PESTLE Analysis For Tesco

PESTLE analysis for Tesco's
What is a PESTLE analysis?

PESTLE stands for Political, Economic, Sociological, Technological, Legal and
Environmental factors. Examples of each are:
 Political - tax policies, trade restrictions, tariffs

 Economic - economic growth, interest rates, inflation rates
 Sociological - culture, health consciousness, age distribution
 Technological - ecological aspects, research and development, rate of
technological change
 Legal - health and safety laws, consumer laws and regulations
 Environmental - recycling policies, pollution
Why use a PESTLE analysis?

The purpose of the PESTLE analysis to assess the industry which an organisation is
in. The PESTLE analysis is used in conjunction with the SWOT analysis which
assesses the Strengths, Weaknesses, Opportunities and Threats to an organisation.
The PESTLE analysis is also seen to assess the Opportunities and Threats to the
organisation.
How is PESTLE analysis used as a strategic tool?
Strategic management is about formulating and implementing decisions which allow

an organisation to achieve its long term objectives. This can be done ad-hoc,
regularly or continuously scanning. Whether the scanning is of TESCO as an entire
organisation or individual store, a PESTLE analysis should be undertaken.
Strategies are formulated by Chief Executive Officers, approved by the Board of

Directors and implemented by Senior Management. The PESTLE analysis is part of
the environmental scanning branch of strategic management.
PESTLE ANALYSIS OF TESCO
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. Tesco’s 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 TESCO’s success. This
is because TESCO has taken into account the implications for consumers,
employees, stakeholders, associated organisations and the company’s mission
statement. Each external factor would have been and continues to be examined and
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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 TESCO’s 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 TESCO’s 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 TESCO’s 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
TESCO’s 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 people’s 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.
TESCO’s 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 TESCO’s did not
take their corporate responsibilities seriously in relation to environmental issues it
could have dire consequences for TESCO’s reputation.
A PESTLE analysis is therefore vital to the development and the success of

TESCO’s 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.
Tesco PESTLE analysis
A PESTLE analysis of Tesco examines the main external factors impacting

on the company:
The political factors can be local, national or international. Many

governments can be involved. For instance, Tesco might have to deal with
British and Columbian politics in regards to its coffee supply.
Economic factors have large impacts. Fluctuations in the stock market,

or tax increases, can seriously affect the bottom line of a company like
Tesco.
Sociological factors can vary from the impact of immigration, to changes

in fashion.
New technologies have had a great impact. For instance, online

shopping has become a major factor in Tesco's recent success.
The changes caused by all the external impacts lead to many legal
problems.
Finally, any large organisation has an environmental impact. For

instance, Tesco uses fossil fuel in its transport network. Reducing this
demand is a major challenge.
In summary, any Tesco PESTLE Analysis must consider external factors in

detail, and examine how their impacts continually change.

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PESTLE analysis for Tesco's

What is a PESTLE analysis?

 Political - tax policies, trade restrictions, tariffs

Why use a PESTLE analysis?

How is PESTLE analysis used as a strategic tool?

Strategic management is about formulating and implementing decisions which allow

Strategies are formulated by Chief Executive Officers, approved by the Board of

PESTLE ANALYSIS OF TESCO

Why do a PESTLE analysis of TESCO?

1. Tesco’s are everywhere;

PESTLE analysis factors examined:

Whilst one of TESCO’s competitive advantages at present relates to their

In addition, planning permission is an issue that TESCO seriously need to be aware

TESCO’s are also instrumental as a retailer in supporting carbon reductions and

A PESTLE analysis is therefore vital to the development and the success of

Tesco PESTLE analysis

A PESTLE analysis of Tesco examines the main external factors impacting

The political factors can be local, national or international. Many

Economic factors have large impacts. Fluctuations in the stock market,

Sociological factors can vary from the impact of immigration, to changes

New technologies have had a great impact. For instance, online

Finally, any large organisation has an environmental impact. For

In summary, any Tesco PESTLE Analysis must consider external factors in

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