Analyzing Tesco's Strategies in a Changing Business Environment

This report provides an in-depth analysis of Tesco's response to the COVID-19 pandemic, focusing on the changes implemented within its global business environment. It examines the impact of the pandemic on customer habits, the adoption of remote working, adjustments to organizational operations, financial strategies, and technological advancements. The report utilizes the PESTEL model to evaluate the political, economic, social, technological, environmental, and legal factors influencing Tesco's actions. Furthermore, it critically assesses the sustainability of these changes, considering factors such as evolving customer needs, competitive pressures, and the potential for long-term success. The report also references Porter's five forces model to evaluate the competitive landscape and threats faced by Tesco. The conclusion emphasizes the importance of understanding the business environment for effective management and sustainable growth.

THE GLOBAL BUSINESS
ENVIRONMENT-2

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1) Critical evaluation of changes adopted by companies due to Covid-19 ................................3
2) Sustainability of changes adopted during Covid-19 ..............................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Environment with reference to business can be defined as all the forces either internal or external
to the business affecting its decision making and operations. When we talk about global business
environment it refers to environment of different countries with all the factors unfamiliar for the
domestic country which impacts firm's in the domestic country in terms of its decisions,
capabilities and operations. In this report impact of global business environment has been
discussed due to COVID- 19 pandemic. Here in this report Tesco has been taken to study the
changes it has adopted to cope up with the challenges of Covid-19 and changes adopted for the
same. Tesco is a supermarket giant in UK' supermarket industry.
MAIN BODY
1) Critical evaluation of changes adopted by companies due to Covid-19
In past few months almost all countries and companies within these countries has experienced a
massive change in terms of its working, decision making, customer offerings, etc. due to Covid-
19 pandemic. Some of these challenges and resulting changes are great but some are very
challenging to adopt and sustain with these challenges and changes. Here a list of changes and its
critical evaluation has been given. These are then connected with what we already studied in the
class and how it is beneficial in catering and understanding challenges like such pandemic.
Changes to tackle customers habits:Due to this pandemic, supermarket like Tesco has
experienced a lot of change in customers habit of making their regular purchases. These days
customers demanded more from online grocery stores rather than stepping out for each and every
thing (Al-Mansour and Al-Ajmi, 2020). This trend of online business has forced companies to
re-devise its strategies to grab the opportunities of digital market and target customers of these
segment. But the adoption of digital market over traditional market system requires advance
technology and expertise to operate business.
Adoption of remote working: Almost all companies in the world has adopted remote working
habits which allows for continued employment for the workforce and ensures financial stability
of them (Amankwah-Amoah, 2020). This trend of remote working demands technological
advancement which adds to the costs of operations because companies along with the well
developed system for integrated workforce also gave computers and laptops to the employees to
carry out their work from home. On the other side it is helpful for both companies and its

employees as the company can continue its business operations during lock-down and curfew
where employees enjoy continuous employment of them.
Changes in organisational operations: Due to Covid companies has adopted many changes in its
operations like Tesco has adopted changes in delivery system and customer offering system
which has increased demand for employing workforce for continuous and timely delivery. Also,
it has made changes in its product design and the way it offers the same to customers, to make
sure that the customer's need of safe and healthy delivery can be fulfilled. Tesco has experienced
more than twice increment in sales of online grocery stores by making probable changes in its
organisational module (Amankwah-Amoah, 2020).
Changes in financial set up: Companies have made many changes in their financial set up like
they become more bother about short term fund requirement to ensure enough liquidity for
market opportunities that are coming their way for company's future and sustainability. But the
problem of falling sales and revenue along with increased costs where the former has occurred
due to interruptions in business activities in times of lock-down and also because of changes in
customer needs and preferences. The increased costs is the result of investment demand for
adopting advance technology and improving processes to implement remote working system. So
the company needs to take an action to recover from downturn and adopt changes for financial
sustainability.
Changes in technology: Companies has invested a lot in technological advancement which is
must for facilitating work from home and helps company in adopting first mover advantage.
Without going for new technology, companies cannot survive in the market in pandemic times
(Brenner, 2018). Machine learning and artificial intelligence are the two technological
development brought up by Tesco which is helpful in meeting street level requirements.
In PESTEL model we have learnt that factors such as political, economical, social, technological,
legal, and environmental has an impact on the overall business activities. The knowledge of these
factors and early adoption of changes in these factors is must for survival and sustainability of
every organisation. In the light of Covid-19 we can understand that how these factors influence
the businesses throughout the world and its pattern of working. It has impacted businesses in
such a way that, many businesses who adapt to these factors earlier than others remain sustain in
the market along with good profit making. On the other hand many businesses has lost its
presence and suffered huge losses.

Political factors: Political factors which can influence companies are political changes, change
in government, change in policies of government,etc. In the times of Covid governmental
policies like restrictions on various activities, imposing lock-down and curfews has affected
many businesses. Many companies have reacted to these policy changes and tries to find out
alternative way of working like despite of lock-down companies adapt to remote working which
enables them to ensure continuous survival and success (Chakraborty and Maity, 2020).
Companies who are fails to adopt changes has suffered huge losses and permanent shutdowns.
Tesco has also reacted positively to such governmental policy and increase its sales through its
online grocery stores
Economic factors: Covid-19 has not only causes loss of life but also affected world economy
which results in fall of productivity, business shutdown, trade interruptions between countries
and industrial impact majorly on aviation, tourism and hospitality. These all have affected
economies of the world. Tesco has also experienced change in its profits due to economic
factors.
Social factors: Factors such as change in customer's preferences, needs and their buying habits
has a lot of impact on businesses throughout the world. Companies must adopt possible changes
according to the customer's need and preferences for the social benefits in times of pandemic and
also, to ensure its continuous sustainability in the market (Hamilton and Webster, 2018). Tesco
also needs to adopt changes for its target customers welfare.
Technological factors: Technological advancement and innovations in the area of technology
has emerged during Covid-19 which has impact on the operations of the companies. Those
companies who adopted these changes on time get success in the marketplace while those who
are not able to do so failed to survive in the market. Tesco has properly organized its logistics
system and also increases delivery slots. It has provided access to its customer through online
grocery stores.
Environmental factors: Environmental factors must be kept in mind to fight with Covid-19
pandemic which include use of those packing pattern which minimises the transfer of this
infection without compromising on environmental issue like pollution and non- renewable
goods. Tesco uses shopping bags for delivery purpose to protect its customers from infection
which also protects environment.

Legal factors: All the important factors which are legally bounded by the laws and legislation of
the economy with regard to the pandemic must be adhered to by the businesses, ignorance of
which may cause huge fines and penalties (Lee and Trimi, 2020). Tesco being in the supermarket
industry must follow the laws related to retail stores during pandemic.
In this way understanding of PESTEL model helps Tesco in achieving success in the
marketplace and compete with its competitors to survive in the market for sustainable growth
and development.
2) Sustainability of changes adopted during Covid-19
Covid-19 pandemic has allowed for many changes to be adapted by the companies to continue
its operations and remain sustained in the market. Some of these changes are critical to adopt
whereas some are not but evolved as the change in pattern of doing business. It is always being
asked whether these changes are sustainable or not, or is there any alternate solution available
with the companies to sustain in the market during pandemic time.
 In the first point we have discussed that many companies have adopted changes to tackle
customer's need and preferences during Covid 19 pandemic. It is being argued that
whether this change is sustainable or not, so it is sustainable till any other opportunity in
the digital market will come. With the change in time, customer's need and preferences
keep changing and companies have to keep track of these changes that are to be come up
and reacts accordingly (RAO, 2020). Many competitors are there in the market who
always look for better opportunity to remain in the market for long term. So changing
according to the customers need always ensures sustainability. Like, if post Covid,
customers can still demand for online shopping so it would be better for long term
survival.
 In the second point above it is given that almost all the companies in the world has
adopted the policy of remote working due to restrictions during lock-down on stepping
out of the homes. Many companies have announced that they will be continue with this
pattern of working for around 5 to 10 years to come. This policy can be successfully
sustained till the pandemic completely gets over, but after this the concept of remote
working may lose its utility because the company will again adopt its usual working
pattern. The alternate solution adopted by many companies to cater to such pandemic is
50% employee's base, alternate shifts and maintaining social distancing at workplace.

 Organisational operations has changed and if this change doesn't sustain then the
company can opt for artificial intelligence which can be helpful in operations and
sustainability (Verma and Prakash, 2020). This is just because artificial intelligence is
helpful in avoiding any kind of human interactions.
 With the changes in financial set companies can be benefited with financial sustainability
if their financial plan and financial management remains in place. In response to Covid
they may change their financial set up by ensuring enough liquidity and financial
stability. They can also rely on loan from various financial institutions for short term
liquidity and investments. But for longer term they have to go for proper financial
planning and analysis of various financial factors to improve its financial performance
and financial sustainability.
 Coping up with technological advancement always considered as a positive attribute of
every company, whether it is during pandemic or anything else. Such technological
developments always ensures long term sustainability in the market (Zahra, 2020). There
is no deny of the fact and there is no other way to remain competitive in the market
without any innovations and technological developments.
In Porter's five forces model we have studied that there are five forces to evaluate
competitive environment of every company where threats of its substitutes, competitors and new
entrants are included. Bargaining power of buyers and bargaining power of customers are also
there. In the light of Covid 19 if Tesco will not change its offerings as per customer's
specifications, then they may experience threats from its competitors Asda and Sainsbury's who
can throw it out of the market with its immediate actions. Also, there is a threat of new entrants
in the market who can outperform in the market by doing something out-of-the-box. They can
make use of new technology or any innovations of their own in times of pandemic to cater to the
needs of customers and their preferences which can be a threat to Tesco's survival and
sustainability.
CONCLUSION
From the above report it has been concluded that the business environment has a lot of
impact on the business performance. Management and policy maker must study and understand
it carefully to remain competitive in the market. No business can survive without proper

understand of it. In this report it has been discussed that how a pandemic like Covid 19 has
impacted businesses throughout the world and their reactions and changes adopted to cater to the
need arised due to it. Thereafter, Tesco a supermarket giant and its PESTEL model and Porter's
five forces models has been explained in the context of Covid 19 pandemic.

REFERENCES
Books and Journals
Al-Mansour, J. F. and Al-Ajmi, S. A., 2020. Coronavirus' COVID-19'-Supply Chain Disruption
and Implications for Strategy, Economy, and Management. The Journal of Asian Finance,
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shocks: Insights on global airlines’ responses to COVID-19. Transportation Research Part
E: Logistics and Transportation Review. 143. p.102098.
Amankwah-Amoah, J., 2020. Stepping up and stepping out of COVID-19: New challenges for
environmental sustainability policies in the global airline industry. Journal of Cleaner
Production. 271. p.123000.
Brenner, B., 2018. Transformative sustainable business models in the light of the digital
imperative—A global business economics perspective. Sustainability. 10(12). p.4428.
Chakraborty, I. and Maity, P., 2020. COVID-19 outbreak: Migration, effects on society, global
environment and prevention. Science of the Total Environment, p.138882.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Lee, S. M. and Trimi, S., 2020. Convergence innovation in the digital age and in the COVID-19
pandemic crisis. Journal of Business Research. 123.pp.14-22.
RAO, S. P., 2020. International business environment. HIMALAYA.
Verma, A. and Prakash, S., 2020. Impact of covid-19 on environment and society. Journal of
Global Biosciences. 9(5). pp.7352-7363.
Zahra, S. A., 2020. International entrepreneurship in the post Covid world. Journal of World
Business. 56(1). p.101143.
Online
Covid 19 and Businesses- Responses to Crisis. 2020. [Online] Available through<http://www.ila-
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