Business Environment Analysis of Tesco: PESTLE and SWOT Analysis

BUSINESS
ENVIRONMENT
ANALYSIS

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Contents
INTRODUCTION.................................................................................................................................1
PESTLE analysis of TESCO.................................................................................................................1
Internal analysis of Tesco......................................................................................................................2
Influence of internal and external environment on decision making process.........................................3
Conclusion.............................................................................................................................................4
References.............................................................................................................................................4

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INTRODUCTION
Business environment has changed considerably and hence it has become essential for the
firms to manage their operations as per this changing business environment. TESCO being
one of the biggest super market firms in United Kingdom had to face lot of challenges due to
the change in the factors affecting their business (Pearson, et al 2011). Tesco is having lots of
resources and are highly capable of dealing with the changing business environment. All
these resources and the changing business environment are having impact on the decisions
that is made by the firm. This report will highlight the change in the business environment of
Tesco by analysing different factors.
PESTLE analysis of TESCO
Today’s business environment has become very much dynamic hence it has become essential
for the organizations to understand the factors that are affecting their business. Some of the
factors that need to be analyzed are specified by the PESTLE strategic tool:
 Political: There is significant change in the political environment of UK and these
changes can be reflected back in the decisions that are made by the government. The
decision such as Brexit will have long term impact on the big retailers like Tesco.
This is because they have lot of suppliers from the other parts of the EU and hence
maintaining same kind of relations with them (Kew and Stredwick, 2017). Apart from
this there were no trade barriers among the countries in the EU previously but after
the enforcement of Brexit Tesco might face challenges in doing cross border trades.
 Economical: The biggest challenge for the company is posed by this factor. There is
significant downfall in the economic growth of the whole European region and hence
it is reducing the purchasing power of the people. It has also affected the demand in
the market. It was one of the most significant reasons for British Government
enforcing Brexit. The reduction in the purchasing behavior of the people will have
direct impact on the sales of the company. Even after being high per-capita income
people are reducing their expenditure (Hamilton and Webster, 2018). Investors are
also not willing to invest in new projects and hence could be a challenge to the growth
of Tesco.
 Social: Society has changed and so are their demands. After a decade of bad phase
after 2009’s recession, significant changes can be noticed in the purchasing capacity
of the people. They are restricting themselves from opening their pockets for
expenditure (Hoskin, 2011). Apart from this, there is increase in the number of
unemployed people which is reducing their target segment’s intention to purchase.