Tesco Plc: Business Environment Analysis with PESTLE and SWOT

This report provides a comprehensive analysis of Tesco Plc's business environment, utilizing PESTLE and SWOT frameworks. The introduction establishes the significance of the business environment and its impact on decision-making, particularly within the context of Tesco, a multinational retailer. The PESTLE analysis examines the political, economic, social, technological, legal, and environmental factors influencing Tesco's operations. It explores both the positive and negative impacts of each factor, such as tax rates, labor costs, consumer preferences, technological advancements, government regulations, and environmental concerns. The SWOT analysis evaluates Tesco's internal strengths and weaknesses, alongside external opportunities and threats, including competitive advantages, failing subsidiaries, market dependencies, economic fluctuations, and political factors. The report highlights the interrelation between external and internal factors, emphasizing their interdependence in achieving organizational goals. The conclusion summarizes the influence of the business environment and the utility of PESTLE and SWOT analyses in evaluating and mitigating potential challenges, providing a valuable resource for understanding Tesco's strategic positioning. The report includes references to relevant academic sources.

Business and
business
environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Table of Contents
INTRODUCTION...........................................................................................................................1
PESTLE Analysis .......................................................................................................................1
2. SWOT and its relation with the decision making and external macro factors........................3
Conclusion ......................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Business environment means factors includes internal and external who affect to performance of
organization in negative and positive way to customers, management and supply & demand of
the organization and its puts direct affect on making decision-making. TESCO Plc is a public
limited retailer company. Its founded in 1919 by Jack Cohen. It is a multinational groceries
retailer. this report will covers pestle and swot analysis of organization and inter relationship
between them.
PESTLE Analysis
It describes proper frame work of macro business environment factors using in the
environmental scanning element of strategic management. It is one of the best took that help to
understand market decline or growth, direction and potential for operations and business position
in marketplace as against form others (Gonen and et.al., 2017). PESTLE help to identify all the
different external factor that affect business and any other organizations functions both
negatively and positively. It is very essential for businesses because it helps to understand
current market situation and recent trend in economy.
 Political factors: Tax rates, political instability, impending and current legislation,
underemployment rate and economic situations of the countries where TESCO operating
are political factors that affect each operations of organization. Raise taxation rates is one
of the element that impact on company business policy. Negative impact- Firm are
paying tax on trading process and run this program effectively, but sudden changes in tax
rates effect its policies in which they need to change the things that take long time of
period. Positive impact- But on the other side TESCO pay tax rate decided by the
government they will lead as a leading brand over other companies who do not follow the
procedure. It also effects on decision-making activity of organization management in
which they make changes in it and try to adopt the following system that raise the
position of company in marketplace.
 Economic factors: Economic factors include changes in taxation and policies and other
factor which affect accessibility of finance budgets. Negative impact- Labor cost is one
of the essential component that impact TESCO supermarket (Sridhar, 2014). In this stage
they have to pay employees extra pay and increase their wages percentage more than the
now that influence on organization finance budget. Positive impact- Company pay
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workers more on the based of their performance and government policy that help to retain
talent people with TESCO for long time of period. Under this changes' management of
firm need to make some changes in their salary procedure and pay accordant to it.
 Social factors: Change s in customer preference is one the main factors that impact on
TESCO productivity and manufacture process very much. Negative- these types of
change need to modify the whole structure of manufacturing products which need take
time as well as this process require investment for conducting market research which is
very important for company. Positive- Organization management take their decision and
modify overall functions and procedure of production according to consumers preference
that help to attract them and retain with company for long period (KABORIO, KAMAU,
and MBITHI, 2017). Production section of firm take their decisions and try to
accomplish expectations of clients as soon as possible.
 Technological factors: Competitive environment required new techniques and
technologies that help to beat the others in marketplace that is one of the technological
factors. Positive- TESCO implement new technology in their business structure and give
training to employees who to use it that help for gaining competitive advantages.
Negative- company implement new machines in its structures which is very expensive
that effect on their financial budgets rather than training of workers that is very difficult
for the management. At that moment high authority make plans and strategy in which
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Illustration 1: PESTLE Analysis
(Source: PESTLE Analysis of Tesco, 2018)

they are using those technologies that does not need high investments and work
effectively.
 Legal factors: Government legislation and policies also directly effect performance of
TESCO. Food Retailing Commission suggest a code of practice must be introduce which
ban many recent practices of retailer such as changing prices without notice to customers.
Negative- Change in prices of products will reduce number of consumer that impact on
profit margin and financial budgets of TESCO. Positive- But on the other side if
organization give notice to clients about changes in price of goods that is lower down
attract more people towards business and increase productivity and profitability more
than the others. At that moment management of company need to take the right decision
and focus on customer satisfactory levels in which they want quality products with low
prices.
 Environmental factors: TESCO are facing immense pressure form government agencies
to focuses environment problems. Organization is liable to respond these issue to benefit
economy or society. Positive- company encourage its customer to shop at tesco.com and
will not use fuel saving routes that build its positive image in marketplace. Negative- this
process need long time of period which is very difficult to do. Management take their
decision and try to follow up it that run business functions and operations effectively.
Firm are now committed that they are reducing its carbon foot print by 50% and
minimize waste produce in its stores by maximize social conscience in clients.
2. SWOT and its relation with the decision making and external macro factors
Internal analysis – internal factors include SWOT analysis of TESCO because SWOT stands
for S- strength, W- weakness, O- opportunities and T- threats so its analyse all things. It helpful
in measures that what opportunity company has that it can use. It also gives knowledge about
threats and weakness of organization that helpful in prevent them and help in increase
profitability.
External analysis – external analysis include PESTLE of TESCO that analyse all external
factors that affect performance through political, economical, social, technological, legal and
environmental. Its helpful in making decision and give information about market condition and
factors that affect business so its helpful in get information and prevent it.
Relationship between external and internal analysis.
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External and internal factor inter relate with each other because it is because external factrors
always analyse and evaluate for internal environment. And internal analysis helpful in prevent
loopholes of external environment like search opportunities and prevent weakness and face
threats so both are interdependent and helpful in achieve goal.
SWOT
Strength Weaknesses
 Competitive advantage: Tesco plc
has a competitive advantage over its
rivals that will look after the proper
assessment of the strategies and action
plans that are been followed by the
firm.
 Good customer base: The wide range
of services and a good product
portfolio that is been carried out at the
organisation. This supports the rise in
the sales of organisations and lead to
higher level of revenue generation.
 Brand equity: Tesco plc is known to
provide high quality products on a
lower price range. This is the biggest
reason behind the rise in the success
level of the selected retail firm.
 Failing of subsidiaries: Some of the
major subsidiaries are not performing
well for Tesco plc that has lead to
reduction in its revenue generation.
Management of Tesco plc is required to
look after it in order to improve the
operational efficiency of organisation.
 High level of dependencies on
European market: Tesco plc is highly
dependent on the sales that are been
performed in the UK and other
European markets. Organisation is
required to look after proper measures
which will help in reduce this
dependency.
Opportunity Threat
 Organisation can opt for forming
strong alliance with other firms on
international and local level. This will
impact the sales and overall operations
of the organisation and improve its
performance.
 Market expansion measures can be
 Economic recessions and fluctuations
in currency exchange rates that will
impact the overall performance of the
organisation. These factors are required
to be managed effectively at the
workplace.
 Governmental or political factors like
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opted and retail stores can be opened
outside UK or Europe that will lead to
improvement of the sales and overall
revenue generation of selected retail
enterprise.
Brexit will impact the operations which
will help in carrying out the operations
in much effective manner. This will
also influence the performance of
selected retail firm.
On the basis of this assessment of strengths and weaknesses of selected retail enterprise,
this can be said that external factors affect the overall operationality of the organisation to a
higher extent. Especially, the socio- economic and political factors are required to manage within
the organisation in an effective way. Besides this, the technological issues also influence
performance of the organisation and thus, required proper planning and rectification of any sort
of issues. The environmental welfare policies and other legal obligations will impact the
performance of the organisation to a greater extent(Yan, Xia and Bao, 2015).
Conclusion
From above study it has been summarized that business environment affect through external and
internal environment so PESTLE and SWOT analysis helps in evaluate and prevent them.
Organization performance affected through many different factors so its evaluate by both tools.
PESTLE analysis is use for external environment and SWOT analysis is helpful for internal
analysis.
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REFERENCES
Books and Journals
Gaspar, J. and et,al., 2016. Introduction to global business: Understanding the international
environment & global business functions. Nelson Education.
Hitt, M.A. and Xu, K., 2016. The transformation of China: Effects of the institutional
environment on business actions. Long Range Planning. 49(5). pp.589-593.
Gonen, N. and et.al., 2017. Normal levels of Sox9 expression in the developing mouse testis
depend on the TES/TESCO enhancer, but this does not act alone. PLoS genetics. 13(1).
p.e1006520.
KABORIO, C.N., KAMAU, S. and MBITHI, M., 2017. Effect of Consumer Factors on Store
Brand Choice in the Retail Industry in Kenya: A Survey of Selected Supermarkets in
Nairobi County. International Journal of Business Management & Finance. 1(20).
pp.332-346.
Sridhar, V., 2014. Analysis of Factors Influencing Mobile First Strategy in India. Review of
Market Integration. 6(1). pp.47-61.
Yan, J., Xia, F. and Bao, H.X. 2015. Strategic planning framework for land consolidation in
China: A top-level design based on SWOT analysis. Habitat International. 48. pp.46-
54.
Online
PESTLE Analysis of Tesco. 2018.[ONLINE].Available
through:<https://pestleanalysis.com/pestle-analysis-tesco/>
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