Tesco's Business Environment: PESTLE & SWOT Analysis for Growth

This report provides a comprehensive analysis of Tesco's business environment using PESTLE and SWOT frameworks. The PESTLE analysis examines political, economic, social, technological, legislative, and environmental factors affecting Tesco's operations, highlighting both positive and negative impacts with specific examples. The SWOT analysis identifies Tesco's strengths, weaknesses, opportunities, and threats, demonstrating the interrelationship between these factors and the PESTLE analysis. The report further reflects on key findings and evaluates their influence on the decision-making process within Tesco, emphasizing the importance of understanding market conditions and involving employees in strategic decisions. The analysis concludes that a thorough understanding of the business environment is crucial for effective management and sustainable growth.

Business and Business
Environment (Part 2)

Contents
INTRODUCTION...........................................................................................................................1
Using PESTLE analysis identify and discuss the positive and negative impacts using specific
examples. ....................................................................................................................................1
Apply a SWOT analysis and explain the relationship between this and the one previously
discussed. ....................................................................................................................................3
SWOT ANALYSIS.....................................................................................................................3
Present a critical reflection of key findings and evaluate how they influence the decision-
making process.............................................................................................................................4
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Business environment are the internal and external elements which has the ability to
affect the functioning of an entity to any level (Slagmulder and Devoldere, 2018)
. These elements help organizations identify strengths, weaknesses, opportunities as well as
threats they may have to deal with in future so they can find ways to overcome them. Tesco is
renowned grocery store of UK established by John Cohn in 1919.
Using PESTLE analysis identify and discuss the positive and negative impacts using specific
examples.
PESTLE ANALYSIS
Pestle analysis is used by organization to examine the environment in which the
business usually functions (Manuel and Herron, 2020). Tesco uses PESTLE analysis on
a regular basis for the smooth functioning of its grocery stores. Political factors: The actions which are under the control of the Government and can be
regulated by the same are termed as political factors. These include factors such as tax
rates, financial stability of the country, fiscal policy initiatives, etc.
Positive impact: Tesco aims to reduce unemployment as much as it can and is quite successful in
doing so. The results of this were quite fruitful which can be seen from its increased
potential sales and diversified workforce (Heidari and Et. Al., 2018). Further, the
political stability in the UK help Tesco to operate smoothly.
Negative impact: The political factor has the capability to make an organization suffer losses or
reduce profitability. Hence, it is a high risk factor to the industry. Economic factors: Any change in the economy directly impacts the organizations of the
country. The factors due to which the change take place are known as economic factors.
Growth of the country, economic stability, inflation rate are some of the examples of
economic factors which affect the working of a company.
Positive impact: Tesco, being a huge a company, has quite large financial resources which help
the company to diversify into several products such as petrol, insurance, etc.
Negative impact: Despite being one of the most successful organizations in the world still Tesco
is facing quality issues related with its products and services.
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 Social factors: Every organization produces goods after considering the demand and
needs of the consumers in the market. These aspects affects the working of a company to
a great extent and are known as social factors. For instance, lifestyle of citizens, emphasis
on safety, education level, buying habits, etc., are some of the social factors which are
considered by Tesco while producing products for its customers.
Positive impact: Tesco has increased the variety and number of non-food items by keeping in
mind the health consciousness that the residents have now-a-days (Carrió-Pastor, 2019).
This is really a great positive impact that the health consciousness had on Tesco.
Negative impact: High education of people could be risky to the organization, Tesco as they
have good knowledge and better understanding of everything. Hence, they can easily detect fault,
if any, by mistake, in the product which may ruin the image of the organization in this highly
technical world. Technological factors: The world is quite technical now and every entity wants to get the
most benefit out of it. Internet connectivity, wireless charging, automation, computer
calculator, etc., are some of the technological factors.
Positive impact: Technology enabled Tesco to deliver products at the doorstep of the consumer
with the help of online shopping through the introduction of store online.
Negative impact: Everyone is highly dependent on the technology this decreased the demand at
the offline stores whereas the cost remains same. Further, disconnection of internet, even for 1
day can cause a huge loss to Tesco.
Legislative factors: There are certain laws and regulations that every organization has to follow.
The entity need to work as per the law applicable to it and hence it affects its working
(Zhang, Lu and Zheng, 2020). Some of the laws followed by organizations are Contract
Law, Securities Law, Consumer Protection Law, Employees Protection Law, etc.
Positive impact: The application of Employees Protection Law on the organizations ensure the
employees that their job is safe and secure.
Negative impact: The application of the several laws on the organizations are the reason for
various formalities and restrictions. All this is very time consuming and waste a sufficient
amount of time of Tesco. Environmental factors: The surroundings or the environment around which influence
the working of any entity can be termed as environmental factors. Changes in climate,
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natural vegetation, soil, behavioural and personal traits, etc., are some of the factors
highly affect the working of Tesco.
Positive impact: Tesco committed and is trying its best to reduce the amount of its carbon
footprint at least by 50%. Also, Tesco aims to minimise the waste produced in the country.
Negative impact: Depletion of natural resources is a major risk especially to the industries who
produce products from petroleum. For instance, the carbon consumption by Tesco.
Apply a SWOT analysis and explain the relationship between this and the one previously
discussed.
SWOT ANALYSIS
SWOT analysis is used by companies to analyse the strengths, weaknesses,
opportunities and threats in order to deal with them and get the most benefit from it
(Sandhu, Shamsuzzoha and Helo, 2018)
. Tesco uses SWOT analysis for its smooth operation and that it can grab as many opportunities
as it can.
Strengths
 Establishment of online stores and
delivery at the doorstep of the products
helped Tesco enhanced its sales along
with the consumer base. Being a huge company, Tesco has
sufficient funds.
Weaknesses
 Tesco sells a variety of food products
and may, sometimes, lead to
adulteration. As it produces a
significant amount of products it is not
possible for the company to check each
food item minutely.
 The leadership change from Dave
Lewis to Kane Murphy lead to a drastic
change in the books of the company.
Opportunities
 Rising health consciousness was an
opportunity for Tesco and the company
grabbed it by making health related
products to satisfy the needs of the
consumers.
Threats
 Depletion of natural resources is a
major threat to Tesco.
 High competition in the market.
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 Unemployment rate in UK used to be
high. Tesco looked down to it as an
opportunity and offered jobs to millions
of people as it needs employees for its
stores.
It is clear from the above analysis that the strengths are interrelated with the factors of
technology and political stability respectively. The huge funds of Tesco enable the
company to contribute a significant amount to the economy of the country. Further,
doorstep delivery made customers very happy especially during the pandemic. The
consumers considered it as the best use of technology (Hanaysha and Et. Al., 2022)
. The weaknesses are related with the social factors. The quality of food items affect the demand
of food products a lot. Opportunities are related to social factor and political factor respectively.
While threats are related to environmental and political factors.
Present a critical reflection of key findings and evaluate how they influence the decision-making
process.
There are multiple methods which could help Tesco to achieve different goats and
objectives in the market. There are multiple techniques which can be used by Tesco to
make and effective decisions which helps them to attain a competitive advantage over
different competitors (Manni and Faccia, 2020). The management of Tesco use various
aspects to take an effective decisions. There are various stages in the decision making
process which is described below:
 Understanding the marketing conditions – This is one of the crucial factors which could
help Tesco to achieve better results in the future. On the other hand, the management
focuses on understanding different market forces. They also understand the needs and
desire of the individuals to formulate a product which is perfect in every manner.
 Involving employees while taking valuable decisions – The management of Tesco
involve their employees while taking the necessary decisions. This helps the management
to understand negative aspects in their decision. Through, this the management can make
a superior plan in which they are able to provide the best products according to the needs
of the consumer. Afreet developing an effective plan they use different modes of
channels which helps them to attract different customers in the market.
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CONCLUSION
From the above report it has been analysed there business environment consists of
various factors that affects the operational activities of the organisation at the workplace. It has
been evaluated there are several factors that should be considered by the managers of the
organisation in order to effectively carry out the operations. In the above report an organisation
has been undertaken into the account through the concept of the business environment has been
analysed. Pestle analysis has been evaluated in the above report in relation to the chosen
organisation. It has been analysed that this analysis facilitates the managers of the company to
find out the external factors of the business that can affects the level of profitability in the
marketplace. Along with that SWOT analysis has also been evaluated in relation to the chosen
organisation. This analysis facilitate the organisation to find out their strengths, weaknesses,
opportunities and threats of the organisation. It facilitates the organisation to capture a good
share in the market.
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REFERENCES
Books and Journals:
Slagmulder, R. and Devoldere, B., 2018. Transforming under deep uncertainty: A strategic
perspective on risk management. Business Horizons, 61(5), pp.733-743.
Manuel, T. and Herron, T. L., 2020. An ethical perspective of business CSR and the COVID-19
pandemic. Society and Business Review.
Heidari, A. and Et. Al., 2018. A systematic mapping study on tourism business
networks. European Business Review.
Carrió-Pastor, M. L., 2019. Authorial engagement in business emails. Engagement in
professional genres, 301, p.47.
Zhang, Y., Lu, B. and Zheng, H., 2020. Can buzzing bring business? Social interactions, network
centrality and sales performance: An empirical study on business-to-business
communities. Journal of Business Research, 112, pp.170-189.
Sandhu, M. A., Shamsuzzoha, A. and Helo, P., 2018. Does outsourcing always work? A critical
evaluation for project business success. Benchmarking: An International Journal.
Hanaysha, J. R. and Et. Al., 2022. Impact of innovation capabilities on business sustainability in
small and medium enterprises. FIIB Business Review, 11(1), pp.67-78.
Manni, F. and Faccia, A., 2020. The business going concern: Financial return and social
expectations. In Sustainable Development and Social Responsibility—Volume 1 (pp.
201-213). Springer, Cham.
Online:
PESTLE Analysis, 2014. {Online}:Available through<https://pestleanalysis.com/pestle-analysis-
tesco/>
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