Impact of External Environment Factors, Leadership Style, CSR and Effects of Brexit and COVID-19 on Tesco

This report discusses the impact of external environment factors on Tesco, recommends suitable leadership style, comments on organisational CSR, and discusses the effects of Brexit and COVID-19 on Tesco.

CONTEXT OF BUSINESS
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Discussing the impact of external environment factors over organisation..............................3
2. Recommending suitable leadership style to organisation that incorporates with business
objectives.....................................................................................................................................4
3. Critically commenting on organisational Corporate social responsibility...............................6
4. Discussing the effects of Brexit and COVID-19 pandemic in 2020/2021 on the selected
business brand and their measure to manage these situation:......................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business is one of the most common but important term in the world which focus on
dealing and trading product and services in the market. Today’s business era demand firm to
become more competitive and effective enough to provide neck to neck competition to brands,
current sustainability measure allow firm to enjoy competitive advantage in the market (Boone,
Kurtz and Berston, 2019). This study is based on Tesco, one of the leading retailer in the world.
This report will discuss external environmental factors and its influence and will discuss suitable
leadership style to achieve business objectives. At last this report will discuss Corporate social
responsibility (CSR) and effects of Brexit and COVID-19 pandemic in the selected business
operation including their measure to manage such critical situation in the market.
MAIN BODY
1. Discussing the impact of external environment factors over organisation
Macro environment analysis helps the businesses in term of redesign their strategies, it is
crucial part of organisational strategic management that makes the organisation to find and
analyse the potential growth opportunities as well as certain risk that have major impact over the
business (Baiev and et.al, 2019). Tesco, a British multinational grocery is one of the leading
supermarket chain within retail sector of UK. For external analysis Pestle framework is most
commonly used that helps in determining the impact of certain factors over company
performance, such factors are discussed below:
Political: It involves governmental policies, international regulations, consumer rights, it helps in
examining at what extent government influence the particular sector. As for UK political
environment is somehow stable but changes drives in it imposed certain challenges for Tesco
company, as well as because of ongoing financial stability in market due to covid pandemic,
government are pressuring retail organisation to create jobs for domestic people.
Economical: Inflation rate, interest, unemployment rate, demands, profit, prices all comes under
this category. Changes in any rate can cause serious challenges for the retail industry (Li, 2020).
Any changes within the UK policy can lead to major change within delivery model of Tesco, as
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well as additional cost that is linked with reforming company’s strategies may be massive. Tesco
also need to make sure that product pricing will influence the sale.
Social: Age, gender, income, interest and all demographic factors have greater impact over
business, as changing behaviour of consumer regarding organic or health conscious food is
creating several challenges for retail organisation. by keeping consumer demand in mind Tesco
is also adapting such changes to accommodate with the demand of organic food.
Technological: This factor in this era has creating several challenges for the business, it is now
becoming a trend that every organisation must proceed with sort of software, technologies in
order to cope up with market demand. This aspect is also creating opportunities for business as
providing them expansion and other growth chances. Therefore, advancement in it is creating
new opportunities for Tesco as well, as they keep on improvising their online shopping presence
for consumers also they are working on providing self-service checkout points which in result
reducing the labour costs.
Environmental: Pollution, carbon gas emission, green economy, sustainability all factors have
major influence over the business (Hommes, 2021). Right now consumer in the market always
prefers their buying from organisation which is committed to environmental sustainability. Tesco
is also committing to sustainability where they are working on reducing their carbon gas
emission, as well they are working on reducing the waste produced in their stores.
Legal: Legal laws, tariffs, import, export quotas, punitive actions by higher authorities falls
under this legal factor, it has greater impact over operability of business failure in this will lead
the firm to shut down their doors forever. Tesco always make sure that they are meeting legal
requirement to prevent from vulnerable consequences. They provide their consumer price
reduction over fuel they purchase, on the basis of amount that spend on their grocery stores.
2. Recommending suitable leadership style to organisation that incorporates with business
objectives
Leadership have always greater influence over business that makes the firm to stand strong
in the market as well as acquire the greater market share that makes them more competitive.
Some of the advantages that are associated with it- better leadership within workplace increases

the business productivity, where firm desired goals are always achievable, it also helps in
retaining the right people for the company and nurture the future leaders (Nunes, 2021). In
context with the business of Tesco, they are serving both national and international market in
such it is essential for them to move in right direction and meet market demand. It only possible
when organisational culture is supportive and every individual is assigned with their own task
that is only happen when leaders set right and forward direction for their team. Having a
corporate culture where leaders are dedicated in work, in such they always make sure that their
team is encouraged and delivering better outcomes for the organisation. Business objective of
Tesco is to serve better to their consumer, communities and planet. Some leadership style is
discussed as follow:
Transformational style: Such leaders also known as visionary leaders who are strongly
committed with organisational goals. They set the objectives for team by considering the facts in
next upcoming days what company will going to do, they are more focused and inspired to set
expectations for team members and energize them to carry out best outcome. Addition to this
such leaders always ready to welcome the responses of their team members in decision making
process.
Authoritarian style: Autocratic leaders expect that other subordinates and team members will
accept their interaction, they do not involve team members to be part of decision making, they
usually make decision by their own. In such leadership style organisation is more committed to
their goals and faster decision process is found.
Bureaucratic style: Those Bureaucratic leaders are most found in large and well developed
organisation where adherence to strict policies are must. In such new ideas coming from team is
not accepted as organisation believes that they are already successful with their present idea.
Working on new idea will be considered as waste of time and money, this leadership style
usually faces struggle in responding efficiently to change.
Democratic style: An participative leader where they always aim to seek opinions of employees
before reaching to any conclusion (Dingle and et.al, 2021). Democratic leaders always put
problems in front of team mates and ask for them to share their views over it so that better
decision can come out. Such leadership style always foster positive workplace environment
where employee is valued and they are always provided with encouragement and appraisals by
their leader.
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Affiliative style: Sometimes also termed as facilitative style where leaders always put their team
first. They pay more attention to emotional and professional requirement of employees, those
leaders always maintain harmony among team members and encourage them to carry out
collaborative work efficiently.
Delegate style: Such leaders are also called as Laissez faire leaders who generally don’t concern
with providing enough guidance to their subordinates. They let their employees to solve
problems by their own. However, a better delegative leader set the clear limits and sort of
expectations before allowing team members to take reins, leaders also provide feedbacks
whenever it is necessary.
Tesco a leading merchandise it is always important for them to have corporate culture
where everyone is valued under any leadership style. A good leader is only one who set
expectations for team mates and to make organisational goals achievable, by keeping the Tesco’s
business objective to serve consumer in mind transformational leadership style can be benefited
in every aspect. As per the view of Akkaya, (2020) Transformational leadership always foster
positive workplace environment where everyone is committed to business goals. Those leaders
always place the higher value for the vision of company and also support their organisation to
catalyse the company success. However, Baig and et.al, (2021) said that sometimes
transformational leaders loose the sights of individual curves when they don’t pay attention
properly.
Thus, Tesco can proceed with transformational leadership style for their workplace, for
an example they can be benefited with workplace productivity where everyone is welcome to
share their views in strategy formulation so organisation can be able to maintain their pace with
market trends.
3. Critically commenting on organisational Corporate social responsibility
CSR refers to management concept through which the organisations are integrated with
social and sustainability factors (Smith, Yellowley and McLachlan, 2020). CSR can be
understood as better way from which businesses acquire the balance within environmental,
economy and social imperatives. Encouraging the uptake of CSR within organisation needed
appropriate approaches that can fit prospective needs and abilities of such organisations. Some of

the CSR issues are arising day by day where it concerns with environmental management,
responsible sourcing, employee standards, working conditions, and issues related to community,
social equity. In such it is important for the organisation to have social image that helps them to
stay at top position in the market. It is obvious that audience in the market always make purchase
decision from the organisation who is committed with CSR and have taken better responsibility
in supporting the community (Hussain,Anis and Alatar, 2020). As for the Tesco their CSR
suggests that they believe in caring about people in different ways by healthy living and
education prospective for the audience as well as in their workplace company also believes in
providing better or flexible working conditions to employee and promote inclusivity so everyone
will be treated fairly. Tesco also advancing the human rights within supply chain management,
they are following CSR for longer period and their support to community makes them one of the
leading supermarket chain within a UK market. Some of the benefit which follow of CSR gives
are as follows:
Brand recognition: CSR leads for better brand awareness as good social image of organisation
let the consumers to think about their brand and to make purchasing decisions. Brand should be
inspirational to the stakeholders, to accomplish this corporate social responsibility is becoming a
most popular business practices. Follow up of CSR values also consider as ethical approach for
branding, by embracing CSR as branding techniques businesses can easily flourish over its
sustainability. Tesco is also following the CSR that makes them to differentiate their
organisation's brand, due to which they are getting positive response from audience as well as it
has increased their brand value.
Investor relation:Most of the studies suggests that corporation who are concerning with their
social, environmental matters are more likely to preferred by investors, where investors always
show their willingness in investment when they found that particular business is more committed
with their CSR practices. Organisations who are looking for getting an outperform and
competitive edge must follow CSR practices that ultimately brings positive responses from
investors.
Employee engagement: CSR values enables the businesses to develop strong association
between employees and organisation, where it helps in boosting the morale of employees so that
they work harder and better for corporation. It is analysed that CSR align the firm and workers as
non financial advantages that strengthen the employee retention process. CSR is associated with
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enhancing the job performance as well as it helps the firm in reducing the cost that requires in
recruitment process, while with this organisations can easily retain their employees (Banjarnahor
and et.al, 2018). Thus for Tesco, they are also working on providing better recreational activities
at workplace for the employee, company is already providing better working conditions to their
worker where all individuals are treated fairly at workplace. Hence, all aspects by company is
making their employee to work with them for longer period.
Risk mitigation: Considering certain activities that gives negative influence over business like
discrimination, disrespectful for the natural resources and unethical practices for using company
funds. Such type of activities always leads to litigations, legal proceeds where company seem to
be negatively affected. Therefore by adhering to the CSR practices organisations can easily
overcome any risk that cause trouble for their business.
Hence, Tesco is adhering with their CSR policies where they support charity and other work
that makes them socially responsible. Company also encourages their employees to do volunteer
work and to support community, they have launched “Your answer, we help you” campaign to
support the local communities every phase of this program aims to provide support for up to 180
local communities. They have also in cooperation with food banks, where company has stated
that food waste is major burden for the environment , therefore in fiscal year 2018-19 they have
donated around 7,448 tons of food to Hungarian food bank association. Therefore their approach
towards society and support for local makes them socially responsible company, because of their
charity functions and other donation campaigns are making investors to raise fund for charitable
programs.
4. Discussing the effects of Brexit and COVID-19 pandemic in 2020/2021 on the selected
business brand and their measure to manage these situation:
UK government took certain decision to manage trade relationship with European Union,
the decision of Brexit impacted every business unit in the country. Multinational brands like
Tesco face critical challenges maintaining operation in European market, issue is supply change
and new trade restriction imposed by European government. Brexit pushed government to take
certain trade decision, UK government reduce extra trade barrier to allow Tesco and other brands
maintaining their operation in international market (Bloom and et.al., 2019). On the other hand,
COVID-19 impact was one of the major issue for businesses in the UK. Tesco and other retail

brands faced critical situation in the market were heavy drop down in sales is noticed, COVID-
19 impacted the performance of Tesco and effected certain major part of the company. There are
certain effects of Brexit and COVID-19 on Tesco, these are:
New trade barrier: Brexit is one of the most common term in the UK but this decision impacted
multinational brand like Tesco, Brexit took place on 29 March 2019 when UK was member of
EU customs union in which movement of goods were allowed between states. However, UK left
EU allowing them to impose import tariff impacting stability of Tesco (Bloom and et.al., 2018).
This company face heavy losses due to sudden change in trade process, supply chain of Tesco
was impacted reduce revenue generation capacity of the Tesco. Brexit effected Tesco in negative
manner but Tesco was prepared for such situation, this brand took decision of reducing trade in
European countries.
Impact on business operation: Tesco dealing in multinational market including EU market, this
company focus on providing FMCG products to the market, Brexit impacted the trade
relationship between UK and EU which means every trade element will be considered in the
process. Tesco have EU worker and employee managing unit of Tesco in the European market,
due to sudden trade restriction, Tesco might stop their operation impacting employment market
of the country (Tetlow and Stojanovic, 2018). Impact on business operation can be seen but
impact on employment are visible where EU will face critical challenges due to sudden pull-out
of Tesco from the market. Tesco balance their business operation even in critical situation, this
company adopted certain type of strategies to survive the market including reduction in cost to
become competitive.
Consumer and social behaviour: COVID-19 is one of the major issue in the market which
impact every business organization, Tesco deal in multinational market and have face certain
type of challenges during the process. COVID-19 has major impact on performance of Tesco but
this pandemic had major impact on consumer behaviour as well. The buying habit and spending
capacity of consumer have changed in which FMCG products faced heavy drop down in the
sales (Apedo-Amah and et.al., 2020). Consumer were not ready to spend their income and saving
on products sold by retailer including those products which fall under necessary item in the
process. Consumer behaviour and social factors including the process of buying an item,
behaviour changed according to the change and current demand in the country.
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High inflation rate: The price of every product reached at point where consumer was not ready
to buy the product, this is because inflation rate in the economy of the UK was high promoting
sudden rise in price of raw material. High inflation rate means there will be high price on raw
material which means cost of manufacturing product will be high promoting price hike in the
country. To maintain inflation rate in the economy, Tesco started reducing price even in high
inflation rate, this company provided FMCG products in normal which attracted consumer from
different market in the process.
Impact on supply chain: Both COVID-19 and Brexit was major challenge for every business
organization in the UK, supply chain of Tesco was badly impacted because of COVID-19. When
UK government took decision of leaving EU, the trade relationship between two nations were
impacted. EU imposed sudden trade restriction which reduce sales of Tesco in EU market then
sudden impact of COVID-19 in next year heavily impacted performance of Tesco (Meyer,
Prescott and Sheng, 2022). The supply chain which was already impacted by the Brexit was
completely broken after impact from COVID-19. However, Tesco adopted the strategy of
increasing sales in local market, this company started focusing on UK’s local market area and
introduce existing product in low price range.
CONCLUSION
This report has discussed business and its importance in the world allowing trade and
dealing of goods and service. Later this report has discussed the impact of external
environmental factors including Pestle analysis to examine major impact on the performance of
selected company in the market. Later this report has discussed suitable leadership style from
leadership style which allow selected company to achieve their business objectives and help
them to gain competitive advantage. Later this report has discussed corporate social
responsibility of company allowing them to ensure continuous development of society and
environment. At last, this report has discussed effects of Brexit and COVID-19 pandemic on the
business organization and measure taken by company for the same.

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