Contemporary Business Environment: SWOT and PESTEL Analysis of TESCO

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