BM461 CW2: Portfolio Papers 2 & 3 - Tesco Analysis Report

This report presents a comprehensive analysis of Tesco, a British multinational retailer. It begins with an executive summary and table of contents, followed by an introduction to the company. The main body of the report comprises two portfolio papers. The first paper conducts a PESTLE analysis of Tesco, examining political, economic, social, technological, legal, and environmental factors influencing the company. The second paper performs a SWOT analysis, identifying Tesco's strengths, weaknesses, opportunities, and threats. Building upon these analyses, the report then explores the operational impact of key drivers on Tesco's finance and marketing functions, considering factors such as market controversies, customer behavior, and financial performance. The report concludes by summarizing the findings and providing a list of references.

CW2 Portfolio papers 2 & 3

Executive summary
The report consists of the PESTLE analysis of the Tesco and the six factors that are
affecting the company’s operating are discussed. The SWOT analysis of the company is
discussed where the strengths and weaknesses along with the opportunities and threats are
discussed. Using the pestle and the swot analysis of the company the main drivers of the
company are used to discuss the impact on the functioning areas of the company that are finance
and the marketing. The effect of the drivers of the company in these fields impact the functioning
of the performance of the company.

Table of contents
Executive summary.........................................................................................................................2
Table of contents..............................................................................................................................3
INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
Portfolio paper 2..............................................................................................................................4
PESTLE of Tesco........................................................................................................................4
Portfolio Paper 3: Operational impact.........................................................................................6
CONCLUSION................................................................................................................................7
REFRENCES...................................................................................................................................7

INTRODUCTION
Tesco is British multinational company that provides customer goods. The company is
headquartered in England, UK. The company provides products like food, energy drinks, baby
food, cheese, confections (candy), tea, ice cream, instant coffee, chewing gums, toothpaste,
beauty products and many more products. The Pestle and Swot analysis of the company is done.
The pestle analysis of the company helps to identify the external and internal factors that impact
the functioning of the company. The pestle and swot analysis are used to identify the drivers of
the company and how they are going to impact the finance and the marketing areas of the
company.
MAIN BODY
Portfolio paper 2
PESTLE of Tesco
Political factors
The company have to follow the rules and regulations of the government. Due the
financial instability of the retailers are being promoted to create job options for the domestic
people. The company along with the increasing the job opportunities also create demand of the
product and the services. The company diversify the workforce by this.
Economic factors
The company is concerned about the growth of the cost, profit, lose and demand. The
company have developed in the international market but it is still dependent on the UK market
for the revenue and hold 30% of the shares. The company has shifted the focus to the brand
awareness and brand value instead of the promoting the luxury items due to the decrease in the
income levels of the disposals.
Social factors
The social tendency of the people in UK is attracted towards the bulk shopping as
compared to the one-stop shopping. The company has increased the offers of sales in the non-
food items. The customers are getting more aware of the food they are having and moving
towards the healthier options (Adamyk, 2019). The company is introducing the organic foods to
the customers.
Technological factors

The digitalization of the company has brought many opportunities to the company such
as the online shopping that is provided with the home delivery option. The company is providing
the customers with the facility of self-serve check points that are convenient and easy, along with
that reduce the labour cost for the company.
Environmental factors
The company is committed to reduce the carbon footprint by 50%. The company is
decreasing the waste production and promoting their customer to be more efficient with the
waste; this is increasing the social conscience in customers.
Legislative factors
The policies and the legislations are influencing the operational performance of the
company. The Code of Practice introduced by the Food Retailing Commission in which the
company have to start new practices of changing the prices and in response to this law the
company provide the customers with fuel at reduced rates aligned with the products they buy at
the grocery stores.
SWOT of Tesco
Strengths
It is the biggest grocery retailer and leading market share. It is geographically diverse and
has growing number of stores internationally. The stores and the products are diversified. It is the
largest private employer and is using superior technology.
Weaknesses
It failed in expanding at US and Japan. The company had fined due to fraud trial and
accounting scandal. There is a decrease in the operating profits and has poor performance in
some markets (Tirawatnapong and Fernando, 2018). The company started the club card scheme
and get backlash from the customers.
Opportunities
The expansion of the new discount business that has shown growth. Partnership with the
reputed brands will attract more customers. Upgrading the online shopping business. Expanding
the business in the emerging countries.
Threats

Christmas ad controversy reduces the sales. Brexit referendum can be a threat. Increased
competition with the supermarket giants. The economic crisis and credit crunches have impacted
the operational performance.
Portfolio Paper 3: Operational impact
The finance and the marketing of the company will get easy affected by any small change
in the market. The controversies about the company have decreased the sales of the company
significantly. The controversies have decreased the brand value of the company and hence
decreased the customers. The starting of the clubcard by the company has made the customers of
the company really angry and they boycotted the use of company’s products. The financial status
and the marketing of the company are impacted. The turnover revenue of Tesco is decreased by
5% every year due to the impact of the negative currency of 8% along with the net impact on the
through the disposal of the spread business (Alam and Raut-Roy, 2019). The volume growth of
2.3% and pricing growth of 0.6% are combined to form the organic growth of 2.9%. The
improvement in the customer goods company has shown positive signs in the major business
divisions this helps the company to benefit from the emerging markets by gaining strong volume
growths.
The stock price of Tesco fluctuated amid $51 to $57 and the long-term price was estimated to be
$58 that is 10% ahead of the market price. The company is expected to generate the revenue
around $61 billion. The sales were estimated to be $13.7 billion in the food business. $11.5 in the
refreshment business. $23.8 billion in the personal care segment and $12.2 billion in the home
care business (Coe, Lee and Wood, 2017). The company has made acquisition with the one of
the top priorities such as Quala, Sundial, Schmidt’s Naturals and Equilibra. This kind of strategic
acquisition will help the company to ensure that the key growth drivers are developing in the
company. The food divisions of the company are not able to provide the same income they used
to and the revenue is declining as the company is unable to generate growth from the expanded
business internationally. The company is recovering from the declining rate by focusing on the
cost-saving programs along with the selling of some of the expanded business where the business
is not showing any growth.
The social factors influence the revenue rate of the business. The refreshment business of
Tesco has shown decrease in the growth and this was due to the fact that the competition is
increasing globally for the alternative diet products to slim-fit brand products and organic food

brands in the market. The company has also shown increase in the luxury product such as the
dairy free products that are made of the soy milk and gelato. This type of high priced products
helps the company to reach back to the same growth in the business (Aiello and et.al, 2020). The
company can help itself by expanding the business in India and China. The marketing strategies
need to review for increasing the revenue.
CONCLUSION
It can be concluded from the report that the pestle analysis and swot analysis are used to
identify the main driver of the company by understanding the internal and external factors of the
company. Pestle analysis of the company help to know the six factors that are impacting the
functioning of the company. The factors involved in the pestle analysis of the company are:
political factor, economic factor, social factor, technological factor, legislative factors and
environmental factors. The Swot analysis of the company helps in identifying the strengths and
the weaknesses of the company along with the opportunities and the threats of the company.
REFRENCES
Books and Journals
Adamyk, 2019. PESTLE Analysis on Tesco PLC.
Aiello and et.al, 2020. Tesco grocery 1.0, a large-scale dataset of grocery purchases in
London. Scientific data. 7(1). pp.1-11.
Alam and Raut-Roy, 2019. Evaluating the Effectiveness of Reward Strategy at Tesco: Evidence
from Selected Stores in UK. Indian Journal of Industrial Relations. 55(1).
Coe, Lee and Wood, 2017. Conceptualising contemporary retail divestment: Tesco's departure
from South Korea. Environment and Planning A: Economy and Space. 49(12). pp.2739-
2761.
Tirawatnapong and Fernando, 2018. Factors Influencing Bangkok People Purchase Intention
towards Tesco Lotus House Brand Products. International Research E-Journal on
Business and Economics. 4(2). pp.15-29.