Global Business Environment: PESTEL Analysis of Tesco's Operations

This report provides an executive summary and analysis of the global business environment, focusing on Tesco PLC. It employs a PESTEL analysis to examine the impact of political, economic, social, technological, environmental, and legal factors on Tesco's operations. The report identifies st...Read More

Global Business Environment
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Executive Summary
In this report, there is an attempt to develop an overall understanding of impact that
external environmental factors on business operations of chosen
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Table of Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
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INTRODUCTION
Every company is operating in certain surroundings and it consists of various
environmental factors and these factors are impacting business operations in huge manner
(David, 2018). Furthermore, to analyse external factors in respect of a chosen company, this
report focuses on PESTEL analysis on Tesco and it will be concentrating on studying impact of
various external environmental factors on business operations of Tesco plc. Tesco is a
multinational corporation involved in dealings of food retailing business and it is headquartered
in UK.
MAIN BODY
Political factors: Chosen company is operating across different countries and therefore,
different global political factors are influencing the activities and performance of Tesco. To
illustrate, tax rates, acts of legislation and also the political stability of the hosting country effects
the performance of company(Bees, and Williams, 2017). There is a situation of financial
instability around the globe and due to this reason, government are ensuring that retailers are
creating employment opportunities for local population.
Strengths: Tesco is having a strong point of stable political environment in UK and also due to
instructions of government for creation of employment opportunities, company is able to draw a
positive image among customers and also able to build a diverse and capable work force.
Weaknesses: Company is facing serious issue due to global financial instability and this is
creating effects on financial position of the company as well. In addition to this, complex
international trade regulations are also impacting the working of company overseas.
Economical factors: In context of Tesco plc, most important economic factors are
changes in taxation policies, changes in policies and also access to finance market. The most
significant factor that is impacting the company is the major dependence of company on UK
market which is around 30% of total market share of company(Gheibi, and et.al.,2018).
Strengths: The most important positive impact in economic segment is strategy of
internationalization and also the strategy of diversification strategy that company is adopting
with an aim of growing their business and market share.
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Weaknesses: Company is facing the serious issue of less disposable income levels and also low
household incomes in the hosting country. This results in challenge in marketing luxurious items
in targeted market.
Social factors: UK is visualising a chain of changes in social trends and due to this,
customers are moving towards bulk shopping and one stop shopping. To complement this
change, Tesco has started sale of non food items in bulk. Tesco is also accommodating changes
so that they can complement the increase in demand of organic products in the market.
Strengths: The strongest point in social factors for the chosen company is that it attempts to
satisfy demands of customers by adopting every possible change(Mkude, and Wimmer, 2015).
Weaknesses: Social environment of Tesco is very dynamic and hence, it becomes very difficult
and expensive to follow and comply with these changes.
Technological factors: This segment is related with the technological developments in
industry and it also impacts the serving pattern of the company. In relation of Tesco, two major
factors impacting the business operations are development and introduction of online shopping
pattern and secondly, self service checkout points have made the operations way more
convenient and smoother.
Strengths: most important strong point is that adoption of technology has reduced to the
operational cost to a great extent and also made operations more convenient.
Weaknesses: The company is facing serious issues in context of intervention of employment
unions due to reduction in employment opportunities due to adoption of technology.
Environmental factors: With increased pressure on companies to address environmental
issues and to adopt ways of operations which what would benefit society, Tesco is clearly
committed to reducing its carbon footprint by 50% by 2020. Also, Tesco is minimizing the waste
produced in their stores by increasing social conscience in customers.
Strengths: Company is taking the advantage of the good image created for the company in
market due to social responsibility steps planned by the company in order to protect
environment.
Weaknesses: The strongest issue for the company is major hazardous impacts that they are
having on surroundings. Though, company is planning to reduce this impact, but at present they
are not having a clean image in terms of environmental impacts.
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Legal factors: This segment relates with the legislations and laws that will impact the
operations of the chosen company. In case of Tesco plc the most significant law that impacts the
operations of this company is Food Retailing Commission. To fulfil requirements of these laws,
company is providing its customers price reduction facility on the fuel that are purchasing from
the outlet of Tesco (Nurmi, and Niemelä, 2018).
Strengths: The company is fulfilling all requirements of applicable laws and it ensures no
intervention from governmental authorities. This helps in smooth functioning of operations of
company.
Weaknesses: As company is involved in various business lines and also operate in several
countries, therefore, it becomes difficult for the management to ensure compliance of every
applicable law.
CONCLUSION
From this report, it can be concluded that inspection and investigation into external
environmental factors of a company is important so as to plan for future course of action and also
for the purpose of effective and efficient strategic planning.
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REFERENCES
Books and Journals
Bees, A.D. and Williams, I.D., 2017. Explaining the differences in household food waste
collection and treatment provisions between local authorities in England and Wales.
Waste Management. 70. pp.222-235.
David, J., 2018. PESTEL analysis of Australia. Howandwhat. Recuperado de https://www.
howandwhat. net/pestel-analysis-australia.
Gheibi, M and et.al., 2018. Controlling air pollution in a city: A perspective from SOAR‐
PESTLE analysis. Integrated environmental assessment and management. 14(4).
pp.480-488.
Mkude, C.G. and Wimmer, M.A., 2015. Studying interdependencies of e-government challenges
in Tanzania along a PESTEL analysis.
Nurmi, J. and Niemelä, M.S., 2018, November. PESTEL analysis of hacktivism campaign
motivations. In Nordic Conference on Secure IT Systems (pp. 323-335). Springer, Cham.
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