PESTLE Analysis for Tesco : Assignment

The expansion of Tesco PLC in
Denmark with PESTEL analysis

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Information of selected organisation......................................................................................3
The allocated Country............................................................................................................4
Objective of Report................................................................................................................4
Discussion of business environment along with application of analytical approach...........5
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment is aggregate of all internal and external factors which influence
business and its surrounding. These both factors work together for affecting enterprise and its
activities (Alon and et. al., 2016). Business organisation is defined where people has common
goal and uses approach for achievement of it. The manager of company should understand both
business environment and organisation in global level so that planning and decision can be made
accordingly. The given assignment is based on TESCO which was founded in 1919 at England
United Kingdom. It is multinational British groceries and retailer business. Products served are
supermarket, superstore, hyper-store and convenience shop. This assignment covers PESTLE
analysis done by TESCO for expanding business in Denmark. The main objective of report is to
expand market of TESCO Plc in Denmark for increasing market share and profit with help of
PESTLE analysis and Porter's Five force model.
MAIN BODY
Information of selected organisation
The selected organisation for expansion of their business in new market is TESCO Plc. It
is British multinational groceries and merchandise retailer organisation which was founded in
1919 at Welwyn Garden City, England, United Kingdom. This is considered as third largest
retailer firm in terms of gross revenue and ninth largest in world measured by revenues. The
founder of TESCO Plc is Jack Cohen as group of market stalls. TESCO Plc has operated shops
in seven different countries in Europe, Hungary, Thailand, Ireland, Asia and leader in UK
groceries which has covered 28.4% market share. Originally,TESCO Plc has expanded in early
1990s with operations of their business in 11 countries in world. It has diversified into various
categories such as clothing, furniture, petrol, financial services, internet services, retailing of
books, electronics, toys, software. It has repositioned itself from down market high volume low
cost in order to attract social groups by offering goods range from low cost value items to finest.
This seems to be successful where 500 shops in mid 1990s to 2500 shops in current scenario.
TESCO Plc is listed on London Stock Exchange (LSE) and part of FTSE 100 index. As per data
of 2015, its market capitalisation was £18.1 billion and considered as 28th largest company listing
on LSE (Behrens, 2017).

TESCO Plc has 6,569 number of locations in 2018 and serving in United Kingdom,
India, Thailand, Hungary, Ireland, Malaysia, Czech Republic. The CEO of this group is Dave
Lewis and John Allan as non executive chairman. It deals in different products such as
supermarket, superstore, hypermarket and convenience shop. There are some subsidiaries of
TESCO Plc group which are: TESCO store limited, mobile, family dinning, bank, Ireland,
Spenhill, Jack's, Booker Group and Dunnhumby. According to data of 2018, revenue is £ 57,491
million, operating income is £1,644 million and net income £1,208 million. There were 460,000
employees working in organisation in 2017. TESCO Plc works on philosophy that is every little
helps puts communities, employees and customers at heart of everything it does. Retailer is
trying best to provide great shopping experience to every consumers whether purchasing
through online or store. The code values followed by TESCO Plc is that no one tries best for
consumers, treating everyone they like to treat and using scale for good. There are five elements
of vision of TESCO Plc such as needed and wanted around world, modern and innovative ideas,
growing business with full of opportunities, winners are applying skills worldwide and inspiring,
trusting, loyalty from consumers, communities and colleagues. The mission is to be champion of
consumers, easier way of living and helping to enjoy better quality of life. In order to serve
individuals with little every day is core purpose of TESCO Plc. There are good practices working
through KPI deployed by TESCO Plc are: objectives should be very clear, KPI clustered on
strategic objectives, data can be viewed through line charts and bar charts. KPI resulted into
understanding of performance results through explanations. This organisation is earning large
profit each year with maintaining high quality (From vision, mission and values to KPIs at
Tesco, 2018).
The allocated Country
TESCO Pc is allocated in various countries such as UK, India, Lotus, Malaysia, Hungary,
Czech Republic, Ireland, Slovakia, Poland, China, Bank, Dunnhumby and so on. It has expand
business in order to achieve goals and objectives of firm. This helps in maximizing of profits and
increase in market share.
Objective of Report
The main objective of report is to expand market of TESCO Plc in Denmark for
increasing market share and profit with help of PESTLE analysis.

Discussion of business environment along with application of analytical approach
In order to describe business environment of Denmark where TESCO is expanding their
new business, PESTLE and Porter's Five model analysis has been used. It is tool that is used for
analysing and monitoring macro environmental factors that has impact on performance of
organisation. It is explained below:
(Source: PESTLE Analysis, 2019)
Political Factors- It means degree of intervenes of government in economy. This factors
includes political stability, government policy, foreign trade, tax policy, trade restrictions
(Denoncourt, 2015). The political party of Denmark is democracy which is transparent and open
to general public. It is multi party structure where everyone help each other. Denmark has active
foreign policies based on right, laws and democracy. Denmark has suffered from financial crisis
in 2008. unemployment level has highest that is 8.1% in 2012. This county has fixed exchange
rate policy where it want to be stable against Euro. Denmark conduct monetary policy through
setting interest rates to European Central Bank. The economic and fiscal policy are used for
achieving stable economic development. As GDP is still growing in 2016 that is 2.1% which is
0.3% more than 2015. As each and every policies of Denmark has increased from last year.
There is no trade restrictions in Denmark which is easier for expansion. It is very essential for
Illustration 1: PESTLE Analysis, 2019

Denmark to know about policies and trade restrictions so that they can easily expand their
market. As people of Denmark follows democracy in their country where each and every people
residing have freedom and equal rights so they can purchase goods and service of their own
choice. This can provide lots of opportunities to Denmark for better running of their business. If
political factors are not considered then government can impose fine and penalty to TESCO for
violation of laws and regulations.
Economic Factors- This factor means the way of organisation is doing business and
profit earned by them. It includes following such as interest rate, exchange rate, inflation,
economic growth (Edgeman, 2019). Denmark is prosperous economy which has grown by 2% in
2018. According to IMF, it will grow by 1.8% and 1.9% in 2019 and 2020. It is small country
with open economy and structural payment surplus. As it depends upon foreign trade for
expansion. The domestic demand is expecting to increase imports which can contribute to
reducing current account surplus that is 7% of GDP estimated by World Bank. The real income
and employment gains support private consumption. The inflation rate of Denmark in 2016,
2017, 2018 was 0.3, 1.1 and 1.4. The GDP per capita was increase from 53,774 to 61,227 from
2016 to 2018 (The economic context of Denmark, 2016). After analysing above data, it can be
said that TESCO Plc has great opportunity to spend their business in Denmark. The economy of
this city is increasing rapidly which create chance for business expander. This provide strength to
TESCO for expansion as this is small country with is developing at faster pace. If TESCO do
expansion in Denmark, then it can increase their profits and economic condition is also good in
that country. It is very peace and safe place for performing business. Apart from positive, there is
also negative for TESCO, as is expecting to increase import rather than export. The
unemployment was 5.4% in 2018 which is bigger than size so they may not prefer to buy
products of TESCO. Thus, through analysis it can be concluded that by expansion of business
creates both positive and negative impact to TESCO Plc.
Social Factors- The areas which involves attitudes, beliefs of people is called social
factors. This factors consists of elements such as age, health consciousness, career attitude,
growth (Frynas and Mellahi, 2015). The Household disposable income of Denmark is 11%
higher that 2005 which is more than last 10 years. Growth has installed from 2006 to 2008 and
again from 2011 to 2013. Similarly, employment rate has increased in 2014 with growth rate of
13%. The job strain has remained stable since 2005 where 21% of employees affected in 2015.

The housing conditions of Denmark has been increased effectively and efficiently
(https://www.oecd.org/statistics/Better-Life-Initiative-country-note-Denmark.pdf). As per OECD
report, the living conditions of consumer has been increased. As TESCO Plc is planning to spend
business in Denmark country for increasing their profit and market share. People of that place are
more brand conscious and prefer high brand value. From last year, there is vast increase in
income and employment rate so their living standard rises which is plus point for retail industry
to do expansion in various countries. There are many elements considered in social factors
which assist in earning of profit and increasing of market share. If TESCO Plc does not
manufacture as per need, demand, taste and preferences of consumer then it can survive.
Through social analysis, it can recognised requirement of individuals and consumers so that they
can produce accordingly. There are various need and requirement according to nature and age
group of consumers and produce accordingly. If they does not work as per Denmark people then
cannot survive in competitive market. Social factors helps in creating both positive as well as
negative impact to organisation and its activities (Woschkowiak, 2018).
Technological Factors- This factors affect management and marketing in three different
ways such as new ways for production, communication and distribution of goods and service of
target market. It includes research and development, innovation and creative ideas (Hamilton and
Webster, 2018). According to Digital Economy and Society Index 2016, Denmark is considered
as digital country among 28 EU members. The public services of Denmark is highly advanced
where 88% are internet users for doing e banking and 82% are doing online shopping. This
country is booming online leisure activities. 69% people read online news, 57% prefer listening
music and play games, 78% use for broad brand connections, 45% for video calls and 67% for
social network. Denmark is considered as first number for internet using, second number for
integration of digital technology and public services and fifth number for human capital and
connectivity. This can provide great opportunity for TESCO Plc for doing business expansion in
Denmark. The technology used by such country is large in world as it assist in developing
nations and business operation. TESCO can provide their goods and service online because more
number of people uses internet and social network for purchasing goods and services.
Technological factors leads to success of any business and its operation. Denmark can analyse
technology in effective manner for their consumer so that they can provide goods and services.
Before entering into any market, various elements need to be analysed properly. Denmark is high

in technology so TESCO should move accordingly for sustaining in market. Though it is small
place but high advancement in technology. Thus, if technology is not followed for manufacturing
and selling then it has to face issue for doing expansion.
Environmental Factors- These factors are important because of pollution targets,
scarcity of raw materials, carbon footprints and others (Hardaker, 2015). There are various
polices made by government of Denmark for environment. It is considered as Europe biggest
producer of waste which aims to 70% of all waste by 2024. It has passed tax on nitrogen
emissions for reducing air quality issues. It has identify responsibility for investing where nations
can meet challenges for climatic change of nation. Denmark is trying best to minimize cost for
preventing and rectifying damage. It is leader exporter of energy technology in world and solar
cell and wind power exceeding their expectation. It has taken numerous steps for renewable
energy source for betterment of environment. Various technology related with clean and safe
environment has been used for betterment of Denmark. From past year, Denmark has done lots
of improvement for environment and their people for achievement of goal and objectives. After
analysis of environmental condition of Denmark, expansion of business by TESCO Plc can be
done effectively and efficiently (Denmark: Environmental Issues, Policies and Clean
Technology, 2019). As for protection of environment, latest and updated technology has been
used by Denmark. TESCO Plc is retail industry which deals in variety of goods and services. In
environmental factors, while producing goods it need to follow all laws related with environment
so that expansion can be done in better way. It is very essential factor before doing any
expansion in any place so that available opportunities can be identified. If such laws are not
followed by TESCO then government of Denmark can impose fine and penalty.
Legal Factors- The factors are legal to organisation for achievement of goals and
objectives. This includes equal opportunities, consumer right, product safety and labelling,
advertising standards (Nguyen and Ha, 2013). The protection of property right is enforced
through independent, fair judicial and trusted system. Intellectual property should be enforced
and respected through world standards. Denmark is considered as world least corrupted nations
and ranked as 2nd out of 180 countries by Transparency Internationals 2017 Corruption
Perception Index (2019 INDEX OF ECONOMIC FREEDOM, 2019). All legal standards are
followed by Denmark so TESCO Plc also need to adopt those regulatory laws and standard in
order to expand their business. The consumer should be protected with their rights and provided

equal opportunities to each and every employee working in organisation. Denmark is very strict
towards following of legal standard, regulation and laws. As TESCO Plc is highly engaged in
product safety and labelling of goods and services. This factor give opportunities to TESCO as it
can provide high quality goods and service through following all legal standards. Nowadays,
consumer are more standard oriented and prefer high quality products. In case of not following
such legal laws, it is very difficult for firm to survive and sustain market growth (Shirsat, 2016).
Porter's Five Force Model is used by TESCO Plc in order to expand market in Denmark.
There are five points included in this model which are described below:
(Source: Porter's Five Force Model, 2018)
Competitive Rivalry- There are many competitors of TESCO Plc in Denmark. Here,
firm need to analyse each and every factors before expanding market in Denmark and serve
consumers in better way.
Supplier Power- The bargaining power of suppliers is diverse distribution, low cost of
switching and volume is critical. Here, TESCO Plc has an opportunity to expand market for
increasing market and share.
Buyer Power- The bargaining power of buyer is that large number of customers and
limited information availability for individuals in Denmark. Here, TESCO Plc need to provide
Illustration 2: Porter's Five Force Model, 2018

high quality goods and services in Denmark market with help of advertising tools to attract large
number of people.
Threat of Substitution- There are many companies dealing in same type of products so
in order to expand market in Denmark, TESCO Plc need to focus on quality and price so
consumers cannot switch to others.
Threat of New Entrants- With rise in market, daily new competitors arise in market.
TESCO Plc has low threat of new entrants as there are many companies dealing in same product
but quality provided by them is different than others. Thus, it is great opportunity for TESCO Plc
to expand business in Denmark.
CONCLUSION
From above report it can be concluded that for expansion of business in global context
analyses should be done. Here, PESTLE analysis has been used as it tool that helps in knowing
macro environmental factors for achievement of goals and objective. TESCO Plc is planning to
expand their business in Denmark so it need to analyse each and every factors to get effective
outcome. Political helps in knowing about tax rate and policies required for expansion.
Economic tells about interest, exchange so when expansion is performed rates can be measured.
As per need and demand of society and people, goods and service should be manufactured and
supplied in market. There is high advance technology used by Denmark which can help
organisation in effective manner. Environmental and legal laws should be applied while doing
expansion in another place. Thus, these factors guide business for better expansion so that goal
and set objectives can be achieved.

REFERENCES
Books and Journals
Alon, I. and et. al., 2016. Global marketing: contemporary theory, practice, and cases.
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Denoncourt, J. A., 2015. Patent-backed debt finance: should company law take the lead to
provide a" true and fair" view of SME patent assets? (Doctoral dissertation, University
of Nottingham).
Edgeman, R., 2019. Performance Management and Enterprise Excellence through Sustainable
Business Models. In Sustainable Business Models (pp. 317-359). Palgrave Macmillan,
Cham.
Frynas, J. G. and Mellahi, K., 2015. Global strategic management. Oxford University Press,
USA.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hardaker, S., 2015. Development and Outlook for Grocery Retailing Internationalization in
China: Competition and Format Expansion within a Geographical Context.
Nguyen, Q. and Ha, P., 2013. Vietnamese confectionery market analysis and entry plan: case:
Candyking Finland Oy.
Shirsat, R. S., 2016. Sustainable business eevelopment–a strategic position for
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Industry (Doctoral dissertation, Dublin Business School).
Woschkowiak, A., 2018. Board Diversity and Firm Financial Performance: Gender, Nationality
and Age Diversity in European Boardrooms.
Online
From vision, mission and values to KPIs at Tesco. 2018. [Online]. Available through:
<https://www.performancemagazine.org/from-vision-mission-and-values-to-kpis-at-
tesco/>
The economic context of Denmark. 2016. [Online]. Available through:
<https://www.nordeatrade.com/dk/explore-new-market/denmark/economical-context>
https://www.oecd.org/statistics/Better-Life-Initiative-country-note-Denmark.pdf
Denmark: Environmental Issues, Policies and Clean Technology. 2019. [Online]. Available
through: <https://www.azocleantech.com/article.aspx?ArticleID=555>)
2019 INDEX OF ECONOMIC FREEDOM. 2019. [Online]. Available through:
<https://www.heritage.org/index/country/denmark>