Icon College: Tesco Macro Environment and Business Analysis Report

This report provides a comprehensive analysis of Tesco's business operations, focusing on the impact of the macro environment. It begins with an introduction to Tesco, highlighting its global presence and diverse product offerings. The main body of the report utilizes PESTLE analysis to examine the political, economic, social, technological, legal, and environmental factors affecting Tesco. It then delves into a SWOT analysis, identifying the company's strengths, weaknesses, opportunities, and threats, and explores the interrelation of external factors with these internal aspects. The report examines Tesco's supplier network, market position, product diversity, and awards, while also addressing financial errors, operational performance, and cost strategies. It identifies opportunities in emerging markets, online shopping, and joint ventures, and considers threats such as economic crises and reputational issues. The report concludes by summarizing key findings and emphasizing the importance of adapting to the dynamic business environment. Finally, the report also discusses Porter's five forces to analyze the competitive landscape and provides a detailed conclusion that summarizes the key findings and suggests future strategies for Tesco.

LO3 Use contemporary examples to
demonstrate both the positive and
negative influence impact the macro
environment has on business
operation LO4 De

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Mainbody...............................................................................................................................1
2. LO3.........................................................................................................................................1
P4 Describe the positive and negative influence of the macro environment..............................1
Lo4...................................................................................................................................................3
P5 Describe internal and External analysis of an organization in order to identify strength as
well as Weaknesses......................................................................................................................3
P6 Interrelation of external factors with strength and weaknesses..............................................5
3. CONCLUSION......................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Tesco is considered as the third largest in terms of profit as it is considered as the 9th retail
company all over the World. It was founded in the year 1919 and has currently around stores
within 12 nations. Tesco offers variety of products and operate in other areas as well such as
mobile networks and financial services. the report will lay emphasis of analysis of the Pestle that
the external factors that are utilized to conduct the market research. also, it will be described
about SWOT analysis in which strengths and weaknesses of particular businesses is described
their interrelationship with external factors.
Main body
LO3
P4
Pestle analysis is considered as a framework that evaluates the external factors that are
utilized to conduct the market research as it provides the overview of the several macro
environmental factors that are taken into the consideration. It provides insight on market
condition and what factors can affect on its growth and expansion. The details analysis of Tesco
are given as follows
Political factors
Tesco is operating within Europe and Asia including within 12 countries. It is also
exposed to several factors that can impact the operations such as political instability, economic
condition, Tax rates unemployment rates and impending legislation of the nations where the
Tesco is operating (Perera, 2017). Such as Tesco is affected by the import duties on the goods as
it imports some duties outside from UK such as East Asia and China. Tesco tax which is known
as the tax on market was proposed through local government but it was refused such initiative to
avoid price hiking. It is noticed that such initiatives will also affect company growth in negative
way.
Economic factors
There are several factors of economy that affect Tesco such as profits, cost price. Tesco
focused on the enhanced borrowing cost within United Kingdom, it will enhance costs as well as
prices and reduces its profits at the same time. Labor cost is also one of the crucial economic
factor that affect business like Cost, profits and leadership.
Social factors
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Over the years shopping trends of the people are also changing as nowadays they are not
having time for it due to hectic schedule. Tesco understands the needs as requirements of the
consumers of United Kingdom and also at the same time provides the services to fulfill these
types of problem. The demands of goods as well as services depends on social ethics and norms
of the people. it is found that obesity is one of the major issues in the society of UK and also at
the same time consumers are concern about their health. Tesco must focuses on such changing
needs of the people and also fulfill the demands regarding organic food.
Technological factors
The advancement of the new technology brought new opportunities to the firm and also
regain the consumer trust (Perera, 2017). To increase the experience of the people Tesco
introduced RFID technology that can automatically counts stocks and remove it after its sales as
such data is also aids for the supplier of the Tesco's store as well as reload when required.
Environmental issues
Tesco is used to minimize the carbon footprint up to the 50%. Firm is motivating
customers to shop online at Tesco.com. The drivers of Tesco will only use routes that are fuel
saving but also same time using rules that are fuel savings, they also collected the plastic bags
from the consumes as well as recycle them.
Legal Factors
Within a business legal environment, Firms never focus on key areas where it can impact
the business efficiency to achieve the goals of the firm. In the past year 2017, 17 workers of firm
took the legal actions against it on the basis of gender and age discrimination. Here the
employees are extreme frustrated as they are paying for low pay rates for weekend, nights as
well as holiday shifts (Perera, 2017). Moreover, company faced several legal actions regarding
accounting fraud and misleading investors.
Lo4
P5
Swot analysis of Tesco
STRENGTHS
Tesco has an efficient network of suppliers.
Suppliers are the one who plays very crucial role within the operations of business. Tesco
has also follows very simple business model that aids them to reduce the cost through having an
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cost-effective waste management system. As an outcome Tesco has an effective relationship
with their suppliers, who are capable of delivering the goods on time.
Britain's biggest grocery store
in context of profit, Tesco has captured the UK sector. As it is a top retail grocery store
as well as supermarket in the United Kingdom and its annual revenue was around 63,911
millions pound both in Ireland and in United Kingdom (Gürel. and Tat, 2017).
Provides variety of products within Diverse Marketing
Tesco offers variety of products as well as services to its staff members all over the world
such as Financial, telephonic services, school uniforms, clothes, mobile phone accessories and
many more all over the world.
Multiple award holders
The performance of the Tesco is not limited to the statics and fans as it won several
awards, Some awards are from '' British Favorite Supermarket''. Grocers label Food and Drink
Awards was awarded 25 times.
The Largest private employer within Europe
One of the reason for the popularity of the Tesco in retail sector is, it provides
employment to people. It has also provided the Job all over the world as some also claims that
Tesco is considered as one of the major private job provider within Europe (Perera, 2017)
WEAKNESS
Financial Errors
The profit of Tesco is highly affected through card debit as firms uses debt regarding for
their benefit through enhancing their profit if debt decrease profit as it focuses that people are not
using their debt rightly.
Weak operating Performance
Operational performance of Tesco within some nations has always been low that reflects
that the marketing department of the firm do not doing any enough ground research before
opining their stores.
Low costing techniques
To offer products as well as services at lower process ,they follow the low cost strategy
model but this strategy is costing the firm low profit margin.
OPPORTUNITIES
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New emerging markets
Tesco has already establishing its business within 14 nations but it also focuses on the
emerging markets like South Korea, Indonesia and Turkey. These are the markets that have big
opportunities to grow.
Online shopping store
Tesco has made a mobile app for increase the costumer experience especially for the
online shoppers (Bohari, Hin. and Fuad, 2017). Firm can upgrade the app as well as add some
features regarding the home delivery. Nowadays due to the Covid 19, people are not coming
from their house as everything is shuttled down, so within this serious situation Tesco helps their
consumers to buy online stuff ,especially the grocery items and at the same time also provide
some discounts to the grocery items so that people do not face so much crisis regarding money
and also this builds the trust of the costumers.
Joint venture
There are some stores that are not doing well as for that Tesco follows the partnership
path as they merge with the coal business for that particular place and get to learn the knowledge
regarding the local market. It is a great opportunity for the Tesco to do business with local
people.
THREATS
Crisis of national income
National economic crisis such as taxation, regulations credits ,government rules are
considered as a threat to the performance and threats of Tesco within some parts of the nation
(Gürel. and Tat, 2017). The firms are also very creative regarding such threats.
Christmas scandal
Within 2017, Tesco launched an add on Christmas as it was funny but at the same time it
was a direct attack on the faith of the christian community, also it was disrespectful.
P6 Interrelation of external factors with strength and weaknesses
Porter five forces
Threat of new entrant
The threat of the new entrant is generally low in this industry due to highly requirement of
the capital and large amount of expenditure on various activities. Thus, this makes the entry of
the newbie quite difficult and makes this threat low for Tesco. Besides this, major strength of the
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company which is its great brand name also makes this threat low for the company. Along with
this, the another strength of Tesco which is that it is greatest grocery store will also make this
threat low as it has already a established name in the market (Gürel and Tat, 2017).
Bargaining power of suppliers
The bargaining power of suppliers is basically the influence of suppliers over the prices and
thus affects the company to high extent. Due to the great network of supply chain of Tesco which
is its one of the strength, bargaining power of these suppliers becomes low. Tesco has a great
chain of supply chain across the world and thus this makes the influence of these suppliers over
prices low.
Bargaining power of customers
In comparison to the number and intensity of suppliers, number of the customers is generally
high and thus this makes the control of customers over varied prices high. The major strength of
Tesco which is great product line and wide variety of products nullifies this treat and thus makes
the bargaining power of users much low. Due to great brand name as well as multitude of
product line, customers tend to avoid switching to competitors and this makes the threat low for
Tesco (Sarsby, 2016).
Threat of substitute products
This threat basically addresses the degree to which the substitute products are being
available in the market. This threat is generally high for Tesco due to its biggest weakness which
is low amount of differentiation. Although Tesco have a wide range of products and great
product line but the amount of differentiation within its products have been reduces since few
years. Due to this less differentiation, there is large number of substitute product available in the
market which is the exact copy of their normal products like kids clothing.
Rivalry among the firms
This predominately shown the intensity of competition which exists among the firms
operating within the similar sector. Rivalry has always been fierce and intense for Tesco due to
its low operating profit. The weak operating performance of Tesco as well as its low cost
strategy has eventually affected the profitability and revenue ratio. This has made the company
somewhat weak in terms of competition and competitors like Sainsbury whose position in the
market is highly remarkable due to their great competitive advantage (Vlados, 2019).
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2. CONCLUSION
from above it is summarized that pestle analysis focuses on the tesco and at the same time
its competitors are also big as well as growing rapidly thus Firm should take an advantage as
several opportunities as possible as firm should also resolves several legal issues as well as clear
the name of its brand from all the legal proceedings. Report also focuses on the Strength such as
efficient network of suppliers, Britain's biggest grocery store, Provides variety of products within
Diverse Marketing, Multiple award holders, the Largest private employer within Europe. It
focuses on the weakness such as Financial Errors, Weak operating Performance ,Low costing
techniques. It also focused on opportunities online shopping store, joint venture,
new emerging markets. It also focused on threats crisis of national income Christmas scandal
and many more.
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REFERENCES
Books and Journals
Bohari, A.M., Hin, C.W. and Fuad, N., 2017. The competitiveness of halal food industry in
Malaysia: A SWOT-ICT analysis. Geografia-Malaysian Journal of Society and Space.
9(1).
Gürel, E. and Tat, M., 2017. SWOT analysis: a theoretical review. Journal of International Social
Research.10(51).
Gürel, E. and Tat, M., 2017. SWOT analysis: a theoretical review. Journal of International
Social Research.10(51).
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Policy, P., 2016. What is pestle analysis.
Rastogi, N.I.T.A.N.K. and Trivedi, M.K., 2016. PESTLE technique–a tool to identify external
risks in construction projects. International Research Journal of Engineering and
Technology (IRJET). 3(1). pp.384-388.
Sarsby, A., 2016. SWOT analysis. Lulu. com.
Vlados, C., 2019. On a correlative and evolutionary SWOT analysis. Journal of Strategy and
Management.
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