Exploring Tesco's Strategies Through a Global Business PESTLE Analysis

Verified

Added on  2023/06/17

|7
|1276
|310
Report
AI Summary
This report provides a PESTLE analysis of Tesco, a prominent UK supermarket company, to understand the dynamics of its global business environment. It examines the political, economic, social, technological, environmental, and legal factors impacting Tesco's operations and strategies. The analysis highlights challenges faced by Tesco due to changes in the external environment, including political shifts like Brexit, economic impacts from the COVID-19 pandemic, evolving social trends, technological advancements, and the need to adapt to changing legal and environmental practices. The report concludes that understanding these external elements is crucial for Tesco to develop suitable strategies for future success and sustainability.
Document Page
Global Business Environment
tabler-icon-diamond-filled.svg

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
Table of Contents
Introduction......................................................................................................................................3
PESTLE analysis..........................................................................................................................3
Conclusion.......................................................................................................................................5
References........................................................................................................................................6
Document Page
Introduction
Business environment is changing constantly at global level. It is made with different
factors which can be related to external and internal environment. These elements are modified
with the change in the external conditions. In addition to this, external factors has a major impact
on functioning of the business entity. It is important for the companies to assess the external
environment and prepare suitable strategies accordingly (Friesendorf and Uedelhoven, 2021). In
the present report TESCO is taken into consideration. It is a renowned supermarket company of
UK. The study will cover PESTLE analysis and the key drivers of changes which should notice
by the management for understanding the future direction of the firm.
PESTLE analysis
It is a model that is applied in order to understand the dynamics of the external
environment. This framework helps in understanding the impact of external elements on
business. It allows managers to prepare suitable strategies in order to face future conditions in an
efficient manner. It is a crucial model which is applied in the field of business environment. It is
related with the outside environment that cannot be controlled by managers (Gheibi and et. al.,
2018). However, the model makes a company enable to prepare suitable strategies in order to
deal with external environment effectively. It is a strategic analytical framework that is utilized
in order to provide an organisation with crucial information on various external factors that affect
the operations of an organisation. It assist in perceiving vital angles into business environment
that can hinder business functioning. In context to TESCO, higher management use PESTEL
analysis to gather deeper understanding of their current business environment and achieve cost
effectiveness within their organisation. Moreover, it enables them in exploiting their potential
opportunities. The various factors of PESTEL analysis are elaborated below:
Political Factors: These factors relate to various government policies, taxes, and rules
and regulations that impact the overall functioning of an organization (Ricci and et. al., 2021). In
context to TESCO, various government policies can aid their business in expanding their
business. Moreover, government rules and regulations set a quality standard for products and
services minimizing the risk of new entry. Although this factor has affected their business
Document Page
negatively due to Brexit, which has impacted the overall performance of their organisation by
disrupting their supply chain leading to decreased production.
Economical Factors: This factor is concerned with economic growth, interest rates and
unemployment rates which cannot be controlled by an organisation and affect its working. In
context to TESCO, management is able to gain leverage over their competitors by developing
effective pricing strategies than can assist in reducing production cost (Gupta and et. al., 2019).
Despite the fact this factor has negatively impacted their functioning of the organisation due to
customers purchasing power being reduced as a result of COVID-19 pandemic. This has resulted
in company not being able to keep its production at optimum levels which have caused decrease
in sale and profitability.
Social Factors: It includes factors such as opinions and social cultural changes,
consumers attitude and understand of demographics that impact the performance of an
organisation. In context to TESCO, the management is able to understand its customer base and
provide them products and services that cater to customer needs and wants this has enabled them
to negate threats such as reduced customer base (Michaud and et. al., 2021). Moreover they are
able to understand shifts in cultural and financial trends and develop products accordingly which
as enabled them to gain a competitive edge in market.
Technological Factors: These factors are focused on distinguishing new technology in
order to produce products and service efficiently combined with identifying new distribution
channels. In context to TESCO, the management has been able to develop various aspects of
retailing and new methods of production which have enabled them to improve their
organisational performance. The company has been able to overcome disadvantage of this factor
which lies in its costly nature to develop through their years of experience and their efficient
development team.
Environmental Factors: These factors focus on the obligation of an organisation to be
ethical and fulfill their environmental responsibilities to promote reduction in pollution and
carbon footprint (Thomas and et. al., 2021). In context to TESCO, the higher management pay
emphasizes on ensuing the organisation fulfill its environment responsibilities to enhance their
overall brand image and values. It is necessary for TESCO to maintain these responsibilities in
tabler-icon-diamond-filled.svg

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
order to avoid backlash from environmental conscious customers and suppliers in market.
Moreover, unfulfilled of this responsibilities can reduce customer base and profitability of their
organisation.
Legal Factors: It is an important factor of PESTLE analysis that is related to follow legal
practices and compliances. In TESCO, they make sure to follow different laws such as safety at
work place, equality act and more to ensure smooth functioning of business.
With the above information, it is analyzed that TESCO is facing ample of challenges due
to change in external environment. Here, change in political environment of country affected the
business practices of the company profoundly. Further, they are also affected with change in
purchasing power of customers due to COVID and other economical events. In addition to this,
change in social environment and technological advancements have also a profound impact on
the organization. Additionally, they are required to amend the legal and environmental practices
with change in legal structure of the company. Here, analyzing the external elements will help
the entity in preparing suitable strategies for the future betterment of firm.
Document Page
Conclusion
Out of above information, it is analyzed that global business environment is a
combination of different elements. There is discussion of PESTLE analysis in order to
understand the change caused by external factors. It is concluded that managers are required to
examine the external environment and prepare suitable strategies accordingly.
Document Page
References
Books and Journals
Friesendorf, C. and Uedelhoven, L., 2021. Macro-Environment of Mobility. In Mobility in
Germany (pp. 11-17). Springer, Cham.
Gheibi and et. al., 2018. Controlling air pollution in a city: A perspective from SOARPESTLE
analysis. Integrated environmental assessment and management, 14(4), pp.480-488.
Gupta and et. al., 2019. British Airways-A SWOT and PESTLE Analysis-The impact of Europe
2020 policy. NOLEGEIN-Journal of Corporate & Business Laws, pp.1-11.
Michaud and et. al., 2021. " In The Final Analysis": The Utilization of PESTLE Analysis in the
Nuclear Medicine Workplace.
Ricci and et. al., 2021, August. PESTLE Analysis of Cybersecurity Education. In The 16th
International Conference on Availability, Reliability and Security (pp. 1-8).
Thomas and et. al., 2021. A PESTLE analysis of solar home systems in refugee camps in
Rwanda. Renewable and Sustainable Energy Reviews, 143, p.110872.
chevron_up_icon
1 out of 7
circle_padding
hide_on_mobile
zoom_out_icon
[object Object]