Tesco PLC: Globalization, External Factors, and Business Strategy

This report provides a comprehensive analysis of globalization and its impact on Tesco Public Limited Company (PLC). It explores the importance of globalization for organizations, highlighting how it facilitates international expansion, reduces customer service costs, enhances competitive performance, and improves business quality. The report delves into the various external factors affecting Tesco, including political, social and cultural, technological, and economic factors. It examines how political decisions, social trends, technological advancements, and economic conditions influence Tesco's business strategies and decision-making processes. The analysis covers factors such as foreign trade policies, taxation, population dynamics, income distribution, technological integration, recession, and economic crises. The report emphasizes how Tesco must adapt to these factors to maintain efficiency and competitiveness in the global market. By understanding these influences, Tesco can develop robust strategies and business practices. This report provides a detailed examination of the interplay between globalization and external factors, offering valuable insights into Tesco's business operations and strategic planning.

Contemporary Business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Globalization and its Importance for Organization.....................................................................1
External Factor Analysis..............................................................................................................3
CONCLIUSION..............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Globalization is a process of interrelation, collaboration and integration that consists of
people, companies, government of different countries and it is driven by international trade, and
investment uses information technology to connect people, business and government together
(Hirst, Thompson and Bromley, 2015). Tesco Public Limited Company is a multinational
grocery store that was founded in year 1919 by Jack Cohen in Hackney, London, United
Kingdom. There are total 6800 Tesco store around world. This report is providing brief of
globalization and its importance for for organization. Different external factors are also studies to
evaluate its impact on working and decision making of organization. The macro factors like
socio-cultural, technological, political and economical factors are considered.
MAIN BODY
Globalization and its Importance for Organization
In context of a business organization globalization is a process that is used by companies
to expand their business on international level (Baylis, Smith and Owens, 2017). In globalization
organization conducts their business in international market from their origin country. They
operate various branches of their organization form one base country where headquarter of
company exists. By globalization organization provide their services to international customer.
Importance of Globalization
Globalization is process is very important for business organization to improve profit and
knowledge of organization. It also can help Tesco PlC in different manner. Globalization is
important because it open ups the international access of company, reduce the cost of customer
service, provide platform to organization and it also improves the competitive performance of
organization.
Provide Access to Internal Customers
When an organization moves to international market then they will be able to provide
services to the international customers. For country level business they are only able to provide
services to local customer and this makes their target market and number of customers limited.
To perform business only one country or location keep their growth and development limited.
For a retail store company like Tesco do not have enough opportunities to grow their market or
launch new product and only way to improve profit and business of organization is possible by
globalization. If company works on one location then they will not be able to serve other people
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because company is conducting business through physical store. Tesco PLC is generating profit
by providing various products to customer through their grocery store (Crane, Kawashima and
Kawasaki, 2016). By globalization company can operate on multiple locations around world and
this will help the company to improve its market share and number of customer. More the
customer company will serve more profit they will gain. They also will be able to gain
information of international market and this will provide them opportunities to make change in
their business and marketing policy in effective way to improve final revenue of company. As
Tesco is a retail store so globalization can help company to introduce various international
product in local market to attract more customers.
Reduce the Cost of Customer Service
To serve customer organization also have to make various investments to full fill demand
their demands. When organization is operating from one location and serving customer on
international level and this will improve cost to the company because they have to make different
arrangements to provide specific international product. In terms of expenses company have to
pay for national and international importation and exportation taxes (Benería, Berik and Floro,
2015). Also, the charges of transportation is paid by organization and it is not best secure method
to serve different consumer in international market. In this case globalization help the company
to established its business in international market and provide them with opportunity to address
greater number of customer to improve profit of organization. Tesco PLC is operating different
countries and it very helpful for them to buy a n international product and sell it to another
country to provide better services .
Provide Competitive Market to Organization
The competitive market is too important for organization. Globalization provides
international platform to the organization to perform business in different competitive market
environment. This is important for organization to take knowledge of international market
condition to plan their business strategies accordingly. Business on multiple location provide
backup plan to the company (Ritzer and Dean, 2015). If company face any kind of trouble in
local market and face financial failure then organization will be able to stand still by getting
financial support. Various type of competitive can help the Tesco to improve the performance
and set new and higher targets. This is how international market help the organization by
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providing extra opportunity to develop its business strategy and practice to gain more knowledge
and improve business.
Improve Quality of Business
Internationalization of business is not only about the expansion of business it is also
about technological. Economical and social; growth of company. Internationalization improves
company operation by improving their business standards and operational efficiency. By moving
on to international market organization get various chances to learn new and innovative business
strategies and learn how to used different technologies in company to improve the speed of
production and customer service (Charles Jr, Schmidheiny and Watts, 2017). This all things of
globalization guide the organization by making them face different market conditions. Through
the process of globalization company learns information how to deal with different customer and
how to full fill their business needs. These challenges improve the organizational methods. This
process of globalization make company aware of various new technologies and business and
marketing procedures to improve their business in other nations. Globalization also provide huge
experience to organization to conduct business in different difficult situation and this thing make
business policy of organization more effective, stable and robust for various conditions.
This is how various factors make the process of globalization useful and important for
business organization. The different driving factors of globalization like growth, high profit and
technical development force the organization to go for global market to conduct business.
External Factor Analysis
Business organizations face different problem in the market place. These problems are
result of different factors that maybe from inside or outside of organization. Factors that are
present outside organization are not in control of company (Kopnina and Blewitt, 2018). These
factors are mostly considered as changes in market conditions that can influence business
policies and practices of organization. Some of these factors are political factors, social factors,
technological factors and economic factors. This various macro factor force the Tesco Public
Limited Company to make various changes to perform business with high efficiency in market.
Political Factors
Political factors are usually consists of change in political decisions which are made by
government of country. In a country government is responsible to maintain economical and
political stability. To stay stable in international platform government make various changes in
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their current policies. This change force Tesco to effectively conduct business in market place.
There are various changes are related to foreign policy, foreign trade policy, taxation policy and
business policies. In terms of globalization mainly organizations are affected by changes in
foreign, foreign trade and taxation policy. Relation between two nation lead the future of
organization in particular country where they are operating by globalization. If the changes made
by country are positive and good for relation between country then this will provide more
chances to organisation to improve their business and government will also support the company
to conduct business.
Change in international or foreign trade policy is also an important factor for organization
cause the profit and investment of capital of Tesco PLC is dependent on this policy. Company
decides its pricing policy as per the guidelines that are provided by government. If terms and
conditions change in international trade policy it make the organization to redesign their
economical planning as per new changes (Hamilton and Webster, 2018). To conduct business a
country organization have to pay different taxes and to decide the cost of product they need to
understand and implement tax changes in pricing of product. The final cost of product is
depended on taxation policy of government. There are many business organizations exists in
country to keep their actions under control government have to decide some limitation for
business organizations. These limitations force the organization to change their business
procedures and methods to work according to criteria limitation decided by government. This
factors also affect individual by affecting their scope in business.
Social and Cultural Factors
The social and cultural factors of organization are related to different population trends.
These population trends are population, growth rate, age distribution, income distribution, carrier
attitudes, safety emphasis, health consciousness, lifestyle and cultural barriers. These are the
different factors that can affect the business strategy of organization. Population is major factor
for organization cause the larger population will provide huge target market to organization. If
the target market and target customer of company are in huge number then it will help them to
gain more profit from business and if population in not enough to conduct business with profit,
this will force the organization to move on to other location or other country. Age distribution in
population is also an important factor to consider (Adekola and Sergi, 2016). Marketing strategy
and selection of product to sell is dependent on what kind of audience organization is targeting.
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To full fill various positions in organization it is important to get employees with right age. This
is how age factor affect working of Tesco PLC. Income distribution is related to average income
of locals. The category of product for sale is depended on average income of people. If average
income of people is low then it will make the organization to sale medium quality product and
avoid premium quality product in retail store.
Carrier attitude of people will affect business in terms of skills and education level of
employees . If the carrier interest of organization is different from the business type then this will
reduce the chances of getting right employee for specific job opening. Lifestyle of locals lead to
the organization to make product catalogue as per requirement of people. If the product in the
inventory of organization are not point of interest of customer then it can cause major loss to
Tesco. Cultural barriers are also important factor for organization. Cause people are intensely
attached to their personal and religious values and company must need to respect this factor of
customer. This factor affects the social life of individual person by violation of their values.
Technological factor
The technological factors of organization are about the technology currently used by
organization. Technological factors are important for organization cause the productivity and
performance of company is depended on the technology used by Tesco PLC. If technology used
by company is not good as compared to other competitors in market then it can cause major loss
to organization and it also can reduce the performance and quality of service of company. This
reduced services quality can force the customers to buy product and service from other
organization that is lead competitor of Tesco PLC (Hirst, Thompson and Bromley, 2015).
Technology is growing faster then ever and this is important for company to implement this
technology in working and process of organization for the positioning of company services in
market place. Implementation of technology is also depended on the current technology used by
company. If technology used by organization is too old for the integration with new technology
so this can reduce the performance and productivity of company. This implementation process
also can cause cost to company. For individual person it is difficult to meet with educational
requirement of technology.
Economical factor
Economical factors for organization are related to money and tax related issues. Mainly
recession, economical crisis and inflation can make huge impact on business and decision
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making of organization. Conditions like recession and economic crisis are the situations where
organization face shortage of money and resources to full fill the requirement of organization
procedures. Due to economic crisis organization also face other problems that are unemployment
and raw material crisis. This economic crisis condition cause huge loss to organization in terms
of capital. Employees lose their trust in organization and leave company cause they don't have
money to pay. This can stop the production of Tesco (Meyer and Peng, 2016). Changes in
taxation policy also affect the business of organization by forcing it to make relevant changes in
financial structure organization to meet profit after implementing changes suggested by tax
authority of country.
Legal Factors
Laws made by legal figure of country also affect business procedure of organization.
Legislation like health and safety law, employment act, food safety act force the organization to
make effectively changes to full fill rights of employees and customers. This is how legal factors
make
Environmental factor
The environmental factors are related to the geographical condition, weather condition
and location of business. The geographical condition is important for the safety of infrastructure
and people in company. Situations like earth quack and land slide cause damage to company ans
employees. Tesco will not be able to sell product which are not compatible with local weather
conditions. The location of business affects the transportation of goods and services for business
purpose. The facility of transportation can also attract more people to buy grocery from Tesco
Store. Traffic conditions and location can reduce or improve profit of organization.
CONCLIUSION
This report is concluding importance of globalization for Tesco PLC. For business
organization different factors and advantages are analysed to evaluate importance of
globalization process. Various external factors like political, economic, technological, social,
cultural, legal and environmental factor to analyse their impact on profitability and management
of company. Form the perspective of globalization all the positive and negative factors has been
studied in report.
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REFERENCES
Books and Journals
Adekola, A. and Sergi, B.S., 2016. Global business management: A cross-cultural perspective.
Routledge.
Baylis, J., Smith, S. and Owens, P. eds., 2017. The globalization of world politics: An
introduction to international relations. Oxford University Press.
Benería, L., Berik, G. and Floro, M., 2015. Gender, development and globalization: Economics
as if all people mattered. Routledge.
Charles Jr, O.H., Schmidheiny, S. and Watts, P., 2017. Walking the talk: The business case for
sustainable development. Routledge.
Crane, D., Kawashima, N. and Kawasaki, K.I. eds., 2016. Global culture: Media, arts, policy,
and globalization. Routledge.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hirst, P., Thompson, G. and Bromley, S., 2015. Globalization in question. John Wiley & Sons.
Hirst, P., Thompson, G. and Bromley, S., 2015. Globalization in question. John Wiley & Sons.
Kopnina, H. and Blewitt, J., 2018. Globalization and business. Sustainable Business, 2nd
Edition. 117(138). p.22.
Meyer, K. and Peng, M.W., 2016. International business. Cengage Learning.
Ritzer, G. and Dean, P., 2015. Globalization: A basic text. John Wiley & Sons.
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