Tesco's Business Environment Analysis: A PESTEL and SWOT Perspective

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BUSINESS AND BUSINESS ENVIRONMENT

Table of Contents
Introduction:........................................................................................................................................3
LO3: Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations.............................................4
PESTEL analysis of Tesco’s:..........................................................................................................4
LO4: Determine the internal strengths and weaknesses of specific businesses and explain their
interrelationship with external macro factors...................................................................................6
SWOT analysis of Tesco’s:.............................................................................................................6
The interrelationship between the macro environment and the strengths and weaknesses of
the firm:............................................................................................................................................6
Conclusion:..........................................................................................................................................8
References:...........................................................................................................................................9

Introduction:
Every organization to conduct the business effectively analyses the business environment of
the organization so that they could finely enhance the business. The report below evaluates
the proper analysis of the micro and macro environment of the organization and to analyse
these aspects the PESTEL and SWOT analysis of the selected organization is very essential.
The organization selected for the evaluation of the report is Tesco’s. The positive and the
negative impacts of the macro environment and the internal strength and weaknesses of the
organization are analysed for the effective evaluation of the aspects in the following report.

LO3: Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations.
The macro-environment is the external factors which affect the business of the organization.
The macro-environment includes Political, Economic, Social, Technological, Environmental
and Legal factors which affect the business of the organization and this every organization is
needed to analyze the effects of these factors in the respective market and implement ways
for enhancing the business of the organization.
The Tesco's is a general groceries and general merchandise retailer and thus it is very
essential for them to analyze the market conditions to enhance the business of the
organization.
There are six external factors which can affect the business environment of the organizations.
The Tesco's is among the largest producer of groceries in the UK. To analyze the impacts of
the macro-environment on the organizations business operations the PESTEL analysis of the
organization is done for better understanding of the aspects (Wood, 2018).
PESTEL analysis of Tesco’s:
Political factors: Tesco’s is a multinational organization which is successfully operating in
12 countries including Asia and Europe. There are various political factors which affect the
organization’s business operations both positively and negatively. The taxation rates, unstable
political conditions and low employment rates, as well as the economic conditions of the
country, are the factors which affect the organization's business operations. The tax rates on
the products and services are raised by the government this could affect the business of the
organization negatively. For example, due to increase in the rates of the import duty of goods
from the Asia and East China the Tesco's faced a lot of problems and the rates of the products
were increased which caused in the loss for the firm. The CEO of Tesco’s stated that the EU
referendum is creating risk for the investors as well as the local council imposed taxation
system for Tesco's which was refused by the government to avoid the price hikes.
Economic factors: There are various economic factors which affect the business operations
of the organization. The labour prices, the monetary and fiscal rates as well as the inflations
rates affect the business of the organization. Earlier the annual wage which was selected for
the labors by the organization is 4.5 billion GBP due to government laws the organization
was to increase the rates by 1% and the wages reached to 45 million GBP. The firm decided
to impose new taxation rates for the labors of the organization and it reached to 49.5 million
GBP. Thus these factors affect the organizations business operations very much (Smithers,
2018).
Social factors: The UK is termed as the fat man of Europe as 7 out of every10 men and 6 out
of every 10 women are obese and the changes in the demand of the food and beverages as
62% of the people are preferring low sugar food products thus this is affecting the business of
the organization. These are the social factors which affect the business of the organization.
Technological factors: Most of the retail industries in the UK had scan & pay facilities and
Tesco's were unable to implement the facilities in their working provisions and thus they
were facing issues for customer retention which affected the business operations of the
organization. Thus Tesco’s implemented the facility in their shops and provided 100

employees with the barcodes to assist their customers with easy payment options. These are
the technical aspects which affected the business of the firm (Farooq, 2018).
Environmental factors: The Tesco's were developing healthy and environmentally healthy
food products for the customers but 75% of the customers thought that the products are
expensive and thus to resolve the issues they merged their ventures with WWF for producing
healthy and environmentally friendly food products for the customers of the firm.
Legal factors: The government imposed regulations on changing the prices of the products
as Tesco’s wanted to change the prices of the products. The labour prices were also changed
by the government and thus this affected the organization's business adversely as the
organization was investing more money and getting small in return (Dudovskiy, 2016).

LO4: Determine the internal strengths and weaknesses of specific businesses and
explain their interrelationship with external macro factors.
To determine the internal strengths and weakness of Tesco's and their interrelationships with
the macro environment can be achieved using the SWOT analysis of the organization.
SWOT analysis of Tesco’s:
Strengths:
 Tesco’s have stores which are
diversified which makes it very easy
for the customers to get all the
products at a single place.
 They use superior technologies for
customer satisfaction, like:
1) Scan & pay
2) Digital membership cards for the
customers.
 Tesco’s possess very effective and
vast supply chain network so that
they could easily reach a vast range
of customers.
Weaknesses:
 The organization's image was
adversely affected as the
organization indulged in serious
fraud as they represented that they
have generated a revenue of 129
million Euros to attract the
customers which were false news
and because of this organization
was fined with a penalty (Murphy,
2018).
Opportunities:
 Nowadays every organization is
focusing on the technological
aspects thus to enhance the
business of the firm it is very
essential for the firm to innovate
new technological aspects for the
better achievements of customer
attraction and retention.
 Due to the low oil processes, the
organization faced downfall and
recently the organization again
started to regain its position as they
achieved 5.7% hike in the business
in the previous year and thus is
expected to grow more in the next
5 years and enhance the business of
the firm (Rahman, 2017).
Threats:
 The volatility in the prices of the oils
and gas in the world market is a
threat for the organization to achieve
a better position in the market.
 Due to lack of supplying facilities of
the organization and seasonal
variations and unable to reach the
customer’s requirements in the
respective areas due to lack of
facilities is a threat for the
organization.
 The organization is needed to carry
the oil and gases carefully to
safeguard them from any damage
and thus the organization is needed
to be very careful about the carriers
for avoiding the threats of loss.

The interrelationship between the macro environment and the strengths and
weaknesses of the firm:
The strengths and weaknesses and the macro-environment factors are interlinked with each
other and get affected by each other. If any organization is not able to understand the strength
and weakness of the organization than it is very difficult for the organization to derive
strategies and tactics for the accomplishments of the business. The macro factors affect the
organization from the outside of the organization. The macro factors affect the business in
positive and negative ways. Macro factors are analyzed with the help of the PESTLE analysis
and the strength and weaknesses of the organization are derived using the SWOT analysis.
The analysis of the macro factors is needed to eliminate the outside factors and enhance the
business (Bhasin, 2018).

Conclusion:
The report above evaluates all the aspects of the impacts of the macro-environment on the
organization's business operations and the PESTEL analysis is done to achieve the proper
evaluation of the aspects. The strengths and weaknesses of the firm are also discussed and
evaluated with the help of the SWOT analysis and the interrelationship between the macro
environment and the strengths and weaknesses are also evaluated more finely in the report
above. The report evaluates all the aspects very efficiently and also the factors are discussed
more finely for proper analysis of the aspects of the working provisions of the firm.

References:
 Farooq, U., 2018. PESTEL analysis of TESCOs. Marketing Tutor,
https://www.marketingtutor.net/tesco-pestle-analysis/
 Kush, J., 2018 "A PESTLE and SWOT analysis of Tesco 2016-2018" 123 Writing,
https://123writing.com/free-sample/pestle-and-swot-analysis-of-tesco-2016-17
 Wood, Z., 2018. Tesco trials 'shop and go' app in till-free store. The Guardian,
https://www.theguardian.com/business/2018/jun/28/tesco-shop-and-go-app-till-free-store
 Smithers, R., 2018. Tesco and WWF bid to “halve environmental impact” of UK
groceries. The Guardian,
https://www.theguardian.com/environment/2018/nov/16/tesco-and-wwf-to-halve-
environmental-impact-of-uk-groceries
 Dudovskiy, J., 2016. Tesco PESTEL analysis. Research Methodology,
https://research-methodology.net/tesco-pestel-analysis/
 Rahman, M., 2017. SWOT analysis of Tesco (Marketing essentials). How and what,
https://www.howandwhat.net/swot-analysis-tesco-tesco-swot-analysis/
 Bhasin, H., 2018. SWOT Analysis of TESCO Corporation. MARKETING91,
https://www.marketing91.com/swot-analysis-of-tesco-corporation/