DISTINCTION level essay for unit 1 assignment 2. Contains Tesco PESTLE, SWOT, 5 C’s and Porter’s 5 Forces analysis. Includes additional information and conclusions.
I’ve been assigned to produce a report for SEMLEP (Southeast Midlands Local
Enterprise Partnership). The report will include an internal, external and competitive
environment within a UK business of my choice. I will be using the PESTLE Analysis,
SWOT, Porter’s Five Forces and 5Cs. I have decided to do this report on one of the
most known stores in the UK, which is Tesco.
I will be assessing the business environment of Tesco. The business environment is all
external and internal factors put together, by doing that we can find out how much each
factor influences our business.
PESTLE
Political
Tesco’s performance and sales are greatly influenced by political factors like tax rates,
stability or different acts of legislation. Tesco trades with countries from the European
Union which means Brexit has affected them. Importing goods costs more now and
takes more time. In the UK, 26% consumed food in 2019 was from the EU. The prices
of imported goods from the EU are going up and may even result in British people
changing their diets as some of them might not be able to afford imported food. Tesco
will end up selling less imported products or will have to lower the prices which will
result in lower profits.
,https://www.bbc.co.uk/news/uk-55460948
Economic
One of the economic factors affecting all supermarkets is wages. A higher minimum
wage means that Tesco will have to pay their employees more and will make less
money. Tesco spends 4.5 billion pounds every year on wages, minimum wage is
increased by 4.4% in the UK and it means Tesco will have to pay even more for wages.
To keep the high profits, Tesco might increase the prices and with their large 27% of
market share it will affect the whole market. Other supermarkets will have to adjust their
prices.
As Tesco also trades abroad, it’s worth mentioning another significant factor, the
exchange rate. Tesco makes and spends money in different currencies but their main
one is the British Sterling, and all the money will be kept as their main currency.
Social
To maintain a good reputation and high sales, Tesco needs to keep up with a variety of
trends, demands and local communities. To ensure they meet everyone's demands
Tesco works closely with local communities and changes their products so that
everyone can find something they like. A good example is vegan or European food in
Tesco. In our local Tesco's we can find large amounts of Eastern European food
because the demand is high which is caused by a high population of Eastern
, Europeans in Northamptonshire. If they fail to meet those demands then their sales
might decrease and the customers will go to a different supermarket.
Technological
Tesco introduced a new RFID Technology. It uses radio waves to identify items and
transmit information which helps Tesco keep track of the current stock and gives them
information on what people are buying, this can be used to adapt to new demands and
social trends. ‘Scan as you shop’ has become more popular in recent years due to how
simple it is and how much time it saves you. Tesco can save money with the use of
‘scan as you shop’ because it reduces the need for workers. Use of Tesco’s Clubcard is
a common and well-known tool when shopping in Tesco. Customers get loyalty points
and discounts. It attracts new customers who might become loyal customers in the
future.
We can’t forget about another huge technological advancement introduced by Tesco.
Self-Checkout tills are a great way to make shopping faster, it enables customers who
are purchasing small amounts of products to scan it themselves instead of waiting in the
queue. It also works well with current Covid circumstances as it helps to keep
customers away from each other and it reduces contact between employees and
customers.
Legal
Tesco needs to be up to date with all the legal changes such as consumer rights and
laws, product labelling and product safety, equal opportunities, advertising standards or
health and safety. They must provide equal pay, ensure no alcohol is sold to underage
customers and no discrimination or racism takes place in their stores. Failing to follow
these laws will result in lawsuits and fines.
Environmental
Recycling is very important to Tesco. In more than 95% of their stores, they recycle
cardboard. Tesco also recycles all boxes and delivery cases. Tesco has set themselves
a goal to become zero carbon by 2050. Renewable energy will help them achieve this
goal and it will also reduce costs. Money they save from the renewable sources of
energy can be used to develop and expand their stores or help those in need.
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