Tesco is one of the dominant UK grocery stores
Executive summary
Tesco is one of the dominant UK grocery stores that use its operating efficiency to win the largest market share. According to the PESTEL analysis, the firm has many opportunities that it can exploit to make sure it remains relevant in the UK, especially after the Brexit. Inflation, online marketing, and environmental conservation are the major threats facing Tesco. These threats affect the demand, prices, costs, sales, and the profit of the company.
Table of contents
Introduction
Tesco is a multinational groceries and general merchandise retailer located in England. The company was created in 1919 by Jack Cohen, and it has managed to manage to open branches in seven countries across Asia and Europe (Tesco PLC, 2020). Tesco has been recording an increase in its profits over time. Some of the challenges of the company include competitors such as Asda, Sainsbury’s, and Morrison’s. The competitors deal with supermarkets and supermarkets and have adopted the new technology o influence and attract more customers. This includes the use of online platforms to influence and advertise their products.
External environment
These are the outside factors that affect the business. Pestle, the portal’s five forces, and other tools used to assess the external environment that influences a business (Fosher, 2018).
Tesco PESTLE Analysis
Pestle analysis is a tool that factors that influence business and provides an insight into the external influences that affect the business (Fosher, 2018).
Political environment
These are governmental activities that affect business operations. These activities can either make a business prosper or deteriorate.
Opportunities
- Political stability
- Domestic suppliers
Brexit has created an opportunity for domestic suppliers, thus reducing costs and increasing sales of Tesco (Kush 2017).
Threats
- UK sugar tax levy
- Living wage regulations
The workers of the Tesco will have an increase in salary according to the laws created by Britain. Tesco will, therefore, increase its production costs and reduce profits.
Economic environment
These are the conditions that affect the consumer and their buying habits (Fosher, 2018).
Opportunities
- Pricing
- Diverse retail stores
Diverse stores will be convenient for customers to access cheap products.
Threats
- Inflation
- Unemployment levels
Brexit will lead to loss of jobs for most individuals, thus affecting the demand, costs, and the profits of Tesco.
Social factors
These are the beliefs that are held by the public that affect business operations (Fosher, 2018).
Opportunities
- Largest private employee
- Flexible goods return policy
This has created loyal customers.
Threats
- Health
- Bulk shopping
Health and saving are focused y the customers.
Technological factors
These are innovative methods that influence business operations (Fosher, 2018).
Opportunities
- Online marketing
- Consumer response
Tesco can use technology to provide information to the customers about their new products and get feedbacks (Kush, 2017).
Threats
- Privacy
- Digital illiteracy
Competitors can learn about the firm. Individuals with no skills to use the internet cannot access some information using technological tools.
Environmental factors
This is the connection between business and nature (Fosher, 2018).
Opportunities
- Renewable resources
- Environmental conservation
Tesco can use renewable resources to generate electricity and to partner with other organizations to conserve energy.
Threats
- Government pressure
- Global warning
The negative effects on the environment linked to industrial activities. Government agencies are pressuring companies to adopt strategies that will reduce industrial waste.
Legislative factors
These are the government policies that have an impact on the performance of Tesco (Fosher, 2018).
Opportunities
- Partnering with governments
- Adhering to the laws
The firm can partner with the government to create policies that will improve the operations of companies. This includes policies that do not harm the operations of the businesses (Fatricia, 2017).
Threats
- Reduction of buyer’s power
- Limits on raw material access
This law can reduce and hinder the operations of the businesses, thus affecting the demand, price, costs, and sales of the company.
In conclusion, Tesco can exploit its opportunities and eliminate the threats that are present in its operations.
Bibliography
Tesco PLC. (2020). Home. [online] Available at: https://www.tescoplc.com/ [Accessed 5 Mar. 2020].
Kush, J., Pestle And Swot Analysis Of Tesco 2016-2017.
Fatricia, R.S., 2017. STRATEGIC ANALYSIS OF TESCO SUPERMARKET. Jurnal Manajemen Terapan dan Keuangan, 6(02), pp.69-86.
Fosher, H., 2018. Understanding the Marketing and Management of trails using PESTEL Analysis.