Tesco Plc: Corporate Structure, PESTLE Analysis, and Impact of Factors

This report provides a comprehensive analysis of Tesco Plc, a leading multinational grocery and general merchandise retailer. It begins by explaining Tesco's corporate governance structure, highlighting its hierarchical organizational structure and the roles of key committees and board members. The report then delves into the impact of external environmental factors on Tesco Plc, utilizing the PESTLE framework to analyze political, economic, social, technological, legal, and environmental factors. It examines how political factors, such as government policies and trade regulations, affect Tesco's operations, particularly in international markets. Economic factors, including labor costs, currency rates, and consumer spending, are also assessed for their influence on the company's profitability and strategic decisions. The report further explores the impact of social factors, such as changing consumer trends and demographics, and technological advancements, including online shopping and self-service payment systems. Finally, it touches upon environmental and legal factors, emphasizing their importance in shaping Tesco's business strategies and overall success. The report concludes by synthesizing the key findings and providing insights into Tesco's strategic responses to these external influences.

TESCO PLC

Table of Contents
INTRODUCTION...........................................................................................................................3
1. Explaining how Tesco Plc company is governed...................................................................3
2. Analysing the effects of external environmental factors on the Tesco Plc.............................5
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
It is essential for the management of the business to understand the impact of the macro
factors of business environment that can affect the business operations . In order to run the
business operation successfully, the management has to make strategic plans for the macro
factors of the external environment they are operating in. 6these are some factors that the
business can not control, but with the effective strategic management a company can overcome
from the impact. PESTEL analysis in an effective marketing strategic tool that helps a company
to carry out the essential information regarding Political. Economical, Social, Technological,
Legal and Environmental factors. The present report is based on Tesco supermarket Plc. The
report will help in understanding the history, corporate structure and corporate governance of the
company. Further, the report will discuss PESTLE analysis of Tesco Plc in detail.
MAIN BODY
1. Explaining how Tesco Plc company is governed.
Tesco plc is a British multinational groceries and general merchandise retailers. It has its
headquarter in Welwyn Garden City, England, United Kingdom. Is the UK 's biggest and world's
second largest retailers in measured in terms of revenue growth. It has its stores in more than 12
countries with more than 6553 shops. It is the market leaders of groceries in UK with more than
30% market shares. The company has diversifies from retailers to also into areas such as the
retailing of books, clothing, electronics, furniture, toys, petrol, software etc.
History of Tesco plc:
Tesco was founded in 1924 by John Edward Cohen. John has started out as a marker
stall trader in East end of London. The name Tesco was used on tea, and was derived from the
initial of Cohen's tea supplier. During 1950s and 1960's, Tesco grew organically and also
through acquisition, and owned more than 800 shops. Telco limited was incorporated in 1932.
with the continuous development with great revolution, in 1995 Tesco became the first
supermarket to introduces company loyalty card. The company started diversifying the range of
products it offered including household goods and clothing.

Organisational Structure of Tesco Plc:
Tesco plc follows the hierarchy organisational structure.
Hierarchy structure of organisation structure:
Hierarchy is a way too structure an organisation using different level of authority and a
vertical link of chain of command. That comes from top level executives, to departmental
managers and to the employees (TESCO COMPANY ORGANISATIONAL STRUCTURE
CHART EXAMPLE, 2018). In this structure the higher level authority control the lower level
authority. The higher level management makes all the decisions, policies and strategies foer the
business operations and the lower level managers and employees has to follow their riuules as
per the policies.
As per this type of structure, position and responsibilities are divided into many parts to
ensure work will be done effectively and smoothly. The top level of management have the fill
authority. As shown in the figure, Tesco organisational structured is constructed of five different
committee that are reporting to Tesco PLC Board of group. There are 11 members of Tesco
Illustration 1: Organisational structure of Tesco Plc
Source: (TESCO COMPANY ORGANISATIONAL STRUCTURE CHART EXAMPLE, 2018)

Executives committee which are lead by Group Chief Executive Dave Lewis. Tesco
organisational structure shows its wide business scope.
Tesco Board of Directors are consists of 10 members. In 2015, John Allan is appointed as
the Chairman of the Board on 1st March 2015, Dave Lewis is assigned at the post of CEO in
2014, Alan Steward has assigned the post of Chief financial officer, and four non- executive
directors are there.
2. Analysing the effects of external environmental factors on the Tesco Plc.
In order to perform the business operations successfully it is important for a business to
evaluate the different factors that may affect the business environment and its operations. There
are various macro and micro factors that affect the plans, policies, decisions and strategies of a
business organisation. It is very essential for an organisation to evaluate and analyse the market
and its environment where it is operating its business operations. Each of the external factors and
make proper strategies in order to get success and stay competitive in the industry (Srdjevic,
Bajcetic and Srdjevic, 2012). These factors can help the company in improving its performance
and the area required for improvement.
PESTLE ANALYSIS
Pestle analysis is a framework or tool used by the marketers of the company in order to
analyse the macro environmental factors that have an impact for an organisation. It is referred as
a concept of the marketing principles. It an effective tool helps in make the strategic business
planning. The PESTLE analysis is the analysis of Political, Economical, Social, Technological,
Legal and Environment factors of the marker or the business environment which are important
for strategic management.
PESTLE analysis is very important for Tesco Plc in order to carry out its plan and
strategies to carry out its business operations. In order to make effective strategies it is
important for the company to have all the useful information that can effect and impact the
decision of an organisation. By analysing PESTLE macro factors, company can be able to
recognise its threats and opportunities that are available in the business environment (Kolios and
Read, 2013). PESTLE analysis will help in identifying the elements of the particular markets like
law, physical environment, and perhaps and even the more and ethics of the population. It will
help the company when it plans to operate in some other market. Such information is very

helpful in building effective strategies. It is crucial part for making strategic planning process.
Without the general idea for the information of the external factors that can affect the company's
operation. It is very difficult for a company to carry out its business in order to grow and attain
its organisational goals.
PESTLE analysis of Tesco Plc
Tesco, a multinational food retailing company, it has its headquarter in the UK and is
operating in more than 12 countries over the world. It is the second largest retailers in world in
terms of profit margins and revenue. Tesco has also expanded its business from just retailers of
food and non-food products, than providing finance, mobiles, insurance , hardware machines and
many more (Hillson and Murray-Webster, 2017). In order to make effective strategic planning
for further growth and expansion its important for Tesco plc to analyse its external business
environment factors that can affect its business operations. The PESTLE analysis of Tesco Plc
are:
POLITICAL FACTOR:
As the retail operators are operating in more than 12 countries. It has to face the different
political environment of the countries. Tesco person is highly influenced by the political factors
like government policies, political stability or instability in overseas markets, foreign trade
policy, tax policy, labour law trade restrictions etc. all these factors indicates the level to which
the government influences in the economy of the country. These factors are crucial importance in
strategic management of Tesco plc. Political policies like import duties on goods has affected the
revenue of the company as it imports some material and stock from outside UK for
manufacturing the product like from East Asia.
The chairman of Tesco plc informs that the changing political condition are affecting the
business of Tesco. He added that the Eu referendum are creating a big risk factors for investors
as British economy is unstable because of Brexit (Tahseen and Karney, 2017). These is a tax
called TESCO TAX that was proposed to be imposed on UK large supermarket, but was reduced
as it would lead to rise in the price of products. The other political factors that have affected the
business of Tesco are:
 political stability and the part retail sector in the country's economy.

 Level of regulations in consumer services.
 Taxation, and wages legislation etc.
Economical factor:
These factors are the main concern for the Tesco retail plc as they are more related to the
cost, demand and supply, profit and prices. Tesco should be aware of the economic factors of the
country that can impact the operations of Tesco in that country. The changes in policies, the
taxation, currency rates are the factor that affect the accessibility of finance (López López,
2017). With the successfully growth of Tesco in international market, it is still depends on the
economic condition of UK market as it has over 30% market share.
The other economical factor is labour market cost, Wage rate in UK is increased by 4.4%
for the age of 25 years, it cost to the Tesco revenue for the year as they have to pay more wages
to the labour. The increasing borrowing cost in UK is another factor as it leads to increase in cost
and price and thus reduce the profitability of Tesco plc in UK. Tesco is making strategies for
adverse affect of the economic factors in a country (Kew and Stredwick, 2017). After the
recession of the 2008, the uncertainty in financial condition., the spending power of consumer
are decreasing which can affect the profit of the Tesco plc. After 2011, the unemployment rate in
UK has rise , which resulted in fall in income of the people. Thus the retail supermarket like
Tesco has suffered as the people are spending less on food and non-food products.
Social factors:
These are the factors which influences the social environment of the market with the
determinants like cultural trend, demographics, population analytics etc. As Tesco is operated in
12 countries, it faces different social culture and de3mpghraphicvc trends of the countries. The
strategies or the policies of the company should be based on the information of such changing
needs and requirement of the social factor. With the increasing in the globalization, consumer
shopping trend are also changing. Consumers want to have different technology that can ease
their shopping method, like online technology, fast and flexible delivery style.
Tesco is highly dependent on the UK customers and should understand their preferences
in order to gain their loyalty and retention in order to grow in market (Tesco PESTEL Analysis ,
2018). With the changes in current trend of British customers oh One stop shopping, Tesco has

started to increased the more amount of products to offer in their stores. The demographic
changes such as ageing population and increase in women employees tends to decline in the
preparing meal at home. It helps in increasing the purchase of food products in UK. The retailers
in UK, especially Tesco are focusing on offering variety og food products in stores and offers
sales in order to increase the sales and revenue of business. Tesco should develop and develop
new product line keeping in view to the changing social factors.
Technological factors:
The advancement in technology has opened a door for opportunities for Tesco. The main
development is inline shopping with the is the current market trend in all over the world. The self
service payment mode has also made it ease for the customer as well as to the company as the
labour cost is reduced. Tesco was facing poor customer experience few years back because of the
horse-meat scandal. But with the help of technological advancement, Tesco has succeeded in
gaining the customer trust again. Tesco has also developed its online mobile payment system.
called PayQwid. Using this app customer can pay online for shopping and get loyalty points
(Hopkin, 2018). The launch of Efficient Consumer Response(ECR) initiative has helped in
providing the shift that is now apparent in the management of the food chain in stores. Tesco is
using various technology in its stores that helped the customer satisfaction and reducing the
labour cost. Some of these technology are:
 wireless devises
 electronic shelf labelling
 radio frequency identification
 self check-out machines
Environmental factors:
Different markets have different norms and environmental standards which impact the
profitability in those markets. Lot of European countries have given a healthy tax breaks that are
operating the renewable sectors. Tesco has collaborated with Global Action Plan which helped in
training and giving employment to young individuals in order to help reinforcement positive
employment friendly behaviour in them. These people has become the Energy Ambassadors of
Tesco in order to reduce Carbon Footprint of the company. Further, Tesco is committed to use

renewable sources and generate 100% of its electricity by 2020 (Newby, 2018). the company has
agreed to minimize Carbon Footprint by 50% up to 2020. Tesco is also taking initiative in
reducinhg wastage in its stores and by increasing social conscience in customer.
Legal Factors:
There are certain laws that can affect the business environment of Tesco. there also some
internal factors of law and regulations which company maintains for themselves. The food
retailing commission in 2004 has set standards like Code of practise in introduced which will ban
many current practices, such as changing the price of the products without notice or demanding
payments from suppliers. To facilitates this Tesco has started to cut in the price of the products.
However, in 2016 Tesco's 17 employees has taken legal actions against employer on the basis of
age and gender discrimination. They were also complained about the low wage rate for nights,
bank holidays shifts. Further, Tesco has also faced the legal action some accounting fraud issues
and misleading the investors foe which the company has to pay 12 million to settle the legal
action.
CONCLUSION
By summing up the above report it can be concluded that, the macro environmental
factors that impact the strategic management and planning of the Tesco plc with the help of
PESTLE marketing tool. The present report has concluded general review of the Tesco Plc with
its history, organisational structure and its corporate governance. The report has also discussed in
brief the importance of PESTLE analysis in order to evaluate the macro environmental factors on
business environment. Further, the report also concluded the importance of PESTLE analysis.
Later, the report has also discussed the different factors and PESTLE, Political , economical.
Social, technological, legal and environmental factors that has impacted the Tesco supermarket
Plc.

REFERENCES
Books and Journals
Hillson, D. and Murray-Webster, R., 2017. Understanding and managing risk attitude.
Routledge.
Hopkin, P., 2018. Fundamentals of risk management: understanding, evaluating and
implementing effective risk management. Kogan Page Publishers.
Kew, J. and Stredwick, J., 2017. Business environment: managing in a strategic context. Kogan
Page Publishers.
Kolios, A. and Read, G., 2013. A political, economic, social, technology, legal and
environmental (PESTLE) approach for risk identification of the tidal industry in the United
Kingdom. Energies. 6(10). pp.5023-5045.
López López, N., 2017. Different ways to assure the continuity of the business.
Newby, P. K., 2018. Food and Nutrition: What Everyone Needs to Know®. Oxford University
Press.
Srdjevic, Z., Bajcetic, R. and Srdjevic, B., 2012. Identifying the criteria set for multicriteria
decision making based on SWOT/PESTLE analysis: a case study of reconstructing a water
intake structure. Water resources management. 26(12). pp.3379-3393.
Tahseen, S. and Karney, B., 2017. Opportunities for increased hydropower diversion at Niagara:
An sSWOT analysis. Renewable Energy. 101. pp.757-770.
Online
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