Report: PESTEL Analysis of Tesco in the Global Business Environment

This report provides a PESTEL analysis of Tesco, a major British-owned supermarket chain, examining its external market factors. The analysis covers political factors, such as government subsidies and potential "Tesco Tax," highlighting both opportunities and threats. Economic factors, including labor costs and the impact of the COVID-19 pandemic, are also assessed. Social factors, such as changing customer demands, and technological factors, including online shopping and technological barriers in rural areas, are discussed. Environmental factors, like Tesco's recycling initiatives and increased transportation costs, are evaluated alongside legal factors, such as government support for campaigns and potential legal issues related to employee pay. The report concludes by summarizing the various opportunities and threats Tesco faces within its business environment.

Global Business
Environment
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Contents
PESTEL of Tesco............................................................................................................................3
REFERENCES................................................................................................................................5
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PESTEL of Tesco
Tesco is a British owned brand with supermarket chain in retail industry across the world
(Bhagra and Sharma, 2018). PESTLE is a macro environment tool which analyse the TESCO's
external market. Its various factors are uncontrollable in nature which influence the performance
of a company.
Political factors:
Political factor of a company influences the business operations drastically. It includes tax rates,
bank rates, interest rates, change in the government, instability of political relations with other
countries.
 Opportunity: Due to instability in the political relations of a country, government
provides subsidies to large companies to generate employment opportunities to local
residents. This has created an opportunity to enhance the demand of its product and
employment opportunities. This has resulted in diversified employees.
 Threat: the tax on large supermarkets known as “Tesco Tax” was proposed by the
council but UK government refused this initiative mainly to avoid price hike. These types
of initiatives can affect the profit of Tesco negatively.
Economical factors:
Tesco pays their maximum attention towards economic practices that may assist them in
sustaining effectively in the competitive market.
 Opportunity: Due to increasing labour cost, in UK and Ireland, Tesco earn millions of
pounds in each and every year. This creates opportunity for company to increase its
profit.
 Threat: Due to this coronavirus pandemic everyone earning are likely to go down, as
well as many people lose their occupations. This may impact directly upon Tesco. .
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Social factors:
This factor determines influence of customer’s requirement and changes in their demand
over the business practices.
 Opportunity: Effective rising in customer’s demand in the context of supermarket
services may help organisation to sustain effectively in the competitive market.
 Threat: If the company would not listen to the customer’s query, or their complaints,
then it has to suffer more as there will be decrease in number of customers.
Technological factors:
Technological factors are the very important factor nowadays for every organisation.
 Opportunity: Online shopping and self-services provided suitability and easy for
customers which in turn have reduced the labour costs.
 Threat: Technological barriers are faced by the customers who lives in rural areas as
compared to the customers in densely areas at the time of new product launch.
Environmental factors:
These factors are facing pressure from the government agencies to address environmental
issues (Brenner, 2018).
 Opportunity: Tesco van drivers use not only fuel redeemable routes but also gather
unwanted plastic bags from customers and recycle them. This creates opportunity for the
company to attract more customers as they are working environment friendly.
 Threat: Company is providing basic facilities to their customers like home delivery
facilities, so this creates increase in their fuel and transportation cost.
Legal factors:
This is the last factors which is used in PESTEL which should be considered the most.
 Opportunity: Tesco is truly following government rules and regulation. So, if they want
to do any campaign, then government gives them full support. This creates full
opportunities for the company.
 Threat: the company being sued for unequal pay, among the employees. These legalities
should be considered and followed in order to maintain its reputation. This may create a
threat for the company.
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REFERENCES
Books & Journals
Bhagra, A. and Sharma, D. K., 2018. Changing paradigm of employability skills in the global
business world: A review. IUP Journal of Soft Skills. 12(2). pp.7-24.
Brenner, B., 2018. Transformative Sustainable Business Models in the Light of the Digital
Imperative—A Global Business Economics Perspective. Sustainability. 10(12). p.4428.
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