Impact of Macro Factors on Tesco - Essay Example

? Impact of Macro Factors on Tesco With the increasing level of globalization, companies must considerexternal factors before drafting policies. The external factors affect largely the operation of the organization, thus, the senior managers must come up with ways to control these factors in order to focus on the company’s goals and objectives. These external factors include: competitors, socio-cultural organizations, threat of new entrant and international organizations (Cripps, 2012). Some of these forces affect the business directly while some others have indirect effect on it. Firms are quite vulnerable to changing laws. In business there are different categories of laws, e.g. consumer laws etc. These are new laws set to protect consumers from illegal practices, such as misleading description of the goods offered. TESCO can cope with this rule by ensuring that it offers product of high quality to the customers as this will increase their trust to the company’s products. It should also distribute products which meet the required health standards to the consumers (Cole, 2012). This will ensure they meet customers’ expectations of getting safe and secure product, a factor that plays part in customer satisfaction. Employment laws are set to safeguard employees from getting mistreated by the seniors. The law addresses issues such as the length an employee is supposed to be working and the minimum salaries an employee need to get (Cripps, 2012). As much as Tesco aim to operate at a minimum cost, they have to ensure they give proper remuneration to their employees to enable them operate per the law. By doing this, they will motivate employees thus increasing the rate of return to the business. Health and safety legislation is also part of the legal laws set to be observed by every company. It states the need of the organization to offer training to it employees (“Buxton Advertiser”, 2011). To respond to this law Tesco need to come up with a program to start offering regular training to their employees so as to enable them to perform their work properly. Finally, legal law also has started to dictate competition methods to be used by the business firms. The competition laws are set to prevent small firms from the huge competition danger posed by the well established firms. A competition law encourages government to subsidize the cost of production incurred by these small firms. This will enable them participate in external trade and compete with other established companies. To cope with this TESCO has to come up with effective ways to ensure that they reduce their cost of production. They can invest in other countries and also adopting the most advanced form of technology in writing to reduce their production cost (“Buxton Advertiser”, 2011). This will enable them compete with the firms getting subsidies from the government. With the expanding markets in the United Kingdom which is the first Tesco base, many new firms are entering the market to take advantage of the high demand thus increasing pressure on TESCO’s management to make necessary changes. Tesco organization can handle this by adopting a high level differentiation of the product in order to continue increasing brand loyalty by customers thus counter checking the thrill of the new entrant in the market (Cole, 2012). This will help Tesco to continue dominating the market. Another factor that may affect the Tesco’s ability to grow is the emerging power of suppliers. With the continued economic growth in the world, many suppliers of both goods and services have seriously been affected by upcoming supermarket chains (Cripps, 2012). This has put Tesco under a constant threat of losing its position in the market to these leading supermarket chains who are offering better prices of products to their suppliers. To avoid losing suppliers, TESCO has to provide better prices to suppliers. This will ensure they contain a significant part of the market. This will make the company the leading group with quick access to products and raw materials thereby outdoing others in the supply and distribution of goods in the market. With the changing times, there have been noticeable changes in the shopping habit of the world population. People nowadays prefer to meet their needs under one roof and by using the shortest time possible (Morgan, 2010). TESCO needs to extend it services into new nonfood markets such as telecoms and banking services under their roofs so as to ensure customer efficiency. As the economy expands, there are small firms coming up to offer grocery services. This has brought up a new range of substitutes in the market (Rome, 2012). Tesco has to come up with a strategy to survive the threat of substitution. Secondly it can open more store in all local towns and centers’ to ensure it supply’s a wider market. Bargaining power of the competitors is also another external element not worth ignoring. Worldwide customers are becoming more difficult to understand. Their taste and preferences are tremendously changing thus becoming too difficult to predict their consumption behavior (Wintor & Malik, 2012). This has created a gap in the market hence many firms are coming up to fill them. TESCO need to come up with new ways of collecting data from its customers to ensure it offer products that derive satisfaction to all (Johnson & Scholes, 2006).As result customers will continue buying the product from TESCO retail shops. Finally to counter check these other firms bargaining power, Tesco need to acquire advanced technology. This will help it provide services and also sell commodities to employees efficiently thus attracting more customers. Technology will enable them serve more customers per hour than before thus saving time spent by the consumers. This in the end will attract more and more customers thus increasing the company’s competitive advantage in the market (Cole, 2012). Tesco also needs to focus more on offering more corporate social responsibility. They need to start focusing on giving incentives to the customers e.g. offers. This will help it earn more loyalty from the customers (Tesco PLC, 2012). By becoming more responsible from the communities where they operate, TESCO will be the customer’s choice whenever they want to go shopping. This will enable it to continue growing despite the changes in political, environmental and social policies. In order to satisfy its international ambitions it has to be flexible (Johnson, & Scholes, 2006). References “Buxton Advertiser.” (2011, October 24). Tesco’s vision for Buxton. Retrieved October 23, 2012 from http://www.buxtonadvertiser.co.uk/news/politics/tesco-s-vision-for-buxton-1-3900894 Cole, P. (2012, April 19). How Tesco intends to improve its UK business. Retrieved from http://www.helium.com/items/2316633-tesco-uk-business-improvement. Cripps, P. (2012, April 18). Tesco plans ?1bn revitalization. The Independent. Retrieved October 23, 2012 from http://http://www.independent.co.uk/news/business/news/tesco-plans-1bn-revitalisation-7657631.html Johnson, G & Scholes, K (2006). Business strategy and global economy. Degree essays. Retrieved October 23, 2012, from http://http://essaybank.degree-essays.com/business/business-strategy-and-global-economy.php Morgan, T. (2010, June 11). The local impact of Tesco's success. The guardian. Retrieved October 23, 2012, from http://www.guardian.co.uk/business/2010/jun/11/local-impact-of-tescos-successhttp:// Rome, M. A. (2012, August 7). Tesco braces for opposition. From http://www.thephuketnews.com/tesco-braces-for-opposition-32461.php Thinking Bookworm. 2012. EXTERNAL ENVIRONMENT ANALYSIS: THE CASE OF TESCO. (2012, March 21). Thinking Bookworm. Retrieved October 23, 2012, from http://thinkingbookworm.typepad.com/blog/2012/03/external-environment-analysis-the-case-of-tesco.html Tesco PLC. 2012, "Corporate Responsibility Review." Teso PLC. N.p., 2012. Web. 24 Oct. 2012. . Wintor, P., & Malik, S. (2012, February 21). Tesco offers paid placements and jobs to people on work experience scheme. The Guardian home. Retrieved October 23, 2012, . Read More