Environmental Analysis of Tesco: Internal and External Factors, SWOT Analysis and Recommendations

This report provides an analysis of Tesco's internal and external factors, including a SWOT analysis and recommendations for improvement. It covers issues such as product quality, marketing, management, Brexit, labour costs, changing consumer preferences, and more.

Individual written report

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Analysing internal factors of the organisation.............................................................................1
Analysing external factors of the organisation............................................................................2
SWOT analysis of the organisation.............................................................................................3
RECOMMENDATION...................................................................................................................4
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Environmental analysis refers to a process of identification of relevant factors that
impacts directly or indirectly business functions effectively and efficiently (Song, Yang and
Zhang, 2019). This also an important tool for the company because it help in understanding as
well as decision making in all situation within an organisation. For the following report selected
company is Tesco which is food retailing company of UK. The company is found on 1919 by
Jack Cohen and its headquarters is in Welwyn Garden City, Hertfordshire, England. The report
covers internal as well as external factors of the organisation. It further covers SWOT analysis of
the company along with the recommendation.
MAIN BODY
Analysing internal factors of the organisation
Internal factors of the organisation are those factors that exist within business
environment of the organisation and it has great impacts on overall organisational operations. It
is important for the every organisation to analyse its internal factors that may affects their
business environment (Doğan, Saboori and Can, 2019). In context of Tesco, its internal factors
that affects its business environment are described below:
Product issues- This describes that the company facing problems in order to maintain
quality and safety to their product while operating their business business. As the Tesco is food
retailing company and foods can easily be spoiled which makes their greater responsibility in
order to protect the quality and safety of their products in order to maintain the health of their
customers in better manner.
Marketing issues- The describes that the company need to focus on marketing strategies
as these strategies will help company to promote their products in the market. Tesco is one of the
largest companies that operating its business in many countries which creates difficulty to them
in order to market their products properly in all over the world. This makes important
responsibility for the Tesco to use effective marketing strategy in order to solve their marketing
issues as well as increase the sales of their products in effective manner. The company
Management issues- This implies that managing team with there is not easy task but is
essential in order to improve the organisational performance of the company is better manner. In
case of Tesco, it is a largest retailing company operating its business in many countries along
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with the huge number of employees which makes difficulty for its management in order to
manage them with their related roles and responsibility in better manner.
Analysing external factors of the organisation
TESCO is the current market leader of UK's retail and grocery sector and in order to sustain it's
competitive advantage and to stay afloat and and profitable as possible for long periods of time
(Yang, Tian and You, 2018). An external analysis is crucial to collect information about the
developments occurring in the broader outside industry and has been listed below in the form of
a PESTLE analysis which is a tool of strategic management which separates the business
environment into different layers for easier study.
 Political – One of the biggest reasons behind Tesco leading the market is it's multiple
locations spread all across the EU which has taken a massive hit following Brexit as the
company has had a major part of it's supply chain network disrupted and has a had to
incur losses due to reduction in business territory.
 Economical – Tesco employs a large workforce to fill vacancies across it's network of
stores ad supermarkets which has made the rise of UK's labour costs a major problem.
The COVID-19 pandemic forcing restrictions and constant lock-downs has also made the
company incur huge losses and the company has been forced to close off it's
unproductive locations and departmental branches such as fish and deli in response.
 Social – There have been many changes in the tastes and preferences of consumers which
Tesco has responded to by making changes in it's product lines such as focusing more on
organic and fresh food offerings and increasing production line focus on vegan products.
The firm has also failed in major markets due to not understanding customer and cultural
differences such as Japan.
 Technological – Innovations and advanced technological integrations have always been
key drivers of Tesco's strategy to corner the retail market and it has been successful for
the most part (Sarkodie and Strezov, 2019). The company was the first major
supermarket chain to introduce membership cards and loyalty programmes and also has
pioneered e-commerce operations through robust websites facilitating both shopping and
deliveries.
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 Legal – There are many legal compliances and rules which Tesco has to adhere by such
as no selling of alcohol to underage customers and the company should also spend more
efforts in generating public goodwill as it has been caught multiple times in pay disputes
and not honouring employee wage contracts.
 Environmental – Tesco has a lot of responsibility towards the community and the
environment as it deals with food products while being the market leader and it has taken
various steps such as public pledges to curb plastic usage and carbon emission but it's
plastic pledge has failed which shows need for further optimization (Ott, 2018).
Tesco has multiple tough competitors which are all offering unique features which have helped
them sustain for a long while such as Sainsbury's which has been developing more than a
thousand new innovative product lines, ALDI which has been getting popular among the UK's
general public as it provides products at a very cheap rate by being a discounter and Morrison's
which has setup new online channels by getting into strategic partnerships with e-commerce
firms.
SWOT analysis of the organisation
SWOT analysis refers to an effective strategic tool that help company to identify its
internal strengths and weaknesses along with the external opportunities and threats in order to
gain competitive advantages. In respect of Tesco, its strengths, weaknesses, opportunities as well
as threats are described below:
Strengths- It describes those factors of the company that makes Tesco highly
competitive from its competitors. One of the strongest strength of the company is its market
share in which it covers 26.9% grocery market share in UK (Richter-Brockmann and Achten,
2018). The company is also perform more effectively in COVID-19 pandemic which also shows
its greatest strength because many string company does not perform effectively in this pandemic
situation. Tesco also focus on making innovation in their business operation which also makes
them more competitive from their competitors.
Weaknesses- It describes those factors of Tesco that need improvement in order to
enhance its competitive advantages in effective manner. The company need to focus on
improving their quality control which reflects its weaken area that need improvement. The
company lapses in maintaining the food safety which may also affects them in order to make
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their business operation smother. The company is operating their business in many country that
makes company to consider in order to improve their problem of shortage of products in better
manner.
Opportunities- It includes those factors that help company to increase their sales and
market share in order to become more competitive to their competitors. There are many factors
in external environment that help Tesco to enhance their competitive growth in better manner
which includes growth of online grocery sales, rise of meat alternatives, social supermarket as
well as AI and machine learning.
Threats- It describes those factors that may affects business operations of Tesco which
may cause reduction in its sales and in profit. The many factors exist in external environment of
the company that affects its competitive growth (Herez, Ramadan and Khaled, 2018). Strong
competitors in retail industry are its hardest threats that affects its business operations effectively.
UK and Eu relations are affects it in order to operate their business in better manner. Economic
recession also affects the company because its purchasing power of the company.
RECOMMENDATION
According to the above discussion, it has been recommended to Tesco, to focus on
improving their quality control and safety of their product in order to maintain their customers
health in effective manner. This will help company to increase their sales as well as profit in
effective manner. As its problem of shortage of product also need improvement in order to make
their business operation smooth in all over the world. The company also need to make their focus
on online store and delivery service in order to help company to operate their business in all over
the world.
CONCLUSION
From the above mentioned report, it is concluded that environmental analysis help
company to analyse their internal as well as external factors that may affects their business
operations effectively. PESTLE analysis helps company to analyse their external factors that has
potential in order to impact their business operations. SWOT analysis helps company identify
their improvement areas as well as external opportunities in order to increase their competitive
growth in better manner.
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REFERENCES
Books and Journals:
Song, Y., Yang, T. and Zhang, M., 2019. Research on the impact of environmental regulation on
enterprise technology innovation—an empirical analysis based on Chinese provincial
panel data. Environmental Science and Pollution Research, 26(21), pp.21835-21848.
Doğan, B., Saboori, B. and Can, M., 2019. Does economic complexity matter for environmental
degradation? An empirical analysis for different stages of development. Environmental
Science and Pollution Research, 26(31), pp.31900-31912.
Yang, M., Tian, X. and You, F., 2018. Manufacturing ethylene from wet shale gas and biomass:
comparative technoeconomic analysis and environmental life cycle
assessment. Industrial & Engineering Chemistry Research, 57(17), pp.5980-5998.
Sarkodie, S.A. and Strezov, V., 2019. A review on environmental Kuznets curve hypothesis
using bibliometric and meta-analysis. Science of the total environment, 649, pp.128-145.
Ott, W.R., 2018. Environmental statistics and data analysis. Routledge.
Richter-Brockmann, S. and Achten, C., 2018. Analysis and toxicity of 59 PAH in petrogenic and
pyrogenic environmental samples including dibenzopyrenes, 7H-benzo [c] fluorene, 5-
methylchrysene and 1-methylpyrene. Chemosphere, 200, pp.495-503.
Herez, A., Ramadan, M. and Khaled, M., 2018. Review on solar cooker systems: Economic and
environmental study for different Lebanese scenarios. Renewable and Sustainable
Energy Reviews, 81, pp.421-432.
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