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HomePESTLE AnalysisPESTLE Analysis of TESCO PESTLE Analysis of TESCO Ahsan Ali Shaw January 2, 2021 PESTLE Analysis No Comments INTRODUCTION Table of Contents Introduction Political factors affecting TESCO Government Regulations Political Circumstances Brexit Deal US/China Trade Conflict Economical factors Impacting TESCO Pandemic of Covid-19 Economic Recession Trade Tariff by Brexit Deal Market Expansion Social factors affecting TESCO Local Social trends Vegan Trend Cultural Impact Social Supermarket Employment Opportunities

Technological factors affecting TESCO Usage of Technology E-commerce Technology from Amazon Go Legal factors Impacting TESCO Laws & Regulations Gender Bias Allegations Fraud Case Unequal Pay Environmental factors affecting TESCO Recycling Plan Sustainable Efforts Conclusion

Pestle analysis of Tesco. Introduction TESCO is a British multinational grocery retail and general merchandising company. Jack Cohen was the founder of Tesco and he established the company in Hackney, London, in 1919. The headquarter of the company is situated in Welwyn Garden City, England. Tesco is one of the leading retailers in the British market. The brand

has a network of 7005 retail stores globally in 2021. The company has employed roundabout 423092 employees to manage various operations of its stores worldwide.

Some of the major products and services of Tesco are supermarkets, hypermarkets, Superstores, Convenience Shops, Club Cards, F&F clothing, Tesco Bank, Grocery Items, Tesco Mobile, Rental DVDs, and Music Downloads.

According to a financial report by Statista, Tesco’s annual revenue was roundabout 53 billion pounds by the end of 2020 and improved by 1.3 billion pounds. The net income of Tesco after minimizing all the expenses was 2.2 billion pounds, and it improved by 360 million pounds since 2019.

Some of the major competitors of Tesco are Safeway, Sainsbury, Morrisons, Insta Cart, Giant Eagle, Iceland, Carrefour, Waitrose, Lidl, Argos, ASDA, and Walmart.

Today, we’ll study the PESTLE analysis of Tesco. Here we’re going

to focus on the macro-environmental factors that impact the growth of the top store in the British market. If you want to study the internal factors, check out the swot analysis of Tesco. Here’s the pestle analysis of Tesco as follows;

POLITICAL FACTORS AFFECTING TESCO GOVERNMENT REGULATIONS Tesco is a multinational brand and operating its business in different countries across the world. The government and political regulations vary from country to country. Therefore, the brand should keep be careful about them and make decisions accordingly. The company follows the safety regulations in different countries to offer safe products. In the UK TESCO must comply with UK laws and regulations. New government rules will mean big changes to the way high street stores and supermarkets operate.

The government announced restrictions on the sales of certain products in a bid to tackle obesity rates.

It will affect supermarket giants across the country, as well as smaller retailers. According to Kent Online, from April 2022, offers and promotions on foods that are deemed "unhealthy" will be restricted. Among other big names, Tesco, Sainsbury's, Asda, and Morrisons will all have to adapt to the new rules with store layouts possibly forced to alter to abide by Government legislation. The Department of Health and Social Care (DHSC) said evidence shows that while promotions may appear to save shoppers money, they actually encourage people to buy more than they need or desire.

POLITICAL CIRCUMSTANCES A stable political is key for running a successful business in any country. Britain has got a very stable political environment and it has helped to become top retail in the local market.

BREXIT DEAL The Brexit deal (exit of Britain from the EU) has created an environment of uncertainty in the business community. The chairman of Tesco, John Alan, said in an interview with BBC that

Brexit would increase the prices by approximately 3% to 5%. The British Prime minister said that deal would include tariff-free trade. But it’s not as simple, because there’s administration cost is involved.

According to an estimate, approximately 80% of the food items of the company come from the EU. A little increase in tariff would increase the retail price.

ECONOMICAL FACTORS IMPACTING TESCO PANDEMIC OF COVID-19 The pandemic of covid-19 has impacted very badly businesses and companies. It was due to the restriction on physical contacts, socialdistancing, lockdown, and shutdown of businesses. The e-commerce platform and online shopping saved Tesco from becoming the victim of the pandemic.

In fact, the pandemic increased the sale and profitability of the company. According to an estimate, the annual revenue and net income of Tesco have increased by 1.3 billion pounds and 360

million pounds in 2020 during the pandemic year.

ECONOMIC RECESSION Although Tesco survived the blow of pandemic and months of lockdown and shutdown of business, not many other people did. The lockdown permanently shut down many small businesses and many became unemployed as a result.

The higher unemployment rate creates an atmosphere of financial instability and social unrest among the public. When the buying power drops, they start decreasing their spending to meet the basic need. The lower spending would impact the growth and profitability of all the business. The economists are predicting such changes in the post-pandemic world.

TRADE TARIFF BY BREXIT DEAL The chairman of Tesco, John Allan, said in an interview with Guardian that without any Brexit deal would have caused more increase in tariff. A deal is better than no deal at all. He said in an interview that people don’t need to panic and worry about the impact of the Brexit deal. The land of the UK still produces enough food to cater to the needs of many. There’ll be a temporary shortage of fresh

food for some time, but things would go back to normal.

MARKET EXPANSION The market in developing countries is expanding. But Tesco still relies on the British home market for the majority of its revenue. If the local government introduces new laws on e-commerce, online shopping, and delivery model business. It would directly increase the cost, retail price, sale, and profitability of the company.

SOCIAL FACTORS AFFECTING TESCO LOCAL SOCIAL TRENDS Tesco follows the local social and cultural trends of different communities and serves them food accordingly. For instance, the company uses the label of Halal meat in the UK for Muslim customers. Tesco also offers kosher products for Jewish customers in the UK.

VEGAN TREND People have been switching from meat-based food towards plantbased vegetarian food for the past few years. The vegan trend is growing among people in the western and European markets. The customer demand for vegan products and plant-based food improved

by 4.1 billion pounds in 2020.

Tesco is aware of the changing vegetarian trend. The company would amplify the sale of vegan food products by approximately 300% in 2025.

CULTURAL IMPACT The market demand for certain products in different cultures depends on cultural influence. In other words, the socio-cultural environment influences the purchasing power of customers. They keep on changing gradually from generation to generation every 5 to 10 years. The customers want a sufficient variety of products to choose from. Tesco keeps an eye on the cultural trends and changing attitudes and behavior of customers. It offers them the products according to their requirements.

SOCIAL SUPERMARKET The social supermarket is a new concept of marketing where the businesses and companies offer the unsold inventory at lower prices. It serves two important social functions. First, it decreases the waste

and recycling cost, and secondly, the lower-price range serves the needy and decreases the food poverty level. Tesco cares about the society and social welfare of the people. Therefore, the brand should introduce such offers.

EMPLOYMENT OPPORTUNITIES According to a study by Guardian, the unemployment rate among the youth of the age of 16 to 24 is boosting. The most important function Tesco performs is to provide employment opportunities to young people.

TECHNOLOGICAL FACTORS AFFECTING TESCO USAGE OF TECHNOLOGY The usage of technology is increasing among businesses and companies. It helps them to be efficient in various processes and provides a better customer experience. Tesco has also adapted to the latest technology and it’s one of the main reasons for the company’s success. Payment through the mobile application, m-commerce, and barcode scanning system are some of the main examples.

E-COMMERCE The pandemic of covid-19 has boosted the trend of online shopping

and e-commerce. People started ordering groceries online to avoid getting infected with the virus. Tesco survived the pandemic and lockdown of businesses because of staying on the e-commerce platform and delivering the products on time. The company plans to recruit 16000 more people to provide a better delivery service.

TECHNOLOGY FROM AMAZON GO Amazon is one of the top 5 tech companies like Google, Facebook, Microsoft, and Apple. Tesco partnered up with Amazon Go for the creation of cashier-less billing technology. It revolutionized the retail shopping process by saving customers’ time and provided troublefree billing.

LEGAL FACTORS IMPACTING TESCO LAWS & REGULATIONS The legal structure and government rules and regulations of different governments are different. Therefore, the brand must follow local and international laws.

For instance, according to a report by Davis in 2018, the European

Union introduced laws that restrict companies to perform any anticompetitive activity. It means that Tesco can’t acquire and merge with a big company of its size in Europe. Now Britain is out of Europe. This law won’t be applicable in the UK, but active in the EU.

The brand can’t hire employees and provide them less than required wages. The company also can’t sell alcoholic drinks to young underage teenagers. The courts imposed heavy fines on Tesco for violating these laws in the past.

GENDER BIAS ALLEGATIONS There was a report in 2016 and it claimed that the workplace culture is highly biased. It discriminates against people based on age and gender.

FRAUD CASE Tesco failed to provide the exact picture of its finances and the company’s profitability in 2017. The courts imposed a heavy penalty on the brand for providing misleading information. The company agreed on a settlement to pay 12 million dollars.

UNEQUAL PAY Some of the employees filed a lawsuit against Tesco for providing unequal pay to the male and female employees. Such lawsuits are jeopardizing the credibility of the company.

ENVIRONMENTAL FACTORS AFFECTING TESCO RECYCLING PLAN Tesco has recently launched phase 2 of the recycling plan and it comprises of remove, reduce, reuse, and recycle the plastic. It would help the company to decrease and remove the non-recyclable plastic. Most importantly, it works in a loop and keeps reducing waste. It’s a very good step for cleaning up the environment.

SUSTAINABLE EFFORTS Tesco is also working on the project of recognizing the illegal fishing boats that are endangering sea life by doing over and nonseasonal hunting. These steps are working towards building a sustainable environment.

CONCLUSION

After an in-study of the pestle analysis of Tesco, we have realized that Tesco is true of the top retail supermarkets in the UK and worldwide. The lawsuits, controversies, and the uncertain economic environment are serious threats to the company. The company should keep its eyes open to the changing laws and regulations....