Sadia Hussain Unit 29
Unit 29 - P4 PESTLE and Porter's five forces
What is a PESTLE analysis?
A framework or tool used by marketers to monitor outside influences that can
impact an organisation. ‘’A PESTEL analysis is a framework or tool used by
marketers to analyse and monitor the macro-environmental (external marketing
environment) factors that have an impact on an organisation.’’
Political
Political factors can have an impact on Tesco in many ways and the way that
they run. For example, the government in all countries set rules and regulations
that all businesses have to follow including Tesco. The government can change
these laws anytime which can have an impact on Tesco and the way they run.
For example, the government can increase or decrease the number of interest
rates that business has to pay which affects them borrowing loans from the
bank, which most all businesses do. Interest rates are the percentage of money
that is charged from the total amount when borrowing a loan from the bank.
The current interest rates in the UK stand at 0.75%, however, due to Brexit; the
interest rates might increase in 2019 if UK leaves EU smoothly. A rise in interest
rates will have a major impact on Tesco, as it will be more expensive for them to borrow loans from the
bank which will affect their profit. ‘’Even a small change in interest rates can have a big impact. It’s
important to keep an eye on whether they rise, fall or stay the same.’’ Tesco operates in different
countries, not just the UK, which means the need to follow the different sets of laws in the country that
they are operating in and respond to the changes in the rules in order to avoid breaking the law.
Economic
There are economic factors that can have an impact on businesses such as Tesco. Most businesses get
their supplies from other countries, for example, businesses in the UK will get their products from outside
the UK because it is much cheaper to import than to purchase from the same country. One of the
economic factors that can impact Tesco is the exchange rates, for example, an increase or decrees in the
value of the currency can make it cheaper or more expensive to import good from other countries. The
value of the pound sterling in the UK has recently increased, which is a good thing for Tesco. Other
Economic factors that can have an impact on Tesco is employment rates. The UK is currently facing high
unemployment rates; increased unemployment rates have a major impact on businesses such as Tesco. If
the unemployment rates are high, it means more people are not working, and people are earning no
income they will not have money to spend, this will have an impact on Tesco because If the
unemployment rates are high, it means they will not have money to spend, which means Tesco will get
less amount of customers, and this will reduce the amount of sales the restaurant makes and their overall
profit will also drop. ‘’People have less money to spend on goods and services when they’re out of work.
High unemployment weakens consumers’ purchasing power, the driver of local economies.’’
Social
There are also many social factors that can have an impact on Tesco and the way that they run. For
example, population growth rates. The population of a country is the number of people living in that
particular country, for example, if the population increases it means the number of people living in the
country has increased either due to immigration or natural population increase due to fewer deaths and
more births. Lower population means lower demand for the goods and services, and if Tesco does not get
many customers, such as if not many people purchase their products, they may not be able to make any
profit, and can go out of business. The population growth in Britain is slowing down due to falling in the
net migration since the vote carried out for Brexit and unemployment levels are also high ‘’The reduction
in the number of immigrants is the largest single driver of the lower level of population growth in the year
1
