Tesco: External Environment Analysis and Business Activities Report
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This report analyzes Tesco's business strategy, focusing on the impacts of external environment factors on the entrepreneurial activities of the firm. It delves into a PESTLE analysis, examining the political, economic, social, technological, environmental, and legislative factors affecting Tesco's operations. Furthermore, the report utilizes Porter's Five Forces model to evaluate the competitive forces influencing entrepreneurial activities and profitability within the retail industry. An internal resources and capabilities analysis of the organization is also conducted, employing the VRIO framework to identify Tesco's strengths and weaknesses. The report concludes with a summary of the findings, emphasizing the importance of strategic tools for understanding the micro and macro environments. The analysis provides insights into how Tesco can maintain a competitive advantage in the market by adapting to the external environment and leveraging its internal capabilities.

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Table of Contents
INTRODUCTION...........................................................................................................................1
Impacts of external environment factors on the entrepreneurial activities of the firm..........1
Effect of the competitive forces on entrepreneurial activities and the profitability of business.3
Internal resources and capabilities analysis of the organisation.............................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
INTRODUCTION...........................................................................................................................1
Impacts of external environment factors on the entrepreneurial activities of the firm..........1
Effect of the competitive forces on entrepreneurial activities and the profitability of business.3
Internal resources and capabilities analysis of the organisation.............................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Entrepreneur is a person who organizes a venture that provides various benefits to the
society and the owner. According to the modern era, entrepreneur plays a key role for the
economy of a country by contributing various perspective from the organisation. As entrepreneur
are those person who formulates new ideas for the society in order to enhance, skills and
capabilities of individuals. The main motive of the entrepreneur is to develop and establish new
business that helps individuals to earn high amount of profits or rewards. Further, this report is
written from the perspective of Tesco which is one of the leading retail organisation in the UK
(Diachenko, 2014). They operates their business at global level and its headquarter is situated in
the Hertfordshire. Moreover, this report highlights on the PESTLE that helps to understand the
external environment. Along with this Porter's five force model will also be included in this
report for the analysis and its impacts on entrepreneurial activities and profitability of the
organisation. Along with this it also focus on internal resources and capabilities of a firm.
Impacts of external environment factors on the entrepreneurial activities of the firm
Political factors- Retail business is one of major industry that is increasing its with a
constant rate. In the context of TESCO, the retailing organisation is operating their business at
global level. Therefore, global politics directly impacts on entrepreneurial activities of the
organisation. It determines that due to political instability at global level it is difficult of TESCO
to recruit effective employee's from different countries, due to which the operations of
organisation consume more time to complete them accurate manner.
Economic factor- The economic factor is one of major concern for TESCO because it is
directly related the leverage cost, demand profits and prices. So it is mandatory for the
organisation to identify the essential changes relates with policies (Eglese, 2014). This governs
due to change in taxation policy, financial results, interest rate etc. impacts on the sales and
profits of the TESCO. As to sustain for longer period in global business, management of TESCO
monitors regulates changes in the society.
Social factor- Their are various changes are seen in the society because of the different
culture and change in customer's demand or needs. In the present scenario, customer's in the UK
follow the pattern of bulk shopping. So company need to manage those activities which are
1
Entrepreneur is a person who organizes a venture that provides various benefits to the
society and the owner. According to the modern era, entrepreneur plays a key role for the
economy of a country by contributing various perspective from the organisation. As entrepreneur
are those person who formulates new ideas for the society in order to enhance, skills and
capabilities of individuals. The main motive of the entrepreneur is to develop and establish new
business that helps individuals to earn high amount of profits or rewards. Further, this report is
written from the perspective of Tesco which is one of the leading retail organisation in the UK
(Diachenko, 2014). They operates their business at global level and its headquarter is situated in
the Hertfordshire. Moreover, this report highlights on the PESTLE that helps to understand the
external environment. Along with this Porter's five force model will also be included in this
report for the analysis and its impacts on entrepreneurial activities and profitability of the
organisation. Along with this it also focus on internal resources and capabilities of a firm.
Impacts of external environment factors on the entrepreneurial activities of the firm
Political factors- Retail business is one of major industry that is increasing its with a
constant rate. In the context of TESCO, the retailing organisation is operating their business at
global level. Therefore, global politics directly impacts on entrepreneurial activities of the
organisation. It determines that due to political instability at global level it is difficult of TESCO
to recruit effective employee's from different countries, due to which the operations of
organisation consume more time to complete them accurate manner.
Economic factor- The economic factor is one of major concern for TESCO because it is
directly related the leverage cost, demand profits and prices. So it is mandatory for the
organisation to identify the essential changes relates with policies (Eglese, 2014). This governs
due to change in taxation policy, financial results, interest rate etc. impacts on the sales and
profits of the TESCO. As to sustain for longer period in global business, management of TESCO
monitors regulates changes in the society.
Social factor- Their are various changes are seen in the society because of the different
culture and change in customer's demand or needs. In the present scenario, customer's in the UK
follow the pattern of bulk shopping. So company need to manage those activities which are
1
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related with bulk shopping. Therefore, to overcome from the impact of social factor TESCO
increases the number non-food items in organisation.
Illustration 1: Source(https://prezi.com/3vd5fqnqm5le/tesco-pestel-
analysis/)
Technological factor- Their are various factor in technology have brought various new
opportunities for retail organisation. Two of the most distinct aspects which are included in
technical aspects is development and introduction of online shopping. Like the home delivery,
self-service check out and customer's discounts (Hammad, 2015). Along with TESCO also
invested large amount of money as it increases the customer's base of organisation that helps to
achieve their objective.
Environmental factor- From the past years there is regular increase in the awareness of
environment safety and to adopts CSR activities etc. This results it increases the customer's area
for business due to which more amount of profits will be earned by the organisation by
improving their goodwill among the society. Further, the environment factor directly impacted on
the goals and activities of TESCO because it is directly effect on its sale. So to reduce the impacts
of this management is already committed towards reducing their carbon footprint with 50%
which works as positive factor of the organisation.
Legislative factor- Government policies and legislations are directly related with the
performance of TESCO. Like the Food retailing commission, retail industry, authorities
introduces various code of practice that impacts on the current practice and policies of TESCO. It
2
increases the number non-food items in organisation.
Illustration 1: Source(https://prezi.com/3vd5fqnqm5le/tesco-pestel-
analysis/)
Technological factor- Their are various factor in technology have brought various new
opportunities for retail organisation. Two of the most distinct aspects which are included in
technical aspects is development and introduction of online shopping. Like the home delivery,
self-service check out and customer's discounts (Hammad, 2015). Along with TESCO also
invested large amount of money as it increases the customer's base of organisation that helps to
achieve their objective.
Environmental factor- From the past years there is regular increase in the awareness of
environment safety and to adopts CSR activities etc. This results it increases the customer's area
for business due to which more amount of profits will be earned by the organisation by
improving their goodwill among the society. Further, the environment factor directly impacted on
the goals and activities of TESCO because it is directly effect on its sale. So to reduce the impacts
of this management is already committed towards reducing their carbon footprint with 50%
which works as positive factor of the organisation.
Legislative factor- Government policies and legislations are directly related with the
performance of TESCO. Like the Food retailing commission, retail industry, authorities
introduces various code of practice that impacts on the current practice and policies of TESCO. It
2
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governs that with the regular changes it is difficult for organisation to manage their work by
following the regular policies for the functions and operations of TESCO.
Effect of the competitive forces on entrepreneurial activities and the profitability of business
Porter five force analysis is one of the most strategic tool which is used to analyse
industry and understanding various factors for industry. TESCO plc managers utilise Porter five
model for better understanding about the profitability and strategy that all relates with retail
industry. Steps relates with Porter five force model is mention as below:
Threats of new entrants- The threat of new entrants is low in context of retail industry.
As to enter in the retail industry it is mandatory for new organisation to invest large amount of
money. Such as reducing their cost of production, to implement low pricing strategies and many
more (López and Ferrándiz, 2016). TESCO activities are effected as low prices reduces the
quality of their products. Similarly profits are also impacted because of decreasing the price. In
order to tackle new players TESCO regularly innovate their products. So existing as well as
existing customer's of organisation sustain for longer periods.
Bargaining power of suppliers- Most of the retail organisation purchases their products
from several suppliers. Suppliers in the dominant position are able to reduce the margins of
organisation. But in context of TESCO the bargaining power of supplier is low because they
purchase products from organisation in bulk amounts. Moreover, bargain power of supplier is
also related with the entrepreneurial activities as if they not provide goods then it is complex for
TESCO to deliver its products to customer's (Sheela and Jalal, 2014). Along with this
management of TESCO also build positive relations with multiple suppliers which works as a
positive factor for organisation.
Bargaining power of buyers- In the present scenario, consumer or customer's are the
king of market. So buyer power is high with in retail industry. This determines that with several
positive factor such as customer's buyer relates with positive factor as it is essential for
organisation to impact large in completing their goals in minimum time period. In the present
scenario, various factors which is used to retain customer's for longer period is discount, one plus
one offer and many more. So new products are used by TESCO to increase their profits again.
Threats of Substitute products- Whenever new products and services meets with the
customer's needs it is easy for organisation to increase their sales. In the context of retail industry
the threat of substitute products will be increased as small amount of products are similar in
3
following the regular policies for the functions and operations of TESCO.
Effect of the competitive forces on entrepreneurial activities and the profitability of business
Porter five force analysis is one of the most strategic tool which is used to analyse
industry and understanding various factors for industry. TESCO plc managers utilise Porter five
model for better understanding about the profitability and strategy that all relates with retail
industry. Steps relates with Porter five force model is mention as below:
Threats of new entrants- The threat of new entrants is low in context of retail industry.
As to enter in the retail industry it is mandatory for new organisation to invest large amount of
money. Such as reducing their cost of production, to implement low pricing strategies and many
more (López and Ferrándiz, 2016). TESCO activities are effected as low prices reduces the
quality of their products. Similarly profits are also impacted because of decreasing the price. In
order to tackle new players TESCO regularly innovate their products. So existing as well as
existing customer's of organisation sustain for longer periods.
Bargaining power of suppliers- Most of the retail organisation purchases their products
from several suppliers. Suppliers in the dominant position are able to reduce the margins of
organisation. But in context of TESCO the bargaining power of supplier is low because they
purchase products from organisation in bulk amounts. Moreover, bargain power of supplier is
also related with the entrepreneurial activities as if they not provide goods then it is complex for
TESCO to deliver its products to customer's (Sheela and Jalal, 2014). Along with this
management of TESCO also build positive relations with multiple suppliers which works as a
positive factor for organisation.
Bargaining power of buyers- In the present scenario, consumer or customer's are the
king of market. So buyer power is high with in retail industry. This determines that with several
positive factor such as customer's buyer relates with positive factor as it is essential for
organisation to impact large in completing their goals in minimum time period. In the present
scenario, various factors which is used to retain customer's for longer period is discount, one plus
one offer and many more. So new products are used by TESCO to increase their profits again.
Threats of Substitute products- Whenever new products and services meets with the
customer's needs it is easy for organisation to increase their sales. In the context of retail industry
the threat of substitute products will be increased as small amount of products are similar in
3

quantity. So the threat of substitute products is moderate in industry, further to tackle
entrepreneurial activities of TESCO management is focusing to become more service oriented
rather than product oriented.
Rivalry among the existing competitors- The retail industry and organisations of UK
are facing intense competition in the market. This determines that the competition among rivals is
high. Due to which entrepreneurial activities of organisation are impacted because it is complex
for TESCO to perform their all operations with a constant policy (Sheng, Zhou and Li, 2014). On
the other side, profits for the organisation are also reduces as all major players covers large
market area to make their sales high.
With the analyses of all the above competitive forces it is effortless for the TESCO plc strategies
to gain a complete picture of several factors which are related with profitability of organisation
and the turnover of retail industry. So with the help of expert management identifies various
factors as it all related with organisational policy. This leads the TESCO to achieve high success
in market by formulating competitive strategy for the organisation.
Internal resources and capabilities analysis of the organisation
In the present scenario, it is mandatory for the business houses to identify their strength
and weakness. So it is easy for the management to tackle the problems of upcoming threats as
well as to made policy that leads organisation to increase their market share by taking the first
mover advantage towards upcoming opportunities (Stümke, 2017). Therefore, VRIO model of
the TESCO is mention as follow:
VRIO works as one of the global chain which is working in the organisation and its policies
related with operations management of TESCO. Some of the major analysis for the VRIO model
is mention as follow:
Particular Value Rare Imitable Organisation
Effective human
resource
Recruitment
policy of TESCO
works as one of
the high value
process for them.
- - -
Diversify TESCO provides - - -
4
entrepreneurial activities of TESCO management is focusing to become more service oriented
rather than product oriented.
Rivalry among the existing competitors- The retail industry and organisations of UK
are facing intense competition in the market. This determines that the competition among rivals is
high. Due to which entrepreneurial activities of organisation are impacted because it is complex
for TESCO to perform their all operations with a constant policy (Sheng, Zhou and Li, 2014). On
the other side, profits for the organisation are also reduces as all major players covers large
market area to make their sales high.
With the analyses of all the above competitive forces it is effortless for the TESCO plc strategies
to gain a complete picture of several factors which are related with profitability of organisation
and the turnover of retail industry. So with the help of expert management identifies various
factors as it all related with organisational policy. This leads the TESCO to achieve high success
in market by formulating competitive strategy for the organisation.
Internal resources and capabilities analysis of the organisation
In the present scenario, it is mandatory for the business houses to identify their strength
and weakness. So it is easy for the management to tackle the problems of upcoming threats as
well as to made policy that leads organisation to increase their market share by taking the first
mover advantage towards upcoming opportunities (Stümke, 2017). Therefore, VRIO model of
the TESCO is mention as follow:
VRIO works as one of the global chain which is working in the organisation and its policies
related with operations management of TESCO. Some of the major analysis for the VRIO model
is mention as follow:
Particular Value Rare Imitable Organisation
Effective human
resource
Recruitment
policy of TESCO
works as one of
the high value
process for them.
- - -
Diversify TESCO provides - - -
4
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products offering large number of
different products
to customer's.
Private label
brands
Majority of the
TESCO products
are sold under
their brand name.
The impact of
brand TESCO
works as a rare
process for
organisation.
- -
Delivery network The existing
network of
TESCO is wide.
Delivery system
of the TESCO is
the rare process
that enhances
their business
performance.
TESCO invested
ample amount of
money in their
transportation
system. So it is
imitable for them.
Most of the
TESCO work is
done with the
consideration of
formulating
positive results.
With the above factors it is analysed that there are various factors relates with organisation and its
performance. This all aspects helps the organisation to complete their work to gain sustain
competitive advantage which are mention as follow:
Inventory management system- One of the major competitive advantage which leads by
the TESCO assist the organisation to enhance the inventory of their work. In the last,
there are various factors which increases the efficiency of organisational process.
Brand value- The major benefit which is achieved by the management is to increase their
brand awareness through using brand equity model. This determines with the
improvement of goodwill it is easy for organisation to enhance their brand value that
results in increasing sale of TESCO products (ZHAO and et. al., 2018).
E-commerce operations- In the present scenario, there are different products relates with
organisation and its performance. Their are various performance works related with
managing their business on e-commerce platform as well as on retail shops.
5
different products
to customer's.
Private label
brands
Majority of the
TESCO products
are sold under
their brand name.
The impact of
brand TESCO
works as a rare
process for
organisation.
- -
Delivery network The existing
network of
TESCO is wide.
Delivery system
of the TESCO is
the rare process
that enhances
their business
performance.
TESCO invested
ample amount of
money in their
transportation
system. So it is
imitable for them.
Most of the
TESCO work is
done with the
consideration of
formulating
positive results.
With the above factors it is analysed that there are various factors relates with organisation and its
performance. This all aspects helps the organisation to complete their work to gain sustain
competitive advantage which are mention as follow:
Inventory management system- One of the major competitive advantage which leads by
the TESCO assist the organisation to enhance the inventory of their work. In the last,
there are various factors which increases the efficiency of organisational process.
Brand value- The major benefit which is achieved by the management is to increase their
brand awareness through using brand equity model. This determines with the
improvement of goodwill it is easy for organisation to enhance their brand value that
results in increasing sale of TESCO products (ZHAO and et. al., 2018).
E-commerce operations- In the present scenario, there are different products relates with
organisation and its performance. Their are various performance works related with
managing their business on e-commerce platform as well as on retail shops.
5
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CONCLUSION
In the last, from the above report it is concluded that there are various factors need to be
improve by the organisation such as strategies, policy and procedures. This determines with the
better strategy it is simple for the organisation to enhances their performance. Due to which
management is able to gain competitive advantage against their rivals. Therefore, to make
effective strategies it is mandatory for organisation to implement several tools such as PESTLE,
Porter's five forces and VRIO model in the context of particular organisation and industry. The
main motive to implement this models is to understand micro as well as macro environment of
the firm in an accurate manner.
6
In the last, from the above report it is concluded that there are various factors need to be
improve by the organisation such as strategies, policy and procedures. This determines with the
better strategy it is simple for the organisation to enhances their performance. Due to which
management is able to gain competitive advantage against their rivals. Therefore, to make
effective strategies it is mandatory for organisation to implement several tools such as PESTLE,
Porter's five forces and VRIO model in the context of particular organisation and industry. The
main motive to implement this models is to understand micro as well as macro environment of
the firm in an accurate manner.
6

REFERENCES
Books and Journals
Azam, R., 2015. Financial transaction of merchandising of Crystal Martin Apparel Bangladesh
Ltd.
Barrett, J., 2017. CRITICALLY EVALUATE THE LONDON 2012 OLYMPICS’IMPACT ON THE
ECONOMY IN RELATION TO TOURISM AND THE LOCAL COMMUNITY (Doctoral
dissertation, Cardiff Metropolitan University).
Diachenko, O., 2014. Project of Marketing Strategy for Penetrating Czech Market by Foreign
Company.
Eglese, S., 2014. MARKETING RECOMMENDATIONS FOR THE UK HEALTH & BEAUTY
RETAIL MARKET: Using Superdrug as a case study.
Hammad, A., 2015. Strategic Change and Its Management to Expand Business Through
Implementation of Models: A Case Study of Boots UK. Available at SSRN 2676800.
López, R.A. and Ferrándiz, J.V.C., 2016. Analysis of the Logistics of Home Delivery of Food
and Household Goods. Implementation in Consum in the Valencia Area. Proposals for
Improvement. Transportation research procedia, 18, pp.189-196.
Sheela, S. and Jalal, A., 2014. Swot analysis on foreign investment in Indian Retail
Sector. EXCEL International Journal of Multidisciplinary Management Studies, 4(4),
pp.81-85.
Sheng, J., Zhou, Y. and Li, S., 2014, August. Analysis of Real Estate Project Market
Localization. In 2nd International Conference on Education, Management and Social
Science (ICEMSS 2014). Atlantis Press.
Stümke, L.I., 2017. Business Diplomacy: The elucidation to ease multinational corporation’s
business risk in developing countries and conflict-prone zones (Master's thesis,
University of Twente).
ZHAO, J.K and et. al., 2018. Research on the Development of Little Red Book—By Adopting
SWOT Analysis. DEStech Transactions on Social Science, Education and Human
Science, (amse).
Online
TESCO PESTEL ANALYSIS, 2013 online <https://prezi.com/3vd5fqnqm5le/tesco-
pestel-analysis/>
7
Books and Journals
Azam, R., 2015. Financial transaction of merchandising of Crystal Martin Apparel Bangladesh
Ltd.
Barrett, J., 2017. CRITICALLY EVALUATE THE LONDON 2012 OLYMPICS’IMPACT ON THE
ECONOMY IN RELATION TO TOURISM AND THE LOCAL COMMUNITY (Doctoral
dissertation, Cardiff Metropolitan University).
Diachenko, O., 2014. Project of Marketing Strategy for Penetrating Czech Market by Foreign
Company.
Eglese, S., 2014. MARKETING RECOMMENDATIONS FOR THE UK HEALTH & BEAUTY
RETAIL MARKET: Using Superdrug as a case study.
Hammad, A., 2015. Strategic Change and Its Management to Expand Business Through
Implementation of Models: A Case Study of Boots UK. Available at SSRN 2676800.
López, R.A. and Ferrándiz, J.V.C., 2016. Analysis of the Logistics of Home Delivery of Food
and Household Goods. Implementation in Consum in the Valencia Area. Proposals for
Improvement. Transportation research procedia, 18, pp.189-196.
Sheela, S. and Jalal, A., 2014. Swot analysis on foreign investment in Indian Retail
Sector. EXCEL International Journal of Multidisciplinary Management Studies, 4(4),
pp.81-85.
Sheng, J., Zhou, Y. and Li, S., 2014, August. Analysis of Real Estate Project Market
Localization. In 2nd International Conference on Education, Management and Social
Science (ICEMSS 2014). Atlantis Press.
Stümke, L.I., 2017. Business Diplomacy: The elucidation to ease multinational corporation’s
business risk in developing countries and conflict-prone zones (Master's thesis,
University of Twente).
ZHAO, J.K and et. al., 2018. Research on the Development of Little Red Book—By Adopting
SWOT Analysis. DEStech Transactions on Social Science, Education and Human
Science, (amse).
Online
TESCO PESTEL ANALYSIS, 2013 online <https://prezi.com/3vd5fqnqm5le/tesco-
pestel-analysis/>
7
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