Analyzing Tesco's Global Business Environment: A SWOT Approach

This report provides a comprehensive analysis of Tesco's global business environment. It begins with an executive summary outlining the paper's focus on determining Tesco's internal and external environment, followed by an introduction that defines the global business environment and states the report's objective: to determine the strengths, weaknesses, opportunities, and threats (SWOT) of Tesco. The report then delves into a detailed SWOT analysis, examining Tesco's strengths (financial position, brand equity, market share, technological development, and efficient supply chain), weaknesses (failed operations, reduction in operating profit, low-cost strategy, and accounting scandals), opportunities (expansion of Jack's, strategic alliances, online shopping, supplier relationships, and emerging markets), and threats (Brexit, increasing competition, economic crises). The report further explores the impact of political, economic, social, technological, environmental, and legal factors on Tesco's marketing and operations departments. The report concludes that Tesco, a well-established global brand, needs to leverage its strengths and address weaknesses while capitalizing on emerging opportunities and mitigating threats to maintain its market position.

Running head: GLOBAL BUSINESS ENVIRONMENT
GLOBAL BUSINESS ENVIRONMENT
Name of the Student
Name of the University
Author Note

1GLOBAL BUSINESS ENVIRONMENT
Executive Summary
The purpose of the paper is to determine the internal environment of the company Tesco. The
headquarters of the company is based in the UK but Tesco has successfully established its
operations in 14 countries. The paper deduced the strengths, weaknesses, opportunities, and
threats of the company, which indicates the brand image, market share, expansion and
diversification opportunities, controversial incidents and increasing competition. The paper
has also reflected the impact of the external environmental factors on the functional units of
marketing and operations.

2GLOBAL BUSINESS ENVIRONMENT
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Strengths:................................................................................................................................3
Weaknesses:...........................................................................................................................4
Opportunities:.........................................................................................................................5
Threats:...................................................................................................................................5
Environmental Factors Affecting functional areas:...............................................................6
Conclusion..................................................................................................................................8

3GLOBAL BUSINESS ENVIRONMENT
Introduction
The environment, which depicts the exogenous factors that are different from an
organization’s home environment and impacts on the capabilities and usage of resources of
the organization, is known as the global business environment (Hanson et al., 2016). The
purpose of the paper is to determine strengths, weaknesses, opportunities, and threats with
respect to the internal and external business environment of Tesco. The British multinational
company offers general merchandise and groceries in their retail outlets spread over 14
countries in total. Tesco is considered amongst the top ten retailers based on the revenue and
reaches in the global environment (Amankwah-Amoah & Osabutey, 2019). The paper will
determine the SWOT assessment by understanding the impact of the political, economic,
social, technological, legal and environmental environment on the multinational company,
Tesco.
Discussion
Strengths:
 Rank- One of the ten most profitable and largest supermarket businesses in the world
(Hwang, 2019).
 Financial position- Tesco has a strong financial position in both the home country and
overseas location as it possesses a significant rate of cash reserves with the presence
of numerous properties, which are still underdeveloped.
 Brand equity- Tesco has significant brand equity along with the presence of global
recognition, which is derived from its quality customer service, quality and wide
range of selection (Fatricia, 2017)
 In 2018, the operating profit grew up to 28 percent for Tesco (Tesco.com, 2020).

4GLOBAL BUSINESS ENVIRONMENT
 Tesco is one of the greatest dominating forces in the retail market with a market share
of 27 percent as of 2019 (Statista.co, 2020).
 Tesco has grown its operation immensely between the years 2008 to 2019 to 6,993
stores (Tesco.com, 2020).
 Number of stores- Being a UK retail brand has not stopped Tesco from expanding its
roots to other overseas locations; the retail brand has diversified to 14 countries with
6993 stores (Tesco.com, 2020).
 Technological development- Tesco is dedicatedly improving its technological
implications by introducing an RFID-enabled barcode system for keeping the record
of existing products.
 Supply chain- The efficient supply chain is the strength of Tesco as it has a simplistic
business model that contributes to improving the waste management policies and
reducing the costs.
Weaknesses:
 Tesco experienced failed operations in Japan and the US in the year 2012
 Reduction in the operating profit of Tesco due by 9 percent in the year 2018 after the
phenomenon of Brexit (Evans & Mason, 2018)
 The low-cost strategy of Tesco can harm the profit margins of the brand.
 Accounting scandal has affected the brand image of the multinational retailer Tesco
(Tesco.com, 2020)
Opportunities:
 One of the opportunities for Tesco is to expand the establishments of Jack’s for
competing with Aldi and Lidl.
 Strategic alliances and joint venture can be a great opportunity for Tesco as it can help
with another chance with operations in the United States and Japan.

5GLOBAL BUSINESS ENVIRONMENT
 The opportunity of online shopping should be stressed upon by the company Tesco
because of the increasing trend of online shopping and consumers’ Internet spending
time (Conaty, 2016).
 Supplier relationship- Tesco should invest its focus and investment in the strategy of
building a supplier relationship (Tesco.com, 2020).
 Emerging markets- The multinational supermarket brand is spread all across the globe
but Tesco can focus on the emerging countries with growing potentiality for market
attractiveness such as Turkey, Indonesia, and South Korea (Dixon & Banwell, 2016).
Threats:
 Brexit Referendum- One of the greatest threats for Tesco is Brexit, which has caused
a threat for the organization due to the increasing impact on the trade deals for the
brand.
 Increasing competition- Increasing competition in the UK market and globally
portrays a major threat to the supermarket company. Major competitors of Tesco are
Morrisons, Costco, ASDA, Walmart, Kroger, Amazon, and Aldi (Steenkamp, 2018).
 Economic crisis- Credit crunches, economic upheavals, tax matters, and legal matters
can considerably affect the performance and efficiency of Tesco (Tesco.com, 2020).
Environmental Factors Affecting functional areas:
Department 1 (Marketing) Department 2 (Operations )
Political Factors -Brexit will majorly affect
the brand image of the brand
in other countries.
-Tesco originally belongs to
the UK, which can affect the
Brexit and instability in the
present governmental bodies
will affect the efficiency in
operating with sufficient
resource capabilities.

6GLOBAL BUSINESS ENVIRONMENT
brand recognition and
association of Tesco as it
might get associated with the
‘exiting’ decision.
Economic Factors The economic growth and
high purchasing power in the
UK reflects the opportunity
to expand its business
opportunities by strategies
like co-creation and market
or product diversification
-High purchasing power will
expect a better and
convenient mode of purchase
and service.
-With high purchasing
power, consumers would
prefer a simplistic
operational network
associated with high-quality
standards.
Social Factors -The fast-paced, working-
class and college-goers
lifestyle in the UK demands
everything online from
products to services.
Changing lifestyle and
buying patterns of Gen X and
Y demands attractive offers
in a convenient medium
-The marketing department
of Tesco will have to manage
-With the changing lifestyles
of the consumer base, which
is influenced by increasing
competition, globalized
brands, and online
application, transparency will
be the most expected aspect
of Tesco's operational plan.
-The need for maintaining an
efficient network of suppliers
and dealers will become most

7GLOBAL BUSINESS ENVIRONMENT
the need for convenience,
quality, discounts and co-
creational marketing
campaigns for engaging the
easy switchers and need-
based customers.
significant than the ‘low
price strategy’ and
expansion.
Technological Factors -Increasing technological
implications impacts the
strategies of involving
customers and improving the
overall customer experience.
-Maintaining the customers’
attention span in the online
services and easy transaction
process will become the most
significant priority for
Tesco’s marketing team.
Technological advancement
can improve the supply chain
process by adding simplicity
and efficiency.
Technology will contribute to
a simplistic and improved
process of transactions,
scheduling, managing and
tracking information in each
stage of operations.
Environmental Factors The concerns of climate
change will direct the
advertisement theme of
Tesco towards awareness
creation.
The environmental concerns
will push the company to
have a sustainable supply
chain network and to produce
more packaging-free
products.
Legal Factors The legal obligations and
numerous controversial
The legal obligations demand
the company to implement a

8GLOBAL BUSINESS ENVIRONMENT
allegations on the retail brand
will demand the marketing
team to invest more in image
improvement campaigns and
customer engagement in
content creation for gaining
trust by familiar brand
advocates.
stricter auditing team to
assess the operational process
from selecting a supplier to
the mediums accommodating
the reach to the customers.
Conclusion
Therefore, it can be concluded from the paper that Tesco is a well-established brand
with stores all over the world. Tesco is known for its efficiency, low-cost strategy and major
expansions. Although the brand is growing effectively, it still needs to utilize potential
opportunities like expansion in growing markets and responding to the demand for
diversifying the business for better market coverage.
References:

9GLOBAL BUSINESS ENVIRONMENT
Amankwah-Amoah, J., & Osabutey, E. L. (2019). New challenges and opportunities in the
global marketplace: learning from developed-country multinationals’ failures.
International Studies of Management & Organization, 1-14.
Conaty, P. (2016). International Expansion in the Retail Industry: A Multi-Case Study on
Strategic Expansionary Variables.
Dixon, J., & Banwell, C. (2016). Supermarketisation and rural society futures. In Routledge
International Handbook of Rural Studies (pp. 257-269). Routledge.
Evans, B., & Mason, R. (2018). The lean supply chain: managing the challenge at Tesco.
Kogan Page Publishers.
Fatricia, R. S. (2017). STRATEGIC ANALYSIS OF TESCO SUPERMARKET. Jurnal
Manajemen Terapan dan Keuangan, 6(02), 69-86.
Hanson, D., Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management:
Competitiveness and globalisation. Cengage AU.
Hwang, K. I. (2019). Three essays on retail globalisation and international trade (Doctoral
dissertation, University of Nottingham).
Statista.co (2020). UK: supermarket market share 2013-2018 | Statista. [Online] Retrieved
from https://www.statista.com/statistics/300656/grocery-market-share-in-great-
britain-year-on-year-comparison/
Steenkamp, J. B. E. (2018). Brands and retailers under attack from hard discounters. In
Handbook of Research on Retailing. Edward Elgar Publishing.
Tesco.com (2020). Tesco - Supermarkets | Online Groceries, Clubcard & Recipes. Retrieved
from https://www.tesco.com/

10GLOBAL BUSINESS ENVIRONMENT