External Environment Research and Analysis Portfolio Paper 1

This paper analyses the external environment of Tesco using PESTLE analysis and identifies key drivers of change that management must consider for future direction. The PESTLE factors analysed include political, economic, social, technological, legal, and environmental. The key drivers of change identified are technological forces and political threats.

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External Environment
Research and Analysis
Portfolio Paper 1

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
REFERENCES................................................................................................................................1

INTRODUCTION
External environment is termed to collection of ample number of factors that are
uncontrollable in nature (Morrison, 2017). For external environment research and analysis
portfolio paper, selected company is Tesco which is leading retailer of UK specialised for selling
groceries and general merchandise.
The paper highlights PESTLE Analysis and key drivers of change which management
must notice in deliberations for future direction.
MAIN BODY
PESTEL analysis
It refers to a framework for scanning external factors impacts strategies, operation and
practices of company. In Tesco, PESTLE Analysis is conducted for the purpose of analysing
factors impacting company and determining future scope of actions. The factors of PESTLE
Analysis in context to Tesco are underneath:
Political: It comprises trade restrictions, political stability, tax policy, tariffs,
environmental regulations and hence forth that determine extent to which government interfere
in an industry. For example, decision of government about Brexit and bringing of new tax
reforms in UK impacts in form of changing whole operations and revenue generating system of
Tesco.
Economic: It involves foreign exchange rates, minimum wage, interest rates,
employment or unemployment rates, raw material costs and credit availability (Vlados and
Chatzinikolaou, 2019). For instance, rising inflation rate in UK because of COVID-19 pandemic
affected the manner in which Tesco price its products.
Social: This factor focusses towards health consciousness, health and safety, population
growth rates and attitude of customer. For example, because of fast pace of life, people of UK
are preferring buying everything in one go or bulk purchasing. In this context, Tesco make
necessary changes in its stores to facilitate needs that impacts positively on strategies to meet
customer demands.
Technological: In UK, technology is changing rapidly. In Tesco, factors that impact
strategies of company are innovation and developments in technologies. When company fails to
adopt trending technologies, it loses its market position.
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Legal: Legal and regulatory policies and procedures can affect the all the factors of
business environment of an organisation. In Tesco, various legislations including Data Protection
Act, minimum Wages Act, Health and Safety at workplace Act and hence forth are applied that
influences employee motivation for great productivity.
Environmental: This factors concern about all the requirements for general protection of
environment. In UK, Tesco has launched phase two of Remove, Reduce, Reuse as well as
Recycle plan to safeguard environment of the nation.
Key drivers of change
As per PESTLE Analysis conducted on Tesco, some of drivers of change which
management is required for taking notice for future direction are as follows:
 Technological forces: In the industry, machine learning, IoT, artificial intelligence, etc
are some new technologies which management of Tesco are required to notice while
establishing future directions of company. With this, managers will be able to streamline
processes as well as update tactics to enhance performances (Wei, Thurasamy and Popa,
2018).
 Political threats: It is analysed that government brings new tax reforms that neds
changes in entire revenue generating system of company. In context to Tesco, changing
tax reforms is key driver to change strategies of company for improving quality of living
in the industry.
CONCLUSION
From the portfolio paper, it is analysed that business environment helps managers of
enterprise to examine industry environment of nation so to determine factors that could impact
strategies and operations directly. Technological factors and political threats are key drivers of
changes to be considered for future direction.
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REFERENCES
Books and Journals:
Morrison, J., 2017. The global business environment: Challenges and responsibilities.
Bloomsbury Publishing.
Vlados, C. and Chatzinikolaou, D., 2019. Methodological redirections for an evolutionary
approach of the external business environment. J. Mgmt. & Sustainability, 9, p.25.
Wei, L. H., Thurasamy, R. and Popa, S., 2018. Managing virtual teams for open innovation in
global business services industry. Management Decision.
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