Understanding Business: Tesco's Challenges - EU, Global Warming, Legal

This report provides a comprehensive analysis of the business challenges faced by Tesco, a major global retailer. It delves into the implications of the EU referendum, examining the economic and legal impacts of Brexit on the company, including potential uncertainties, trade adjustments, and job market effects. The report also explores the environmental challenges posed by global warming, such as infrastructure adaptation costs, emission control requirements, and supply chain disruptions. Furthermore, it considers the legal implications of these environmental concerns. The report highlights Tesco's responses to these challenges, including its sustainability initiatives and strategic planning. The analysis emphasizes the importance of understanding external factors in ensuring long-term business sustainability and competitiveness in a globalized market. The report concludes by summarizing the positive and negative implications of these factors on Tesco and the broader economy.

UNDERSTANDING
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
EU referendum and impact of leaving of Britain from EU (Economic Issue)............................1
Effect of Global Warming on Business (Environmental Issue)..................................................2
Implications of EU referendum on Tesco (Legal Issue)..............................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
In today’s globalized world, it is important to have a thorough understanding of business
in terms of the factors that can affect it in doing trade in other nations. These factors are like
political, economical, social, technological, legal and environmental/ethical. With giving due
consideration to these factors, a business can sustain in the long and can survive with gaining a
competitive edge over others. In the present report, there will be discussion on three issues which
can cause issues for the business. For this purpose, the firm, Tesco has been selected that will be
emphasized to understand the issues.
EU referendum and impact of leaving of Britain from EU (Economic Issue)
A reference means a vote which any person of any age can participate in order to give
his/her answers in the form of “Yes” or “No”. The side which is having maximum votes is
considered to be the winner. In United Kingdom, a referendum has been held in order to take
decision that whether Britain should leave the European Union or should stay in it. In this, all
British, Irish and Commonwealth citizens who are of age more than 18 years and were the
residents in UK were eligible to give their votes (EU referendum: Pros and cons of Britain
voting to leave Europe, 2016). This referendum was held because the British public wanted
Britain to get split from EU according to the latest opinion polls. Around half of the conservative
MP’s with having many labor MPs, the DUP and five cabinet ministers wanted Britain to leave
in order to make it free from the control of EU and to provide its many benefits like child benefit,
migrant welfare payments, protection from the City of London and to run their own affairs
(Crutzen, Mosier, Smith and Winiwarter, 2016). However, the Prime Minister David Cameron
did not want it to happen along with sixteen members of his cabinet.
If Britain will leave European Union and will become independent, there will be few
benefits and a lot of issues associated with it which will have a huge impact on the working of
Tesco. One of the major issues which organization will face is that of significant uncertainty
which can be created because of this and may lead to hamper the growth of economy (Pina and
Tether, 2016). It is because; leaving of Britain from EU will result in the decline in the value of
pound. Reason behind this is that UK exports will become more competitive and Tesco will be
required to adjust the negotiations during UK-EU which they will desire to stay from at least two
years. However, on the other hand, Tesco will have the advantage of avoiding sophisticated trade
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terms that presently exist in the nation. But, it may lead to insecurity of finance and decreased
prices of commodities. Along with that, leaving of Britain from EU will keep jobs at risk that
will be a loss for the retail industry as well like all other sectors (Cook and et.al., 2016). It can be
assessed that Tesco will get free from worse trade terms, but, the deals would not be as good as
they are in the current scenario after when Britain will leave the European Union.
Effect of Global Warming on Business (Environmental Issue)
Presently, global warming is such an environmental issue that is creating severe issues for
firms like damage to property and infrastructure, loss of productivity, mass migration and
security threats. It can be explained like at the time when Tesco decided to start its business in
China, it was needed to build a large infrastructure to get established in this nation (Tesco’s
growing pains on the road to zero-carbon, 2016). Due to the issue of global warming, company
was required to design its infrastructure in such a way that it would not get affected with the heat
and side effects generated through this. It made the firm to spend a high amount of money.
Global Warming leads to emission of harmful gases which can make the people working in firm
unhealthy. Thus, this makes it necessary for Tesco to make capital expenditures for setting
emission control systems in the organization (Reducing our impact on the environment, 2016). It
has to make high investment of funds for the purpose of protecting firm and its employees from
the harmful effects of pollution. Along with that, Tesco need to install emission control system in
the firm so as to save itself from kind of obligations can be made against company as
government has imposed stringent regulations on the emission of greenhouse gases.
This is the reason; Tesco is following the rules and regulations imposed by UK
government to run its business in a smooth way. Company has set ambitious green targets within
which it is making initiatives to address the energy efficiency of its entire business as well as to
engage the suppliers so that they can contribute their efforts in reducing the emissions (Welter
and et.al., 2016). Tesco is giving due consideration to its supply chain carbon impact so that
environment would not get affected in a negative manner and employees as well as society can
be protected from the harmful effects of global warming and other climatic changes occur due to
this. Apart from that, because of changes occurring in the atmosphere, sometimes, Tesco has to
change the prices of goods and services on uncertain basis. It can be explained like; if there is a
very little rain in a year, prices of the commodities has to be increased by the organization which
affects their sales (Tesco - Supply chain carbon management, 2016). It leads to firm to bear
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losses and thus, it is essential for Tesco to have pre-plans for the uncertain situations which may
occur because of global warming.
Implications of EU referendum on Tesco (Legal Issue)
As Brexit, that is, Britain exit will lead to form new trade agreements in UK, it will have
a huge impact on the working of all industries performing their business in the nation. Along
with that, major consequences that company will have to face are that of increased rate of
unemployment and substantial decline in the property prices in the entire nation. Because of
these issues, Tesco would be needed to give job opportunities to many people that will not be
possible for it as well as value of its property will also be decreased (What is Brexit and what
would happen if Britain left the EU?, 2016). Apart from that, there will be clear downside risks
for the City of London as it is the global center of finance. Exit of Britain from EU will damage
its strong position in the market and thus, will ultimately affect the business of Tesco in the form
of damaging its gas, water, electricity and broadband networks.
There are many implications of European Union referendum on Tesco’s business as if
Britain will exit from EU; there are possibilities that Tesco needs to change its various company
policies so as to resist with the changes that would occur in the trade terms, investment and the
immigration. Company needs to make plans in order to retain the employees in the long run as
after the exit of Britain from EU, there may be many employees who would resign from Tesco
(Wheeler and Hunt, 2016). In addition to this, there will be many other impacts like the value of
pound will be reduced and thus, the sales of organization will get affected in UK as well as in
other nations where it is operating. Along with that, there will be implications of Brexit in the
society as well. Some people may be happy with the decision that they will be free from the
control of European Union (Mora, 2016). On the other hand, some may not be in the favor of this
decision as because of this, they may have to bear several losses.
In case of businesses, there may be some firms who will find exit of Britain from EU to
be beneficial while, some would find it to be a loss. From the economic point of view, major
issue which Tesco would face is that of loss of job opportunities and thus, changes in the prices
of products of services offered by the firm (Schweigert, 2016). But, on the contrary, company
may have the advantage of a stable political environment in the economy as when Britain will
get free from the control of European Union; it will have its own regulatory authorities who will
make decision for its benefits. This will help the nation and thus, the firms in having a balanced
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trade-off between sovereignty and ultimately, the best decisions that would be in the favor of
nation. There will be welfare of society by the actions of government as well as through
company policies as directed by the political parties over there (Giles, 2016). Therefore, it can be
said that, there will be positive as well as negative implications for Tesco as well as for the
whole economy if Britain will leave the EU.
CONCLUSION
From the above report, by studying the issues, it can be assessed that for a business to run
at the global level and to be in the market in the long run, it is important to take care of the
external factors that can affect it to a high extent. These factors play a significant role in making
a company successful in attaining growth and profits and in beating the competition that exists in
the market. Thus, ignorance of these factors can lead a firm to bear several issues.
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REFERENCES
Books and Journals
Cook, J. and et.al., 2016. Consensus on consensus: a synthesis of consensus estimates on human-
caused global warming. Environmental Research Letters. 11(4). p.048002.
Crutzen, P. J., Mosier, A. R., Smith, K. A. and Winiwarter, W., 2016. N2O Release from Agro-
biofuel Production Negates Global Warming Reduction by Replacing Fossil Fuels.
In Paul J. Crutzen: A Pioneer on Atmospheric Chemistry and Climate Change in the
Anthropocene. Springer International Publishing.
Mora, P., 2016. Understanding Consumer Behavior. In Wine Positioning. Springer International
Publishing.
Pina, K. and Tether, B. S., 2016. Towards understanding variety in knowledge intensive business
services by distinguishing their knowledge bases.Research Policy. 45(2). pp.401-413.
Schweigert, F. J., 2016. Social Responsibility as a Matter of Justice: A Proposal to Expand
Business Ethics Education. In Understanding Ethics and Responsibilities in a
Globalizing World. Springer International Publishing.
Welter, F. and et.al., 2016. Family Business in Emerging, Developing, and Transitional
Economies: The relevance of context.
Online
EU referendum: Pros and cons of Britain voting to leave Europe. 2016. [Online]. Available
through: <http://www.theweek.co.uk/eu-referendum>. [Accessed on 7th May 2016].
Giles, C., 2016. What are the economic consequences of Brexit?. [Online]. Available through:
<http://www.ft.com/cms/s/2/70d0bfd8-d1b3-11e5-831d-
09f7778e7377.html#axzz47xtISV3S >. [Accessed on 7th May 2016].
Reducing our impact on the environment. 2016. [Online]. Available through:
<https://www.tescoplc.com/tesco-and-society/the-essentials/reducing-our-impact-on-the-
environment/>. [Accessed on 7th May 2016].
Tesco - Supply chain carbon management. 2016. [Online]. Available through:
<https://www.carbontrust.com/our-clients/t/tesco/>. [Accessed on 7th May 2016].
Tesco’s growing pains on the road to zero-carbon. 2016. [Online]. Available through:
<http://www.endsreport.com/article/25197/tescos-growing-pains-on-the-road-to-zero-
carbon>. [Accessed on 7th May 2016].
What is Brexit and what would happen if Britain left the EU?. 2016. [Online]. Available through:
<http://www.express.co.uk/news/politics/645667/Brexit-EU-European-Union-
Referendum-David-Cameron-Economic-Impact-UK-EU-exit-leave>. [Accessed on 7th
May 2016].
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Wheeler, B. and Hunt, A., 2016. The UK's EU referendum: All you need to know. Online].
Available through: <http://www.bbc.com/news/uk-politics-32810887>. [Accessed on 7th
May 2016].
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