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Pestle Analysis of Tesco (Pom)

A PESTLE analysis examines the political, economic, sociological, technological, legal, and environmental factors that may impact an organization. It is used to assess opportunities and threats from external factors to inform strategic decision making. A PESTLE analysis of Tesco identifies several key factors, including the economic recession, competition law, planning permission regulations, technological advances, and environmental responsibilities. Regularly conducting a PESTLE analysis allows Tesco to understand its external environment, anticipate changes, and ensure its continued strategic, competitive, and sustainable success.

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Akhil Bhatia
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1K views5 pages

Pestle Analysis of Tesco (Pom)

A PESTLE analysis examines the political, economic, sociological, technological, legal, and environmental factors that may impact an organization. It is used to assess opportunities and threats from external factors to inform strategic decision making. A PESTLE analysis of Tesco identifies several key factors, including the economic recession, competition law, planning permission regulations, technological advances, and environmental responsibilities. Regularly conducting a PESTLE analysis allows Tesco to understand its external environment, anticipate changes, and ensure its continued strategic, competitive, and sustainable success.

Uploaded by

Akhil Bhatia
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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What is a PESTLE analysis?

PESTLE analysis factors are Political, Economic, Sociological, Technological, Legal and Environmental. The PESTLE analysis examines each factor to assess what their impact or potential impact on the organisation. In this way, they can prepare strategically for any changes that need to be made in the organisation or simply to have the awareness of the external market to give them a competitive edge over other firms in the industry. Examples of each PESTLE analysis factor are: Political: what is happening politically with regards to tax policies employment laws, trade restrictions, tariffs Economic: what is happening within the economy i.e economic growth/ decline, minimum wage, unemployment (local and national), credit availability, cost of living, etc. Sociological: what is occurring socially i.e cultural norms and expectations, health consciousness, population growth rate, career attitudes,. Technological: new technologies are continually being developed. There are also changes to barriers to entry in given markets Legal: changes to legislation. This may impact employment, access to materials, resources, imports/ exports, taxation etc. Environmental: what is happening with respect to ecological and environmental aspects.

Why is a PESTLE analysis used?


A PESTLE analysis is used in business and is a method of assessing the industry which an organisation is in. The PESTLE analysis looks specifically at factors which are external to the organisation which will impact on the business. This is with a view to determining the current role and status of the organisation in relation to its competitors and can be used as a marketing tool.

How is a PESTLE analysis used?


Knowledge is power and therefore the process of obtaining information by the firm is critical to its success. The gathering of important information is known as a strategic audit which is an audit of both external and internal factors. Whilst the internal audit looks at all aspects internal to the company, we are concerned with the external audit which examines macroenvironmental facts such as PESTLE analysis factors. There are other methods of analysis which the PESTLE analysis works alongside such as a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. The Opportunity and Threats aspect are concerned with the external factors what influences the market and performance. It can therefore be said that the PESTLE analysis is useful in assessing opportunities and threats to the organisation. An example of a PESTLE analysis factor which may also be an opportunity or threat is the economy. Due to the present credit crunch, it is now difficult to secure a mortgage. Therefore organisations in the property industry are now threatened as their individuals jobs and organisations as a whole have been deeply affected leading to some redundancies.

Public limited company LSE: TSCO Retailing 1919 (East London) Jack Cohen Cheshunt, Broxbourne, Headquarters Hertfordshire, United Kingdom Number of 5,380 stores (As at Feb 2010) locations (see table below) David Reid (Chairman) Key people Products Revenue Operating income Net income Employees Website

Type Traded as Industry Founded Founder(s)

Philip Clarke (Chief


Executive)

Groceries, consumer goods, financial services, telecoms 60.93 billion (2010/11)[1] 3.81 billion (2010/11)[1] 2.67 billion (2010/11)[1] 472,000 (2010)[2] tesco.com

Why do a PESTLE analysis of TESCO?


Tesco is the giant of all supermarkets due to its UK dominance. Retail analysts have identified three main reasons for this. 1. Tescos are everywhere; 2. sell to everyone; 3. sell everything Due to the nature of the TESCO organisation with particular reference to how it has branded and marketed itself, and the current economic climate, the assessment of external factors by a PESTLE analysis has been crucial in TESCOs success. This is because TESCO has taken into account the implications for consumers, employees, stakeholders, associated organisations and the companys mission statement. Each external factor would have been and continues to be examined and categorised in terms of whether its implication

is negative or positive, large or minor significance, intermittent or continuous impact and so on.

PESTLE analysis factors examined:


Politically, the credit crunch may lead to higher numbers of unemployment. As one of the largest and fastest growing retailers more jobs will be available with TESCO therefore helping to reduce the levels of unemployment. A PESTLE analysis is therefore useful in keeping TESCO up to date with their environmental surroundings, for example, realising in advance that we were heading for a recession would have helped them to plan ahead. Whilst one of TESCOs competitive advantages at present relates to their overwhelming physical presence, there are issues about TESCO driving out the competition from other retailers. There are policies as well as laws and regulations governing monopolies and competition which would be identified though a PESTLE analysis. This is potentially one of the main issues that TESCOs are faced with. Protecting consumers and ensuring that entrepreneurs have the opportunity to compete in the market economy are important within consumer law. Due to the current state of the economy, many small businesses are failing and many unable to enter the market. A PESTLE analysis helps to assess where location wise there is a demand for expansion. The situation is in no way being assisted by the ever expanding TESCOs chains of store. Under EU law, there is presumption that an organisation with a large market share is dominant. The concerns with this are that quality of products and services will slip and there is a risk of paying higher prices. TESCO to date has not been assessed as posing a risk of exploitation but should bear this in mind. This is the reason why regular or continuous scans making use of the PESTLE analysis will lead to continuous assessments which can ensure that TESCOs dominance is not in any way exploitative. In addition, planning permission is an issue that TESCO seriously need to be aware of due to their continued expansion. Planning permission is heavily regulated in the UK. A thorough PESTLE analysis would help to identify the relevant laws on planning permission and whether any resistance to planning was on lawful grounds or merely local peoples dissent. The PESTLE analysis would therefore initially assess the potential success of a store in a new area.

With the economy being as it is at present, TESCO are fortunate that they have not been as badly affected as some retailers by the recession. TESCO have branded themselves as selling to everyone and therefore offer a range of products and services from Value to Finest prices thus appealing to all segments of the market. The Sociological aspect of the PESTLE analysis involves considerations such as the increase in immigration of Eastern Europeans or increase in young professionals. Naturally there is therefore a demand for new goods for example, the career minded professional who is a single person. This has seen a rise in the meals for one or quick microwaveable meals to make cooking quick and easy for those always on the go. Technological factors which have perhaps had the most impact on TESCO has been the growth in the use of the internet. They have capitalised on the use of online shopping and provide a delivery service through their website at www.tesco.com. TESCOs are also instrumental as a retailer in supporting carbon reductions and have created a 100 million Sustainable Technology Fund for this purpose. They also encourage their customers to make low carbon choices. Yet if TESCOs did not take their corporate responsibilities seriously in relation to environmental issues it could have dire consequences for TESCOs reputation. A PESTLE analysis is therefore vital to the development and the success of TESCOs in addition to the day to day management of each store in line with strategic decisions. Without knowing what external factors affect the organisation, it is difficult to manage the business in an efficient manner.

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