legal policies and strategies according to new trade policies which are implemented by the
UK government after its exit from European Union. Which can be helpful for businesses to
perform their business activities and attains the profit margin and increases the sale of their
businesses. And businesses can expand further globally with following all the trade tariffs and
charges so that this can be helpful in smooth flow of their businesses across world.

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