LSC UoS BA Business: Tesco Mobile External Environment Analysis

This report provides a comprehensive analysis of Tesco Mobile's business environment. It begins with an introduction to the business environment and its importance, specifically focusing on Tesco Mobile, a virtual network operator in the UK. The main body of the report delves into the external environment, emphasizing the significance of its analysis for Tesco Mobile. It then presents a detailed PESTEL analysis, examining political, economic, social, technological, environmental, and legal factors affecting the company. A SWOT analysis is also included, identifying Tesco Mobile's strengths, weaknesses, opportunities, and threats. Furthermore, the report utilizes Porter's Five Forces model to assess the competitive landscape. The report concludes by summarizing the key findings and offering insights into Tesco Mobile's strategic positioning. References are provided to support the analysis.

Contemporary Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
Main body........................................................................................................................................4
External environment and its importance and need for its analysis for Tesco Mobile...............4
PESTEL analysis of Tesco Mobile.............................................................................................5
SWOT analysis of Tesco mobile ....................................................................................................7
Porter five forces model: .................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment is the sum of collection of different internal as well as external
factors such as employees, customers needs and expectation in order to fulfil the demand and
supply of the company (Amankwah-Amoah 2019). This factor effect the company performance
directly or indirectly which help in making effective decision for expansion and growth. Along
with this, it help in identifying the business opportunity by tapping useful resources which
improve the overall capability of the firm. This report is based upon Tesco mobile which provide
virtual network operating system in UK, Ireland, Slovakia, Hungary, and the Czech Republic.
The company was founded in year 2003. The headquarter is located in Welwyn Garden city, UK.
In the recent years the organisation have shifted towards offering 4G services to the consumers.
In the year 2006 the company announces to move globally and enter in the joint venture with O2
to offer mobile telecommunication services to the customers. Currently the company is having
375000 customers across the world. They provide various services like mobile phones and
smartphones. This report covers external as well as internal market environment as it provide
insight regarding risk and uncertainty present in the market. At last this, it is essential for the
company to have proper research in order to make profit and develop a sustainable business
environment for the longer duration.
Main body
External environment and its importance and need for its analysis for Tesco Mobile
External environment refers the competition for those factors which have control within
the organisation and mainly they exit outside the company. They directly or indirectly impact the
performance of the company. The external environment is consist of two major elements such as
micro and macro environment. The micro involves those factors which impact the business in
negative as well as positive manner. Further macro-environment include some specific factor
which effect the working condition of the company and its operations. The micro environment in
the marketing include all these factor which effect the business strategies to make effective
decision to fulfil the requirement. This is important for every organisation to conduct micro
environment analysis before reaching to any conclusion.
There can be different elements in micro environment which include, customers,
competition and employees working for the particular company. The current report is based upon

Tesco Mobile which serves the virtual network operator in UK. This brand is one of the most
know brand across the globe which have various stores and manufacturing plant worldwide. The
company usually requires huge financial cost to serve the customers effectively. Finances are the
crucial aspect for the any business to operate and this leads towards expansion and growth.
For instance Tesco mobile this is essential to have skilled employees to reach the desire
objectives of the company (Asongu 2019). This along starts from the micro environment as this
include hiring of the process and provide them timely training and development session in order
to compete in the competitive world. The factor which harm the performance of Tesco mobile
depends upon the external conditions so this is essential for the company to provide better
services which reduces the competition present in the market. Macro elements affects the whole
economy and to businesses who are having their operations in that economy, the only difference
is the impacts they have on it.
Understanding of audit external and internal environment
There are several factor on which Tesco mobile should work upon to audit its internal
and external environment which are explained down below in the detail manner.
Identifying the opportunities and threats: This is essential for the company to analyse
and opportunities to explore the market as there is changing demand in the current market. This
is important for any organisation to reduces the loss and assist in offering better services to the
consumers. In the context of Tesco mobile it is important to have explore the market as this will
help in making capturing large market share as well as profit. Along with this the proper research
must be conducted in order to analyse the threat and take effective measures to reduce the risk.
Understanding the market: For every organisation this is crucial to know the market as
the needs and wants of the customers are changing rapidly. The research team of Tesco mobile
should figure out the current and future trends as this help in making effective products and
services for the customers. Due to regular and frequent changes in the market this become
essential for the company to make changes in order to stay for the longer time period.
PESTEL analysis of Tesco Mobile
This is known as the frame work used by the marketers or the business people for
analysing the as well as monitoring the external environment effectively. This tool aid in the
future for taking appropriate actions which result in making effective decision for the company.
The PESTLE analysis include different factors such as Political, Economical, Social,

Technological, Environmental and Legal which provide insight about the market and make sure
the decision are taken accordingly. Here is the analysis of Tesco Mobile which is done in the
detail manner down below:
Political factor: This talks about the intervention of government in the business
operations. There are different factor such as policies of government, political stability in current
and overseas economy, laws and regulations made by government for effective and smooth
functioning of organisation. However this impact the performance of the company so every rule
and regulation should be followed to avoid risk. The current political condition of UK is stable
and this is beneficial for the company to operate as this will help company to make more profit in
the future. The government of UK provide funds and other resources for the start up for the
smooth running of the business.
Economical factor: This is consider as the most important element present in the
organisation. As this include economical condition, per capita income and financial conditions of
the nation. This is important for the company to analyse the economic conditions of the company
before entering in the marketplace. In the context of Tesco mobile the management must make
sure about the performance and income level of the individual in the particular region as this will
help in making more profit for the firm. As UK is the developed nation the economical
conditions of the people are good and they can purchase the product because of purchasing
power. Furthermore the global risk and uncertainties in the world economic have impact the
revenue of the Tesco mobile. The overall profits and productivity of entity is affected and the
main reason behind it is BREXIT.
Social factor: This are the elements which are mainly divided on the basis on
demographically region. There can be different elements present in the social factor such as age,
gender, believes and norms. Although they play a major role in expansion and growth for the
company. This factor holds the direct impact on the performance as well as operational activities
of the company. So this become essential for Tesco mobile to take effective measures and
understand the market. It is consider as the dynamic structure for Tesco mobile to make decision
and policies as per the culture and requirement of the company. As the company have entered in
Poland so the company must do proper analysis of their culture for offering better services to the
consumer.

Technological factor: This refers to the technological advancement and changes take
place in the organisation. As in today's world there new experiments and techniques are
emerging in the market for attracting customers. This factor have influenced the marketing
management and the methods which are used in offering new services along with new services
for communication devices and other offers. As for the Tesco mobile, it is essential to always
introduce new technology for the customers as this aid firm to have more market share in the
limited time frame.
Environmental factor: In the present world the environment have become the most
serious issues for the 21 century. The organisation are focusing on using to reduce the pollution
and waste and offer quality product to the consumer. It is crucial for the company to use ethical
ways of doing business as this will help in developing brand image in the minds of customers.
Tesco mobile always taken the environment as the as the important part of the organisation. How
ever the firm is very responsible socially and perform its CSR (Corporate Social Responsibility),
to pay back in small amount what they take from the world. As this step create goodwill in the
market which in result make more profit in the future.
Legal: This are the factor which are directly related to the laws and legislation of the
country. This include health and safety, consumer rights, advertising standards, laws and product
standard and grade. This laws are taken into action as this to reduce the unethical practises done
by the organisation. Every nation have there laws in doing business and for the UK there are
strict laws which every organisation should follow in order to avoid conflicts. Tesco mobile
should make sure that all the activities are taken into account as per the rules which help in
smoothing functioning of the company.
SWOT analysis of Tesco mobile
This is the framework which is used in identification of organisation positioning and
create the effective planning which is essential for taking effective decision. SWOT is an
acronym of Strengths, Weaknesses, Opportunities and Threat and it should be analysed to reduce
risk and make a strong hold in the company. There are the two elements such as internal as well
as external by which they can manage to offer high quality services to the consumers. In the
regards of Tesco mobile the management must make sure about its strength and weakness in
order to make changes and which improve the positioning of the company in a well define
manner. There are four elements in the SWOT analysis which are given down below:

Strength Weakness
 The company have diversified product
line which comprise of communication
device and accessory (Bitkowska
2019). Tesco mobile have wide range
of customer which make it the most
preferred brand in UK.
 The company use all the industry
standard such as DMR which ensure
about the safety and security of the
consumers. The company have global
presence in several countries.
 The company have healthy relationship
with the customers which makes them
the strong competitor in the market.
Along with this they focus on long term
vision which help them have larger
market share in the company.
 The major weakness to the company is
the rival present in the market. There
are many players in the respective field.
Beside this Tesco mobile have low
advertisements which reduce the
marketplace.
 The company emphasis less on the
market segment and offer low quality
product as well as services to the
consumers. However they react lately
to the technology which is an major
weakness for the company.
 Firm focuses at the national level rather
than improvising the international
boundaries. They also have slow sales
services which brings downs the image
of the company.
Opportunities Threats
 There is vast opportunities present in
the market and major one is to expand
the business across the globe. The
company can new feature phones to the
consumers with new technology in
order to capture large market share.
 The firm also focus on prepaid
connection as most the people prefer
prepaid rather than postpaid. Earlier the
trend was biased towards prepaid
 The major threat is the competition
present in the market. The technology
have to face the serious threat from the
market. The major competition for
Tesco mobile is Vodafone's, Apple etc.
So to avoid the threat firm have offer
high quality product and service to the
consumers.
 Another threat is the growing concern
about the health. Due the vibration

connection but there have sharp
increase in prepaid services.
 The company should moves towards
5G as this will provide competitive
advantage in offering better services to
the consumers. However company
should introduce the customers with the
new technology as innovation always
guarantee success.
produces by the phones and networks
cause illness and sickness . This issue
have lead towards unnecessary
lowering down the sales of the
company.
 The telecommunication sector requires
huge investment in order to survive in
the market. This cost here is the major
threat which minimize the expansion
and growth of the company.
Porter five forces model:
This is the model which help in identifying the five competitive forces as they provide
insight of internal as well as external environment in forming the company(Boone and et., al.,
2019). It enables the company to have effective decision by acknowledging there strength and
weakness of the company. Porter's five forces model can be utilized and applicable to all
segments of the economy, for gaining knowledge about the competition within the industry. This
model have five essential elements which are elaborated in the detail manner down below:
Rivalry with existing Competitors: There are several competitors present in the market
which capture half of the market. As there will be large number of rivals the less power will be
posses by the company. In the context of Tesco mobile, this is essential for the company to
identify the threat and rivalry in order to maximize the product service. The company have high
control over its competition as they offer high quality product and service to the consumer. As to
overcome this problem company have to innovate new product and service. Beside this, firm
should develop economic of scale and lower down the price per unit as this help in holding
strong position in the market. Research and development have also become an essential element
to establish there positioning in the market.
Bargaining Power of Suppliers: All the organisation who deals in mobile industry buy
their raw material from the different suppliers. Hence the suppliers domain the market which
decease the share of Tesco mobile. So to handle the situation firm have build efficient supply

chain system with the different suppliers as this will provide competitive edge among the
suppliers. Further company can experiment with their product design using different kind
material and suppliers so that in any case the price is charged high by the suppliers company can
shift to another supplier for raw material. Many company like TUI and other company have build
third party supplier as this help in providing significantly less bargaining power compare
to other big player in the market.
Bargaining power of buyers: Buyers have become more demanding as they want best
offering present in the market for the minimum price possible. In case of higher bargaining
power the customers have higher ability seek the discount and offer present in the market. To
minimize the bargaining power firm have to build large customer base along with this is crucial
to provide opportunities to the firm to streamline its sales and production process (Singh 2019).
How ever rapidly innovating new products and service company can charge high price. Another
step for the company is to come with new products which will limit the bargaining power of the
individual. Furthermore new product will reduce the defection of the existing customers of Tesco
mobile to its competitor.
Threats of the substitute product and service: When the new product and service
meets the similar customers needs in the different ways the profit of the company reduces. For
example services like Dropbox and Google Drive are substitute to storage hardware drives. As
the threat of substitute product and service will be high as it offers a value proposition which is
uniquely different from the present offering of the industry. So in this case company can offer
more service rather than focusing on the product. By understanding the needs and wants of the
customers Tesco mobile can minimize threat to the substitute. At last company can switch the
cost which is helpful in attracting more and more customers towards the company.
Rivalry among the existing competitors: If there is tough competition in the market as
the companies take major steps and lower down their price in order to avoid market penetration.
Tesco mobile can build unique method of selling product and service which will help in making
separate customer base for the company. The most effective way to reduce or eliminate the
competition from the market is to collaborate with the competitors which is helpful in capturing
larger market share for the company.
By analysing all the five competitive forces of Tesco mobile there has been proper insight
regarding the crucial impact which would effect the profitability of the company. With the help

of this model firm can figure out the game changing trends to swiftly response the emerging
opportunities. From the above discussion Tesco mobile manage those forces which is in the
favour of the company.
CONCLUSION
From the above mention report it has been analysed that contemporary business
environment helps to identify the challenges and competition present in the market. There are
several factors such as increasing competition, introduction of new innovative products, they
have great influence on businesses which enables them to explore new opportunities and make
plans as per the requirement. Further SWOT analysis have done as this is useful in understanding
the strength and weakness of the firm so that active steps are taken to improve the productivity of
the company. Along with this PESTLE analysis have been done to figure out the external
environment for the company. At last Porter's five forces has been taken into account to analyse
the way of doing effective business for the longer time duration.

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