Business Environment Analysis of Tesco Company in Croatia

This report analyzes the business environment factors for Tesco Company in Croatia using PESTEL Analysis. It discusses the political, economic, social, technological, environmental, and legal factors that can influence the company's marketing strategies and provides recommendations for its business expansion.

Country Evaluation

Table of Contents
INTRODUCTION.................................................................................................................................3
MAIN BODY........................................................................................................................................3
International Marketing.....................................................................................................................3
CONCLUSION.....................................................................................................................................8
REFERENCES....................................................................................................................................10

INTRODUCTION
Business environment is defined as sum of external factors that can influence the
business outcomes of companies (Remišová and Lašáková, 2020). This report is based on the
case study of Tesco Company in respect to its associated business environment. Company
initiated its business operations in the year 1919 by the founder Jock Cohen. Company is a
part of retail sector and conducts its business operations at more than 6800 locations across
the globe. Headquarter of the company is located in England, United Kingdom. Company is
also listed in London Stock Exchange. In this report different aspects related to business
environment for Tesco Company will address. Henceforth, reports will emphasis on the
business environment factors with the support of PESTEL Analysis tool. Impacts of all the
different business environment factors over company’s marketing strategies will also analyse
in this report. Necessary recommendations will also be a part of this report.
MAIN BODY
International Marketing
Marketing is defined as promoting company’s products and services in front of the
potential customers (Ahmadi, Rahimi and Rezaei, 2018). International marketing is all about
promoting company’s products at international level. This involves marketing at world wide
scale at global level to achieve the best possible growth for business.
Business environment analysis
Business environment analysis can be conducted with the support of PESTEL
Analysis tool. This tool comprises with all different elements and factors part of the business
environment (Saura, Palos-Sanchez and Correia, 2019). Business environment is a sum of
external factors that can influence the business operations of Tesco Company. As the
company is planning to expand its business in Croatia. Business expansion is a strategic
decision making company take to enhance the growth potential and profitability of
organisation.
PESTEL Analysis

PESTEL Analysis is a well diversified tool project all different external factors
becomes part of the business environment. This analytical tool comprises with political,
economic, social, technological, environment and legal factors part of the external business
environment. All these factors directly influence the business outcomes of companies.
Political Factor: Political factor is among the key business environment factor part of
PESTEL Analysis tool. This factor of business environment comprises with different
policies, strategies, tactics government of Croatia frame to enhance the growth of corporate
sector in country. Government all across the globe supports corporate sector as the sector
play role in the economic development of nation (Lašáková, Remišová and Kirchmayer,
2017). Retail sector comprises with basic essentials requires for living that also gain special
interest of government to improve the growth of retail market in country. Government in
Croatia give huge priority to the growth and development of corporate sector specially to
retail market. As the sector comprises with basic essentials involve food products, clothing
and orther products which also generate huge taxable income for government over regular
basis. All the different aspects about retail market allows government to give specific
priorities ti the growth and development of the retail sector in country. Tesco Company is
planning to expand its business in Croatia. As per the approaches of government in Croatia
towards the growth and development of corporate sector especially to retail sector company
will gain huge importance of Croatia’s government. Company will gain tax benefits at initial
stages also as the Tesco Company is among one of the emerging brand of retail market. With
the entrance of Tesco Company in Croatia market it will improve the quality of products in
market along with it creates major employment opportunities for the graduates in Croatia. All
such factor will allow company to gain competitive advantages in the Croatia retail market.
Political stability is another big factor part of the PESTEL Analysis. In Croatia due to
immense support of people government is in very stable position. Stable government allows
sustaining the policies for long time. Due to stability in strategies and policies it will drive
Tesco Company’s to frame long term strategies and policies to entertain growth in the market
of Croatia. Sustaining policies for longer time is an effective way to achieve higher growth
from the operations of company. Marketing team of company can frame long term
promotional strategies to entertain healthy sales event at the initial stages of business. Tesco
Company has already been very active in the retail market of Croatia as long as marketing is
concerned. Company will also get competitive advantages of its ongoing marketing and

promotional strategies over different digital platforms like YouTube, Instagram and other
digital platforms.
Economic Factor: Economic factor is also a huge business environment factor influence the
business of company. Economic factor involves economic position of Croatia, market
condition, currency exchange rate, value of money and other key economic factor. They are
also among the crucial business environment factor especially in case of company is aiming
to expand its business at other locations. Economic factor directly influence the business
outcome of company. Value of currency exchange will directly affect the product prices in
Croatia. In case the currency exchange rate gets increase it will produce the products prices in
Croatia and in case of opposite situation it will increase the prices of all different retail
products offer by Tesco Company. Inflation in economy also put a greater impact over the
business of company. Inflation in economy directly impact over the purchasing capacity of
customers. Due to inflation the product prices of all products in retail market get increases
and in case of reduced inflation the prices of products get decreases. Inflation directly heats
the purchasing capacity of customers of company (Ishchenko, 2017). Economic factor is
among the major dominating business environment factor impact over the company’s
operations. In Croatia due to effective monetary policies of government inflation is in
controlled position. Currency exchange rate is also balanced that also sustain the prices under
government control under Croatia. All these factors will support Tesco Company to have an
effective success of the business expansion strategies in Croatia. Per capita income of people
in Croatia is also high which will also allow them to buy all the products required them to
live a good standard life. Economic stability of peoples in Croatia will support the company
to not only entertain a huge sales growth in groceries and food items only but it will also
allow company to gain an effective sales hike in clothing range. Company offers all different
types of clothing products by introducing all top clothing brands. With the support of
marketing strategies company will be able to sale all its retail products in the market.
Social Factor: Social factor is also among the key business environment factor analysed
under PESTEL Analysis tool. Social factor involve different social elements like religion,
caste, background of customers, standard of living of people in country and other social
factors. All the factors part of the social factor directly influences over the sales of company
and also on the potential of organisation in respect to gain growth rate in target market.
Fashion and trends part of the business environment is also a key element part of the PESTEL
Analysis. In case of clothing segment offer by Tesco Company fashion and trends directly

impact over the sales of company in respect to its clothing line. Company try to serve all the
latest products that are trendy also to its customers top enhance the customer experience from
the shopping in Tesco. It becomes essential for the organisation to launch all trendy products
in market to sustain and grow in market. Fashion and trend is a constant changing process
which also drives company to continuous develop ad upgrade its products to gain the healthy
success in market (Bereznoy, 2017). In Croatia peoples are much updated in respect to trends
and fashion. Company latest clothing collection will allow Tesco Company to gain the
competitive advantage in the retail market of Croatia. Marketing strategies will also use by
company to attract the customers. With the support of digital marketing strategy company
will try to make the clothing lone of company a recent one as a trendy clothing line. Social
factor is among the most crucial business environment factor impact over the sales of
company in market. Company can also use feedback strategy in all its shopping centres to
address the shopping experience of people in Croatia. This will allow company to continuous
upgrade the products quality and services of company in market. Social factor also involve
mindset of peoples. Mindset defines what the fundamentals behind the shopping decision of
customers are. Involvement of feedback strategy will allow company to identify the
fundamentals of decision making process of people in Croatia. This recommendation will
support company to gain the effective sales turnover and make the business profitable even at
the initial stage of business life cycle in Croatia retail market.
Technological Factor: The analysis of the technological factor under the Pestle Analysis
helps in ascertaining that what are the technological advancements that an economy has been
able to adopt and integrate in their overall system. In the present context of analysis of the
economy of Croatia, it can be said that the technological advancement is comparatively at a
much lower rate i.e. the country and its companies are slow to adopt the advanced
technologies that are emerging and being implemented all over the world. The research and
development activities that are carried out in the economy of Croatia are also significantly at
a much lower scale of development. The county does not invest any significant amount of its
funds on the development and promotion of the technology that is being used and this
ultimately acts as another factor that restricts the growth of the economy and also fails to
attract any major foreign investments from outside. Another factor that contributes in the
overall weak formulation of the technological advancement is due to the lack of proper
electricity supply and internet facilities where the country has a majority of those areas that
are devoid of easily and cheaply available internet connection (Bedić, Šlaus and Donoghue,

2019). This also hinders the technological advancement since the internet is the basic
necessity for conducting researches and different market analysis and trends observation. It
also increases the awareness regarding the recent developments that are taking place all
around the world and keeps oneself updated. Therefore, it can be adequately said that the
company who is deciding to venture into this market might not be able to fully tap the
potential of the market and might not even be very successful. Since Tesco is planning to
venture into the international markets of Croatia it is evident that the retail industry although
does not require much advanced technology and can operate normally as well but still there
are systems that are inherently necessary. The stock management and tracking software,
customer payment options, online ventures and easy accessibility etc. are just some of the
aspects that have become extremely necessary in order to keep the work and processes
flowing smoothly. The lack of adequate availability of internet facilities is one of the major
problems that will hinder all over the process of operating and conducting business activities
in the market of Croatia (Huđek and Sinković, 2018). It is practically impossible and very
expensive for Tesco to hire human resources for keeping the track of inventories or the lack
of any online delivery services etc. This will restrict and limit the potential to earn revenuers
in the international market of Croatia significantly for Tesco company and can prove to be a
loss making expansion in the international market. Therefore, overall it can be said that this
factor is not very well developed and integrated in the market of Croatia, and it can inflict
more harm on the operation of Tesco rather than generating positive outcomes. Thus the
technological factor is an unfavourable aspect in the international or external market of
Croatia that needs to be analysed and considered extremely significantly by the investors of
Tesco Company.
Environment Factor: Environment factor is also among the key business environment factor
influence the business of company. Environment factor involve eco friendly products that can
not diminish the value of environment protection campaign run by government in Croatia.
This is the recent development of business environment after the emergence of environment
protecting in society. Government give huge priorities to channelize eco friendly products for
consumers. Tesco Company deals in food products, clothing line and home products. All
these products immensely respect to eco friendly campaigns run by government in Croatia.
All these products offer by Tesco Company do not harm in anyway the eco friendly
campaign runs by government. Tesco Company also involves in many social responsibilities
as a part of corporate social responsibility campaigns. Marketing team of company can

channelizes promotions of using eco friendly products to gain the competitive advantages
even at the initial stage of business cycle in Croatia. Corporate social responsibility campaign
will support company to introduce the brand in front of local peoples of Croatia as a part of
the campaign (Kasemsap, 2018). Marketing team of company will also involve local peoples
as a part of the campaign to enhance the brand value in the market of Croatia and also to
improve the trust of peoples in the company’s brand value. Brand value plays a huge role for
the companies in gaining success in market. Involving local peoples in running corporate
social responsibility campaigns will support company to achieve the effective brand value
even at the initial stages of the business which will drive the growth and success of
company’s business even at the initial years of business.
Legal Factor: Legal factor involve all laws and regulations issued by government. Legal
factor is also among the crucial business environment factor influence the business of
company. Tesco Company needs to cope up with all laws and legal regulations issued by
government in Croatia to run the business. Laws and regulations play role in running the
business of company (Hillary, 2017). Different laws like equality act, anti discrimination,
environment protection, employment act, equal rights act and other regulations and laws
applicable over companies in Croatia will also be implemented over the Tesco Company.
Management needs to deal with all these laws as a part of the business operations. Marketing
team of company can follow the policy to promote all these laws of company as a part of
business promotions to gain the strategic advantages in the retail market of Croatia.
The above mentioned PESTEL Analysis factor play a huge role for the company in
achieving an effective growth in the retail market of Croatia even at the initial stages of the
business in the market. Company carry the huge potential advantages to enhance the
profitability by opening up stores in the retail market of Croatia.
CONCLUSION
This report has projected the impacts different PESTEL Analysis factors put over the
operations of company. In case of business expansion it becomes essential for the company to
gain the competitive advantages with the support of analysis done as per the PESTEL
Analysis factor. Political factor involve different policies of government related to the
corporate sector. Economic factor involve economic situation of country, currency exchange
value and inflation likes factors that create impacts over the business of company. Social

factor involve different fashion, trends and other social elements. Technological factor
involve all technological advancement in market. Environment factor involve different
concepts like social responsibility and others. Legal factor projects all different laws.

REFERENCES
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