Global Business Environment Assignment

Global Business Environment
Student Name:
Student University:
0

In the retail industry, Tesco is a British multinational company based in England, United
Kingdom (UK). Tesco is one of the largest retail supermarkets in terms of revenue across the
globe with high profits (Aiello, et al., 2020). It is essential to analyse the unpredictable
external environmental factors affecting the operations and performance of the company
through PESTEL Analysis used as a tool which consists of political, economic, social,
technological, environmental and legal factors.
Political
In the UK, Tesco’s operations are affected by the current and impending legislation,
unemployment rate, tax rates, economic condition and political instability. For instance, there
is an impact of import duty on Tesco’s goods due to importing some of them outside the UK
such as East Asia and China. The “Tesco Tax” was proposed for implying tax on large
supermarkets by the local council but was refused as an initiative by the UK government for
avoiding price hike in future (Simpson, 2014). The key driver of change is creation of new
employment opportunities which will help in increasing products demand and diversifying
workforce.
Economic
In the UK, labour cost affects the supermarkets due to increase in the UK “Minimum Wage
Rate” which might cost millions of pounds to Tesco. Other than this, factors affecting Tesco
in the UK are prices, cost and profits where it is essential to focus on borrowing cost for the
company which is increasing. This will lead to decreasing profits and increasing prices and
costs affecting cost leadership strategy and brand reputation with the presence of
diversification (Rodionova, 2017). The key driver of change is to shift the focus towards
valuable brands advertisement.
Social
There is change in consumers shopping trend consistently where individuals are having tough
schedules expecting to have fast delivery along with flexible goods return policy. In the UK,
Tesco is relied on its customers and requires understanding and providing services to them
for dealing with such issues that is consumer attitudes and beliefs. Other than this, obesity is
another concern for customers and the society while thinking about their health along with
their demand for organic food and changing behaviour considered by Tesco (Doward, 2017).
1