Tesco Pest Analysis

Topics: Motivation, Tesco, Human resource management Pages: 8 (2849 words) Published: May 2, 2011
The Primary aim of HRM is to create a competitive advantages for an enterprise by ensuring that their employees are talented, competent and motivated, this can be achieved by greater training and investment in employees. To ensure advantage the enterprise must have comprehensive and well followed recruitment policies to ensure that they meet legal obligations as well as organizational needs and social requirements. This can be done via an analysis of the business’s Micro and Macro-environment. The objective of this report is to analyze the market in which Tesco PLC operates and discuss how this will affect the companies HR policies.

Political factors:
As with any company, Tesco is restricted, to a degree, by current employment legislation such as equal opportunities, health and safety, minimum wage, working hour limits. All of which will have an influence on the way that the company is staffed. In addition to laws on the way that employees are treated there are also other political factors to take into consideration, for example, in January 2011 VAT was increased from 17.5% to 20% some companies have chosen, at least initially, to bear the brunt of the VAT increase and not pass it onto customers. Tesco are set to pay VAT until January 25th, however this will only be on the non-food portion of the product mix as food items are VAT exempt. Despite this, it will cause decreases in profit margins as, in 2007, non-food items accounted for 25% of the product mix and since, have seen a year on year increase. Owen, E. (2011). Retailers Absorb VAT Hike For a Limited Time. [online]. Haymarket Brand Media. Available from: http://www.marketingmagazine.co.uk/news/1047799/Retailers-absorb-VAT-hike-limited-time/ [Accessed 07/05/2011] Datamonitor. (2007). Tesco Case Study: Non-foods Hold Key to Tesco Future Growth Strategy. Marketresearch.com. Available from: http://www.marketresearch.com/product/display.asp?productid=1536663&SID=37570259-500608356-535554999 [Accessed 07/01/2011] Tesco, despite being a UK based corporation, has expanded its operations into countries in the EU and Asia to take advantage of the lack of major competition from large supermarket chains and thus gain greater market share in these countries as well as spreading the risk of market concentration in the UK. Although Tesco’s online sales contribute massively to overall revenues the retail industry is still a highly localized one, relying on local employees and customers to survive. It is for this reason that governments require Tesco to offer a range of low as well as high skilled jobs, part and full-time work to be available for numerous demographic groups. This will help to absorb some of the job losses that are likely to occur when a large enterprise enters a market with little competition and smaller local businesses are forced to compete or close. Friends Of the Earth. (2005). (Good Neighbours? Community Impacts of Supermarkets). FOE. Available from: http://www.foe.co.uk/resource/briefings/good_neighbours_community.pdf [Accessed 10/01/2011] Economic Factors:

Economic state of a country is very important because it changes factors such as demand, costs, prices and profits. Unemployment reached 2.5 million in the last quarter of 2010 (National Statistics Online). As a result people have less disposable income to spend, obviously food is a necessity and so sales will not decrease totally however it is likely that the trend will be for increased sales on value products, this can be seen in the rising popularity of budget supermarkets such as Aldi and Lidl. Leroux, M. (2009). (Discounters Aldi and Lidl Storm World Retail Top Ten). Times Online. Available from: http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article5505312.ece [Accessed 20/01/2011] This can, however, be combated to an extent by Tesco who have a range of own brand products from “Value” to “Taste the Best” which, at varying low prices, offer...

Bibliography: Name: Daniel Winter
Unit: Human Resource Management
Course: Business and Management
Tutor: Mike Plummer
Human Resource Management 1:
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