Get an in-depth understanding of Company through a PESTEL analysis of Tesco. Discover the political, economic, social, technological, legal, and environmental factors impacting the company’s business environment. Learn how Xerox is adapting to changes and positioning itself for future success.
Introduction
Tesco is the world’s second largest grocery and generalized merchandize store which started its operations in 1919 in England. It is ranked after Walmart in profitability. It expanded from a grocery store to selling books, clothes, furniture, crockery, electronics etc. Jack Cohen, the founder of TESCO first purchased tea from T.E Stockwell and from there he got the idea for the name of his new venture TESCO which had three initials of his seller’s name and two of his. In 2012 it became the 15th largest listed company in London Stock Exchange.
TESCO entered into a partnership agreement with ESSO in 1997 by allowing them to open their petrol pumps on their retail outlets. It has been under investigation in the past for trying to form cartel with other big supermarket chains in order to influence and control the prices of various goods. (10 Interesting Facts about Tesco, 2014)
Political Factors
TESCO claims that it has no political affiliations and does not support any political party but the evidence suggests otherwise. In 2003 it made £44713 donations to different political parties. It is also alleged to influence government through its senior officials who also sit in some government regulatory board. It has been very prominent in many Labor party events. Supermarkets like Walmart and TESCO have been believed to influence government for reduction in taxes and expansion permission.
This is why these organizations support government financially and in their other political endeavors so that they can get their way in return. These giants do not accept openly about their political affiliations but in reality whenever they sense any strong contestant in politics they start funding his/her political campaign in return for favors. This is how they are able to sit in boards of most important government institutions, passing laws that are in favor of their businesses.
Economic Factors
In 2009 TESCO reported earnings for the first time that were under 10 percent growth that were because of the financial crisis that had hit the whole world and all consumers were cash stringent. But TESCO grew even slower than its rival chains that are of 3.5%. Some firms even reported losses but luckily for TESCO their earnings only slowed down and did not turn into a loss.
Then in 2011 it reported its worst six months in UK because of the rising unemployment, fall in income of people and overall shrinking economy made people to spend less on food, clothing, books and other things. (Kollewe, 2011)
Social Factors
People have changed their social habits and culture, now both men and women work in order to achieve a better lifestyle as a result of which now there is less time left for all activities like grocery shopping, meal preparation. Ready to cook and eat food has seen immense growth in recent years due to same reason and TESCO should develop its product line on the same lines if it wants to protect itself from becoming outdated.
Modern and flexible brands are sought after these days; consumers like to be associated with tech savvy brands. TESCO should develop its product lines keeping in mind the same social changes that have taken over the society.
Technological Factors
TESCO has invested heavily on technology like website development which has in turn increased its revenues by 10%. Apart from making investment in online experience TESCO has also improved its checking out system for the convenience of its visiting customers. There are now heat sensors installed in waiting queues area to measure the body heat and notify the staff when the queue is too long.
Also there are modernized and advanced scanners and bar codes readers to guard the store against theft and store lifting. CCTV cameras which can record the incidents for later evidence provision, they can also detect faces of last time offenders so the store staff can be careful about repeat offenders. (King, 2010)
Environmental Factors
TESCO in collaboration with Global Action Plan trained and gave employment to young individuals in order to help reinforce positive environment friendly behavior in them. These individuals became Energy Ambassadors of TESCO in order to reduce Carbon footprint of the company. Then TESCO has helped develop a Mushroom supply manufacturing facility which will help in recycling of waste and excessive waste through agriculture.
In 2010 TESCO was found to have been using shopping bags that were harmful for the living beings on Earth because they were built with lasting capacity of three months but the waste that was left was injurious to lives of birds and fish. It was asked to immediately replace its shopping bags to something environmental friendly.
Law/Legal Factors
The term TESCO Law was coined to give businesses permission to provide legal services to their consumers like they come for shopping in a supermarket and do one stop shopping they can do this in business too. But ironically TESCO never took part in this activity and does not provide legal services to its clients. So TESCO Law is not applicable to TESCO as many people confuse it as coming out from TESCO. However one situation that is TESCO is guilty of not abiding by Competition rules at Norfolk site.
The land bought by the owner actually gives it rights to handle the development according to his own desire and TESCO has been using these rights to prevent competition from entering the area. In 2010 it was allegedly doing so and could have faced heavy charges and fines if proven guilty.(Goodley, 2014)
Bibliography
- 10 Interesting Facts about Tesco. (2014, July 16). Retrieved February 02, 2016, from In Fact Collaborative: http://infactcollaborative.com/economics/facts-about-tesco.html
- Goodley, S. (2014, June 10). Tesco faces potential fines after failing to comply with 2010 competition order. The Guardian .
- King, L. (2010, January 01). Technology helps Tesco beat crunch. Computer Worl UK .
- Kollewe, J. (2011, October 2). Tesco feels economic squeeze with worst UK sales result for 20 years. The Guardian .