Tesco Business Environment: Pestle Analysis and Governance Report

This report provides a comprehensive analysis of Tesco's business environment, encompassing its governance structure, operational strategies, and external factors. It begins with an examination of Tesco's organizational structure, including its hierarchical management levels and the roles of key personnel like the CEO and board of directors. The report then emphasizes the importance of PESTLE analysis for understanding the external environment and its impact on business decisions. A detailed PESTLE analysis of Tesco follows, exploring political, economic, social, technological, environmental, and legal factors affecting the company's operations. The political factors include government regulations and Brexit, while economic factors cover inflation, employment, and labor costs. Social factors discuss changing consumer trends and preferences, and technological factors highlight the adoption of retail technologies. Environmental factors are also considered. The report concludes by summarizing the key findings and their implications for Tesco's future.

BUSINESS ENVIRONMENT

EXECUTIVE SUMMARY
This report gives a brief analysis of the whereabouts of Tesco from its origin to the internal
structure of the company. It also covers the details about the board of directors and their
committee which states the details about who takes the decision regarding which aspect. Other
than this it also highlights that why it is necessary to conduct an external analysis for the
company. It assess all its positive attributes and covers the areas for which company needs to
prepare their measures for so that they can sustain their market for a long period of time. Also
the Pestle analysis of Tesco is covered in this report which states which areas the company needs
to make changes so that they can meet the expectations of consumers.

Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
TASK 1............................................................................................................................................4
Examine how your chosen organization is governed and structured..........................................4
TASK 2............................................................................................................................................5
Importance of Pestle Analysis.....................................................................................................5
TASK 3............................................................................................................................................7
Pestle Analysis of Tesco..............................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment means all of the internal and external factors that affect how the company
functions including employees, customers, management, supply and demand
and business regulations. An example of a part of a business environment is how well customers'
expectations are met. Tesco, is a British multinational groceries and general merchandise retailer
with headquarters in Welwyn Garden City, Hertfordshire, England, United Kingdom. It is the
third-largest retailer in the world measured by gross revenues and the ninth-largest retailer in the
world measured by revenues. This report contains issues such as structure and managerial
aspects of Tesco. Importance of Pestle analysis for the company and Pestle analysis for the
company (Dima, Hadad and Luchian, 2017).
MAIN BODY
TASK 1
Examine how your chosen organization is governed and structured
Tesco has many stores in UK and their base of operations is stronger in UK because they started
their operations here and with success they have achieved better brand image through which they
are able to expand their operations on an international scale. It is because of the diversified
culture of the company and hiring of employees through which they have been able to
understand the culture of different people in different countries so that they can serve them by
forming appropriate strategies so that more of them can be served and they can increase their
share in the market. Overall across the world the company has more than 5,00,000 employees.
They have been successful in establishing their market in 11 countries. It is because of many
characteristics of the company such as years they have served in the market, their reputation etc.
will help them to increase the base of customers (Grizane and Jurgelane, 2017).
The board of Tesco is diverse which states many of the members will have different thought
process, insights through which company can have benefits from different areas. The committee
of board includes the Chairman, Group Chief Executive, Chief Financial Officer, Senior
independent Director and a number of directors that are non executive. John Allan as the Non
executive Chairman, Alan Stewart as Chief Financial Officer. Deanna Oppenheimer as Senior

Independent Director and Dave Lewis as the CEO of the company. The CEO of the company
that is Dave Lewis was elected in the year 2014 and since then he has been serving the company
and helping them to sustain their environment. In total there are nine people in the board
committee of the company.
It is the board of directors who governs the company which makes the structure of the
company tall and hierarchical. There are three levels in the structure of the company such as top
level, middle level, lower level. Top level of management involves the role of CEO and he is the
one who has the power to take all the decisions in the company. Other than him members of the
board takes decision for the functions that are supervisory so that they can make the functioning
more effective. Other than this these people have a job to represent the company in the market
that is international. Members such as managers, vice president and assistant serve under the
middle level of management of the company. these people coordinate on areas such as
marketing, allocating the funds in the right area and looking after the activities of HR. Last stage
is the lower level of management undertakes the activities of regional manager who takes the
decision for the whole region. They undertake the analysis for the company and assess that if or
not it is viable for the expansion of the company (Alotaibi, 2016).
TASK 2
Importance of Pestle Analysis
It is necessary to conduct the Pestle Analysis of the company as it helps the company to know
the whereabouts of external environment.
 The infrastructure of the business is influenced by the laws and regulations made by the
government. It is important that business are aware of these factors which brings changes
so that they can maintain the flow of work. These factors reflect the status of the business
that assess that they are able to achieve success in the market. It is important to assess
these factors which can affect the business so that they can work on the strategies that are
needed to comply with the issue of political factors (Decock and Spiessens, 2017).
 This factor directly helps the company to know the rate of growth, sustainability and
opportunities in the market. It is important because it will help the company to form a
blueprint so that economic changes in the country do not leave a profound or negative

effect in the business and if the change is major then blueprint will have all the measures
to fight with it. Other than this analysis of environment will also tell the company the rate
of viability in the market so that they can set the salaries of employees on the basis of
that. If they incur a regular return then they will be able to serve in the market for a long
period of time.
 It is necessary to conduct the analysis because with time a change in society begins to
appear so that they can match with the aspect of evolution. Sometimes it is beneficial for
the business and sometimes it is not which brings problem for the business. It will be
easy for them to keep a track on these measures so that marketing strategies used by
Tesco are appropriate. It is necessary that business keeps a track on the patter of
consumers such as in their consumption, lifestyle and attitude towards things so that they
can offer them things on that basis (Remišová and Lašáková, 2020).
 With the help of technological factors company can assess that if or not they are
achieving growth in that particular market. With this they will be able to know the rate of
success as they will conduct a research from technological aspects to take out the
important factors in that area. With the help of this research company will be able to take
out the innovative methods and trends which helps to assess the flow of chain easily. This
way they will be able to enhance their reach and stay ahead of their competition in the
market (Bashir and Verma, 2017).
 It is necessary that activities are taken out in the area of environment factors because it
helps the company to increase their image in the environment and they are able to work
for the betterment of the environment. It is necessary because environmental conditions
can affect the business in a negative manner such as they can stop the production of many
products and lead to heavy losses for the company which will be hard to bear.
TASK 3
Pestle Analysis of Tesco
Political Factors-
Tesco operates in more than 11 countries which also includes countries such as Asia and
Europe because of this reason they are exposed to many factors that can influence the operations

of the company. These factors undertakes the area of instability in the political environment of
the country. For instance government of a country increases the duty on import of goods, this can
affect the operations because many of the materials and products are imported from Asia and
China. Chairman of Tesco is concerned with the decision of Brexit taken by the EU and it is
changing the mind of many investors to invest in the company. Many initiatives for tax has been
introduced and rejected by the government which can impact the operations negatively in the
future. The economy of the country is not in a good condition which states that they have to
work under the compliance and decision taken by the government so that they can sustain the
operations of their business and survive in the market (Saleem, 2017).
Economic Factors-
These factors are concerned with the rate of inflation, rate of taxes, level of employment,
standard of living of people. Cost of labor is an important factor in the economy that influences
the whole sector of supermarkets in a negative manner. The minimum wage rate of labor has
increased recently by 4.4 per cent for the people who are older than 25 years. This shift in wage
rate has been very difficult for the company to bear as they have to bear it in millions of pounds.
There are other factors which is affecting the company to staying at their strategy of low cost
pricing. It is necessary that Tesco focus on the cost of borrowing as it leads to decrease in profits
if the cost have increased. It can change the strategy of pricing and image of the brand in the
market. It is because of diversification and their base of setup in other countries that the company
has been able to achieve success in the market. Still the highest share of Tesco is in UK which is
more than 25 per cent (Breckova, 2016).
Social Factors-
These factors are concerned with the changes in beliefs, values and culture of people.
Trends of shopping for consumers are changing with time. The schedules of people are tough
nowadays they don’t have time for themselves which is why they want the delivery of the
products they ordered on the same day. If by any chance they do not like the product or there is
mistake in delivery then they expect that policy of return will be flexible to them. The mode of
shopping they prefer is one stop. The company is relying on customers of UK so that they can
meet the solution to these issues. There is another issue which needs the attention of the

company and that is related to the beliefs of the consumer, their attitudes and the demand for the
goods and services. Another issue in the society between people is obesity as nowadays they
look forward to eating healthy so that they don’t face any health related problems. It is necessary
that company assess the behavior of people and demand of organic food. The beneficial aspect
for Tesco is that consumers of UK are loyal to their brand.
Technological Factors-
Some time ago company was facing issues such as poor experience of customers and the
scandal of horsemeat. But with the advancement in technology they brought opportunities that
are new through which the company can gain the trust of customers back. Retrial technologies
are adapted by the company to claim the opportunity of technology. To increase the experience
at in store services they have introduced RFID technology. It helps to keep a track of stock by
removing the items from data after the sales have been made. The information is in the hands of
the owner of the store. Other than this they have introduced their application through which they
can make payments online and the app goes by PayQwid. More than 500 stores are using this
app. This also gives them the opportunity to link with their clubcard through which bills of
shopping can be paid and they can get loyalty points. To increase the level of convenience the
company has introduced the facility of scan as you shop so that products can be tagged. It saves
cost of labor and time as well (Holotiuk and Beimborn, 2017).
Environmental Factors-
Agencies of government are putting pressure on many companies so that look after the
issues of environment and contribute in this area so that improvement can be seen. This is
necessary as it represents that company is working for the welfare of the society. Tesco is
motivating their consumers to buy products online from their official site. The drivers of the
company saves fuel by using routes that are small for bringing ecological balance and recycle
those bags of plastic which are not wanted by customers. The company has committed that they
will use resources that are renewable and by the year of 2030 they generate 100 per cent of
electricity. Also they have mentioned that they will reduce the use of carbon footprint by half of
they are using right now.
Legal Factors-

It is important that they do not have to undermine the areas where changes are made
because of change in law that affects the performance of Tesco and put hurdles in the path of
achievement of objectives. Some time ago company faced a case where 16-17 employees of the
company took a action to court which was on the basis of discrimination on gender and age. This
is because they were frustrated after they saw low rates for working overnight, on weekends and
on holidays. There was another legal action which was for a fraud in accounting and taking the
investors to a wrong path and to settle the case they had to pay 12 million pounds. It is necessary
that the company maintains their operations under the guideline of Food Retailing Commission.
If the company do not serve under the guidelines and follow the rules and regulations of different
countries then they won’t be allowed to serve in their markets which will decrease the profits and
reduce the share in the market (Michael, Reisinger and Hayes, 2019).
CONCLUSION
From the above studies it has been concluded that Tesco needs to work under the guidelines and
regulations of different countries and stop working unfair trade activities so that they don’t have
to face any lawsuit against them and their image is not affected in the eyes of employees as well
as customers. It is important that they analyze the external environment and understand the
importance of it so that they are able to predict the outcome of the condition and decision made
by them. This way they will be able to prepare the measures that are necessary for the upcoming
trends and changes that can steal the position of the company in the market.

REFERENCES
Books and Journal
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Alotaibi, Y., 2016. Business process modelling challenges and solutions: a literature
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Breckova, P., 2016. Family Business in the Czech Republic.
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