Internal and External Factors: Impact on Tesco

Internal and External factors
INTRODUCTION
A multinational company from UK is Tesco. This Company is a multinational food retailing company.
Tesco is headquartered in UK and have stores in twelve countries all across the world. The company is
famous for selling food and non-food products; it is also providing other services like mobile, insurance,
finance and hardware services.
PESTLE Analysis of Tesco
Political factors
The company is retailing the products in different
countries and the global political factors are highly influencing the
performance. The political factors involve the acts of legislation,
ta rates and the stability of the country in which the company is
operating. The retailers worldwide are asked to create job
opportunities for the domestic population of the country due to
the financial instability in world. Tesco helps the countries by
making available different job opportunities for the local people
along with increasing the number of customers for the increase
Economic factors
The main factor that makes
and breaks the costs, profits,
demand and prices, is the
economic factors. This is the main
concerning factor for the
company. The company is always
aware of the changes in the
taxation, policies and other factors
that are accountable for the
making effect in the financial
accessibility. The company own a
market share of 30% in UK even
Social factors
The trends in the customer shopping patterns have
changed in UK and the population is moving towards bulk
shopping as well as one-stop shopping. This is the
outcome of various social changes. The number of non-
food items has been increased in the items for sale in the
company because of the changing trends of shopping.
The social conditions in the country affect the attitudes
and beliefs of the customer that in turn influence the
demand for the products and services. The customers all
round the world are becoming more and more concern
and aware about the health issues and hence the
approach of people towards food is constantly changing
(Hashim and et.al, 2021). Tesco is changing according to
the needs of the customers by accommodating the
demand for the organic products.
Environmental factors
The pressure on the company
has increased in order to address the
environmental issues and find ways to
adopt that can benefit the society. The
aim of the company is to reduce the
carbon footprint of the company by 50
percent in 2020. The company is
increasing the social conscience in the
customers to minimise the production
of waste in stores (Hashim and et.al,
2021).

Technological factors
The advancement in the technology by
the years has brought wide range of
opportunities for the company. The innovation
and development in technology have allowed
the company to introduce an option of online
shopping along with facilitating the home
delivery. This has increased the customer’s
satisfaction. The company is able to make
more convenience and ease for the customer
by having the self-service checkout points
along with reducing the labour costs that is
benefiting the company. The company has
invested in projects that are energy efficient
and will help the company in achieving the
Legislative factors
The policies and legislation of government
directly influence the performance of the company.
In 2004 the Food Retailing Commission (FRC)
suggest that a practice code should be introduced
that bans the traditional practices at the retailing
company that includes demanding payments from
the suppliers and changing the prices without
giving any notice. These policies are facilitated by
Tesco by reducing the price of fuel purchased by
the customers in alignment to the spent amount of
the grocery stores. The company also provide with
certain promotion offers having lower prices.
SWOT Analysis of Tesco
Strengths
 Financial turnaround- The company was able to
recover from the annual loss of £6.4 billion in 2015
due to a scandal. The company gained £1.9
billion operation profit in the 2020. The company
is able to correct its issues and work on them.
 Market share- Tesco’s market dominance is
unchallenged as it has 26.9% grocery market shares
in the Great Britain while the closest competitor of
the company, Sainsbury has 14.9% market shares.
 Strong performance during pandemic- The
company shows a growth of 10.5% in the three
months of September during the time of pandemic.
The growth in the company results due to the online
sales. To cater the growth demand the company
hired around 16000 people which make the volume
of growth clear for Tesco (Fatricia, 2017).
 Innovation- Tesco was a winner for having
advanced NoSQL architecture in the EMEA region.
The company put efforts in the optimisation of the of
the delivery scheme to respond to the shortages due
to the covid-19.
Weaknesses
 Leadership change- In September Ken
Murphy became the CEO of the company after
Dave Lewis. Ken has to look over and maintain
the well-oiled machine along with pushing the
company online is not an easy task.
 Quality control- The company have various
quality control measures still a disturbing
compliant came from the customer that makes a
need to improve the measures for the company.
 Shortage of products- The company is
rationing few products to meet the shortages
due to the panic buying of the customers. The
company assured the customers that they have
adequate stock for serving the normal buying
patterns of the customers (Jelassi and
Martínez-López, 2020).
 Food safety issues- the company lapse in
following the food safety guidelines that can
cause major consequences. The company
issues the food recall urgently after identifying
the defects and safety issues that can harm the
customers.

Opportunities
 Growth in online grocery sales- Tesco can improve
the online trend of buying the grocery as due to the
pandemic situation the customers are restricted to
stay home, this has increased the trend of buying the
groceries online.
 High unemployment rates- Due to the pandemic
many people have lost their job and the population
being jobless is around 16-24 years. The only place
where the people can still find job is supermarket and
Tesco can use the unemployed population as a fuel
to grow.
 Rise of meat alternative- The customers globally
are switching towards the meat alternative and the
plant based protein sources are estimated £4.1
billion. The company can promote the meat
alternatives for long term sustainable business
(Rosnizam and et.al, 2020).
 Social supermarket- The company can use the
social supermarket stockpiles that has to use within
specific dates to reduce the wastage and poverty.
The company can sell the products at more
affordable rates.
Threats
 UK-EU relations- the pursuit of UK for the no-
deal Brexit result in the suspension of trade
agreement with EU that is absolutely free by
now. If the suspension happens then UK have to
trade according to the WTO rules that will result
in additional custom checks, quotas and tariffs.
 Brexit and supply chain- The food imported to
the supermarket will be affected by 80% due to
the Brexit. Stymied flow from EU to UK of the
imported goods will be impacted negatively on
the supply chain of Tesco.
 Economic recession- The resultant drop in the
purchasing power of the customers due to the
loss of income and job, along with economic
recession are the main cause of concern.
Financial instability is caused in the company
due to pandemic situation (REVI).
 Competition- The revival of the competitor of
Tesco poses a threat in the market share.
Organisations impact on the external environment
Tesco can impact the external environments in different ways and has already committed to their
communities, customers and environment they serve. The plan of Tesco is to reduce the deforestation up to
zero that is caused by the Tesco products by 2020. The company is making the packaging of their products
fully compostable and recyclable by 2025. The commitment of Tesco is to help their customers to eat healthy,
eliminating the waste and restoring nature (Awadari and Kanwal, 2019).
Helping the customers to eat more sustainably
The company is promoting the customers to eat healthy for saving nature. The company is providing
the customers with the sustainable and delicious food to choose from. The company is finding alternatives of
the non-veg products and the company is committed to earn a profit of 300% by selling the substitutes of the
food to the customers. This way it is helping economically to the countries in which it is serving. The company
is going to transform the products to make them better for the environment and also keeping it affordable to
buy. This way increasing the completion for the other company’s in market for sales.
Restoring nature in food production
The company is making the farmers grow and produce enough food that is required by the company.
This way the company is producing jobs for the farmers and at the same time restoring as well as protecting
the natural resources. The direct raw material will be extracted from the farmers and they can be paid well.
This helps in increasing the jobs for the farmer and making them stable which in turn will help the economy of
the country. The company can took all the farmers together to work for them and the nature.
Eliminating waste
The company is trying to reduce the waste generated by the products by making them all eco-friendly and
creating a sustainable business for the long run. Many other steps will be taken by the company in order to
achieve this goal (Dryden and et.al, 2021). Eliminating will help the company to impact the government policies
by making the rules for every company to reduce the waste up to certain level.