Tesco's Business Environment: PESTLE Analysis, Leadership & CSR

This report provides a comprehensive analysis of Tesco's business environment, focusing on the impact of external factors through a PESTLE analysis, a recommended democratic leadership style, and corporate social responsibilities. It examines political, economic, social, technological, legal, and environmental factors influencing Tesco's operations, highlighting the importance of adapting to these elements for business success. The report advocates for a democratic leadership style to foster employee motivation and collaboration, enhancing productivity and innovation. It also details Tesco's CSR initiatives, including waste reduction, fair trade support, and stakeholder engagement. Finally, the report discusses the effects of Brexit and the Covid-19 pandemic on Tesco, outlining the strategies the company employed to address these challenges.

CONTEXT
OF
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
The impact of external environmental factors and PESTLE Analysis of TESCO using.............1
Leadership style...........................................................................................................................2
Corporate social responsibilities in the processes using evidence from the research..................4
Effects of Brexit and covid- 19 pandemic in Tesco and how business addressed situation:.......6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment is a group of various factors such as internal and external factors
and it is most essential aspect of organization. The business environment gives various
opportunities to improve the performance of business. The current report will be based on
TESCO which is multinational retailing company in the UK. This study will explain the impact
on external factors of organization using PESTLE analysis, also it will recommend a suitable
leadership style that help to achieve business objectives. Furthermore, the assessment will clarify
it specifies the information related to the corporate social responsibilities in the processes
(Sołoducho-Pelc and Sulich, 2020). Moreover, lastly the report will explain the effect of Brexit
and Covid-19 pandemic on TESCO.
MAIN BODY
The impact of external environmental factors and PESTLE Analysis of TESCO using.
 Political factor- In UK, political stability can impact on TESCO, in positive manner. For
example, political relation with other nations, can enable organization to expand venture
globally that aid to increase the sales, and profits. The Political factor mostly influences
the performance of the organization that usually affect the act of taxation rates, stability
and legislation of religion they function. Business play most important role in create the
employees opportunities and enhance the demand for business products and its services
(Adamyk, 2019). Government of United Kingdom also encourage more to retail industry
for expand job for domestic population as well as business also focus on diversify their
business workforce.
 Economic Factor- Employment, economic growth, income level, and other factors are
included in current term. Any change related to each factor can impact on retail and
TESCO as operate in the same sector. In the UK, high extent of economic growth can
impact supermarket positively, in term of providing chance to build wider customer base
as individual person is able to purchase goods that company offer to them. Labour cost of
United Kingdom also affects the retail industry and UK supermarket. T increase cost and
price as well as also decline in profitability of industry due to upwards shift in cost. It
affects the business cost leadership strategy and business brand reputations.
 Social factor- The consumers in UK has transformed their appearance to numerous
purchasing and single stop buying, it is reflected by the common alteration in the variety
1

of social alteration. Moreover, The organization is adaptive towards such as alterations by
accommodating demand for organic items. Tesco has introduced different non-food items
offered for sale like product quality that demanded by buyers get huge susceptible by
their attitude and impression that adjust with social conditioning. Social trends are
directly affects the industry because customer demand because of trends so, company
required changes according to customer expectations and their perceptions. Different
types of goods and services are demanded by customer and its also influence be the social
conditioning so, it influences retail industry.
 Technological factor- Technology help organization concern to take out the changes and
raise the productivity of business practices. Moreover, the formulation and introduction
of online purchasing and the home delivery facility, the other one is individual checkout
points answer proper convince. As well as ease for consumers which positively effect to
have decreased labour price. The process in technology has brought various chances for
the company.
 Legal factor- The norms of government has directly effect the performance of Tesco, to
continue flexible dealings the company has to adapt the law of international and local
market. Moreover, some peculiar guidelines has positioned by food retail and
commission and it must be followed by the association of retail segment. Business not
able to sell alcohol to underage customer (Baliyan, 2021). Tesco was sued and fined in
previous years for mislead their customer and other issues. Business all notable to pay
less than minimum wages to workers which set by UK governments.
 environmental factor- The high pressure level on Tesco to address environmental issues
and choose the method of work to benefit the social group. Furthermore, the company is
looking for decrease in the waste of product in the physical stores or organization
increase social conscience in consumers. Tesco has started broad vision to decrease its
carbon emission by 50 percent trough 2025. industry has to take initiative for remove and
reduce the non recyclable plastic and its is new opportunities for business to involves
sustainable resourcing.
Leadership style.
leadership refers to the procedure of motivating workers to work together cooperate to
accomplish good things. As well as on the basis of career and developing leadership skills by
2

using various methods to reach organization objective. Also, there are various type of approaches
of giving the way and motivating different employees for leadership style (Ozcan and Ozturk,
2020). It is essential for Tesco to understand the leadership style by determining the affect to
influence directly.
Democratic style of leadership
Tesco has adopted democratic style of leadership and this style is also known as
participative leadership, it let multiple people to take part in the decision-making process. This
leadership style aid Tesco to motivates the workers because of this the company continues to
give good service to consumes. It is required in good communicating skill, inclusive mentality
and the knowledge to share power. It should execute the engaging in a team and aid democratic
approach to develop the organization. In this leadership style the leader of Tesco listen to the
voice of employees. Moreover, is has realized that during those worker increased the
productivity due to the workers being determined. This leadership works best in environments
that are low pressure and are not usually prostrate to quick turn around (Peker, Inandi and Gilic,
2018.). That is because this kind of leadership takes time it happens when working with large
team of the organization.
The characteristic of Democratic leadership style are given below:
 Promote creativity- In this leadership leaders trust their workers to generate the ideas
and bring the solution. This trust motivates the ability of Tesco. It encourages employees
to work together in various types without micromanagement.
 Inclusive- Leaders want all employees to come on the table when it is a decision-making
time. This approach decreases the struggle and make the workers feel valuable.
 Collaborative- The democratic leadership style motivates employees to work together,
the workers can't trust to leaders announcement to get the things finish. Rather, they
should bring the solution by their own.
 Trust building- Leaders trust their workers to get thing finish, a cheerful approach that
expect that employees are self-motivated, and they can solve problems personally. It
helps in build team work and create coordination between all member within team and
they work together in effective and efficient ways.
Furthermore, the democratic leadership style is essential Tesco because it promotes the
effort of workers and collaboration. In this leadership style every employee get chance to give
3

idea and suggestion to leader. Also, this leadership aid to build trust and respect because it
always hears to its employees. Moreover, the leaders the decision maker in Tesco, they play a
important role in managing employees and performance. This leadership is crucial for leaders to
follow and achieve the company success. The good leaders aid the business to increase during
the crises with their problem solving ability.
The advantages of Democratic Leadership in terms of Tesco:
 Improve staff productivity- Democratic leadership motivates employees, it also helps
in improve employee morale and performance as well as employees engagements
(Gogokhia and Berulava, 2021). The team members are happier when they involve in
decision making process of business.
 Diversify ideas- Leaders are free to consult with every employee for better creativity and
ask for ideas to everyone because it helps in provide various ideas for better outcomes.
This grows the probability that leaders can make decision that is beneficial for many
employees.
 Build a strong team- The workers will work together on particular task, and it also helps
in build strong team for achieve a common goals and objectives. The employees will also
able to understand the importance of team work with mutual respect.
 Increased job satisfaction- The democratic leader hear to their workers interest, when
leaders listen to their workers and it rises their morale and refer happy and contributing
employee. The democratic leadership allow employees to feel more confident and
protecting environments helps in improve their job satisfaction level.
Corporate social responsibilities in the processes using evidence from the research
Corporate Social Responsibility is the idea for the organization that they should play a
positive character in the community and believe in social and environmental impact of
organization decision. It is a self-regulating business framework that aids a company be socially
accountable to itself. The stakeholders and the public, practices corporate social responsibility
also known as corporate citizenship. Corporate social responsibility is also known as CSR. The
CSR is described as the commitment was oriented by the director of the company affairs. Tesco
steering wheel model was used to measure its accomplishment of Corporate Social
Responsibility important action sign. And it has formed the role of dealing area in responsible
and safe portion. It is made a role for Tesco steering wheel to check the firm responsibility
4

formed a role of daily activities of the organization (Nyame-Asiamah and Ghulam, 2019).
Moreover, Tesco has established its strength awareness campaign in 1996. The workers of the
company are awaited to take active part in it. The leaders of Tesco stores, agency and depots
remind energy use and work towards decreasing wastage. The company has decreased the energy
consumption by 35% per square foot between 1997 and 2005. The broad member of Tesco
discuss the Corporate Social Responsibility strategy of the organization every year and quarter
the execution was reviewed. Apart from this, the more people buy the product of Tesco that is
beneficial for farmers and growers in developing countries (Student, 2021). The company is
supporting Fair trade Foundation from ten years and now it is the biggest seller for fair trade
product in UK. This year the company has introduced its own brand Fair Trade range it is
developed in organization with fair trade foundation.
Moreover, If Tesco wants to meet objective its workers have to work together, because
they have to focus on the aspect of Tesco. They use management tool called as steering wheel to
bring together their work in all area and measure the company performance. It aids to manage
Tesco in balanced way, by covering the things they do and it allows them to plan for the future
and it sets target for new year to come. The steering wheel was converted into four parts- people,
finance, customer and operations, each of the part was divided into segments. Tesco Corporate
Social Responsibility key performance sign are measured and reported in the liable and safe
portion of operations quadrants. Apart from this Tesco has taken lead in gathering different
stakeholders to engage Corporate Social Responsibility activities. It is unique collaborative
approach provided that firm entity has stepped forward to move stakeholders. Also, it is riveting
due to some modern aspect of programming they are carrying out. Tesco is not using the model
which is utilized by the headquarters, instead delaying their own ideas and initiatives. Tesco
cares about people in various ways such as healthy living and education initiatives, giving great
working condition, support inclusivity and forward human right in supply chain. CSR is
important for Tesco because its one benefit is relative to the cost of the company and other
stakeholder is the activities of Corporate Social Responsibility are published by ensuring
consumers and the local community known what you do (Benghezal and Izadi, 2022). The CSR
having the issues such as responsible sourcing, community relations, environmental management
and working condition.
5

Furthermore, the Corporate Social Responsibility policy of Tesco is the company's
corporate strategy is for extended key development and concentrate on central purpose of getting
value for consumers to make loyalty for lifetime. Tesco is bound up towards carrying business in
social responsible and also in honourable manner. Tesco Corporate Social Responsibility
program and initiatives are modified and implemented. Tesco manage their sustainable decisions
and financially stable to gain more competitive advantages and achieve goals and objectives of
business. As long as company focus on their business innovation and formulate more strategies
to meet the demands of clients and customer and company also able to combine with the
marketing strategies for provide quality products to customer at affordable cost. The importance
of CSR for Tesco is becoming greater nowadays than ever before because of a series of ethics
related scandals. The chain of supermarket has recently dealt such as inappropriate profit
reporting and poor supplier treatment cases. In another way it is important for supermarket series
to renew the trust of its towards the engagement in Corporate Social Responsibility programme.
Effects of Brexit and covid- 19 pandemic in Tesco and how business addressed situation:
covid pandemic hit the United Kingdom in 2020, it affected every and each sector of
business and its economy. Every industry in UK suffered at the time of pandemic. Tesco is
supermarket business and retail super market segment and it basically made its reputation and
place in competitive marketplace for customer with grocery and foods that are need of every
customer. Due to the covid, government come up with some guidelines such as social distancing
and lock-down so, it affects customer and retail shoppers as well as its employees so, it badly
affects the business and various factors (Monte, 2021). This made business incur loss on the
daily basis because of customer decrease. Supply and demand force in economy also force in
economy were disrupted as the manufacturing units and production houses were also working on
their low capacity. But the requirements of food and grocery increase at the time of pandemic
because during those times it resulted in low demand as well as high demand. Tesco think more
critical for business to lead changes and provide better facilities to customers without spreading
virus.
Tesco is second largest supermarket in United Kingdom have plenty of resources and
business utilize the many resources at the time of pandemic to bounce back. There are various
negative impact of pandemic which increase the labour cots,decrease sales, spreads of virus,
6

strict guidelines of governments. Company provide online facilities to their customer and also
provide safe delivery at same time. To increase the delivery of goods and services by enabling
the faster delivery business with advantages from their acquisition company for best delivery
chain. Tesco company also able to achieve the scale of economics with the helps of increase cost
of and raw materials. Business also able to be noticed the major shift in customer demands and
low purchasing power of customer which they produced in large quantities and it can make the
final products low (Boons, 2021). Business also able to achieve the economic scale of business
because company manufacturing products in large quantities and it result in the fixed and
optimum utilization of resources. Company also affects because type require electricity and fuels
to run machines for manufacturing and they able to enhance the sales of economy but which was
severely affected by pandemic as well as kept price unaffected due to the high inflation rate in
United Kingdom.
Brexit is refer as the exit of United Kingdom from European union, it also change the
dynamic of economic because trade of goods in EU also stopped and there are different
implication of tariffs on goods. Before Brexit, company retail and trade their products and
services in the different countries for generate more profitability and productivity without any
tax implications and tariff. It lead in increase in prices of goods and services under the basic need
segments and grocery by 3-5%. in the context of employment, free movements of employees are
also affected which caused decline in supply of labour and increase in cost of labour from
various nations in EU. Tesco company has the manufacturing and production houses and they
need the unskilled and skilled employees and business hire unskilled employees mostly for their
business operations and manufacturing of products and services from the various nations and it is
impacted the same.
For deal with the negative impact of Brixit on industry, Tesco builds strong supply chain in able
to market grip in EU. Business require to fulfil their profitability and also focus on various
nations of the EU. The main objectives of business is to sell their products ta the same prices as
well as increase in product price and they also decide to sell large quantities which not economic
growth which affected so, company will sell large quantities which helps business to increase
their productivity and profitability in order to achieve goals and objectives of business (Moura,
2021). Company face shortage in Tesco workforces and enhance costs which associated with
7

retaining and recruiting new employees. It also impact on customer confidence of business
because EU imposed ban on the certain food products for the health and safety reasons. It will
also become more delivery times and expensive. Brexit also negatively impact on food price and
it had impact on the current situations. Economic shock due to covid also impact on supply chain
and it largest impact on different sectors. Laborant and people supply are also become more
complex because of troubled by Brexit. There have the significant drop in customer demand
because of lock down measures, health concern and travel restrictions.
CONCLUSION
As the conclusion, the success of Tesco rapid growth and development in recent time is
the make the brand of company in the UK retail sector. Leaders of business must be ensured the
good infrastructure, good management and organization structure which adopted the business
needs. Company make good decision during the pandemic with the helps of online sales because
it helps business to increase their sales as well as profitability. In the conclusion, this report
discussed the pestle and macro environment's analysis of retail industry and also elaborated the
different types of leadership style and democratic leadership style of Tesco with its characteristic
and advantages within the organization. This report also evaluated the corporate social
responsibility of business and its elaborated the impact on Brexit and covid-19 and how company
are able to address the situation with their actions.
8

REFERENCES
Books and journals
Adamyk, K., 2019. PESTLE Analysis on Tesco PLC.
Baliyan, R., 2021. A Shift in Paradigm for Apparel Industry Post Covid 19. Turkish Journal of
Computer and Mathematics Education (TURCOMAT).12(13).pp.5203-5211.
Benghezal, D. and Izadi, J., 2022. Exploring the impact of CSR strategy in food retail sector
firms.
Boons, F., and et.al., 2021. Disrupting transitions: Qualitatively modelling the impact of Covid-
19 on UK food and mobility provision. Environmental innovation and societal
transitions.40. pp.1-19.
Gogokhia, T. and Berulava, G., 2021. Business environment reforms, innovation and firm
productivity in transition economies. Eurasian Business Review.11(2).pp.221-245.
Monte, A., 2021. A study of value chain reconfiguration processes under Covid-19 pressures:
the case of Tesco PLC in the United Kingdom.
Moura, M.B.L.D., 2021. Equity Research in Food & Retail Industry-TESCO PLC (Doctoral
dissertation, Instituto Superior de Economia e Gestão).
Nyame-Asiamah, F. and Ghulam, S., 2019. The relationship between CSR activity and sales
growth in the UK retailing sector. Social Responsibility Journal.
Ozcan, O. and Ozturk, I., 2020. Impact of organizational culture and leadership styles on
employee performance: A research study on the banking industry. Research Journal of
Business and Management.7(1). pp.45-55.
Peker, S., Inandi, Y. and Gilic, F., 2018. The Relationship between Leadership Styles
(Autocratic and Democratic) of School Administrators and the Mobbing Teachers
Suffer. European Journal of Contemporary Education.7(1). pp.150-164.
Sołoducho-Pelc, L. and Sulich, A., 2020. Between sustainable and temporary competitive
advantages in the unstable business environment. Sustainability.12(21).p.8832.
Student, A., 2021. To examine the added value of implementing Corporate Social Responsibility
practices on the UK supermarket industry, a case study of Tesco PLC 2015-
2020 (Doctoral dissertation, University of Chichester).
9