External Environment Research and Analysis: Tesco PESTLE Report

This report presents a PESTLE analysis of Tesco, a UK-based multinational retail company. The analysis examines the political, economic, social, technological, environmental, and legal factors impacting Tesco's operations. It explores the political stability in the UK and the uncertainties caused by Brexit, as well as the economic impacts of COVID-19, including declining consumer spending and rising labor costs. Social factors such as Tesco's initiatives for diverse customer needs and the growing demand for vegetarian and vegan products are also considered. The report further investigates Tesco's technological advancements, environmental initiatives, and the impact of various legislations and policies. The conclusion emphasizes the importance of continuous analysis of external factors and highlights opportunities for Tesco to enhance its revenues and brand value within its target market. The report is supported by references to relevant academic sources.

External Environment
Research
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................6
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INTRODUCTION
The external environment in a business includes legal, political, social, demographic,
global, economic and technological sectors. It is essential for managers in a business to
understand the ways in which environment is changing and the impact of these changes in
business operation (Bartosik-Purgat, 2020). In the following report Pestle analysis on Tesco is
conducted to understand the external environment of business. Impacts of all the external factors
and ways in which business can deal with them are also discussed.
MAIN BODY
PESTLE analysis is a framework that describes all the macro-environmental factors
which are used for scanning different strategic management components. It is a tool that helps in
understanding decline or growth in market, direction as well as potential of various operations. A
Pestle analysis on Tesco is conducted which is a multinational giant dealing in retail sectors.
There are six factors described in this framework as mentioned below:
Political factors: Tesco is a British multinational operating in a number of different
countries including Ireland, Slovakia, China, Poland and so on. The major operations and
revenue are generated from its home market in United Kingdom. The political environment in
United Kingdom is stable but due to BREXIT a lot of uncertainty is created. The political
environment in which Tesco is operating is conducive to businesses. Tesco is successfully
responding to various legislations and adjusting their marketing strategies according to external
environment.
Economic factors: Due to recent hit of COVID-19 all the economies in world are hit and
the economies are falling with raising problems of unemployment. This is also resulting in
decline in spending by customers and consumers switching to different brands with less prices.
This is having a huge impact on revenues and profits of Tesco as well (Woodward and Veal,
2019). Also the high labour cost for Tesco in Ireland and United Kingdom is costing company
million of pounds each year.
Social factors: There have been a number of initiatives taken by Tesco in order to
respond to different social changes and demands. This includes different meat for Muslim
customers and independent stores for meat throughout UK. They are also selling different kosher
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products for their Jewish markets and customers. Company can further take social changes into
consideration such as increasing demand of vegetarian and vegan food in European markets.
Technological factors:It is necessary for every organisation working in today's market to
keep themselves updated with latest technologies. Tesco is successfully addressing the needs for
technological developments within their organisation. This includes introduction of Club cards,
use of RFID, connected devices, BYOD for staff, mobile payments and so on. It is a great factor
that enables Tesco to stay in competitive market . It is essential for companies to bring in new
innovation in order to attract customers and increase their customer base. However, it is required
by organisations to focus on the cost required for these developments as the require huge
investments.
Environmental factors: There is enormous pressure on companies throughout the world
that they are facing from government in order to address various environmental issues.
Companies have to face this pressure from the governments as well as the public and customers
who are concerned about their environment. There are a number of initiatives taken by Tesco in
respond to this pressure (Ibrahim and Harrison, 2020). They are focusing on removing use of
plastics in their packaging and products. They are also working towards seven issues including
climate change, deforestation, sustainable diets, sustainable agriculture, marine impact, food
waste and packaging waste.
Legal factors: There are a number of legislation and policies that are impacting Tesco
directly. Examples can be taken such as UK and EU competitive law that is prohibiting anti-
competitive activities due to which Tesco cannot merge with or acquire any other huge
supermarket giant. Tesco also needs to consider the Employee Welfare Act, they cannot mislead
customers or sell alcohol to under age customers.
CONCLUSION
With the help of above report it can be concluded that there are a number of external
factors that are severely affecting functions and operations in Tesco. It is required by Tesco to
make sure that they are continuously analysing all the external factors that may negatively affect
them, and make strategies to deal with them. There are also a number of different opportunities
present in external environment such as technological advancements, social changes, economical
profits that can be used by Tesco to enhance their revenues, profits, brand value and brand image
in their target market.
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REFERENCES
Books and Journals
Ibrahim, E.B. and Harrison, T., 2020. The impact of internal, external, and competitor factors on
marketing strategy performance. Journal of Strategic Marketing, 28(7), pp.639-658.
Bartosik-Purgat, M., 2020. External factors of new media tools' usage in personal
communication across countries. International Journal of Emerging Markets.
Woodward, R. and Veal, T., 2019. KEEPING IT ALL TOGETHER. Teaching Business &
Economics, 23(2), pp.27-29.
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