Impact of External Factors, Leadership Style, CSR and Effects of Brexit and Covid-19 on Tesco
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This report analyzes the impact of external factors on Tesco using PESTLE analysis, recommends a suitable leadership style, discusses corporate social responsibilities, and explains the effects of Brexit and Covid-19 on Tesco.
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Table of Contents INTRODUCTION...........................................................................................................................1 MAIN BODY...................................................................................................................................1 The impact of external environmental factors and PESTLE Analysis of TESCO using.............1 Leadership style...........................................................................................................................2 Corporate social responsibilities in the processes using evidence from the research..................4 Effects of Brexit and covid- 19 pandemic in Tesco and how business addressed situation:.......6 CONCLUSION................................................................................................................................8 REFERENCES................................................................................................................................9
INTRODUCTION Business environment is a group of various factors such as internal and external factors anditismostessentialaspectoforganization.Thebusinessenvironmentgivesvarious opportunities to improve the performance of business. The current report will be based on TESCO which is multinational retailing company in the UK. This study will explain the impact on external factors of organization using PESTLE analysis, also it will recommend a suitable leadership style that help to achieve business objectives. Furthermore, the assessment will clarify it specifies the information related to the corporate social responsibilities in the processes (Sołoducho-Pelc and Sulich, 2020). Moreover, lastly the report will explain the effect of Brexit and Covid-19 pandemic on TESCO. MAIN BODY The impact of external environmental factors and PESTLE Analysis of TESCO using. Political factor-In UK, political stability can impact on TESCO, in positive manner. For example, political relation with other nations, can enable organization to expand venture globally that aid to increase the sales, and profits.The Political factor mostly influences the performance of the organization that usually affect the act of taxation rates, stability and legislation of religion they function. Business play most important role in create the employees opportunities and enhance the demand for business products and its services (Adamyk, 2019). Government of United Kingdom also encourage more to retail industry for expand job for domestic population as well as business also focus on diversify their business workforce. Economic Factor-Employment, economic growth, income level, and other factors are included in current term. Any change related to each factor can impact on retail and TESCO as operate in the same sector. In the UK, high extent of economic growth can impact supermarket positively, in term of providing chance to build wider customer base as individual person is able to purchase goods that company offer to them. Labour cost of United Kingdom also affects the retail industry and UK supermarket. T increase cost and price as well as also decline in profitability of industry due to upwards shift in cost. It affects the business cost leadership strategy and business brand reputations. Social factor-The consumers in UK has transformed their appearance to numerous purchasing and single stop buying, it is reflected by the common alteration in the variety 1
of social alteration. Moreover, The organization is adaptive towards such as alterations by accommodating demand for organic items. Tesco has introduced different non-food items offered for sale like product quality that demanded by buyers get huge susceptible by their attitude and impression that adjust with social conditioning. Social trends are directly affects the industry because customer demand because of trends so, company required changesaccording to customer expectations and their perceptions. Different types of goods and services are demanded by customer and its also influence be the social conditioning so, it influences retail industry. ï‚·Technological factor-Technology help organization concern to take out the changes and raise the productivity of business practices. Moreover, the formulation and introduction of online purchasing and the home delivery facility, the other one is individual checkout points answer proper convince. As well as ease for consumers which positively effect to have decreased labour price. The process in technology has brought various chances for the company. ï‚·Legal factor-The norms of government has directly effect the performance of Tesco, to continue flexible dealings the company has to adapt the law of international and local market.Moreover,somepeculiarguidelineshaspositionedbyfoodretailand commission and it must be followed by the association of retail segment.Business not able to sell alcohol to underage customer (Baliyan, 2021). Tesco was sued and fined in previous years for mislead their customer and other issues. Business all notable to pay less than minimum wages to workers which set by UK governments. ï‚·environmental factor-The high pressure level on Tesco to address environmental issues and choose the method of work to benefit the social group. Furthermore, the company is looking for decrease in the waste of product in the physical stores or organization increase social conscience in consumers. Tesco has started broad vision to decrease its carbon emission by 50 percent trough 2025.industry has to take initiative for remove and reduce the non recyclable plastic and its is new opportunities for business to involves sustainable resourcing. Leadership style. leadership refers to the procedure of motivating workers to work together cooperate to accomplish good things. As well as on the basis of career and developing leadership skills by 2
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using various methods to reach organization objective. Also, there are various type of approaches of giving the way and motivating different employees for leadership style (Ozcan and Ozturk, 2020). It is essential for Tesco to understand the leadership style by determining the affect to influence directly. Democratic style of leadership Tesco has adopted democratic style of leadership and this style is also known as participative leadership, it let multiple people to take part in the decision-making process. This leadership style aid Tesco to motivates the workers because of this the company continues to give good service to consumes. It is required in good communicating skill, inclusive mentality and the knowledge to share power. It should execute the engaging in a team and aid democratic approach to develop the organization. In this leadership style the leader of Tesco listen to the voiceofemployees.Moreover,ishasrealizedthatduringthoseworkerincreasedthe productivity due to the workers being determined. This leadership works best in environments that are low pressure and are not usually prostrate to quick turn around (Peker, Inandi and Gilic, 2018.). That is because this kind of leadership takes time it happens when working with large team of the organization. The characteristic of Democratic leadership style are given below: ï‚·Promote creativity-In this leadership leaders trust their workers to generate the ideas and bring the solution. This trust motivates the ability of Tesco. It encourages employees to work together in various types without micromanagement. ï‚·Inclusive-Leaders want all employees to come on the table when it is a decision-making time. This approach decreases the struggle and make the workers feel valuable. ï‚·Collaborative-The democratic leadership style motivates employees to work together, the workers can't trust to leaders announcement to get the things finish. Rather, they should bring the solution by their own. ï‚·Trust building-Leaders trust their workers to get thing finish, a cheerful approach that expect that employees are self-motivated, and they can solve problems personally. It helps in build team work and create coordination between all member within team and they work together in effective and efficient ways. Furthermore, the democratic leadership style is essential Tesco because it promotes the effort of workers and collaboration. In this leadership style every employee get chance to give 3
idea and suggestion to leader. Also, this leadership aid to build trust and respect because it always hears to its employees. Moreover, the leaders the decision maker in Tesco, they play a important role in managing employees and performance. This leadership is crucial for leaders to follow and achieve the company success. The good leaders aid the business to increase during the crises with their problem solving ability. The advantages of Democratic Leadership in terms of Tesco: ï‚·Improve staff productivity-Democratic leadership motivates employees,it also helps in improve employee morale and performance as well as employees engagements (Gogokhia and Berulava, 2021). The team members are happier when they involve in decision making process of business. ï‚·Diversify ideas-Leaders are free to consult with every employee for better creativity and ask for ideas to everyone because it helps in provide various ideas for better outcomes. This grows the probability that leaders can make decision that is beneficial for many employees. ï‚·Build a strong team-The workers will work together on particular task, and it also helps in build strong team for achieve a common goals and objectives. The employees will also able to understand the importance of team work with mutual respect. ï‚·Increased job satisfaction-The democratic leader hear to their workers interest, when leaders listen to their workers and it rises their morale and refer happy and contributing employee. The democratic leadership allow employees to feel more confident and protecting environments helps in improve their job satisfaction level. Corporate social responsibilities in the processes using evidence from the research Corporate Social Responsibility is the idea for the organization that they should play a positivecharacterinthecommunityandbelieveinsocialandenvironmentalimpactof organization decision. It is a self-regulating business framework that aids a company be socially accountable to itself. The stakeholders and the public, practices corporate social responsibility also known as corporate citizenship. Corporate social responsibility is also known as CSR. The CSR is described as the commitment was oriented by the director of the company affairs. Tesco steeringwheelmodelwasusedtomeasureitsaccomplishmentofCorporateSocial Responsibility important action sign. And it has formed the role of dealing area in responsible and safe portion. It is made a role for Tesco steering wheel to check the firm responsibility 4
formed a role of daily activities of the organization (Nyame-Asiamah and Ghulam, 2019). Moreover, Tesco has established its strength awareness campaign in 1996. The workers of the company are awaited to take active part in it. The leaders of Tesco stores, agency and depots remind energy use and work towards decreasing wastage. The company has decreased the energy consumption by 35%per square foot between 1997 and 2005. The broad member of Tesco discuss theCorporate Social Responsibility strategy of the organization every year and quarter the execution was reviewed. Apart from this, the more people buy the product of Tesco that is beneficial for farmers and growers in developing countries (Student, 2021). The company is supporting Fair trade Foundation from ten years and now it is the biggest seller for fair trade product in UK. This year the company has introduced its own brand Fair Trade range it is developed in organization with fair trade foundation. Moreover, If Tesco wants to meet objective its workers have to work together, because they have to focus on the aspect of Tesco. They use management tool called as steering wheel to bring together their work in all area and measure the company performance. It aids to manage Tesco in balanced way, by covering the things they do and it allows them to plan for the future and it sets target for new year to come. The steering wheel was converted into four parts- people, finance, customer and operations, each of the part was divided into segments. TescoCorporate Social Responsibility key performance sign are measured and reported in the liable and safe portion of operations quadrants. Apart from this Tesco has taken lead in gathering different stakeholders to engage Corporate Social Responsibility activities. It is unique collaborative approach provided that firm entity has stepped forward to move stakeholders. Also, it is riveting due to some modern aspect of programming they are carrying out. Tesco is not using the model which is utilized by the headquarters, instead delaying their own ideas and initiatives. Tesco cares about people in various ways such as healthy living and education initiatives, giving great working condition, support inclusivity and forward human right in supply chain. CSR is important for Tesco because its one benefit is relative to the cost of the company and other stakeholder is the activities ofCorporate Social Responsibility are published by ensuring consumers and the local community known what you do (Benghezal and Izadi, 2022). The CSR having the issues such as responsible sourcing, community relations, environmental management and working condition. 5
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Furthermore, theCorporate Social Responsibility policy of Tesco is the company's corporate strategy is for extended key development and concentrate on central purpose of getting value for consumers to make loyalty for lifetime. Tesco is bound up towards carrying business in social responsible and also in honourable manner. TescoCorporate Social Responsibility program and initiatives are modified and implemented. Tesco manage their sustainable decisions and financially stable to gain more competitive advantages and achieve goals and objectives of business. As long as company focus on their business innovation and formulate more strategies to meet the demands of clients and customer and company also able to combine with the marketing strategies for provide quality products to customer at affordable cost. The importance of CSR for Tesco is becoming greater nowadays than ever before because of a series of ethics related scandals. The chain of supermarket has recently dealt such as inappropriate profit reporting and poor supplier treatment cases. In another way it is important for supermarket series to renew the trust of its towards the engagement in Corporate Social Responsibility programme. Effects of Brexit and covid- 19 pandemic in Tesco and how business addressed situation: covid pandemic hit the United Kingdom in 2020,it affected every and each sector of business and its economy. Every industry in UK suffered at the time of pandemic. Tesco is supermarket business and retail super market segment and it basically made its reputation and place in competitive marketplace for customer with grocery and foods that are need of every customer. Due to the covid, government come up with some guidelines such as social distancing and lock-down so, it affects customer and retail shoppers as well as its employees so, it badly affects the business and various factors (Monte, 2021). This made business incur loss on the daily basis because of customer decrease. Supply and demand force in economy also force in economy were disrupted as the manufacturing units and production houses were also working on their low capacity. But the requirements of food andgrocery increase at the time of pandemic because during those times it resulted in low demand as well as high demand. Tesco think more critical for business to lead changes and provide better facilities to customers without spreading virus. Tesco is second largest supermarket in United Kingdom have plenty of resources and business utilize the many resources at the time of pandemic to bounce back. There are various negative impact of pandemic which increase the labour cots,decrease sales, spreads of virus, 6
strict guidelines of governments. Company provide online facilities to their customer and also provide safe delivery at same time. To increase the delivery of goods and services by enabling the faster delivery business with advantages from their acquisition company for best delivery chain. Tesco company also able to achieve the scale of economics with the helps of increase cost of and raw materials. Business also able to be noticed the major shift in customer demands and low purchasing power of customer which they produced in large quantities and it can make the final products low (Boons, 2021). Business also able to achieve the economic scale of business because company manufacturing products in large quantities and it result in the fixed and optimum utilization of resources. Company also affects because type require electricity and fuels to run machines for manufacturing and they able to enhance the sales of economy but which was severely affected by pandemic as well as kept price unaffected due to the high inflation rate in United Kingdom. Brexit is refer as the exit of United Kingdom from European union, it also change the dynamic of economic because trade of goods in EU also stopped and there are different implication of tariffs on goods. Before Brexit, company retail and trade their products and services in the different countries for generate more profitability and productivity without any tax implications and tariff. It lead in increase in prices of goods and services under the basic need segments and grocery by 3-5%. in the context of employment, free movements of employees are also affected which caused decline in supply of labour and increase in cost of labour from various nations in EU. Tesco company has the manufacturing and production houses and they need the unskilled and skilled employees and business hire unskilled employees mostly for their business operations and manufacturing of products and services from the various nations and it is impacted the same. For deal with the negative impact of Brixit on industry, Tesco builds strong supply chain in able to market grip in EU. Business require to fulfil their profitability and also focus on various nations of the EU. The main objectives of business is to sell their products ta the same prices as well as increase in product price and they also decide to sell large quantities which not economic growth which affected so, company will sell large quantities which helps business to increase their productivity and profitability in order to achieve goals and objectives of business (Moura, 2021).Company face shortage in Tesco workforces and enhance costs which associated with 7
retaining and recruiting new employees. It also impact on customer confidence of business because EU imposed ban on the certain food products for the health and safety reasons. It will also become more delivery times and expensive. Brexit also negatively impact on food price and it had impact on the current situations. Economic shock due to covid also impact on supply chain and it largest impact on different sectors. Laborant and people supply are also become more complex because of troubled by Brexit. There have the significant drop in customer demand because of lock down measures, health concern and travel restrictions. CONCLUSION As the conclusion, the success of Tesco rapid growth and development in recent time is the make the brand of company in the UK retail sector. Leaders of business must be ensured the good infrastructure, good management and organization structure which adopted the business needs. Company make good decision during the pandemic with the helps of online sales because it helps business to increase their sales as well as profitability. In the conclusion, this report discussed the pestle and macro environment's analysis of retail industry and also elaborated the different types of leadership style and democratic leadership style of Tesco with its characteristic andadvantageswithintheorganization.Thisreportalsoevaluatedthecorporatesocial responsibility of business and its elaborated the impact on Brexit and covid-19 and how company are able to address the situation with their actions. 8
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REFERENCES Books and journals Adamyk, K., 2019. PESTLE Analysis on Tesco PLC. Baliyan, R., 2021. A Shift in Paradigm for Apparel Industry Post Covid 19.Turkish Journal of Computer and Mathematics Education (TURCOMAT).12(13).pp.5203-5211. Benghezal, D. and Izadi, J., 2022. Exploring the impact of CSR strategy in food retail sector firms. Boons, F., and et.al., 2021. Disrupting transitions: Qualitatively modelling the impact of Covid- 19onUKfoodandmobilityprovision.Environmentalinnovationandsocietal transitions.40. pp.1-19. Gogokhia, T. and Berulava, G., 2021. Business environment reforms, innovation and firm productivity in transition economies.Eurasian Business Review.11(2).pp.221-245. Monte, A., 2021. A study of value chain reconfiguration processes under Covid-19 pressures: the case of Tesco PLC in the United Kingdom. Moura, M.B.L.D., 2021.Equity Research in Food & Retail Industry-TESCO PLC(Doctoral dissertation, Instituto Superior de Economia e Gestão). Nyame-Asiamah, F. and Ghulam, S., 2019. The relationship between CSR activity and sales growth in the UK retailing sector.Social Responsibility Journal. Ozcan, O. and Ozturk, I., 2020. Impact of organizational culture and leadership styles on employee performance: A research study on the banking industry.Research Journal of Business and Management.7(1). pp.45-55. Peker,S.,Inandi,Y.andGilic,F.,2018.TheRelationshipbetweenLeadershipStyles (Autocratic and Democratic) of School Administrators and the Mobbing Teachers Suffer.European Journal of Contemporary Education.7(1). pp.150-164. Sołoducho-Pelc, L. and Sulich, A., 2020. Between sustainable and temporary competitive advantages in the unstable business environment.Sustainability.12(21).p.8832. Student, A., 2021.To examine the added value of implementing Corporate Social Responsibility practicesontheUKsupermarketindustry,acasestudyofTescoPLC2015- 2020(Doctoral dissertation, University of Chichester). 9