Tesco's Business Environment: Competitor Analysis, PESTLE, and SWOT

This report provides a detailed analysis of Tesco's business environment, focusing on its operations within the UK market. It begins with an introduction to the company, its competitors (Asda, Sainsbury's, and Barclays), and the different types of organizations. The report then explores Tesco's organizational structure, comparing it to those of its competitors. A significant portion is dedicated to a microenvironment analysis of Tesco, including a PESTLE analysis (political, economic, social, technological, environmental, and legal factors) and a SWOT analysis (strengths, weaknesses, opportunities, and threats). Finally, the report examines the impact of both the micro and macro environments on Tesco's strategic direction and overall performance, offering insights into the challenges and opportunities the company faces within the dynamic UK business landscape.

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BUSINESS ENVIRONMENT
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Table of Contents
Introduction...............................................................................................................................................2
LO1 Different types of Organizations......................................................................................................3
1.1 Tesco PLC description........................................................................................................................4
1.2 Asda Stores Ltd............................................................................................................................5
1.3 Barclaysbank......................................................................................................................................6
1.4 Sainsbury’s.........................................................................................................................................7
LO2 Organizational structure and organizational functions.................................................................8
LO3 Tesco microenvironment analysis..................................................................................................10
3.1 PESTLE Analysis of Tesco..................................................................................................................10
3.1.1 Political.....................................................................................................................................10
3.1.2 Economic..................................................................................................................................11
3.1.3 Social.........................................................................................................................................11
3.1.4 Technological............................................................................................................................12
3.1.5 Environmental..........................................................................................................................12
3.1.6 Legal..........................................................................................................................................13
3.2 Tesco SWOT Analysis.......................................................................................................................13
3.2.1 The strength of Tesco...............................................................................................................13
3.2.2 Weaknesses of Tesco................................................................................................................14
3.2.3 Opportunities............................................................................................................................14
3.2.4 Threats......................................................................................................................................14
LO4 The impact of micro and macro environment on Tesco...............................................................15
4.1 Microenvironment impact on Tesco................................................................................................15
4.2 Impact of the macro environment on the Tesco strategic direction................................................16
Conclusion................................................................................................................................................17
References................................................................................................................................................18
Introduction
Business within the UK market has attracted the growth of various companies within the
market and this is also spread across the international business market platform. There are many

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different types of organization within the UK market operating within different industries. Tesco
Limited is one of the largest companies in the UK market will larger operation revenue. In
addition, the organization has a larger number of employees and stores spread across the
international business environment. The company operates within the retail market, online
business and financial market. Some of the competitors of Tesco are Sainsbury's, Barclay's bank,
and Asda stores. Asda stores are primarily a retail store and compete with Tesco on the retail
category and the second largest store after Tesco. Sainsbury's is a diversified organization that
competes with Tesco at the retail industry and at the financial category through its Sainsbury’s
Bank. Lastly, Barclays Bank is a financial institution and majorly competitor of Tesco in the
banking industry. The organizational structure show interrelationwith the organizational
functions and position that performs these functions. Another area that has influence in the
operation of the company is the macro and microenvironment that affects performance leading to
the achievement of strategic objectives. The following paper analyses operations of Tesco
Limited incomparison with its three competitors.
LO1 Different types of Organizations
There are different types of competitors that operate different types of businesses that
range from banking, retail and many other types of businesses. The three competitors are Asda
Store Ltd, Barclays Bank and Sainsbury’s.

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Figure 1: Market share for major retailers
1.1 Tesco PLC description
Tesco is a Britishretailer that deals in different types of general merchandise and
groceries that are based at Welwyn Garden City. Many reports have ranked Tesco as the third
largest retail company within the country. The size of the company is considerably large
reaching seven Asian and Europe countries despite being the largest grocery within the UK. The
company has a market share of 30.6 percent making it leads other organizations in the category
of groceries (Tesco PLC 2019).
The background of the organization can be traced back to 1919 when the company was
founded as a group of a market stall. The organization opened its first shop in 1931 from where it
has expanded to reach more than 100 retail shops across the country. The company has also
reached more than eleven countries throughout the world and is currently selling more products

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under the portfolio of clothes, books, electronics, furniture, software and telecoms among many
other products (Kelly 2013).
The company is currently ranked the largest company within the company after
suppressingAsda and Sainsbury’s stores. The size of the company is large with 6569 shops found
in different locations and with many different headquarters (Ryle 2013). Currently, the company
has more than 460, 000 employees and operating under the income of £1,644 million, a total of
£57, 491 million revenue making a net income of approximately, £1,208 as at 2018. Tesco has
more than nine subsidiaries operating under different business portfolios but under the Tesco
brand.Some of the common subsidiaries include Tesco Stores Ltd, Tesco Bank, Tesco Family
Dining Ltd and Tesco Mobile among others. Some products that are sold under the Tesco brand
are superstores, supermarket, convenience store and hypermarket (Mason & Barry 2015).
The strategic plan of Tescoincludes vision, mission and business objectives. The mission
of the Tesco is anchored on the statement “We make what matters better together”. The core
value of the company is based on the need to treat everyone the way one needs to be treated
(Wood 2010). This implies that customers are treated as they expect to be treated well. The
vision of the organization is based on what is needed, a growing business, modern and
innovative, winning locally and globally, and inspiring and earning at the same time from the
loyalty of customers (Euromonitor 2012).
1.2 Asda Stores Ltd
Asda is another UK based retail store that has its headquarter at Leeds, West Yorkshire
UK. The company was founded in 1949 through merger of supermarket and Associated Dairies

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company within Yorkshire. The company was ranked the second largest retailer in the UK in
2003 and 2014. The company is currently the second largest company after Tesco since 2019
where it has regained its growth momentum.The company was acquired by Walmart and has
remained within the second position interchangeably with Sainsbury’s in the UK market. Since
the acquisition of the company, Asda has remained operational on its brand name thereby
gaining a brand position within the market (Ruddick 2014).
Size of the company is equally large being the second largest retail store as of 2019 in the
UK. The company has more than 633 stores located across the country and is operating four
common products. These products are grocery, general merchandise and financial services
leading to total revenue of £21,666 million as of 2016. The operating income of £791.7 million
and a total of 165,000 employees. The company is a subsidiary of Walmart and also has two
main subsidiaries called Asda Mobile and Asda Money (Smithers 2018).
1.3 Barclaysbank
Barclays Bank is another competitor of Tesco under the financial categories and has been
a financial institution for many years.Barclays bank is a financial and investment organization
that offer various financial services to customers in the country. The bank is based in London
from where it offers services such as personal banking, corporate banking, investment
management, and wealth management services. The company traces its background to 1690
when it started financial services to goldsmiths in London. The bank has since been able to
spread to other parts of the country and is currently multinational bank with more than 79000
employees (Yan 2014).

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The size of the company is large with many branches spread across the world through its
London head office. The bank has three main divisions namely, Barclays Wealth, Barclays
investment and Barclays card. The company has its operations organized into two main clusters
and these include corporate and investment banking is grouped together with wealth and
investment while the other cluster is retail and investment portfolio (Wallace 2016).
The organization structure is based on the mentioned clusters of the company that enables
the company to compete within the financial sector. Firstly, the corporate and investment
banking together with wealth and management forms cluster with various products and services.
Some of these services include corporate banking, investment management, investment banking
and wealth management. Secondly, the retail and business banking forms another cluster with
services such as Barclaycard, Africa banking, business banking, UK retail and Europe banking
(Vitali, Glattfelder & Battiston 2011).
1.4 Sainsbury’s
Sainsbury’s is one of the largest retail stores within the UK and is currently ranked as the
second-best retailer in the country. The company control market share of at least 16.1% of the
retail market. The company has often been ranked interchangeable with Asdawithin the market
and is currently ahead of Asda (Tovey 2018). The strength of the company is based on its
customer-friendly culture that enable the company to attract a large number of customers within
the country. Sainsbury’s has more than 1415 stores spread across the country more than the close
rival Asda Stores Ltd. The company has a strong online store that is fairly competing with
market leader Tescolimited. The company has products such as hypermarket, forecourt shop,
superstore, and convenience shop. The company over the past years come up with subsidiaries

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such as Sainsbury’s Bank, Argos, Habitat, Nectar and Sainsbury’s supermarket. Currently, the
company has more than 186 900 employees as of 2018 and controls a total of £28,456 billion in
revenue (Museum of London 2012).
The company slogan is based on the statement live well for less that also drive the idea of
the relatively cheaper cost of goods within the store.The management of the company is lead by
CEO as the top management and the company has passed through numerous CEOs since its
founding date. The company has been trading in a number located within the country and
advocate for the low cost of good among its stores. The organizational structure of the company
majorly consists of various division that operates under the Sainsbury's brand. These functional
divisions include Sainsbury’s Bank. In addition, the company has been operating other acquired
stores autonomously under the brand name of Sainsbury’s. Sainsbury’s development of
Sainsbury’s bank has been enabling the company to compete well with Tesco a larger market
retailer and financial institution (Butler 2016).
LO2 Organizational structure and organizational functions
Tesco organizational structure is hierarchical that interrelate with position and functions.
The organizational structure composes of board members and executive members each
performing a specific function. The organization is large in size and there has diversified
organizational structure that enables the company to manage its corporate functions (Johnston,
Clark & Shulver 2012). The executive members of the organization management are the office
bearers and include financial officer, directors, CEO, staffs. The company organization structure
furtherconsists of the management of various functional divisions that include subsidiaries
(Wood 2015). For instance, the Tesco bank has a different structure that fits the banking or

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financial market as compared to Tesco mobile product line. Furthermore, the organization
through its online functional unit has tried to integrate most of its products to include its core
business linked to online business. This is complex and affects most of the functional units of the
business. For instance, integrating the Tesco bank with a retail store is complex and is
determined by the organizational structure of the company (Ghani 2012).
Figure 2: Tesco Organization structure
The organizational structure of Tesco has been criticized for its complexity and its
relationship to the organization's performance in the market. The organization structure that is
used by Tesco has operational efficiencies that determine performance in the market. The
organization structure of Tesco is almost similar to that of Sainsbury’s a close competitor that
has also diversified its product portfolio to include financial services.Asda stores have a bit
different organizational structure that is also interlinked to its function since Asda is a subsidiary

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of the Walmart company. Asda has therefore been linked to its parent store leading to another
organization structure that rests on its market functions. The complexity of the organizational
structure of Asda is based on the interrelationship with the parent store Walmart (Duncan 2015).
LO3 Tesco microenvironment analysis
The macro environment where Tesco operates has both positive and negative influence in
the operation of the company. Macro environment of Tesco require understanding political,
economic, social, technological environmental and legal factors and this forms the basis of
PESTLE Analysis (Freeman 2010).
3.1 PESTLE Analysis of Tesco
3.1.1 Political
The politicalenvironment of the UK has changed over the past period of time that has an
impact on the operation of Tesco Ltd in the market. Firstly, the government increased VAT tax
in 2011 and this has increased the price of products leading to a falling in demand. The sale
revenue to the company therefore, significantly fall following the government policy (Hartley-
Brewer & Merrick 2015). In addition, the adoption of overweight measures of the government
reduces purchases of food products that may cause obesity leading to low sales. Secondly, the
government of the UK has recently developed measures to improve the economy of the country
in order to realize a favorable economicenvironment that enables Tesco to excel. For example,
the government increased VAT tax from 17.5% to 20% thereby increasing the price of the
product sold withinTesco retail stores (Brooks 2013).

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3.1.2 Economic
The economic environment within the UK market has a positive and negative influence
on the operation of Tesco. The economic growth of the country has seen Tesco realizing growth
as the company remains the largest in the retail industry. The estimated growth of the UK
economy was 2.7% which reflect a positive growth rate transferred to the operations of the retail
business. Secondly, as the UK was in the economic recession, Tesco was affected as customers
had low spending and the result was low sales revenue. Labor cost is another economic factor
that affects the remuneration of staffs working withinTesco. For instance, the government
increases the wage by 4.4% in 2018 to forms the minimum wage rate and this affects the wage
bill of Tesco (Farrell 2015).
3.1.3 Social
Consumer trend and population composition are social determinants of shopping
withinTesco. The composition of the population of the UK is majorly elderly and the aged
population is increasing which has an effect on the taste of products that Tesco sales. Firstly, the
increase in elderly people within the country has led to a flourish of online business launched by
Tesco as products could be delivered to elderly people in their residents. Moreover, elderly
people within the country has high income that increases the spending on Tesco products.
Secondly, the negative effect of the aged population is based on the change in taste as this affects
the sale of some products. Matching the taste of these population can sometimes be difficult as
the company has to spend time understanding the preference of population. For instance, obesity
is a social issue that has affected the shopping trend within the UK since the government came
up with a measure to reduce obesity (Tesco PLC 2014).

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3.1.4 Technological
The technologicalenvironment within the UK market is a key determinant of the
operations of Tesco. Tesco Ltd has highly invested in technology as the company uses
information technology to manage its supply chain. Firstly, the advancement of technology
within the UK market has place Tesco ahead of its competitors within the market. The company
has used its technologies to reach more customers through the online store within the country
and regionally. In addition, technologies help the company to integrate its business portfolios
within the core company management. Mobiletechnologies, for instance, has increased the use of
mobile to select products sold within Tesco stores. Secondly, the negative impact of technology
is based on the disruptive technology that may result in customers moving to old technologies as
compared to new ones used by the company. For instance, Tesco has RFID technology that
assists customers shop withinTesco stores (Tesco PLC 2014a).
3.1.5 Environmental
The UK is a country that value the environmental policies that are set by international
communities and this has an effect on business operating within this market. Tesco is highly
influenced by environmental policies in both a positive and negative way. Firstly, the company
has adopted a sustainability policy that aims to complies with the requirement of
environmentalsustainability. The company has a sustainable policy that consider clean energy
consumption, reduction of greenhouse gases and limited waste production. The company over
the past has restructured its stores in compliance with environmental requirements. For example,
Tesco has 50% carbon footprint by 2020 as an environmental plan (Zhao 2014).