Impact of External Environment on Tesco: Challenges and Strategies

Business in Context

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Explain the impact of external environment on the company.....................................................3
Recognise the key challenges faced by the company using PESTLE Analysis.........................5
Evaluate the manner an organisation tackles the challenges with regards to its business
strategy........................................................................................................................................6
RECOMMENDATIONS.................................................................................................................7
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
A business, whether it is small or big, has its own internal as well as external
environment which impacts the working of the firm either positively or negatively. External
environment is not in the control of the company and it brings some challenges and opportunities
with it (Vlados and Chatzinikolaou, 2020). An organisation needs to analyse it in time and has to
take required action, otherwise the company may have to face some serious consequences. The
report is based on Tesco, a London based multinational retailer and grocery store. This report
will discuss the positive and negative impact of the external environment on the firm along with
the challenges faced by the company. It also mentions the way, an organisation is tackling the
various problems.
MAIN BODY
Explain the impact of external environment on the company.
The factors affecting the performance and activities of the company from outside its
boundaries are considered as external forces. The corporation do not have control on these
factors but it can handle it with a view to take advantage from it. PESTLE Analysis have been
used to evaluate the impact of theses forces on Tesco.
It is framework which is used to recognise the positive and negative influence of external
forces on an organisation.
 Political- These factors considers the impact of government decisions on the activities of
the company. Due to the signing of the Brexit, Tesco is facing difficulties in availing its
food items in low prices because the company used to purchase its goods from various
sources of EU and now, it has to face custom charges from EU. On the other hand, the
government has asked firms to create new jobs which is beneficial for Tesco. It can open
more stores to recruit them which will help the firm in increasing profits and will also
helps in becoming good in the eyes of government (Bolland, 2017).
 Economical- It involves the taxation structure, inflation rate etc. which affects the
profitability of the firm. The company is facing difficulties on monetary terms as Brexit
has resulted in increase in tariff rates which will tend to increase the price of the goods.
Tesco deals in low price goods, so change in the economical factor do not impact the sale