Brief History of Tesco Plc - Case Study Example

PEST and SWOT Analysis of Tesco Plc Table of Contents Brief History of Tesco Plc 3 Brief Evaluation of PESTEL and SWOT Framework 3 Application of PESTEL and SWOT Framework to Tesco Plc 4 PESTEL Analysis 4 SWOT Analysis 8 Problem and Overcoming It by Tesco Plc 10 References 11 Brief History of Tesco Plc Tesco Plc. is one of the leading multinational retailers headquartered in UK. Tesco can be considered as one of the largest organisations within the global retail industry in terms of employee strength and revenue generation. It is true that UK retail industry is becoming highly competitive as several leading organisations within the retail industry are implementing unique strategies in business operation process in order to gain competitive advantage over each other. Tesco started its business operation activities in the year 1919. Slowly and gradually, the organisation expanded its business activities not only in UK, but also several emerging and developed places across the globe. It is the first retailer in UK that has implemented online business operation strategies in business operation process. Now the organisation has been regarded as one of the leading across the globe. This essay will apply PESTEL and SWOT framework to Tesco. Moreover, the essay will discuss about problems that have faced by organisation and how they have overcome the problem. Brief Evaluation of PESTEL and SWOT Framework PESTEL can be considered as an important strategic marketing tool that can help an organisation to evaluate and analyse the impact of several external environmental factors on the business performance of the organisation. PESTEL framework includes political factors, economical factors, social factors, technological factors, legal factors and environmental factors. Government of UK has developed several political, economical, environmental, legal and social policies for each and every organisation. PESTEL analytical framework helps the organisations to evaluate the impact of these factors and developed policies on the business performance of the organisations. Moreover, the organisations can develop effective future strategies based on the identified impact. SWOT also can be considered as an important strategic marketing tool that helps an organisation to determine its strengths, weaknesses, opportunities and threats. Strengths and weaknesses can be considered as organisations’ internal factors. On the other hand opportunities and threats can be considered as organisations’’ external factors. SWOT analytical framework actually helps organisations to develop potential opportunities by transforming own weaknesses to strengths. Moreover, effective SWOT analytical conduction helps an organisation to mitigate external threats that can affect business performance in near future. Application of PESTEL and SWOT Framework to Tesco Plc This part of the essay will apply PESTEL and SWOT framework to Tesco Plc. PESTEL Analysis This part of the report will analyse the impact of all the important external environmental factors on the business performance of Tesco Plc. Political UK is politically developed. Government of UK is supporting the retail organisations in UK to develop and implement profitable business strategies in order to improve the economic condition of the country during the post-recession era. Moreover, this support is helping government to fulfil the market demand of differentiated retail products and services. Therefore, it can be stated that political environment is favourable for Tesco. Economical Recent European financial crisis and global economic recession affected the economic environment of UK. High unemployment rate, low disposable income of people and limited purchasing power of common people are the major consequences of this economic crunch. These issues have affected the growth of the UK retail industry (Pride, 2013, p.21). The business performance of Tesco Plc. also has been suffering from this inadequate economic environment of UK. In last 8 years, employee turnover in Tesco has increased significantly. Moreover, affected purchasing power of common people in UK is also affecting the sales growth rate of Tesco. Looking into these aspects, it can be stated that economic environment of UK is still unfavourable for Tesco. Social It is the social trend of the people of UK to consume differentiated retail goods from single retail outlet. Moreover, adoption and implementation of online consumption process by Tesco helped the organisation to penetrate the UK market to consume goods through online. Looking into these facts, it can be stated that the social environment of UK is highly favourable for Tesco Plc. Technological UK is technologically developed country. Each and every organisation in retail industry can avail advanced technological resources to run business operation activities. Tesco Plc. is the first ever organisation that has introduced the concept of online order processing, online consumption, online order delivery and online payment concept within the retail industry. Most importantly, the organisation has succeeded to introduce this online consumption process in business thanks to the available advanced technological resources in UK. It is true that, recently Tesco Plc faced several privacy issues regarding online payment. But, implementation ICT software application in online payment process has helped the organisation to overcome this problem. Looking into these aspects, it can be stated that technological environment in UK is favourable of Tesco Plc. Environmental Government of UK has developed several critical environmental policies for the business organisations in UK to reduce the percentage of carbon emission level, which is constantly increasing due to the high consumption of fossil fuel energy sources by the organisations. However, it is true that recently tesco Plc. has introduced long headed fuel efficient trucks in logistics and supply chain activities in order to reduce the consumption level of fossil fuels and level of carbon emission. But, in some areas in UK, Tesco is still continuing with its old logistics vehicles that require havoc fossil fuel energy sources. These aspects are creating environmental issues for Tesco Plc (Worthington, 2012, p.72). Looking into these aspects, it can be stated that environmental factors are slightly unfavourable for Tesco Plc. in UK. Legal Government of UK has developed several legal policies, such as employment policies, trade policies, wage distribution policies and employee safety & health policies for the retail organisation in UK. Recently, Tesco has faced legal issues regarding inadequate and illogical high employee turnover (Adrian, 2000, p.220). These issues reduced the brand image of Tesco among the government and other important stakeholders. Looking into these aspects, it can be stated that legal environment in UK is slightly unfavourable for Tesco Plc. SWOT Analysis This SWOT analysis framework will help to determine Tesco’s internal strengths, weaknesses and external opportunities, threats. Strengths High brand loyalty and strong brand image. Leading organisation within the industry in terms of employee strength and profitability. Strong and effective online consumption process for the consumers (Humby, 2007, p.225). Strong and effective business expansion strategy across UK and around the globe. Effective product differentiation and business diversification strategy. Weaknesses The organisation faced privacy issues in its online payment process. Strategy to reduce manpower and high employee turnover during the recession and financial crisis period affected the brand image among its stakeholders. Workplace discrimination and cultural barriers caused workplace conflicts that have affected workplace environment of Tesco Plc. in recent past (Chaffey, 2008, p.207). Opportunities Tesco Plc. should continue with its business expansion, product differentiation and online business operation strategy to maintain its competitive position in UK retail market. The organisation should try to follow each and every developed legal policy by government in order to gain support of government and other important stakeholders in its business operation process. The organisation should try to focus on aggressive cost leadership strategy to gain more competitive advantage over its competitors. Threats Recent financial crunch and economic recession affected the purchasing power of common people, which is affecting sales growth rate of Tesco. Intense market competition is affecting the market share of Tesco Plc. in UK retail market. Developed legal and environmental policies are other threats for Tesco Plc. Problem and Overcoming It by Tesco Plc It is clear from above discussion that Tesco Plc. being one of the leading organisations in the UK retail industry has first ever adopted and implemented online business operation strategy. Online order processing, order placing, order delivery and online payment for the sold products have eased the consumption activities of consumers in UK. But, recently Tesco Plc. is faced privacy issues in the online payment process. Several customers have made complains that their bank account and personal details have been hacked by the cyber thieves. It can be considered as a serious threat for the Tesco’s high brand image. This particular issue affected Tesco’s brand image among its important stakeholders. Moreover, it has reflected in the falling sales growth rate. The management of Tesco started to gaining concern about this issue. Immediately, the organisation installed advanced security software application in online payment procession process to secure the privacy of the customers’ bank account details and other personal details. However, advanced ICT security software application helped the management of Tesco Plc. to resolve the issue quite effectively. It is true that, several consumers in UK still think twice before considering online payment aspect. But, the management of Tesco Plc. has invested a large amount of its business profit in this software application process to ensure tight security for the consumers’ payment details (Pitt, 2012, p.125). This process has helped Tesco to regain its high brand image in UK retail market. References Adrian, T., 2000. Managing Change. New Jersey: Pearson. Chaffey, D., 2008. Internet marketing. New Jersey: Pearson. Humby, C., 2007. Scoring Points: How Tesco Continues to win Customer Loyalty. London: Kogan Page. Pitt, M., 2012. Essentials of Strategic management. London: Sage. Pride, W., 2013. Business. Stamford: Cengage Learning. Worthington, I., 2012. Greening Business. New York: Oxford University Press. Read More