Global Business Environment

Global Business Environment
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Table of Contents
Introduction:...............................................................................................................................3
PESTEL analysis of the operating environment of Tesco.........................................................4
The key drivers of change that should be considered while setting the future direction of
Tesco..........................................................................................................................................5
Conclusion:................................................................................................................................6
References..................................................................................................................................7
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Introduction:
The report shows an in-depth analysis of Tesco plc which is one of the top retail
supermarkets in the UK as well as across the world (Wood, 2016). The PESTEL analysis has
determined how the factors of the external environment impact on the organizational
performance of Tesco. It also identifies the key factors which must be considered by the
management of Tesco before setting any future direction.
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PESTEL analysis of the operating environment of Tesco
The following section covers the PESTEL analysis of Tesco plc which helps to analyze the
factors which have impacts on Tesco’s performance:
Policital
Economi
Legal
cal
PESTEL
Environm
Social
ental
Technolo
gical
Figure 1: PESTEL framework (Schuetz, 2018)
 Political factors: As Tesco plc is currently operating its business in more than 12
countries; the company can be affected by many political factors such as tax rates,
stability of the country, financial stability etc. Therefore, the Govt has directed the
retailers to create jobs for the domestic population which can increase the competition
for Tesco.
 Economic factors: By analysing the economic factors, it has been revealed that the
main points to consider include the GDP, foreign exchange rate, disposable income,
interest and inflation rate etc. The worldwide pandemic Corona virus can affect the
operation Tesco and fall an impact to their performance (Yusop, 2018).
 Social factors: The main social factors include shopping trends of consumers, beliefs
and attitudes, health, behavior etc. People have become more health-conscious and
they are very busy because they have a tight schedule so they prefer one-stop
shopping and organic food which is an opportunity for Tesco. At present, Coronavirus
can be a threat to the growth of Tesco plc.
 Technological factors: The first one is the development and introduction of online
shopping and scope of home delivery. The second one is the service checkout points
provided by Tesco for the comfort of customers and it can also reduce the labor cost.
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Furthermore, Tesco has invested in energy efficiency projects so that it can fulfil the
long term objective.
 Environmental factors: Environmental issues have a great impact on Tesco plc
because the government has been pressurizing the companies to adopt ways that are
beneficial for society. In this case, Tesco has taken initiative to decrease the carbon
footprint within 2020 and minimize the waste produced by the stores. Such an effort
will help the company gain a competitive advantage in the long run.
 Legal factors: The operating process can be is affected by policies and legislations
introduced by the Government. The factors include employment law, consumer law,
import and export law, health and safety law etc.
The key drivers of change that should be considered while setting the
future direction of Tesco
The PESTEL analysis has helped to discover the following key drivers that should be
considered by Tesco’s management while setting the future direction for the company:
 Political instability
 Increasing interest rate
 Unemployment rate
 Climate change and pollution
 Health consciousness
 Legal laws
 Coronavirus pandemic
 Technological advancement
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Conclusion:
The report basically highlights various points that are important to identify the macro-
environmental factors which can affect the operation system of Tesco. The PESTEL analysis
has largely helped to build a framework to make effective policies and strategies because the
success of the strategies depends largely on the proper analysis of the macro factors.
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References
Baron, D., 2013. Business and Its Environment. Boston: Pearson.
Schuetz, C.G., Mair, E. and Schrefl, M., 2018, October. PESTEL Modeler: Strategy analysis
using MetaEdit+, iStar 2.0, and semantic technologies. In 2018 IEEE 22nd International
Enterprise Distributed Object Computing Workshop (EDOCW) (pp. 216-219). IEEE.
Worthington, I., Britton, C. and Thompson, E., 2018. The Business Environment. Harlow,
United Kingdom: Pearson Education Canada.
Wood, S., Coe, N.M. and Wrigley, N., 2016. Multi-scalar localization and capability
transference: exploring embeddedess in the Asian retail expansion of Tesco. Regional
Studies, 50(3), pp.475-495.
Yusop, Z.B.M., 2018. PESTEL analysis. COMRAP 2018, p.34.
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Global Business Environment

PESTEL analysis of the operating environment of Tesco.........................................................4

Figure 1: PESTEL framework (Schuetz, 2018)

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