Impact of Brexit on Tesco's Consumer Behavior and Decision Making

This dissertation executive summary examines the impact of rational decision-making and bounded rationality on consumer behavior within the Fast-Moving Consumer Goods (FMCG) sector, with a specific focus on Tesco PLC in the context of Brexit. The research explores the interplay between these decision-making frameworks and consumer choices, considering how factors like limited information, time constraints, and external environmental influences shape purchasing decisions. The study includes a literature review, detailing key concepts and relevant research, and a methodological approach involving data collection, analysis, and thematic interpretation. The analysis considers the implications of Brexit on Tesco's operations and consumer behavior. The research concludes with recommendations and suggestions for future improvements, reflecting on the complexities of consumer behavior in a dynamic market environment.

DISSERTATION

EXECUTIVE SUMMARY
This report is based on the evaluation of rational decision making and bounded rationality
on customer behaviour in FMCG sector. It is one of the famous and fastest growing sector that
provide variety of products to customers in market place with the aim of satisfying their needs
and wants. In this, Tesco is a famous British multinational company that operate their business in
retail sector and also provide quality services to large number of customers in order to improve
their satisfaction level. This is the main reason that research will be carried out in which clear
aim along its objectives and questions is mentioned by the investigator to find out the issues.
Along with this, literature review is also completed on the basis of views and opinion of different
authors towards the selected research topic. Different research methodologies such as data
collection, research approach, research design, philosophy and many more that help investigator
to gather relevant data and information about the specified research area. All these are important
methods which used by investigator to undertake research activities in systematic manner.
Thematic analysis is also used by researcher to interpreted or analysis collected data to take
positive outcomes. At the end, recommendation and conclusion is also take a crucial part which
includes necessary improvement that required to implement. By these, whole research can be
easily completed in successful manner.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
Overview of Research............................................................................................................1
Background of Research.........................................................................................................1
Rationale of Research.............................................................................................................2
Research Aim.........................................................................................................................3
Research Objectives...............................................................................................................3
Research Questions................................................................................................................3
LITERATURE REVIEW................................................................................................................5
Concept of bounded rationality in context of consumer behaviour.......................................5
Importance of analysing consumer behaviour for Tesco PLC...............................................6
Significance of rational decision making for a FMCG company...........................................6
Influence of external environmental factors on consumer behaviour....................................7
Potential influence of post Brexit on Tesco PLC and its impact on consumer behaviour.....8
RESEARCH METHODOLOGY...................................................................................................10
Type of investigation............................................................................................................10
Research approach................................................................................................................11
Research philosophy.............................................................................................................11
Research design....................................................................................................................12
Data collection......................................................................................................................12
Data analysis.........................................................................................................................13
Data sampling.......................................................................................................................13
Validity and Reliability........................................................................................................13
Ethical consideration............................................................................................................13
DATA ANALYSIS........................................................................................................................15
DISCUSSION................................................................................................................................44
Concept of bounded rationality in context of consumer behaviour.....................................44
Significance of rational decision making for a FMCG company.........................................44
Importance of analysing consumer behaviour for Tesco PLC.............................................44
Influence of external environmental factors on consumer behaviour..................................45

Potential influence of post Brexit on Tesco PLC and its impact on consumer behaviour...45
CONCLUSION AND RECOMMENDATION.............................................................................46
Conclusion............................................................................................................................46
Recommendations................................................................................................................47
REFLECTION AND ALTERNATIVE METHODOLOGY.........................................................48
Reflection.............................................................................................................................48
Alternative methodology......................................................................................................48
REFERENCES..............................................................................................................................49
APPENDIX ..................................................................................................................................51
Appendix 1: Cover Sheet for Research Proposal and Final Dissertation......................................51
Appendix 2: Dissertation Marking and Descriptors .....................................................................52
Appendix 3: Dissertation Research Checklist ...............................................................................59
Appendix 4: Important Contacts ...................................................................................................61

TOPIC - To evaluate the impact of rational decision making and bounded rationality over
the consumer behaviour in terms of FMCG sector in light of Brexit. A case study on Tesco PLC.
INTRODUCTION
Overview of Research
Rational decision making includes several steps to make choice among available
alternatives. It provides orderly path to solutions that results in optimal outcome which maximise
utility. On contrary, bounded rationality provides an idea to make decisions from the conceived
information which provide satisfaction to consumers by solving complex problems. Rational
decision making provides decision making techniques to address all desires by providing
information or factual data (Alós-Ferrer and Strack, 2014). Bounded rationality limits existence
of rational decision making as decisions based on rationality are depending on time constraints.
The rationale decision making is method for choosing among the possible choices which are
based on the facts and also reason. But bounded rationality limits the achievement of required
information or consumers get unreliable information regarding alternatives along with
consequences which reduces capabilities to evaluate information in order to make rational
decisions. The decision making under bounded rationality based on limited amount of efforts or
time consume to make the final decision.
Background of Research
Rational decision making is considered as a multi- step process for making better
decision between alternatives. This is based on the facts, logic, objectivity and analysis through
which individual can make a better decision towards the specified activity and aspect. Mainly, it
is a method for systematically selecting the possible choices taken by the people based on the
facts and valid reason. It directly impacts on the customer behaviour because while taking
decision consumers get various option to select the better one. It helps in maximizing benefits
and at the same time also minimize costs. For example, people want to buy useful and
satisfactory products at lower cost (Baldwin, 2014). This is the reason that they will judge the
benefits of certain objectives compared to similar object. In this, they will compare cost and
make decision accordingly. Rational decision making assumes that customers need full and
perfect information regarding products which they want to buy. They also measure the criteria to
collect and analysed the data in effective manner (Berndt, 2015). On the other hand, bounded
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rationality also play a significant role in providing ideas to make a decision by including the
conceived information which help in providing satisfaction to customers by making better
judgement through solving complex problem and situation as well. It also include limits
existence that is related with the rational decision making which is based on the rationality that is
depend on time constraints.
Mainly, rational decision making is related with time constraints and also works on the
assumption in which decision maker get proper information towards the alternative options and
cognitive ability or resources that may aid in maximising the benefits. Whereas, bounded
rationality include limits that contribute in attaining required information regarding the
alternative option in FMCG sector. As consumers has wider scope to select the better option by
making rational decision. In this context, decision making under bounded rational is related with
the limited efforts or time in which consumers have to take final decision to select the best one.
Both aspects are crucial for business organisation and customers because it largely affect their
decision and also support them to improve the chances of increasing profitability level of the
company at market place.
This research is based on Tesco plc, which is a British multinational groceries company
founded in 1919 by Jack Cohen with the aim of establishing its competitive brand image. After
Brexit, it has been evaluated that Tesco negatively impacted as increased overall cost of its
products and services which was difficult for customers to pay. This will negatively impact on
profitability level of the company at market place (Brounen, Kok and Quigley, 2013). In context
of FMCG sector, rational decision making and bounded rationality play a crucial role in making
better decision in which customers has certain option in products and services. This is the reason
that customers get largely affected towards both aspects. Thus, it is important for the company to
set their product range as per customer’s needs and wants so that they can easily satisfy their
requirements.
Rationale of Research
Current research is based on the evaluation the impact of rational decision making and
bounded rationality on the customer’s behaviour in regards to FMCG sector in light of Brexit.
This topic plays a crucial role in evaluating the actual behaviour of consumers in which they
make best decision from alternative options. With the help of this, they can easily improve the
chances of attaining certain benefits by reducing the cost (Caplin and Dean, 2015). As both
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factors play a significant role in develop the better solution or decision to select best option. This
is because individual get limited time, sources and capability to make positive judgement from
certain alternatives. In this regards, the main reason behind selecting this topic is to enhance
skills and knowledge of researcher in order to attain positive and reliable outcomes at the end of
the research. This type of research provide brief knowledge about the particular topic and area in
which research is carried out. With the help of this, researcher can easily enhance their
knowledge and also can attain success in future project activities by exploring their ideas and
opinions.
Research Aim
Research aim is one of the important and crucial part of research activities as it provides a
statement in which research issues are mentioned. Mainly, it provides a better direction to the
investigator to undertake research in better manner (Coimbra Carvalho and Afonso Mazzon,
2013). This will improve the chances of attaining valid and accurate information to resolve the
issues present in the research. In this context, the aim of this research report is “To evaluate the
impact of rational decision making and bounded rationality over the consumer behaviour
in terms of FMCG sector in light of Brexit”. A case study on Tesco PLC.
Research Objectives
 To examine the concept of bounded rationality in context of consumer behaviour.
 To ascertain the importance of analysing consumer behaviour for Tesco PLC.
 To identify the significance of rational decision making for a FMCG company.
 To identify the influence of external environmental factors on consumer behaviour
 To evaluate the potential influence of post Brexit on Tesco PLC and its impact on
consumer behaviour.
Research Questions
 Understand the concept of bounded rationality in context of consumer behaviour?
 What is the importance of analysing consumer behaviour for Tesco PLC?
 What could be considered as the significance of rational decision making for a FMCG
company?
 Explain how external environmental factors affects consumer behaviour?
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 What influence has been there of post Brexit on Tesco PLC and its impact upon
consumer behaviour?
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LITERATURE REVIEW
It is a narrative review of an article that provides the detailed information about some
specific area. This is completed as well as ongoing investigation that has been conducted to
determine current methodologies and the knowledge that may be appropriate. It helps in
providing the theoretical description regarding particular area. This part of research is based on
the secondary method of data collection. With the help of using books, journals, articles and
internet sources, researcher can gather the information and data in significant manner.
Concept of bounded rationality in context of consumer behaviour
On the basis of opinions of Cooper and Kovacic, (2012), it has been stated that Bound
rationality is defined to the idea associated with individual rationality and decision making is
limited as per the information perceived by them. It is considered as an alternative for
mathematical decision making modelling. At the time of making purchase decisions, consumers
emphasis on maximising utility which leads to make irrational decisions. Numerous consumers
do not have adequate information or data to take decisions that influences their behaviours for
various products. In general, consumers are overloaded with various alternatives at different
departmental stores and does not prefer to gather information due to less available time and they
make judgemental decisions. Bound rationality helps consumers to behave in rational manner
and taking rational consumer decisions. It helps in making choices after considering all relevant
alternatives that are available at departmental stores or market place. It influences decision
making process that leads towards gaining optimum beneficiary utility for consumers. They have
various options and their choices are based on preferences at the time choosing alternatives
which influences their behaviour at a great level. It is a concept that helps consumers to take
rational decisions in real world.
According to Ren and Huang, (2018), it has been observed that humans adopts rational
behaviour in solving complex problems to make decisions by mapping shortcuts in order to
enhance effectiveness of decision making. With the help of such rationality, consumers gain
information about alternative products and further, they evaluate each alternative as to make final
decision which can satisfy their needs. The choices are consistent with the requirements of self-
interest and makes reasonable decisions as per the conceived information. The consumer
behaviour stipulated in relevance to complex social phenomenon which drives behaviour of
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consumers. In this diverse world, bound rationality provide various procedures that helps in
selecting a suitable alternative among diverse available alternatives which mirrors consumer
behaviour.
Importance of analysing consumer behaviour for Tesco PLC
As per opinion of Gabaix, (2014), Consumer behaviour is a study of person, group of
company which is related with purchase, use and also disposal of products and services. It is a
branch that deal with different stages that a customer goes by before buying services or products
for their use. Under this, study about the consumer behaviour is related with all the aspects of
purchasing behaviour from their pre purchase activities to post purchase consumption,
examination and also disposal activities. Under this, study of the consumer behaviour assumes
that customers are the actors at market place. In addition to this, consumer behaviour is
observational activity that conducted for studying about behaviour of customers at marketplace
from time they are enter in market and take initiate about purchase till make thefinal purchase
decision. Understanding the consumer behaviour impacts in the marketing as well as public
relation decisions. It is a kind of decision process and the physical activity in which the people
are engage in examining, using and disposing of services and products in an effective manner.
Tesco is a large scale company that deals in retail sector. This company analyse
behaviour of consumers, in addition to make effective strategic marketing decisions. It will help
in determining the demands and needs of consumers and also provide them products accordingly.
Through determining consumer behaviour, before and at the time of purchase aids in
manufacturing, designing, costing, segmentation and the promotional activities. On the other
hand, through analysing the customer behaviour; Tesco company can provide value as well as
satisfaction to its consumers. It will help in attract large number of consumers and the reputation
of firm will be enhanced in an effective manner. In addition to this, firm can make improvement
in it's existing services or products by innovation. On the other hand, through analysing customer
behaviour, Tesco can gain the competitive benefit. If firm will provide high quality services to
customers according to their needs then it will develop its positive reputation of firm in front of
customers.
Significance of rational decision making for a FMCG company
On the basis of view point of Garcia, (2013), it has been stated that rational decision
making is a multi- step process for making the choices among different alternatives. It is a
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method for choosing systematically between possible choices based on the facts. Choice to
decide rationally can make possible in order to support decision maker through making
knowledge. In this, consumer have the full knowledge regarding alternatives as they have proper
time, resources and cognitive ability to examine choice against others. In this, people will make
the choices that will enhance advantages for themselves as well as reduce cost. In this, rationale
approach to the decisions depends on the obtained data scientifically that permit informed
decision making, minimizing chances of errors, assumptions, subjectivity etc. It is a traditional
approach to understand the decision making process. In addition to this, rationale decision
making is sequential and structures approach to the decision making and aimed at seeking the
better solutions of issues. In this, decision maker derives required information through statistical
analysis, modelling, observation and also make systematic analysis.
As per view point of Rabin (2013), The main importance of rationale decision making to
FMCG company is that it infuses process of decision making with consistency, logic and
discipline. It is a step- by- step approach that needs explain issues, determine weigh and the
decision criteria. In addition to this, rational decision making can assist decision makers to deal
with the complex issues in difficult environment. In order to resolve the issue, there will be need
to follow the steps which includes in the rational decision making. It is helpful in providing the
positive impact on development as well as productivity of FMCG organisation in significant
manner. On the other hand, it aids in taking the consensual and purposive decisions which are
based on the sound reasoning included all stakeholder which are included in consensual process,
purposive, sound reasoning etc.
Influence of external environmental factors on consumer behaviour
As per view point of Goldfarb and et. al., (2012), External environment is composed of
all outside factors which impact on business operations. Business should act to keep its
operations flow. It is complex for the manager to manage and control all the external factors and
develop positive impact on productivity of business. In addition to this, external factors impact
on the consumer behaviour in negative and positive manner. The influence of this environmental
factors identified as the social impact. It consists social norms, family roles, groups, subcultures
etc. which impact on the buying decision of consumers. Impact of external environmental factors
on consumer behaviour are mention below:
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Political factor- It is the most necessary external factor that impact on functioning of
business organisation. In this, Brexit factor is included as most necessary component that impact
on the buying behaviour of consumes towards services or products of an organisation.
Economic factor- It is one of most identifying factor that contribute towards success of
business even though it is external factor. It consists different factors such as economic crisis,
fluctuation in the interest rate and many others which directly impact on consumers purchasing
and economy of country. Since, UK was facing issues related with fluctuations within economic
development because of Brexit. It impacted on the behaviour of customers towards services and
products of Tesco Plc.
Cultural factor- Values, opinions, beliefs and attitude of a person is shaped with culture.
It turns attitude of people towards buying particular services or products, the culture of person
gratifies many emotional requirements and try to protect the beliefs as well as values. In addition
to this, culture protection is to be reflected in consumer behaviour.
Technological factor- Smart internet searches, artificial intelligence and some of other
high technology has been forefront business from many years. Rapid change in technology
enhance cost of company. On the other hand, due to the technologies, companies have been
changed the way of conduct business operations in short period of time.
Potential influence of post Brexit on Tesco PLC and its impact on consumer behaviour
On the basis of Gyamfi, Krumdieck and Urmee, (2013), it has been stated that Brexit is
withdrawal of UK from EU. Result of vote defied the expectations as well as roiled global
markets, causing British Pound to fall lower level against dollar. In this, Brexit will impact
directly on the consumer behaviour of Tesco company. It impacts on the attitudes, purchasing
capability and behaviour of consumers. In addition to this, consumers might feel that after Brexit
they will not get all of the desired product in UK as the country is going to be parted from EU. In
medium term, Tesco has been forced to make the inevitable changes in its supply chain after
United Kingdom leaved European Union. 50% of cheese and butter has been consumed in
United Kingdom and milk imported from European Union that was shifted sourcing efforts of
Tesco to the local manufactures. Increased inflation will incentivize retailers of UK to source
consolidate and locally when possible.
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