Case Study: Analyzing Tesco's Political Risk and Sustainability

This case study examines Tesco's vulnerability to 21st-century political risks, specifically focusing on the impact of Brexit. The analysis begins by mapping Tesco as a system and identifying aspects susceptible to political instability and trade barriers. The study applies the PSIR and Dunphy framework...Read More

Sustainable
Enterprise

Table of Contents
Main body..................................................................................................................................3
Mapping the enterprise as a system...............................................................................3
Identify aspects of the system that are vulnerable to 21st Century Political Risk
(define and justify).........................................................................................................3
Apply analysis to the enterprise using frameworks taught in class...............................3
Identify 2 categories of political risk, each with 2 indexes and 2 indicators for each
index, for monitoring the sustainability.........................................................................3
Define the level of sustainability of the enterprise and justify.......................................4

Main body
Mapping the enterprise as a system
BREXIT- It is defined as withdrawal of UK from European Union. This affects the
economy of government at broader aspect. With implications of this, mainly business sector
was grinding because they had to follow rules and regulations, policy measures, procedures
of both the sides which created a major problem for entrepreneurs. There were many issues
and challenges which were faced by people. BREXIT was initiated by Boris Johnson who is
prime minister of UK.
In relation with Tesco, they were affected by BR at depth because there products and
goods were consumed and traded within both the areas. Some of the major headlines were
given by Boris Johnson during implications of BR which are mentioned below-
Statement- EU departure will unleash UK’s potential but admits there will be ‘bumps
in the road’
Through this statement, BR. was in the news everywhere and in TESCO was
suffering from it because cost of labour was increasing in the firm & enhanced production
cost affected business widely. But it is rumour that UK & EU will be considered as friendly
countries said by Prime Minister Johnson. So, this consistently changing of policies, rules and
regulations affected their management and structure of business. It is essential for chosen
firm to be aware about such changes made by government so that decisions and change in
management is done accordingly. Besides this, many entities are getting benefit from these
implications because of dynamic business environment. It is duty of Tesco manager to make
ensure legal team of firm is aware about such changing business environment.
Identify aspects of the system that are vulnerable to 21st Century Political Risk (define and
justify)
BREXIT says that understanding social forces is important for managing political
risks. The causes of Brexit has been shown from a long time but only a few business
communities actually understood the warning. These patterns of Brexit are not unique for
United Kingdom and lessons are you there to be learnt from risky professionals. Between all
the noise of BREXIT political manoeuvring and also extraordinary uncertainty of the future it
is easy to lose their juicer how and why is Britain facing this problem. It is important to
understand that what was the reason that lead to UK choose to leave European union. Due to
this the matter of risk professional did not only arise for those in United Kingdom but also all
across Europe. This tells us more about profound political risk in the current environment.
The risk management for enterprise means being aware of interplay between all the different
forces on how can the impact upon organisation. It also adds to Briggs it has sobering lessons

for all the risk community regardless of where one operates whether in United Kingdom or in
European Union.
Apply analysis to the enterprise using frameworks taught in class
PSIR Framework
The PSIR analytical framework refers to providing a systematic characterisation of
environmental, Natural and socio- economic information under its four points. This stands
for pressure, state, impact and response. This is usually used to show the progress in
decoupling economic activities due to related environmental pressures.
Pressure: Pressure here is related to human activities which causes and environmental
impact. Brexit here is causing pressure upon Tesco as the prices for human resources in
company is increasing.
State: State in this framework is condition of key environmental indicators. The movement of
labour is from United Kingdom to European Union is the key condition and environmental
indicators causing problems for the company.
Impact: impact refers to how the key indicators affect changes in social environment. Brexit
have highly changed the social environment for Tesco. Along with high cost for labours
company is also facing problems as the production have been suffered widely.
Response: Response in this framework refers to legislative, economic, government,
administrative, and community action to deal with the changes. The managers of Tesco need
to retain their employees so that the productivity of organisation is not affected due to Brexit.
Dunphy frame work:
This framework was introduced by Dr Dunphy who proposed a number of different
developmental phases in cultural transformation which is based upon relationship between
leadership, culture, and performance. These six stages applied on Tesco are mentioned
below:
 The first stage here is opposition or rejection in which employs at Tesco are moving
to European Union and they are acting as value destroyers.
 Second stage is non-responsiveness where Tesco is facing ignorance from its
workforce.
 The third stage is compliance in which integration in HR and environmental functions
regarding Tesco will take place.

 Next is efficiency in which HR department of Tesco decides to make sure that they
increase productivity and efficiency.
 It is the stage of competitive advantage in which Tesco focuses on innovation.
 This is the last and final stage of transformation where Tesco will overcome all its
problems and sustain in business.
Identify 2 categories of political risk, each with 2 indexes and 2 indicators for each index, for
monitoring the sustainability.
Political risk is probability that political procedure event of condition which will result in
loss. Politics cover everything from taxes to interest rate and political events which can
democratically impact the price of the acid of the cost of doing business there are number of
political risk within the business which are described as:
Trade barriers: trade barriers that risk which is directly associated with the functioning of
organisation. This can be defining as a tariff which can increase margins for make it
impossible to compute in foreign markets. There is Number of cases of trade barriers realty
result to local politics or trade wars between the nations. In context of Tesco it can be
described as, trade war between UK and allied Nations where they restrict their trade because
of personal war.
Political instability: political instability success terrorism rights couple civil war and
insertion can complete disturb the business operation in country for long period of time. Have
number of impact on business because it can damage their reputation as well as infrastructure
which will reduce the chances of future success or continuing the operation. BREXIT is one
of this political instability, where Britain wants to exit from European Union. Impact on
major businesses of Tesco because there are number of chances where form can lose its
operations in other regions of Europe than Britain.so it can act as a political blunder and
political instability for Tesco which is at high risk for the organisation working.
There are two indicators which can be used by Tesco for finding the political instability, first
indicator is infrastructure of that nation and second indicator is power of government. These
two indicators can be used by the test score for identifying what is going in politics of the
nation which can act as a risk for organisation. This indicator can bring the sustainability
within the organisation and maintain the profit of firm in the competitive environment.
Sustainability can be bring with the help of analysing the power of government as well as
infrastructure of the nation where and organisation can identify that what steps will
organisation take after formation of powerful government as well as what are the
infrastructure available for the government where it can take the decision like trade barriers.
This all will help full for the business identify the sustainability and bring the policies and
procedures which retain sustainability within the organisation environment.
Define the level of sustainability of the enterprise and justify
Sustainability emphasizes on fulfilling the current requirements without compromising
the capability of future generations in order to meet the demands. It is said that the main

concept of sustainability is consist of three main pillars which are social, economic as well as
environmental. Sustainability of the enterprise refers to an essential business approach helps
in creating and maintaining long-term value for the company by taking into consideration that
how a business entity operates in different environment which includes ecological, economic
as well as social environment. Apart from this, it has also been analysed that Sustainability is
created on the assumption as formulating such type of strategies help companies in order to
maintain long term growth. Therefore, it can be concluded that sustainability highly
influences the overall environment in both positive and negative way. It has been identified
that the chosen organization which is Tesco identified that due to arise of BREXIT,
sustainability of the company is highly affected with this. Reason behind this is that it is a
political decision which might create both positive as well as negative influence. This might
affect the overall sustainability of the enterprise in a negative manner as it reduces the level
of trade and commerce among different countries. Along with this, it has also been analysed
that there are further negative impact which as the overall economic system of the country get
reduced due to which the living standards as well as buying behavior of consumer will be
affected.