Impact of Brexit on Tesco: Analysis and Recommendations

This report analyzes the impact of Brexit on Tesco, a multinational retailer of groceries in the UK. It discusses the effects on Tesco's supply chain, workforce, and financial condition, and provides recommendations for the future. Additionally, the report covers PESTLE analysis, leadership styles, and corporate social responsibility at Tesco. Course code and college/university are not mentioned.

Context of business

Table of Contents
.........................................................................................................................................................1
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
PESTLE analysis of TESCO.......................................................................................................3
Types of leadership style ............................................................................................................4
Corporate Social Responsibilities at Tesco..................................................................................6
Impact of Brexit on Tesco............................................................................................................8
Impact of Covid-19 on Tesco .....................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Retailing industry is a leading industry in the united kingdom United. The business is
growing day by day and every company wants to come in the competition with other competitors
so there many strategies and model is implement for growth and standardization of company.
This report will be based on the business environment of leading retailing company Tesco. Tesco
is a multinational retailing company have an origin in United Kingdom. This project discusses
the external environmental factor by using PESTLE analysis and recommend the leadership style
which is beneficiary for the company success. Then explain corporates social responsibilities in
the process and at last effect of Brexit and Covid-19 will discuss according to business point of
view of organization.
MAIN BODY
PESTLE analysis of TESCO
Political factor-
Business of retailing company greatly influence by the political factor, a Tesco is
operated in worldwide so this factor affects the performance of Tesco. These factor includes, tax
rates, legislation acts and stability of region where company operates. Financial instability
arises after pandemic in the world so thereby governments encourage retailing company to
create employment which placed near the locality of stores. As Tesco plays a very important part
in creating employment, furthermore the demand of products also increase which create a
pressure on company for enhance in rate of workers.
Economic factor-
Economic Factor is more important according to growth rate of Tesco, as it is most likely
to cost of leverages, profits, demand, prices, etc. so thereby the company should attentive on
changes in the government norms, policies majorly it includes changes in taxes or any other
factor by which relates to finance. As Tesco have operates in all over the world but the still
company dependent on the UK market as contribute 30% of shares.
Social factor-
Changes in society increase day by day and consumers are shift towards shopping of
every product at single store i.e. one step shopping (Brock, Kemp and Williams, 2022.).
Therefore, Tesco has enhanced their business towards non-food products so there by sale rate
increases in short period. The numerous variety of goods and services provided by the company

and Tesco focus on the demands of market and mostly consumers are influenced by their attitude
and beliefs, and that enhance company's trust on the customers Because currently people are
more concision about health due to this their thought towards foods related products are change
constantly, Tesco work on the organic products for enhancement.
Technological factor-
The advancements of technologies have give various opportunity to Tesco. This majorly
includes two most distinct features. first, online shopping with home delivery services and
Second, self-service checkout points which is easy for customers to shop. And in turn it reduces
cost of labour. Furthermore, Tesco has work on substantiality by reducing carbon.
Legal Factor-
Government rule and regulation directly affect growth and performance of Tesco. For
example, the Food Retailing Commission (FRC) in 2004 implement on companies that includes
Code of Practice be introduced which has many practices, such as changes in prices are not
allowed without informing government. To interpret these policies, Tesco provides oils in lesser
price to its customers. Tesco have many rules for safety and health of employees according to
government of different countries.
Environmental Factor-
Environmental factor play a major role in the company as Tesco is multinational
company and have variety of products which increases the waste of country. With increase in
environmental issues, Tesco adopt operation for the welfare of society, Tesco work on that area
and clearly committed that reduction in carbon by 50% in 2020. also, Tesco focus on the
making of sustainable material of packing so thereby reduction the pollution may be seen.
Types of leadership style
Transactional leadership
Transactional Leadership mainly concern about actual work of employees which means
that transactional leader give an achievable target to workers in a particular time and when
employees attain that target then company give appreciation and rewards. That majorly come
under in sales department of company (McBride, Anthony and Freischlag, 2021). This leadership
adopts by many companies for getting higher positioning in the market place that also increase
the spread rate of product in the market and for achieving productivity and productivity but
Tesco already have high market value so that leadership style is worth for the company.

Transformational Leadership
Transformation leadership have focus on the improvement constantly so thereby leaders
are continuously pushed the employee of their team to move outside from their comfort zone
and implement various stretch goals (Bonsu and Twum-Danso, 2018). This leadership style
associate with the charismatic leadership which means that the department are focuses on
developing skills of employee for earning higher amount of profit from market by their
communication in particular. The organization has high market value may adopt this leadership
for dealing with the customers in a standardize manner. If the proper induction is not conducted
by the company it affects the company profile.
Strategic Leadership-
Strategic leadership mainly involve for the managing the operation department of
company on a daily basis and in the growth of capitalization of the organization (Kowo and
Akinbola, 2019.). The strategic department implies many strategies to empower worker which
results in increase of worker's interest in performing their work in an effective manner. The main
motive behind this leadership is to attain high amount of profit by increase in productivity. They
encourage the employees for produce work and in returns incentive and appraisal is to be give by
the company.
Democratic Leadership-
Democratic leadership is a type of leadership in which decision-making are taken by the
teams and leaders are consulted with the team for betterment in any service and then final
decision make which is favoured by everyone (İnce, 2018.). By this type of leadership, diversity
of group, thinking and knowledge be identified by the leader that reflects the potential of the
employees. But at the time of quick action this leadership lack because it takes more time for
taking final decision.
Autocratic Leadership-
This type of leadership mainly involve the decision of leader is final and all team
member is followed the decision of leader without any argument which means that leaders
decision play an essential part in working of employees (Hogg, 2021.). The leaders which are
come under this have abundance of knowledge and technicals of business because in the uneven
or unfavourable time the quick action is required for impose of any rules. For example: in the

pandemic, the situation of some countries are out of hand after one or two months so at that time
company make decision in quick manner for the welfare of society and workers.
Recommendation
From the above discussion of leadership style it can be recommanded that Tesco adopt
strategic leadership in the company for improvising the profitability and productivity because
retailing industry grow year after year and that enhance the competition among the business. As
Tesco is operating in many country and have footprints over worldwide with variety of products
such as cosmetic, food, oils, medicines, etc. so for effective growth in every field Tesco go with
this strategy as many departments are there in the company. Tesco have many competitors which
focus is on the products which are in higher sale so the competitors seek that area thereby Tesco
plan many strategies by which it can't be ease for any competitors to substitute their predicts.
Strategic leaders are aware in terms of internal and external aspects and make and
strategy to mitigate the problem. They majorly focus on the productivity by imply strategies on
the product such as festival sale, discounts etc. This type of sale enhance the growth of
company. The session of motivation are also conducted by the departments which increase the
worker's interest in performing the function in an effective manner and by this image of company
profile on the customer's mind. So it is easy for Tesco to work with strategic style as it is
beneficiary in enhance employment rate and spread rate of products. So basically the motive of
gaining market, workers and departments trust this strategy should be followed by the company.
Corporate Social Responsibilities at Tesco
Corporate Social Responsibilities is the concept where companies follow the
environmental and social concerns in their operation and in there communication with there
stakeholders. It is the commitment of business to contribute to the development of the
community and society which helps in improving the quality of life. CSR helps the business by
representing it at global level. It includes the laws and principles that companies are bound to
follow and makes a contribution to society in the positive manner.
To improve the environment, Tesco implies the policies, strategies and business practises
related to corporate social responsibility, which helps the company in developing its core values.
It also aims at looking the strategies related to reuse and recycling and focusing on the
responsible consumption. Tesco ready for work program helps the company by enhancing the

positive environment, gaining customer support and increases the reputation of business and
improved people socially, economically and politically.
 Economic Strategies: Tesco plays an important role in generating employment,
developing skills and creating economic development. It has around 326,000 of
employees in twelve countries. It has also created around 15000 new jobs for performing
its operation. Due to this rapid changes in the world, Tesco assures that they remain
dynamic by satisfying the needs of its customers. Tesco also focuses on offering value to
its customers through providing good quality product, flexible prices and by serving
customers according to their needs. Tesco increases the volumes of products by 50%,
which helps them in increasing the sales. For low income group, the company offers the
low prices at grocery stores which adds value for these group of people. It also aims to
focus on the regeneration of communities(Latif and Sajjad, 2018). Tesco is in
partnership with the local authority, and other peoples to offer opportunity to people to
provide them with new service and retail jobs and generates a positive way of learning.
 Social strategies: Tesco never underestimate the impact of its business on its society.
They look after the social factor by looking over thee people, by supporting education,.
Promoting healthy lifestyle, getting involved in the community, supporting child
education and by managing supply chain. Tesco believes that there are people are the
most valuable asset for them as they help in assuring the success of there business. They
offer attractive packages for there staff which includes flexible working hours, free
uniform, free meals, health insurance and other monetary benefits. Thy also provides
training and development programmes for there to assure the best come out of them,
which helps in increasing there productivity and efficiency. They spend around 23
million each year in training programmes(He and Harris, 2020). It also introduced human
rights policy, for its employees which includes the employees wages and there security. It
also aims to provide healthy living among its customers by maintaining the quality of
products and ensuring that the consumers adapt to healthy lifestyle by ensuring that the
lifestyle is affordable and accessible to all its customers. Tesco increased it sales by 12%
from last year on the healthy products. They also invested in children's education skills
by providing them computers in school, Tesco believes that education is an important
areas and there support is very important. In last year, the company provided around

3000 computers in schools with other equipments like microscopes, digital cameras and
encyclopedias.
 Environmental Strategies: Tesco focuses on the approaches related to environment as
they believe in environment sustainability. It never neglects the environmental
responsibilities, as they are aware that they are the sources of supply in the future. They
aims to achieve the environmental goals by reducing the consumption of energy and by
minimising the usage of water. Most of the customers are concerned about the recycling
process. So, Tesco opened three recycling centres in Hertfordshire. These centres re
made for customers. Customers can use these centres to recycle, bottles, cardboard, jars.
According to survey, Tesco accounts for 13% of material which is collected for recycling
which makes easy for them to recycle(Sánchez‐Torné, Morán‐Álvarez and Pérez‐López,
2020). They also introduced the degradable plastic bags to all of its stores which can be
converted into a no harmful residues in a little time. Tesco also focuses on the
biodiversity to prevent wildlife. It has been developed by the Tesco's seven suppliers
which helps in managing plans to monitor the wildlife. It also introduced the policy
related to animal welfare which covers all the aspects of protecting wildlife.
Tesco recognizes the affect that business crates on the economy, on the society and on the
environment. It focuses on to work on the activities that makes a difference and maximizes the
benefits and minimizes the negative impacts on the business.
Impact of Brexit on Tesco
Brexit is occurred on March 29, 2019 which withdrawal UL from the European Union.
This event has affected the Tesco, which is known as one of the multinational retailer of
groceries in UK. It impositions the tariffs from the EU(Jones and Comfort, 2018). As, UK is the
member of custom union of EU, which allows flexible movement of goods between states. Once,
if the UK leaves customs then they haver to pay custom duties on imports. These will increase
the cost of goods for Tesco as well as for other retailer. This will reduce the profit margin of
Tesco which affects its financial condition. Due to Brexit, Tesco's supply chain will also be
affected as it supplies food to the EU countries. If ones the UK leaves the EU, then they will not
be able to assess the EU market which results in decline in sales. It will also impact the
workforce of Tesco, as many of its employee are the citizen are from EU. Once the UK leaves,

the employees will not have the right to work in UK. These will impact the company by
declining its Workforce.
Tesco's used to trade with EU more cheaply and freely as it is a member of trading bloc. Around
80% people are concerned with the prices of groceries and 60% for the prices of clothing. It also
adopted scan checkouts to meet its market demands. In 2021, groceries prices are increased by
2%. This shows that the food trade between EU and UK is more would be more expensive
because of its custom duties(De Ville and Siles-Brügge, 2019). Supermarkets reported problems
due to Brexit as the products are moving to Northern Ireland. According to Tesco's CEO, ready
meals has been affected as there life is short and some fruits are also vanished, which leads to the
wastage of resources. Due to this, customers face the shortage of fresh food and the prices
become higher.
Positive Impact of Brexit on Tesco
There is a positive impact of Brexit on Tesco as it allows the company to focus on the
UK customers and rather than the EU. It will help in increasing the market share of Tesco in UK,
which will result in becoming more profitable. It will also result in better services which will be
provided to the customers. This will helps in increasing the brand image of Tesco. The company
is also going to generate more employment opportunities for the local people of UK. Tesco is
unable to enter the market due to some barriers. It will seek to the collaboration agreements with
local business to overcome the barriers. It will help to expand the market and will help economy
to grow.
Impact of Covid-19 on Tesco
As Covid pandemic arose in 2019 and many countries are surviving at that time and UK
region affected drastically by the pandemic many people lost there families. Tesco is
multinational company which spread all over the world, at the covid time all business fall and
economy of country down with huge loss (Desai, Studente and Garivaldis, 2022.). The only
industry that was constantly run was retailing industry as they fulfil the basic needs of the
population and without basic needs survival is not possible. At the initial, company faces a loss
but it is not in large amount as Tesco earn large amount of profit after a month and the pandemic
is last for more than two years so gross profit of company is at peak at that time.
Retailing industry is only industry by which a person earn wages that means it is only
source of income for the survival. Tesco already have many stores and market value but

Pandemic creates a large amount of turnover of company. As Tesco have online delivery
services so people are efferently use Tesco over other companies and at the time of pandemic the
main inflammation takes place by contact Tesco launch app by which transaction could be done
without any contact that result a growth in an effective manner of a company. Population is more
about heath at pandemic so Tesco focus on the hygiene and product quality that enhance the
loyalty of customers on the product as well as on the company. So it can be said that covid didn't
give too much loss to the company in terms of finance.
CONCLUSION
From the above discussion on business environment it can be concluded that, many
industries are present in the United Kingdom but retailing industry make a different place among
all others. Requirement of people are increased day by day so for fulfilling their need retailing
company increase their market share in the world. Every company wants to come in competition
with another and grows in effective manner. This report had based on the leading retailing
company Tesco and analyse the external environmental factor by using PESTLE analysis. Later
explain leadership style and recommend the best style by which company achieve their goals
and success. Later, report explain corporates social responsibilities in the process and at last
effect of Brexit and Covid-19 had discussed for the growth of organization.

REFERENCES
Books and Journals
Bonsu, S. and Twum-Danso, E., 2018. Leadership style in the global economy: A focus on cross-
cultural and transformational leadership. Journal of Marketing and Management, 9(2),
pp.37-52.
Bonsu, S. and Twum-Danso, E., 2018. Leadership style in the global economy: A focus on cross-
cultural and transformational leadership. Journal of Marketing and Management, 9(2),
pp.37-52.
Brock, A., Kemp, S. and Williams, I. D., 2022. Personal Carbon Budgets: A Pestle
Review. Sustainability, 14(15), p.9238.
De Ville, F. and Siles-Brügge, G., 2019. The impact of Brexit on EU trade policy. Politics and
governance. 7(3). pp.7-18.
Desai, B., Studente, S. and Garivaldis, F., 2022. The Impact of the COVID-19 Pandemic on
Consumer Purchasing Behaviour: Implications for the Retail Sector. In Global Strategic
Management in the Service Industry: A Perspective of the New Era (pp. 1-15). Emerald
Publishing Limited.
He, H. and Harris, L., 2020. The impact of Covid-19 pandemic on corporate social responsibility
and marketing philosophy. Journal of business research. 116. pp.176-182.
Hogg, M. A., 2021. Uncertain self in a changing world: A foundation for radicalisation,
populism, and autocratic leadership. European Review of Social Psychology, 32(2).
pp.235-268.
İnce, F., 2018. The effect of democratic leadership on organizational cynicism: A study on public
employees. İşletme Araştırmaları Dergisi, 10(2), pp.245-253.
Jones, P. and Comfort, D., 2018. Storytelling and corporate social responsibility reporting: A
case study of leading UK retailers. European Journal of Sustainable Development
Research. 2(4). pp.1-11.
Kowo, S. A. and Akinbola, O. A., 2019. Strategic leadership and sustainability performance of
small and medium enterprises. Ekonomicko-manazerske spektrum, 13(1), pp.38-50.
Latif, K.F. and Sajjad, A., 2018. Measuring corporate social responsibility: A critical review of
survey instruments. Corporate Social Responsibility and Environmental
Management. 25(6). pp.1174-1197.
McBride, A. S., Anthony, E. Y. and Freischlag, J. A., 2021. Transitional Leadership: Three
Leader's Perspectives on an Increasingly Common Position. The Journal of
Pediatrics, 236, pp.5-7.
Sánchez‐Torné, I., Morán‐Álvarez, J.C. and Pérez‐López, J.A., 2020. The importance of
corporate social responsibility in achieving high corporate reputation. Corporate Social
Responsibility and Environmental Management. 27(6). pp.2692-2700.
Online
Tesco PESTEL Analysis. 2022. [Online] Available through: <https://fourweekmba.com/tesco-
pestel-analysis/>
Corporate Social Responsibility at Tesco. 2022. [Online]. Available through:
<https://corporate.tesco.hu/en/sustainability/koezoess%C3%A9gek/t%C3%A1rsadalmi-felel
%C5%91ss%C3%A9gv%C3%A1llal%C3%A1s-a-tesc%C3%B3n%C3%A1l/>
1

2