Impact of PESTLE Analysis and Cultural Factors on Human Resource Functions at TESCO

This report discusses the impact of PESTLE analysis and cultural factors on human resource functions at TESCO, one of the largest retailers in the UK. It covers the overview of the company, PESTLE analysis, and the cultural factors that affect HR functions. The report concludes with the importance of considering these factors in developing effective strategies.

REPORT

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Overview of company and its current global position.................................................................3
PESTLE analysis.........................................................................................................................3
Cultural factors that has impact on Human resource functions...................................................5
Conclusion.......................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
There are various departments in an organisations and one of the main function is Human
resource. It is important for human resource manager of an entity to analyse both internal as well
as external market so that level of threats is declined in an effective manner. For the present
report, TESCO is taken into consideration. The company headquarter is located in UK and is
established in the year 1993. TESCO offer high quality home essentials and groceries, which is
the reason of its success. The report will cover PESTLE analysis along with its impact on
managing people. In addition to this, various Cultural factors is discuss that has impact on
Human resource functions.
MAIN BODY
Overview of company and its current global position
TESCO is one of the largest retailer in United Kingdom and is attain 4th position in all over
the world. The company offer its products in major markets that is USA, Europe and Asia with
around 4,80,000 staff members. The company offer product in more than 14 countries with its
goods and service involve home living range, groceries and many more. The target market of
TESCO is premium class and middle class households. It is determine that company offer
product at low price that help in attracting large number of people and enhance its profitability
level.
It is important for an entity to analyse external factors that has an impact on overall
performance and business activities. For this, the higher authorities of TESCO is using PESTLE
analysis.
PESTLE analysis
It is considered as a tool that help an entity to analyse impact of uncontrollable factors on
business activities. Along with this, it aid company to develop an effective strategy and decline
the level of threats in an effective manner. The elements of PESTLE analysis is given below
along with its impact on managing people.

Political factors: It consist of factors such as Political instability, tax rates,
unemployment rate, current & impending legislation, economic condition of country where it is
operating. In relation to Tesco, the government of UK is supporting companies to expand its
operations in other countries that has a positive influence on the overall performance and profit
margin of entity. On the other hand, change in any of the policies may have negative influence as
they are required to made modifications that occur cost and time of mangers of company. One of
the factor is tax rate, if the tax rate is high and a company is import goods from other country
then it may decline he overall revenue level of company and vice versa. In addition to this,
employment rate in UK is high that occur higher cost to company and to cover all this cost,
organisations raise price of product that may have negative impact on sales of an entity. It is
determine that political factors has impact on managing people as change in legislation by
government is requited to communicate to people so that they can working according to it in an
effective and proper manner as well.
Economical factor: This element consist of factors such as inflation rate, buying power,
economic condition of country, customer confidence and many more. In relation to TESCO, it is
situated in UK where people have strong buying power that has a positive influence on the
overall sales and profit margins of company. It also has negative influence after Brexit as there is
decline in inflation rate of country due to which people were like to save more rather than
investing money. Managing people by considering all this factors assist higher authorities to
make better decisions that has positive influence on overall efficiency of an organisation.
Social factor: It involve norms, values, opinions, customs, beliefs of people prevailing in
a country. It is determine that TESCO employees are belong from different culture and their
opinions is different too, its managers focuses in marinating good relationship among staff
members so that no conflicts is arise. This factor has direct impact on managing people as it is
essential for an organisation to consider all social factors in order to attract large number of
people and develop its value at marketplace.
Technological factor: Technology is changing rapidly and change the buying behaviour
and attitude of people also. It has both positive and negative impact that is it help an entity to
make improvement in processes and offer innovative products in market whereas at the same
time, it occur cost to an organisation. There is development of virtual teams due to technology

and it allow organisation to communicate with its employees from different locations. The
people working from different locations are requited to be manage properly and if not then it will
creates confusion in employees that has negative influence on overall productivity and
profitability of company.
Legal factor: It is significant for an entity to follow all the rules and legislations in order
to implement activities in a smooth and proper manner. It include laws such as employment law,
health and safety law and any other legislations. Employment law means that an employee has
the right to challenge companies adverse and unfair practices. It is important for an organisation
to follow this law in order to maintain a positive working environment that has positive impact
on implementation of operations and activities as well. Moreover, it is essential to consider all
the labour issues and solve them on time. If not, then an employee is not taking interest in
working and organisational objectives is not attained within stipulated time frame. Trade union is
an association of workers formed to protect the rights as well as interest of labour unions. In
many organisations, trade union has formed as it make employees feel valued and important as
they have the right to address if any situations occurs against to them. Legal factors has direct
impact on managing people as it is essential for companies to make employees understand about
the laws and give them proper knowledge about their rights in an effective manner.
Environmental factor: For an organization, it is important to undertaken all the
environmental factors such as using environmentally products in order to produce goods as well
as services. This factor has impact on managing people as it is important to make employees
understand about using eco-friendly products so that improvements take place in an effective
manner.
Cultural factors that has impact on Human resource functions
Human resource department plays an essential role as they are responsible for recruiting
effective and talented candidates who has the ability to reach company towards success as well
as growth. Along with thus, It is important for HR managers to consider cultural factors before
developing any policies or taking any actions. There are various cultural factors that has direct
influence on human resource functions which are as follows:
Woman participation: In many organisations, the participation of female employees is
encouraged as they contribute more in order to attain objectives of an organisation. If it is taking
about human resource functions then it is essential for HR managers to develop policies

according to it and maintain an environment so that both males and female staff feel equal at
workplace. One of the major function of HR is to decline level of workplace discrimination so
that positive image is develop in the mind set of customers that leads to raise in productivity and
profitability of an organisation.
Diversity in terms of workforce: In every multinational organisation, there are employees
belonging from different background, families, religion and many more. The HR manager
develop policies by analysing the people prevailing at workplace so that there is no conflicts
arise. It is important for human resource manager to implement cultural diversity strategies so
that equal benefits is given to all staff members and a good relationship is maintained among
employees.
Emergence of online communities: There are many online communities have emerged
because of social media revolution like virtual communities, transnational communities and
many more. One of the major factor that has high influence on culture and HR functions is
technology as it is changing and changing the attitude of people towards particular brand or
company. Social media revolution has impact on HR functions as it enable managers to gain
knowledge about different countries and interact with employees working on different locations.
For instance, development of virtual teams allow HR to make policies for safety and security of
staff members so that they feel important to be part of organisation and put their efforts in order
to achieve desired goals and objectives as well.
Increase in trend of providing training and development session: It is defined as a process
that every staff member is undergo in order to gain an insight about company, its work and
culture as well. It is determine that HR mangers finds its challenging as employee in an
organization having different language, values, culture, opinions and many more. For instance,
Americans keep at least 6 inches distance while interacting with people whereas Arabs like to
interact and communicate closely. Along with this, gestures and words also have different
meaning that arise difficulties in order to communicate with employees in an effective manner. It
is important for human resource manager to consider culture of its staff members and then
provide training accordingly that develop an understanding and enhance skills as well as
knowledge level of employees.

Conclusion
From the above study, it has been concluded that it is essential for an organisation to do
environmental analysis so that it can develop effective strategies and decline the level of risk
associated with activities of company. There are various laws such as employment law, labour
laws and many more that has direct influence on overall activities. Moreover, there are various
cultural factors that is associated with Human resource function as it is analysed that it is
important for HR manager to consider cultural factors and then develop policies as well as
strategies in an effective manner.

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