Digital Business Report: Tesco Case Study and External Factors

This report provides a comprehensive analysis of Tesco's digital business operations. It begins with an introduction to digital business, defining its key characteristics and benefits. The main body of the report presents a detailed case study of Tesco, a multinational retail company, examining its transition from traditional retail to e-commerce. The overview section traces Tesco's history, market segmentation, and strategies for customer retention. The report identifies and analyzes key factors responsible for the growth of Tesco's digital business, such as innovation, data collection, customer relationship management, and market demand. Additionally, the report explores the external factors, including political and economic factors, that can impact Tesco's business operations. The report concludes with a summary of the key findings and implications for Tesco's future digital business strategies.

DIGITAL BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
Case study....................................................................................................................................4
Overview......................................................................................................................................5
Key factors responsible for the growth of digital business..........................................................6
External factor may impact business operations..........................................................................7
CONCLUSION ...............................................................................................................................8

INTRODUCTION
Digital business refers to the use of electronic devices to communicate the values and
promote the organisation's offering through virtual media. It basically promote the new and
innovative ways by which the company can connect and collaborate with the large audience
within the stipulated period of time. Information technology has played the key role to modify
the infrastructure as well as business operations by using internet to carry out daily regime
effectively (El Sawy and Pereira, 2013). This transformation of business has overcome the
distance barrier and accelerated the growth of business by leveraging the market opportunity and
expand the business growth effectively. Especially the new venture makes the best possible
advantage of digital media as they gets the online space due to which it become comparatively
easier for them to communicate with customer and promote their website through various
platform like social media or SEO. For the better understanding of report Tesco company has
been selected which is one of the largest grocery store that have strong distribution channel. The
company cater the need of the customer through both retail outlet as well as digital platform.
There are different type of business that have different purposes but the mode to deal
with customer is via digital or traditional platform. Like, E commerce model which is the part of
digital business register the domain name and prepare the hosting account to invite the customer.
On other side traditional business includes the brick and mortar model which is the physical
stores that hire the staff who can guide the customers and help them to get the desirable product
or services. Thus, the difference between both the models is defined below:
Basis Digital business Traditional business
Meaning It is the online medium that assist
the user to get the goods and
services by using electronic
devices like mobile, laptop and so
on.
It involve the face to face dealing
where the company deals in the
tangible asset that customer can
touch, experience and feel at the
time of shopping.
Reach The companies such as Tesco
which fall under the category of
digital business has wider reach as
they can prepare the online
Here business can only cater the
audience who are in the proximity as
they can only reach out to the outlet
sand get the required stuffs

catalogue to display their
offerings which can further be
availed by the huge customer at a
time irrespective of their
geographical area.
(Bharadwaj and et.al., 2013).
Result Here with the help of tool and
technique such as google or data
analytics the company can get the
result at real time. It is basically
useful to understand the
customers response and changing
trend.
Although it is necessary for the
traditional media to understand the
dynamics but here the businesses
understand the changing pattern
after a long tenure that can be
quarterly when they prepare the
statements.
Factors that facilitate digital business in recent times
Increase dependence on the electronic devices: As nowadays most of the user explore
the devices like laptop, tablet and most commonly mobile phones. So the large business like
Tesco find it as an opportunity to target the market and reach the prospectus by sending them
personalised messages via text messages or email platform. This has further helped the customer
as well as company to manage the E-CRM. Hence, the sharp adoption of mobile has lead the
digital business to penetrate in the mass market suitably.
Secure transaction: Earlier people used to prefer cash transaction so they were more
likely to visit the physical stores (Korpela and et.al., 2013). But with the increase in awareness
and introduction of secure platform has lead the customer to use debit or credit cards for cashless
transaction. Herein, Tesco that operated globally gives different payment options to the customer
such as use of payment card or cash on delivery. Along with that the representatives of company
remain connected with the customer through helpline number that help the company to retail
trust of consumer.

MAIN BODY
Case study
Tesco is the multinational retail company within UK which has always taken initiative to
adopt the changes that prevail in the external market. In 1961, the company was categorised as
the largest retail outlet in Europe that mean it give wider shopping options to the customers
under food and non food item within the same roof. Even the name of company is recorded in
the Guinness book, which depict a that it has made every possibility to mainatain rthe huge
customer base. Also the company has diversified its business in 13 countries including both
developed and emerging economises to capitalise its reach. Being the revolutionary company, in
2006 it was the only dealer of the food items that earned profitable business out of online
shopping. Further, the company launched different advertisement campaigns that run across the
website of company, yahoo as well as on other platform to engage the customer through online
platform (Pagani, 2013).
Overview
Tesco was founded by Jack Cohen in 1919 in United Kingdom as a group samll groyup
of market stalls. This business appealed the interested of customer and expand rapidly across the
different geographical areas. Like, today the company has around six thousand stores with the
purpose to serve the audience of each and every corner of the world like Ireland, Thailand, UK,
India, China, Poland and so on. To retain the interest of existing customer and invite the potential
customer, the company used the loyalty card and offer heavy discounts to the customer which
makes their product quick cheaper in term of pricing as compare to the other competitor. This
strategy worked in the favour of company (Jansen and Cusumano, 2013). Also the team remain
open to understand the dynamic environment like due to the globalisation has increased the
opportunity for both make and female to get employment. For this, the company constantly
practised to engage the customers through website by offering them proper arena to explore. To
promote this practice Tesco gave the facility of home delivery and used social media to
encourage the responses and generate the source of traffic for company.
The prime objective of Tesco is to remain market leader in terms of selling the quality
product to large customers. For this the company has expanded its modes of operations from the
physical stores to the online platform. Within physical retail outlet the staff of company manages

the inventory in such a way the customer can easily approach the shelf. Along with that it used
RFID technology that automatically send the notification to the supplier to refill the stock of the
company. This has promoted the balance growth between the different stakeholders of company.
Moreover, the site of the Tesco was launched in 2000 and became the largest dealer of home
shopping services. It helped the company to browse the website and explore the catalogue to
purchase non perishable items such as furniture, electronics, toys and so on. Along with this the
company constantly worked on their technology fro the convenience of internal as well as
external stakeholder of company. Due to which Tesco attained the remarkable growth of 70%
and became biggest retail company of UK.
Tesco has done the market segmentation on the basis of different categories such as
geographical as well as demographic. Within, geographical the company target the UK which is
its home country as well as other thirteen countries such as Europe and China. Along with this
under demographic category, it target to both men and women of different age group. As the
prices are reasonable so both middle and low income group people that include employees and
professional avail the offerings of company (Park and El Sawy, 2013).
Key factors responsible for the growth of digital business
The business makes effort to reinvent themselves in the market to gain the potential
platform where they can successfully function and expand their operations. Shifting from
traditional mode to the digital mode is the great transformation that has been experienced by
various companies including Tesco. Some of the key factors that has led the Tesco company to
use digital media are stated below:
Innovation: As use of the innovation and advance technology always help the company
to build the potential image (Selander, Henfridsson and Svahn, 2013). So being the fast mover
Tesco explicitly used the digital platform to flourish the business and serve the immense demand
of the customer effectively. Along with this as different customer prefer content from different
medium so respected company used the images, text as well as video to appeal the interest of
user. Moreover, the company instead of storing data manually used the centralised database
system that record all they necessary information regarding the customer. Thus, on the basis of
repeat purchases the company target the audience and form long term relationship with the end
user.

Comprehensive data collection: This is again one of the main reasons for the Tesco
company to choose the online platform as it assist the business to gather the data of the different
customer and represent the growth of company. Like, with the use of digital business the
company come to know whether it is gives suitable revenue to the company or not. Thus,
massive amount of customers response assist digital business to enhance its strategy and spread
the brand awareness.
Customer relationship: In physical store it is not feasible for the sales representative to
give preferable amount of time to solve each and every customer's query. Further, the website of
company contains the contact detail as well as the area where customer can post their
constructive feedback or reviews. Such information helps the company to adopt the significant or
desirable changes. Similarly the customer support staff can help to reduce the chances of
dissonance by appropriately solving the queries of each and every individual within the
organisation (Hu, Huang and Zhang, 2016). Therefore, this method adequate amount of attention
to the customers query.
Market demand: With the advance use of internet the dependency on the electronic
media increased. Today most of the people experiences busy life due to which they prefer
shopping by staying at their own places. The manager of Tesco was visionary due to which they
before 2000 invested in the online platform and constantly tried to pitched the customer. Later on
it gain the huge customer response that has even improve the profitability or productivity of
company. Hence, there are wide options for the company due to which prepare the innovative
marketing campaign to fulfil the requirement of potential market.
External factor may impact business operations
External factor are the macro factors that directly affect the operations of business. So
these factors need to be appropriately analysed by the organisation before expanding the business
operations. Thus, the explanation of these factors that can affect the performance of Tesco
company are defined below:
Political factor: It represent the tax rate, legislation as well as the stability of the political
parties that influence the performance of Tesco's digital business. As the local authorities of
different region consider it as an opportunity to invite the global retailer as they help to enhance
the employment opportunity for the local residence. This is an opportunity that positively
influences the performance of Tesco company. On other side, as the company has expanded its

business in the emerging economies which is good investment for the future but there the
policies are quite unpredictable due to political instability (Pestle analysis of Tesco. 2018).
Economic factor: It include the disposable income, inflation rate or interest rate that
company identifies to leverage the profit or emerging demand. Although the digital business of
Tesco is growing globally but it generate most of the traffic from UK due to which it has
gathered 30% market share from its home country. In case of inflation when the purchasing
power of the customer decreases Tesco concentration on the advertisement of necessary items
instead of luxury goods to maintain its profitability.
Social factor: It refer to the variety of trend or preferences that changes the interest of
customer like earlier people used to prefer one stop shopping but now their interest has shifted to
bulk shopping. To match the demand of customer the manager of respected company always
welcome the suggestion of loyal customer. Further, within the food range Tesco has stretched its
category by adding low fat snacks or various organic product to fulfil the need of health
conscious people.
Technological factor: Adoption of advance technology and innovation also bring new
opportunity for the companies. The major transition that Tesco bought in its operations was by
investing in the online shopping platform which facilitate the delivery of the product on the
home steps of customer. Along with that the company invest in the energy efficient projects that
is the sustainable method to attain the objectives by reduce the emission of carbon.
Environmental factor: Tesco has always carried out the digital operations by adopting
potential methods that safeguard the interest of external factors. For instance, it has abolished
the use of plastics bags and remain conscious to minimise the chances of wastage. Further, the
company has prepared the objective to reduce the carbon footprint for at-least 50% till 2020.
Along with this the intensive promotion of the digital business is a fuel saving route that is useful
to address the environmental issue.
Legal factor: Within business the government legislation as well as policies plays
significant role which each and every company need to follow smoothly (Teece, 2017). Although
Tesco has faced legal charges in terms of sex discrimination that hampered the image of
company all around the world. But now the company render each and every legislation like fair
wages, healthy and safe working environment effectively for the welfare of employees.

CONCLUSION
From the above report it has been determined that digital business is one of the most
profitable source that help to promote the brand and generate sound revenue. It basically offer
the wide platform from where the company can explore huge market and cater the need of
audience effectively. There are different factors such as innovative use of technology, changing
preferences of customer as well as market demand that has lead the transition. Such revolution
has helped the company to reduce the chances of carbon footprint and save the renewable energy
such as fuel by making all the dealings with the help of digital platform. Although at-times the
company may find certain issues by using digital business like it may not gain the quick response
of the customer or the negative image is company is portrait by the competitor via viral market.
Such issue need to be address by making suitable strategy because it can only help the company
to maintain the positive image of company by maintaining the viable relationship with different
stakeholders. Therefore, special precaution need to be made by company for the external factors
so that they can carry out their sustainable and profitable business effectively.

REFERANCES
Books and Journal
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Teece, D.J., 2017. Dynamic capabilities and (digital) platform lifecycles. In Entrepreneurship,
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Online
Pestle analysis of Tesco. 2018. [Online]. Available
through:<https://businessteacher.org.uk/pestel/tesco.php>