Tesco plc is a British-based international grocery and general merchandising retail chain. It is one of the largest food retailers in the world; it operates in 14 markets across Europe, Asia and North America. According to Tesco’s annual financial report of 2011 the UK is the company’s leading market with 60% of group sales and profits coming from the UK business. Despite Tesco having international growth, this means the company is highly dependent on the UK market and this is starting to lead to problems for them. For example, this year Tesco reported a fall in profit for the first time in 20 years. Because of this Tesco needs to use a PEST (Political, Economic, Social and Technological factors) analysis as it will allow the business to build their vision for the future and help them to avoid further decreases in profit. Good use of PEST Analysis would also help Tesco to avoid taking further action that would result in failure for reasons beyond their control e.g. the recession. PEST analysis is used to analyse business markets, industries, segments or the whole economies. It provides a summary of the driving forces in the macro environment. It identifies drivers that were of high importance in the past, indicates to what extend they might change in future and how this will interfere with the organisation or the whole industry. Depending on the objective of the analysis, a distinction between the current situation and potential future changes may be helpful. Political factors have an effect on Tesco. The government encourages retailers to provide a mix of job opportunities such as low-paid jobs, local based jobs, flexible jobs, high-skilled jobs and high-paid jobs etc. This is so the demand from population categories, e.g. students, working parents, senior citizens, is met. Tesco offers a mix of jobs and because of this they can benefit from more motivated employees who will have a higher level of loyalty towards the company because they meet the employee’s...
References: Gavin Lumsden, Caelainn Barr (2012), Big Price Drop leaves Tesco investors reeling [online] Available at:
http://citywire.co.uk/money/big-price-drop-leaves-tesco-investors-reeling/a557703 [Assessed 18 October 2012]
Zoe Wood (2012), Tesco profits fall for first time in almost 20 years [online] Available at:
http://www.guardian.co.uk/business/2012/oct/03/tesco-profits-fall-uk-supermarkets [Assessed 18 October 2012]
Matt Kranz (2011), USA Today [online] Available at: http://usatoday30.usatoday.com/money/perfi/columnist/krantz/2011-01-23-market-value_N.htm [Assessed 18 October 2012]
Tesco Annual Report 2012 [online] Available at: http://www.tescoplc.com/files/pdf/reports/tesco_annual_report_2012.pdf [Assessed 18 October 2012]
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