Impact of External Environmental Factors on Tesco PLC and its Corporate Social Responsibilities

This report analyzes the impact of external environmental factors on Tesco PLC using PESTEL analysis and recommends a suitable leadership style. It also critically comments on their Corporate Social Responsibilities.

Context of business

Table of Content.
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Impact of external environmental factors on Tesco PLC using PESTEL analysis.....................1
Recommend a suitable leadership style that will help to achieve the effective business
objectives.....................................................................................................................................3
Critically comment on their Corporate Social Responsibilities..................................................5
Effects of Brexit and COVID-19 pandemic in 2020/2022 on Tesco PLC and how the business
addressed the situation.................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
A context of business comprises effective understanding of the component that can make
impact on business from various perspectives, involving the decisions that are being made.
Business environment generally refers to an internal and external component which can
influence the operational functioning of the business. It is essential for the organization to be
aware of such elements to improve the suitable activities as well as the strategies as per the
situation (Middleton, 2018). In the report, the chosen organization is Tesco PLC which is a
British multinational grocery as well as general merchandise retailer headquartered in the
Welwyn Garden City, England. Tesco PLC was the third largest retailer within the world that is
measured by the gross revenues and the ninth-largest in the world generally measured by the
revenues. The report will cover PESTEL analysis of the respective organization. Moreover, there
is a comparison within various leadership style types and how it can help in enhancing the
organizational effectiveness. Furthermore, there is also a discussion about the corporate social
responsibilities mainly linked with the Tesco PLC organization.
MAIN BODY
Impact of external environmental factors on Tesco PLC using PESTEL analysis.
The external environmental factors that make influence on Tesco PLC organization is well
explained by PESTEL analysis that include components like Political, Environmental, Social,
Technological, Economical and Legal factors.
Political element: The organization is mainly functions within the 12 countries consisting
Europe and Asia. It is generally exposed towards various political elements which can influence
the functioning of Tesco PLC. The elements include current and impending legislations, Tax
rates, unemployment rates, political instability, economic conditions of the country and many
more (Asadpourian, Rahimian and Gholamrezai, 2020). The organization has always keep the
good advantages via the free trade. In this, these such free trade facilities can help and allow to
import the foreign products for having the sales in the stores at a low price than earlier it is
because it is generally imported within the Abroad.
Economic element: A Tesco PLC comprises a variety of products as well as the economic
components can play a crucial role within the consumption of such broad array of the products.
The organization generally required to have a keen eye for any of the economic alterations which
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generally occur within the countries, which it functions in, since these such are the components
which will influence its sales, profits, revenue and distribution as well. The organization must be
aware several taxation policies, to influence the same, for its own profit (Aithal and Aithal,
2019). Any of the alterations within the policies in the United Kingdom can lead towards the
major alteration while delivering the company’s model and extra cost linked the restructuring of
the organization may be enormous. The organization should also keep in view that the product
pricing will impact the sale. In case of the economy is under the pressure, or any inflation occurs,
the daily need products should be priced respectively.
Social element: In this, due to having a distinctive social alteration, the trends generally
depict that the clients within the UK generally have moved to the bulk shopping and one-stop
shopping. However, A Tesco PLC has enhanced the ratio of non-food products offered for sale.
In addition, the specific type of goods and services usually demanded by the customer is highly
impacted by their beliefs and attitude which, in turn, are highly impacted by the social
conditioning. It is because, clients are generally becoming more aware about their well-being
problems, and due to this their methods towards the food is altering constantly. The organization
is adopting such alterations by simply accommodating the demand for the organic products
(ERGASHEV and Ravshanov, 2021).
Technological element: The development within technology generally have brought
several new opportunities for the Tesco PLC. In this, the two of the most distinct ones can
involve, firstly, the advancement and introduction of the online shopping including facilities
towards home delivery. Secondly, the self-service check-out points typically have given with
convenience as well as ease for the clients, that in turn have low labor costing. Moreover, Tesco
PLC has also invested a specific amount on the energy efficiency projects in order to fulfil its
long term objectives so that carbon footprints can be reduced. Tesco PLC has effectively
managed to shift the significant trends of the shopping towards online one, with including 43%
of its shoppers today, people shopping from the online websites and getting their products and
goods home delivered (Barykin and et. al., 2021).
Environmental element: In the PESTEL analysis of Tesco PLC, the specific environmental
factors are influencing its business and are as mentioned below:
The organization has undertaken several steps to aid enhance the surrounding environment
as well as produce a more sustainable community as well. Currently, Tesco PLC has launched its
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2nd phase which include Reduce, Recycle, Remove and Reuse plan. The organization generally
has taken several steps in order to remove as well as reduce all the possible non-recyclable
plastics to a reduced level as well as can explore the various possible new opportunities to
effectively use the residual plastics which is still being used (Antipov and et. al., 2019).
Legislative element: The alterations within the government policies can directly influence
the functions within the organization. It generally requires to follow both the local and
international market legislations to smoothly continue the specific operations.
Recommend a suitable leadership style that will help to achieve the effective business objectives.
A leader in a business organisation is primarily responsible for providing particular
guidance, an approach, and incentive to every employee within the organisation. The behaviour
of managers generally, including how they enforce the policies, can make plans, inspire the
employees, as well as interact with them, can be characterised as their management style. Each
leader inside the company has their own distinctive way of conducting the business. It mostly
reflects a manager's or person's behaviour when leading a team or organisation within a business
entity. The management style can effectively accommodate a variety of benefits, including the
ability to provide direction, foster trust, inspire employees, create a productive work
environment, and foster confidence (Mishra and et. al., 2018). In order to maintain the
interpersonal relationships between the company and employees, the manager inside the business
usually requires knowledge, appropriate or effective conversation skills, honesty, self-esteem,
and initiative. Generally, there are different leadership philosophies, that are as described below:
Commanding or Autocratic leadership style: The top to bottom strategy is the standard
method in which the management style is articulated. A controlling leader can choose in this
situation without the assistance of others. It typically signifies that group members aren't
permitted to choose such styles. The design also makes it possible to precisely define each
individual's responsibilities and functions inside the organisation. Additionally, it presents some
risks because just one person can make the decision and there is no selection of alternatives.
Additionally, teams or businesses may feel as though they no longer have a voice in professional
development (Bushe, 2019).
Bureaucratic leadership style: Among well-established as well as large companies, the
leadership style is more frequently observed. The bureaucratic leadership style might include
clearly-defined authorities as well as stringent requirements. The administration, including the
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military and governmental sectors, is where the style is primarily established. Additionally,
bureaucratic managers may adhere closely to predetermined obligations and norms, which may
cause them to have a bias towards an organization's policies. In this, the workers may notably
face obstacles with regard to innovation due to the styles (Konttila and et. al., 2019). These types
of styles have the benefit of having a defined, concise set of guidelines that can also help to
eliminate favouritism. Additionally, workers typically lack innovation, which might make it
difficult to make changes within the firm. A person's professional development is not as
encouraged by the leadership style as it may be.
Transactional leadership style: A short-term strategy is maybe included in transactional
leadership. Only the job of their staff is important to the managers in this model. It is mainly
applied in sales and marketing, when leaders establish their own objectives. Employee
motivation is based on rewards and appreciation under the transactional leadership approach.
This is also referred to as a clear exchange between the team leader and the employee because
the latter must set the objective and achieve it within a set time frame so the former can be
rewarded. The drawback of such approach is that it can restricts the organization's ability to
effectively innovate and grow. The authorities in charge of career development generally also
suffer from its harmful effects. The best approach for achieving the short-term objectives is this
one (Boon, Den Hartog and Lepak, 2019).
Participative leadership style: Within this, the democratic leadership styles are generally
more frequently used to illustrate the participative leadership. This leadership approach calls for
expertise and understanding. In this. the democratic leaders specifically gain self-assurance in
this manner of leading. Schools, governmental organisations, and other enterprises frequently use
this kind of leadership. Decisions are made by leaders using the opinions of their subordinates.
Encourage teamwork and cooperation among staff. This leadership approach offers a novel
option that enables staff members to take part in the decision-making process. To accomplish the
required aims, Tesco PLC’s management uses a democratic management approach. The lengthy
decision-making process is a major flaw in democratic leadership. In the case of Tesco PLC, the
company employs a consultative leadership style in which the managers can confer with either
their superiors or their subordinates to arrive at a decision that will benefit both parties (Bag and
et. al., 2018). The consultative leadership style is described in more detail below as follows:
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Consultative leadership style: A leadership style known as consultative can focus on team
building. In this situation, the team's leader seeks input from other team members in order to
make effective judgments. Therefore, before making strategic decisions, Tesco PLC managers
typically communicate with the lowest level subordinates. Consultative leadership is one of the
leadership philosophies that Tesco PLC organisation must employ. It is because organisational
managers are required to communicate with their staff members before making any decisions
(Priyono, Moin and Putri, 2020).
Critically comment on their Corporate Social Responsibilities.
The notion through which an enterprise establishes the social and environmental measures in
its business functions is generally referred to as "corporate social responsibility." This corporate
strategy outlines the ways in which a business might advance society. Corporate social
responsibility is crucial to the brand's and society's reputation. The most efficient method of
raising morale at work. Corporate social responsibility strengthens the relationship between
workers and the business. A firm must assume accountability for both itself and its stakeholders
if it is to fulfil its social obligations. Companies utilise corporate social responsibility (CSR) as a
strategy as part of their corporate governance to make sure that their operations are advantageous
to society. These obligations are broken down into human rights obligations, financial
obligations, philanthropic obligations, and environmental obligations. In this case, environmental
stewardship works with environmental regulations like carbon emissions, pollution, and waste
management, whereas human rights stewardship deals with fair labour. Charitable endeavours
include charitable giving, support for the medical community, and money for education.
Corporate social responsibility helps to raise brand recognition, boost sales, reduce costs, and
make credit more readily available (Mahdi, Nassar and Almsafir, 2019).
Tesco PLC has established a number of social obligations in order to conduct profitable
company. The business has a number of policies in place that are beneficial to the environment,
human rights, and health. The following corporate social responsibilities belong to the business.
The business started its "Ready for Work" corporate social responsibility initiative in the
year 2004. The program's primary goal is to give participants the practical business skills needed
to introduce them to business management. The Ready for Work programme seeks to conserve
the environment while enhancing the financial health of 4,444 towns. Additionally, there is a
solid fit between the workplace and the business. The promotion of entrepreneurship among
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students and the unemployed was also emphasised. The corporation has also concentrated on
constructing schools, medical facilities, hospitals, and scholarships for students.
Charity: The business is giving to a good cause. The different businesses owned by Tesco
PLC can contribute to this fund. The store contributes a small amount of money to several
charities. The business forms alliances with a variety of non-profit organisations, including
Prince's Trust, The Homeless, Disabled Go, One Parent Families, and Parentline Plus (Lenoël
and Young, 2020).
Clothing: The organisation can give the New Life Trust the returned clothing and extra cash.
The Medical Research Centre and awareness efforts to fund the provision of equipment for those
with impairments will then be funded by the New Life Trust. The Foundation will directly assist
in providing 400 devices to persons with disabilities with the extra money earned from the sale
and recycling of used clothing. Additionally, the clothing samples we collect will be given to
homeless shelters.
Food: The business gives extra food to the Fare Share organisation. Essen is still given out
to those in need by the charity Fare Share.
Impact of climate: To combat climate change, the corporation has developed a five-year
environmental plan. In the UK, the corporation wants to cut carbon emissions and achieve
carbon neutrality. At several branches, the company is reducing energy use by 25%. Reduce
carbon emissions by powering your stores with sustainable energy sources. The business is also
concentrated on creating items that are energy-efficient and assist clients in consuming less
energy (O'Regan, 2020).
Management of waste: The company is generally committed to ethical trash management.
The corporation has stopped delivering rubbish to landfills nationwide as part of a five-year
commitment. The business produces green energy from garbage. A 25% reduction in plastic
packaging has also been made by the corporation for a number of products. We use recyclable
materials for our packaging.
Training & development: Tesco PLC gives students and unemployed people the chance to
advance their careers at the Tesco PLC Company through a number of qualification programmes.
The business discovered that roughly 30% of persons who participated in the training
programme were working in different industries. It has a favourable impact on the company's
brand value. In an effort to better people's lives, the firm broadened the scope of its Ready for
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Work programme in 2005. Through these actions, the business has been able to promote a
favourable reputation among its stakeholders and customers (Coelho, 2022).
Effects of Brexit and COVID-19 pandemic in 2020/2022 on Tesco PLC and how the business
addressed the situation.
A Brexit mainly defined to a UK and withdrawal which the UK will effectively withdrawal
from the European Union in the year 2020. Such UK withdrawal generally negatively influence
the corporate of both European Union and UK countries. Alike, Brexit generally has impacted
the British business retailer of Tesco PLC. It can turn out that the organization has efficiently
closed the 11 stores within country. The products from various stores are generally shipped and
this thing made difficulty for the clients or dealers to effectively deliver their products. Such
Brexit has specifically influenced the dispersion of the supply chain. In addition, it is quite
impossible for the dealers to deliver a fresh product to their clients. The specific reason is due to
alteration within the national policies (Gong and et. al., 2022). Earlier to the Brexit, UK has
efficiently followed all the regulations and rules mainly set by the European Union as well as
making it quite easier for the dealers in order to manage their supply chains. The Tesco PLC has
been reported over $22 million in the costing by the termination of financial year. The
organization has generally extended the range of frozen food products instead of fresh food
items. As an outcome, the organization is facing major loss. The dealers are quite obsessed with
current condition where the short lived items must stay at the border after Brexit. Tesco PLC has
cancelled all the orders and the goods or products have been returned towards the stores after the
paying custom payment, VAT along with custom duties.
Analysis of situation of Brexit: Tesco PLC has been stopped the shipping of various
products towards the European Union countries. The organization has effectively altered the
delivery of its products within the Czech Republic for the Brexit. Tesco has effectively extended
variety of frozen food items instead of fresh food products. In addition, a British government has
also been decided to postpone the control of goods imported from the European Union. Such
things can help the organization to effectively make alterations towards the supply chain (Payne,
Nazlioglu and Mervar, 2022).
COVID effects on business: The COVID has negatively make impact over the business
across nation. Tesco PLC has witnessed a great loss during the lockdown of country. The
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organization has suffered its first loss after the sale fell unfavourably during the first outbreak of
COVID.
CONCLUSION
From the above discussed report, it has been find out that PESTEL analysis can help to
determine how the extrinsic factors can influence the business. In this, it includes the leadership
styles and can corporate the social responsibilities in context with the Tesco PLC. Moreover, it is
analysed that there are some of the significant elements of Brexit and pandemic COVID-19
which can influence the business. Furthermore, it is identified that the participative leadership
style is quite efficient to achieve the objectives. It is because it can help Tesco PLC to enable all
the staff members to effectively share their views and ideas. In addition to this, so that sharing
ideas can assist them to make the team members feel valued within the workplace that directly
leads to accomplishment of the aims and objectives in a timely manner.
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