External Environment Analysis of Tesco in the 21st Century

This report provides an analysis of Tesco's business operations in the 21st century, focusing on how the company navigates its external environment. It begins with an introduction highlighting Tesco's significance as a leading UK retailer and its adaptation to changing consumer demands. The report then delves into an external environment analysis using the PESTLE framework (Political, Economic, Social, Technological, Environmental, and Legal factors) to assess how these macro-environmental elements impact Tesco's performance. It examines opportunities like market share expansion and technological advancements, alongside threats such as competition from Aldi and Lidl. The report concludes by summarizing Tesco's strategic responses to these challenges, emphasizing its efforts to maintain market goodwill and revenue generation through strategies like online platforms, self-checkout options, and adapting to consumer needs. The report also references Tesco's financial performance and commitment to environmental sustainability.

Business in the
century

Table of Contents
Introduction.................................................................................................................................................3
External environment analysis.................................................................................................................3
Opportunities and threats.......................................................................................................................4
Conclusion...................................................................................................................................................5
References...................................................................................................................................................6

Introduction
Organization plays a vital role in satisfying the need and requirement of economy
because different organizations provides different services to the economy which helps in
satisfying the basic needs customers. In 21 century demand of the people are changing as per the
upcoming trends due to which they required the best and unique services from the organization
due to which companies also tries to develop their services as per the demand of the customers
so that growth of the economy can take place and profit of the business can also be increased in
the market .Tesco is one of the top retailer company in UK which was founded in 1919 by Jack
Cohen.its headquartered in welwyn garden city England. Its demand in the market is more as
compared to other organization in the market due to the services which it provides to the
customers. Tesco provides different variety of goods and services to the customers which helps
in developing the productivity of the company which will further help in maintaining goodwill
of the company. In this report it will be analyzed how external environment affects the
functioning of the business and how business overcome from the challenges of the external
environment to maintain its goodwill in the market (Kwiatkowski, 2018).
External environment analysis
There are different factors in the external environment of the business which are affect
the functioning of the business in the marketplace. To observe the activities of external
environment pestle analysis has been done. Pestle analysis is basically a method which is used to
analyze macro environment so that functioning of the company should not affected and smooth
functioning of the company can take place. Pestle stands for economical, political, social,
technological, environmental, legal. Political factors: These are the factors which can affect the
profit of the business in the market if government will impose high rates on the goods and
services then it can affect the import and exports of the goods due to which revenue generating
power of the business will get affected. In order to maintain the financial stability of the
economy government has encourages the retailer organization to provide the job opportunities to
the people so that growth of the economy can take place due to which Tesco is providing the
employment opportunities to the economy so that growth of the economy can take place
effectively. Economic factors: these factors can affect the financial condition of the business
because if the inflation rate will get higher then it can impact the demand of the company in the
marketplace due to which revanue of the company also get affected in market. organization
should be aware about the changes in the policies, taxation etc so that functioning of the
company cannot get affected (Polson, 2020). Tesco id dependent on the UK market where it has
30% market share due to which it is important for the business to analyze the economic condition
of the market. Social factors: In today’s world demand of the individual is changing as per the
trend which gets developed in the economy due to which organization has to develop its services
as per the need and demand of the buyers so that growth of the economy can take place demand
of the customers can also be satisfied effectively. If the organization will not produce its goods
as per the trends which is taking place in the economy then it can affect the demand of the
organization due to which revenue of the company will also get affected in the market.

Technological factors: There are various advance technologies which are taking place in the
economy like ecommerce platforms tesco has developed its websites where people can buy the
goods and services provided by the tesco by the comfort of their home. Tesco has also adopted
the self checkout services for the customers which will helps in providing better services to
buyers. It will also helps in reducing labour cost in the company which will generate the revenue
of the company in the marketplace. use of advance technology in the business helps in attracting
the attention of the customers which will increasing the revenue of the company in the economy.
it will also helps in providing competitive advantage to the business in the market.
Environmental factors: in order to maintain the environment clean and healthy Tesco has
committed to reduce the carbon footprints by 50% in 2020 so that environmental conditions can
get affected and healthy environment can be maintained. Tesco has reduces the use of carbon
from the organization which will helps developing the demand of the company in the
marketplace due to which demand of the company will also get increased in the market. if the
environmental conditions will not be stable then it can develop various diseases in the business
which will affect the growth of the economy (Yoder, 2019). Legal factors: In order to perform
smoothly in the economy there are various rule and regulation which are given by the
government on the basis of which organization has to plan there activities. Tesco has offered the
price reduction offers to the customers on the fuel in accordance to the money invested on the
grocery items so that demand of the company can be increased in the marketplace. if the
organization will change the price of the goods and services without any notice then it can affect
the growth chances of the business in the economy. From the last three years there are various
changes which are taking place in the external environment due to which company is also
planning its strategies accordingly like use of advance technologies in the business like
ecommerce platforms, self checkout options etc which will helps in raising the demand of the
business in the marketplace. tesco is also developing its services as per the needs and
requirement of the customers so that demand of the economy can be fulfilled effectively. As per
the research it has been analyzed that from the 2019/2020 finacial years the overall revenue of
the tesco is 53 billion pounds which is huge achievement for the business. this was an increase of
1.3 billion from the prior financial years the overall sales of the business is increasing every
years due to which revenue of the company also gets raised in the marketplace.
Opportunities and threats.
There are various opportunities and threats which are faced by the business like tesco has
increased its market share by opening 1000 stores in UK and international market which will
help in increasing the overall profit of the business in the marketplace. It organization will focus
on the non food based item then it can helps in developing the market share of the business in the
coming years if the organization will have franchise agreement with the other industries then it
will helps in increasing the global market share of the company in the market. it has been
predicted that if the organization will promotes its services through the online platform then it
will helps in generating the revenue of the company in the marketplace. There are various threats
which can provide impact the functioning of the business in the marketplace like arrival of the

competitors in the market. aldi and lidl are the biggest competitors of the tesco they provide the
high quality of products to the customers at the discount prices which can affect the demand of
the business in the market (Visser, 2017). it has become very difficult for tesco to compete with
these organization on the basis of prices. To overcome from the threats various strategies has
been planned by the business like providing offers to the customers, developing unique quality of
goods in the marketplace providing attractive services to the buyers by the use of new and
advance technology in the business so that more people can get attracted towards the
organization and profit of the company can also get increased in the economy.
Conclusion
From the above report it has been concluded that tesco has successfully performed its
activities by analyzing the factors of the external environment the analysis of external
environment has been done with helps of pestle analysis due to which performance of the
business has also been enhanced in the market. if the organization will analyze the macro
environment effectively then it can affect the over functioning of the business due to which profit
of the business will get affected in the market. there are various opportunities which will help
tesco to increase its market share in the economy on the other hand there are threats also that can
affect the performance of the business in the marketplace like arrival of the competitors in the
economy but to maintain the goodwill of the business tesco has planned various strategies to
over from the threats which can further helps in generating the revenue of the company in the
marketplace.

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