Tesco Strategic Analysis
Tesco is an international distribution based primarily in the UK, in Ireland and Asia. Its capitalization is 34.84 billion at 11 July 2008 and its turnover is 80 billion Euros in 2008. Tesco is British distribution group and 3rd World Group. Its activity revolves around three areas: distribution in the UK, international distribution and financial services. (Pagano, Margareta, 16 May 1987).
The Macro Business Environment of Tesco Group
The Macro-Environment consists of factors that may influence an organization externally. This is usually outside of the control of corporations. Examples of factors that may influence a business are changes in interest rates, changes in cultural trends and tastes, more competitors in surrounding areas as well as greater regulations or changes to government laws. (Pagano, Margareta, 16 May 1987). A popular method used to analyze the macro-environment is through a PESTLE analysis which stands for political, environmental, sociological, technological, legal, and ethical issues.
Factors That Will Have Significant Impact on Tesco
The political environment includes all government actions that affect the business in the retail trade. This effect may be through formal legislation, such as the law on the sale of goods, as well as through competition policies and planning systems. For example, the recent developments relating to food safety and sale of genetically modified foods also influence and restrict the activity in the retail sector. (Pagano, Margareta, 16 May 1987).
The influence will be different for each type of retail businesses, and an enumeration of all possible political factors beyond the scope of this book. However, it is important to understand that many of the legal setting are introduced in order to protect consumers and are a long stage of preliminary discussions. Listening to the political situation, we can provide undesirable consequences and take appropriate action.
Economic problems affect the business activities in two ways. First, the level of its income and inflation impact on consumer spending, and secondly, directly on the conduct of retail business affects the level of taxes, rents, labour costs and other expenses.
Economic problems are not limited exclusively to the local economy. The globalization of retailing on the Internet means that international competition is largely based on the price is now becoming a reality in many markets. It is widely known as facts, when consumers buy in order to save cars in continental Europe not in the UK. Another example - the increasing popularity of "booze cruises for the" taken for the purchase of beer and wine in France, where taxes and prices are lower. In the future activities of commercial firms will affect the UK is definitely the influence of the single European currency.
Social and Cultural Factors
Major changes in social trends have an impact on the demand for a company’s products and availability and desire of employees to work in an organization. Nowadays trends towards organic and fair trade goods, Tesco should provide a wide range of organic and fair trade products, it will appeal to customers and can increase in sales. People wants everything under one roof (one-stop shop) and prefers healthier and convenience foods due to lack of time for cooking. So by selling low fat and convenience foods it can get profit from higher sales. National retailers like Tesco are more restrained to take on new suppliers. It was Tesco who introduced the payment made by cheques and cash at the checkout.
Technological advances often lead to revolutionary changes in the market. Technological developments reduce costs, improve quality which leads to innovation and benefits both the customers and the organizations. Tesco provides Electronic Point of Scale (EPOS), barcode scanners, monitoring...
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