Global Business Environment 1: SWOT Analysis and Operational Impact

This report presents a comprehensive SWOT analysis of Tesco Plc, a major player in the global retail industry. The analysis identifies key drivers within Tesco's internal and external business environment, including its diversified product portfolio, low-cost structure, strong R&D, and loyal customer base as strengths. Weaknesses include cost structure and inventory management issues. Opportunities lie in the growth of online shopping and potential expansion. Threats encompass competition, uncertainties like Brexit, and external factors such as the COVID-19 pandemic. The report further examines the operational impact of these factors on the marketing and HR functions, considering the effects of Brexit, technology, and the pandemic on strategies and employee management. The conclusion highlights Tesco's strong market position while emphasizing the need to manage operational weaknesses and protect its brand image in a dynamic business environment. The appendix includes a company overview of Tesco Plc.

Global Business
Environment
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Executive Summary
This report is aimed at conducting SWOT analysis of a company to identify key drivers
that drives its operations within its internal and external business environment. Tesco Plc is
chosen as organisation for conducting SWOT Analysis for this report. Based on observations and
drivers identified in SWOT analysis of the company, operational impact analysis on the
marketing and HR functions of the company is conducted.
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Table of Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Main Body.......................................................................................................................................4
Portfolio Paper 2: SWOT Analysis........................................................................................4
Portfolio Paper 3: Operational Impact Analysis.....................................................................5
Conclusion.......................................................................................................................................7
References........................................................................................................................................8
Appendix..........................................................................................................................................9
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Introduction
This report aims at conducting SWOT analysis of Tesco Plc. Based on which, operational
impact analysis on the marketing and HR functions of the company is conducted.
Main Body
Portfolio Paper 2: SWOT Analysis
SWOT analysis of a company helps in identifying all those factors that are present in
internal and external environment of company (López, 2017). Below mentioned is SWOT
Analysis of Tesco Plc:
Strengths – This includes all the factors within internal environment of the company that
act as competitive advantage for the company. Tesco has a diversified product portfolio which
includes grocery, books, furniture, financial services, telecom services, etc. in both online and
offline store. This provides multiple revenue options for the company and risks also gets
diversified. Company is a discount supermarket chain and operates on a low-cost structure. Its
simplified business model acts as competitive advantage for the company (Grundy, 2017). It has
a strong research and development team which continuously improves its technologies to make
company processes more efficient and customer experience easier and more delightful. It uses
technologies such as electronic shelf labelling, self-check out machines, RFID, etc. to improve
its customer satisfaction which has earned it loyal customer base that also acts as one of the
biggest strengths for the company.
Weaknesses - This includes all the factors within internal environment of the company
that act as barriers to operational excellence for the company (Jenkins and Williamson, 2015).
Tesco’s cost-structure and employee structure acts as its weakness. It concurs high employee
turnover especially at front line which causes it additional employee cost and for a company
operating at low-cost structure, it is a burden which adds to the woes. Its inventory management
process also possesses some weakness as when demand of some products shoots up, it is not able
to manage it on time and there occurs shortage of products which leads to losses to the company.
Opportunities - This includes all the factors in external environment of the company that
represents opportunities of growth, development and expansion for the company. Demand for
online shopping has increased especially in lock-down, it has seen unprecedented increase. Tesco
with its strong distribution channel can exploit this opportunity to the fullest. Other than online
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shoppers, it should plan opening stores in other places as well where there are opportunities for
company to earn profits.
Threats – This includes all the factors in external environment of the company that with
the aid of its weaknesses can act as hurdle for the growth and expansion of the company
(Marasinghe and et.al., 2018). Tesco is in retail industry which has lots of big participants.
Therefore, one of the biggest threats to the growth and success of the company is from its rivals.
They cannot only poach customers of the company but can also lure productive employees of the
company offering them better package and better facilities. Another threat is presented by
uncertainties in business environment which is able to bring unforeseen effects for the company.
For example, Brexit has created a confusion over management of trade deals with other
European Union partner companies.
Key drivers identified in the SWOT analysis:
 Brexit
 Technology
 COVID - 19 Pandemic
 Social factors
 Political factors
 Economic factors
Portfolio Paper 3: Operational Impact Analysis
SWOT helps a company analyse internal and external impact factors which further helps in
analysing their impact over operations of the company:
On HR function – Human resources function of the company is directly responsible for
employee management within company (Abbamonte and Cavaliere, 2019).
 Brexit - Tesco operates on low-cost model. Brexit has created cost confusion in the
company which has resulted in company cutting costs and scrapping jobs to reduce it
price structure. Final deal of Brexit will also result in changes in policies of recruitment
and selection of employees. There will be need of developing suitable training schedule
for the employees and their employee benefits like pay structure will have to be revised
accordingly.
 Technology - Technological and business advancement in e-commerce reduces need for
sales staff but company had been able to create more jobs in logistics which still remains
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labour-intensive. For which company can use more automation in its process like using
more robots in direct sales like it uses in factory and had tried on in delivery as well
(Cuthbertson, Furseth and Ezell, 2015). Improved technology can result in reduction in
lower-level workforce but will increase the opportunities in higher-level jobs. This will
change focus of HR function as now higher level employees must be managed and
pursued to retain.
 Covid -19 Pandemic - Also, Covid-19 pandemic lock-down has disrupted supply chain
operations which again forces company to cost cutting measures like . However, due to
company being in grocery business, it registered good sales in both online and offline
business even during lock-down.
 Social factors – It includes factors which have the ability to impact mental health of the
employees such as performance pressure, retrenchment pressure, technological pressures,
etc. All these factors create confusion in mind of employees which has negative impact
on their mental health as well that affects their productivity (Hill and Hill, 2017). HR
managers of the company therefore, devote their time in employee relationship building,
motivating them and providing them necessary support and training.
 Political factors – It includes the impact of governmental policies over the operations of
HR department of the company. Policies are a powerful tool for government to regulate
however, company abides by all applicable laws and regulations. It is responsibility of
HR managers to ensure that employees are provided with all safe working environment,
welfare and developmental measures, etc. It also trains its employees properly to operate
with customers in a desired manner.
On marketing function – Marketing department of company is responsible for managing all
activities in the company which are aimed at improving its sales and brand value (Evans and
Mason, 2018).
 Brexit - Brexit has resulted in uncertainties which has prompted management to change
all its related policies including marketing strategies. Confusion in dates of Brexit has
created an uncertainty in economic and political environment of the country which has
shaken up the customer confidence over the freshness of the products that Tesco
imported from outside Britain as well as drop in value of sterling is not a good sign for it.
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 Technology - Technology has helped change marketing dynamics a lot. E-commerce
business is on the rise and promotional tools has also shifted its focus towards digital
promotion. Company uses new and creative technologies to interact with its customers
online and attract them by offering newer offers like cashback, loyalty programs, gift
codes, coupons, vouchers, etc. on its website (Felgate and Fearne, 2015).
 Covid -19 Pandemic – Pandemic has both positive and negative impact over marketing
operations of the company. It has created confusion in mind of customers over what to
buy and how much to buy which gives a marketing department a chance to increase their
sales. Company has to renewed its sales promotion strategies with an aim to renew and
strengthen customer trust over it. Prices, discounts and promotional offers had to be
renewed to retain edge over competitors. Company highly focuses on its strong
distribution channel to satisfy its customers all over UK even after any policy confusion
(SPARKS, 2018).
 Social factors – This factor undertakes the implications of societal factors such as social
issues like hunger, unemployment, etc. UK has been already facing economical doldrums
which was fuelled by pandemic lock-down. Such difficult situations has lead to negative
impact in mental health of the customers which has resulted in changed customer buying
behaviour. For example, under panic customers are hoarding essential products while
reducing the demand of other products. It lays additional pressure over the marketing
department of the company to calm customers in their panicky state while increasing and
maintaining demand of the other non-essential products.
 Political factors – Tesco is a company with global operations and political environment
of the country impacts its operations to a great extent. Complex political situation of UK
with regard to businesses owing to government policy decisions such as impact of the
Brexit deal, handling of economical and social instability due to pandemic, etc. has led to
negative impact over the marketing function of the company and they had to undergo
constant transformation in their policies to restore customer confidence and support
company's business operations (Shewmake, Siegel and Hiatt, 2020).
Conclusion
From the above analysis, it can be concluded that Tesco is well placed in its market.
However, it has some operational weaknesses which can turn the tide against it in dynamic
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business environment. It has stable finances and loyal customer base which helps it grow
sustainably. However, being a low-cost company, it should restrict unnecessary costs that can
have negative impact over its profitability. Company has a strong brand image which it is needed
to safeguard by not embroiling into controversies and litigations.
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References
Books and Journal
Abbamonte, L. and Cavaliere, F., 2019. Adaptively Evolving Ecosystems: Green-speaking at
Tesco.
Cuthbertson, R., Furseth, P.I. and Ezell, S.J., 2015. Tesco and Sainsbury’s: The Need to Turn
Ideas into Action. In Innovating in a Service-Driven Economy (pp. 159-165). Palgrave
Macmillan, London.
Evans, B. and Mason, R., 2018. The lean supply chain: managing the challenge at Tesco. Kogan
Page Publishers.
Felgate, M. and Fearne, A., 2015. Analyzing the impact of supermarket promotions: a case study
using tesco clubcard data in the UK. In The Sustainable Global Marketplace (pp. 471-
475). Springer, Cham.
Grundy, T.D., 2017. Dynamic competitive strategy: Turning strategy upside down. Routledge.
Hill, A. and Hill, T., 2017. Essential operations management. Macmillan International Higher
Education.
Jenkins, W. and Williamson, D., 2015. Strategic management and business analysis. Routledge.
López López, N., 2017. Different ways to assure the continuity of the business.
Marasinghe, L. and et.al., 2018, December. Analyzing the Location Feasibility for Retail
Businesses using Market Location Factors. In 2018 IEEE International Conference on
Information and Automation for Sustainability (ICIAfS) (pp. 1-5). IEEE.
Shewmake, T., Siegel, A. and Hiatt, E., 2020. The History and Progression of Sustainability
Programs in the Retail Industry. In Channel Strategies and Marketing Mix in a
Connected World (pp. 247-274). Springer, Cham.
SPARKS, L., 2018. Tesco’s chain management supply 07. Logistics and Retail Management:
Emerging Issues and New Challenges in the Retail Supply Chain, p.183.
Online
Our history. 2020. [Online]. Available through:<https://www.tescoplc.com/about/our-history/>
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Appendix
Company Overview
Tesco Plc is one of the largest retail supermarket chains in the world. It is a British
multinational company founded in 1919 having its headquarters at Welwyn Garden City,
England (Our history, 2020). It is primarily a groceries and general merchandise retailer but also
offers others products and services as retailers like books, clothing, toys, furniture, financial
services, telecom services, software, etc. It is a listed London Stock Exchange company and is
also a constituent of FTSE 100 Index.
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