PESTLE Analysis of Tesco PLC for Global Business Environment

This report analyses the business environment of Tesco PLC using PESTLE Analysis and how these factors positively and negatively impact the activities carried out in the company. It includes drivers of change and their impact, recommendations, and references.

Global Business
Environment

Executive Summary
Business environment refers to the factors that directly or indirectly influence the workings of
the organisation. Aim of this report is to analyse the business environment that an organisation
operates in and how these factors positively and negatively impact the activities carried out in the
company. PESTLE Analysis is one of the most effective tool that helps in evaluating political,
economic, social, technological, legal and environment factors. This assists the company to
identify and deal with key drivers of change by considering the deliberations for the future
growth of firm. Hence, it helps in making an informed decision that will help in long term
sustainability of the organisation.

Table of Contents
Executive Summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
PESTLE Analysis of Tesco PLC............................................................................................1
CONCLUSION................................................................................................................................2
REFERENCES................................................................................................................................3

INTRODUCTION
Business environment refers to all the internal and external factors that effects the
functioning of organisation. It helps in creating good opportunities for the business, tapping
resources that are required and improving overall functioning in the company (Ko and et. al.,
2020). In this report, PESTLE Analysis is done on Tesco PLC which is multinational grocery
store based in UK. Tesco PLC is currently operating in around 12 countries and have a good grip
over the market share but still there are some external factors which impacts the company, those
factors are discussed below.
MAIN BODY
PESTLE Analysis of Tesco PLC
PESTLE Analysis is an effective tool in marketing which is used to understand external
environment of the organisation. This tool helps in critically evaluating outside forces that may
affect the course of business in a positive or negative way. This tool is further applied on Tesco
PLC-
External factors to
consider
Factors affected within
my industry
Importance to
organisation
Political factors  Government
policies
 Tax and
regulations
These factors help in
determination of the
level of influence that
government have on
business (Somers and
et. al., 2019).
In context of Tesco
PLC, their operations
are global level so
several factors such as
restrictions on trade or
a change in taxation
Government policies
and regulations help
the organisation in
following a set
standard of operations.
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policy directly
influence the
operations in
organisation.
Restrictions on trade
will put a negative
impact on the sales of
the respective
organisation. So Tesco
can further expand in
the country where
there are less trade
restrictions.
Economic factors  Exchange rates
 inflation
The factors such as
economic growth and
inflation directly
impacts the
organisation
(Thornton, Campbell
and Owusu, 2019).
In context of Tesco
PLC, change in
inflation rate does not
put much effect on the
sales of Tesco as
people cut out luxuries
but they always need
daily grocery which is
positive for the
Exchange rates helps
the organisation in
establishing effective
profitability.
Organisation needs to
consider the inflation
rate of the country, as
the directly impacts
the price of the
products.
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company.
Social factors  Taste and
behaviour of
the consumer
This refers to the
factors associated with
the society like
cultural norms, taste
and behaviour of the
consumer.
In context of Tesco
PLC, they are shifting
more towards the
healthy food as people
are moving towards a
healthy lifestyle. This
change puts a positive
impact on the
respective
organisation.
Behaviour of
customers is important
for Tesco PLC to
understand the
requirement of the
customers.
Technological factors  Application
 social media
This refers to any
change or
advancement in the
technology used in the
activities of business.
In context of Tesco
PLC, advancement in
their grocery app has
increased the customer
experience as they can
now purchase grocery
from their home. This
Software helps the
organisation in
providing customers
with online services.
This increases the
profitability of the
company.
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put a positive impact
on the company as the
customers gets a good
shopping experience
from the ease of their
home.
Legal factors  Business laws
 Food laws
This refers to the legal
norms that effect the
working in the
organisation in
whatsoever way.
In context of Tesco
PLC, they have faced
legal issues for not
following the standard
clause in the business,
this puts a negative
impact on the goodwill
of the company. To
overcome this negative
impact, they have
started following every
clause in consumer's
right section, this has
improved the trust
worthiness in the
brand.
Working according to
the business and food
laws helps the
organisation in gaining
trust of the customers.
Environmental
factors
 Restriction on
production
activities.
The different ways in
which the surrounding
environment puts an
This helps the
organisation in
contributing towards
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effect on the
organisation is
considered to be
environmental factors.
n context of Tesco
PLC, there was
pressure on them to
address the
environmental issues
and change their
production cycle to
sustain the
environment, this puts
a negative effect on
the productivity of the
organisation. To
overcome this, they
started using more of
biodegradable material
in their process of
manufacturing which
helped in maintaining
a good environment.
the society.
What are the drivers of change and their impact?
There are several factors of changes that impact the overall industry as a whole including the
government policies and tax regulations that leads to impact the operational activities of
company. Apart from this, Tesco also shifted their focus towards the advertisement of their brand
value instead of more productive and luxurious items. Also, Tesco tends to opt changes by
effectively accommodating for the demand of organic products. Respective company also
invested for the effective amount on the energy regarding the efficient projects to fulfil their long
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term goals and objectives towards the elimination of carbon footprints. Company also work for
waste products to enhance the social conscience among their customers. Lastly, undertaking the
legal norms and legislations, Tesco provide price reduction on the fuel which they purchase as
per the amount spent on grocery stores.
Recommendations
From the above discussion, it has been suggested that Tesco plays an important part in terms of
creating the employment opportunities that enhances the demand for its products and also
diversifies the workforce. In this context, it is also important to specify that business grows at the
international level as the company also depend on the market of UK and company need to put
more focus on advertising its values brand instead of more luxurious items. Apart from this,
Tesco needs to opt suitable changes by accommodating the overall demand of significant
products. Meanwhile, company also minimise the waste which is produced in their stores
enhancing the social conscience among their customers.
CONCLUSION
From the above discussion it can be concluded that keeping a track of business
environment is necessary as it helps in accessing the outside forces effecting the operations of
business. PESTLE Analysis is one such important tool to analyse every aspect of the
environment.
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REFERENCES
Books and Journals
Ko, W.L. and et. al., 2020. The effects of strategic alliance emphasis and marketing efficiency on
firm value under different technological environments. Journal of Business Research,
120, pp.453-461.
Somers, F.J. and et. al., 2019. European business environment: doing business in the EU.
Routledge.
Thornton, H.C., Campbell, A.J. and Owusu, R.A., 2019. External barriers facing
internationalising sharing economy companies: a study of European and American
sharecoms. Journal for Global Business Advancement, 12(1), pp.70-94.
Online
PESTLE Analysis for Tesco discusses its Business Environment. 2021. [Online] Available
through: <https://pestleanalysis.com/pestle-analysis-tesco/>./
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