Global Business Environment

GLOBAL BUSINESS ENVIRONMENT
BM461

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Background..................................................................................................................................3
PESTLE Analysis........................................................................................................................3
Key drivers of change for future direction...................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Global business environment refers to the environment in the various countries having
the exogenous factors that are impacting the decision-making in the home country. It involves
certain factors that are shaping the nature of the global business environment. The project shall
be highlighting the factors in the external environment which are Impacting the business of
Tesco company through the PESTLE analysis. Further it shall be reflecting the key drivers of
change that the management shall undertake for directing the future of the company.
MAIN BODY
Background
Tesco Plc is a British multinational retail organization that is involved in the business of
grocery and merchandise products. It is one of the largest supermarket chains and the market
leader in grocery products operating across the world in several countries (Kokodey, Gnezdova
and Lomachenko, 2018). It was founded in 1919 and the headquarters are established in London.
It serves 11 different countries through differently sized departmental stores.
PESTLE Analysis
PESTLE analysis is the tool that is used for monitoring and analysis of the macro-
environmental factors lying in the external environment of the organization. They help in
ascertaining the various opportunities and threats that can influence the process of decision-
making.
Political Environment: - The changing circumstances in the political environment to which the
company is exposed is one of the major reasons impacting its business performance. Since,
Tesco operates in various countries across the globe, it has to stay updated with the different
legislations and regulations formulated by the government in respect of the tax rates,
employment and trade policies. Political instability is one of the major factors that shall influence
the profitability of the company. For example, the Brexit policy that has been adopted and the
referendum of European Union is a major threat to the business. Apart from that the US-China
trade wars have also affected the business of the company from several dimensions (Tallman,
Luo and Buckley, 2018). Currently there is higher level of political instability round the world so
it's better to focus upon the domestic markets more as compared to the international markets.
Economic Environment: - The economic environment in which the company is conducting its
business operations is also one of the major factors that has ever affected the profitability and
future growth prospects of the company. The economic conditions are one of the major concerns
for Tesco in order to leverage the costs, demand, profits and prices of the goods and services that
are offered. The rates of taxation, interest, foreign currency, employment, GDP growth, income
levels, wage rates and the personal disposable income of the customers are some important
dimensions in the economic environment that are to be planned for the business. The
supermarkets of Tesco are established globally but still the major portion of its revenue is
extracted from UK, so it has to be regularly updated with the conditions of its own economy
(PESTLE Analysis for Tesco discusses its Business Environment, 2021). For example, if the
interest rates increase then the borrowing cost for the company shall increase making it difficult