Marketing Communication - Essay Example

Marketing Communication This report is an attempt to identify and analyse the various PEST factors which affect the responsiveness of Tesco towards its corporate social responsibility of energy conservation, fight against global warming and reduction in carbon emission. After identifying the various factors, a threat and opportunity analysis was done to determine the areas which could be effectively used to both promote business and the goal of energy conservation. The threat and opportunity identification process lead to recommendations which would lead to energy conservation, carbon emission reduction thus reducing the affect of global warming. A cost – benefit analysis was also done to find out the viability of the recommendations followed by a suggestion on the ways to incorporate the energy conservation initiatives into the very fiber of Tesco’s corporate culture, by outlining an education programme for its employees to conserve energy. RESPONDING TO GLOBAL WARMING Tesco and Global Warming – PEST Analysis With the growing concern over environmental pollution and consequently its effect in the form of global warming has led every organization in the world to reconsider their strategies1. It is extremely essential that an organization considers its environment before beginning its existence and marketing process. As a matter of fact, environmental analysis should be incessant and feed all aspects of planning2. An Organization’s Planning environment is effectively made up of: First, the internal environment, for e.g. staff (i.e., internal customers), wages, finances, office technology, etc. Second, the micro-environment, for e.g, the external customers, distributors, suppliers, agents, competitors, etc. and third, the macro-environment, for e.g., the Political (and legal) forces, the Economic forces, the Socio-cultural forces and the Technological forces, together being known as the PEST factors.3 In this report we will try to identify and understand the PEST factors of Tesco, which can affect the issue of global warming over the next ten years for the largest British retail-chain. Political Factors The political factors have an enormous power over the regulations governing the retail business along with the control on the spending power of the consumer, the control over monopoly of a single large retailer in the market and the availability of such retail services to most customers situated across the country. The following issues or political factors can be looked upon as either threat or opportunity for Tesco in the next ten years: 1. Stability of the political environment –Threat and Opportunity - A government in power will formalize rules governing the business of Tesco and the influence that Tesco will have over a government, as an environment friendly business. 2. Government’s position on marketing ethics– Threat and Opportunity – The rules laid down by the government to make a business more environmental friendly will have profound effect on the money spent to be more environmental compliant. However, this would also ensure that Tesco gains advantage by advertising its efforts to help global warming cause through advertisements and thus, gain popularity. 3. Trading agreement of Tesco with other countries – Threat – Given the global nature of Tesco’s business, the different laws laid down by different Governments such as EU, NAFTA, ASEAN etc, can hamper the uniformity of Tesco’s policies for being environmental friendly. Economic Factors The economic factors are the most vital ingredient for the success of a business. Marketers need to consider the state of a trading economy in the short and long terms, especially for planning international marketing. The issues of interest rates, rate of inflation, employment level per capita, the long-term prospects for the economy Gross Domestic product per capita, etc, can all affect the revenue of a company and thus the budgetary allocation on adopting environmental friendly methods of business. Thus, the economic factors can be looked upon as threats and as well as opportunities. Socio-cultural Factors The socio-cultural factors affect the consumer behavior and acceptance of a company’s efforts of being environmental friendly. It also determines how environmentally conscious different consumers groups are. Since these factors vary from country to country, it becomes a challenge for Tesco’s global nature of business. Technological Factors Technology provides the all essential competitive advantage for Tesco and has been a major driver in globalization. The technological factors such as the cost associated with providing environment friendly products and services, the cost associated with participating in innovations to promote anti global warming products and services, the cost associated with environmental friendly distribution system development4 etc, are threats as well as opportunities All the above discussed PEST factors can be recognized as threats as well as opportunities since some of them provide initiatives for Tesco to be environmental friendly and some of them act as hindrances to the cause of anti global warming initiatives. Strengths and Weaknesses Analysis of the PEST Factors Analysis of PEST factors based on: Strengths of the identified PEST Factors Weaknesses of the identified PEST Factors Sources – This includes, news articles, Tesco website, Tesco financial reports like Tesco Plc Preliminary Results 2005/6, Tesco Interim Results 2006/7; etc. A considerable number of sources have been studied to validate the data stated, which show the reliability of the facts enlisted here. The sources have been collected from wikipedia and Tesco Plc website. Thus, the authenticity of the wikipedia source may be questionable at times. Quality The sources have been obtained from news reports and company reports thus the quality can be relied upon. The quality of the sources in terms of authenticity can be questioned for the news reports since they did not always have their sources mentioned for further verification. Currency The currency of some of the sources provides strength to the quality claim of the data stated in the report. All the sources are not very current, thus a possibility of margin of error can not be ruled out. Accuracy The accuracy of the data obtained from company website sources can not be questioned and hence is the strength in the PEST analysis. The accuracy of the other sources like news reports, articles on Tesco etc., may be questioned since the data stated in these articles and news reports did not always state their source of data. Recommendations There are five recommendations, which can be considered by Tesco for fulfillment of its endeavors in becoming more environment friendly and global warming conscious: 1. Extending the zero-emission delivery fleet distribution system5 – By extending the concept of zero-emission delivery fleet distribution system to all its business lines and locations across the globe, Tesco would not only leverage its image of being environment friendly, but will also set standards for other similar retail giants.6 2. Extending the concept of carbon labeling7- The concept of Carbon labeling by providing public information about the carbon footprint of the products on its shelves will help Tesco in its overall plan to reduce its carbon footprint. This practice needs to be extended to all the business, locations and stores of Tesco for complete achievement of its environment friendly initiative. 3. Encourage communication by emails, reducing fax related paper waste and using double sided paper documents- These initiatives would facilitate the reduction in paper wastage. By communicating through emails and printing emails, only when absolutely necessary, the use of paper for communication will reduce a great deal. Fax related paper wastage can be reduced by using a fax-modem and by using a fax cover sheet only when necessary. Fax-modems allow documents to be sent directly from a computer, without requiring a printed hard copy.8 3. Choose suppliers who take back packaging for reuse – By choosing suppliers who would reuse the packaging material, Tesco can initiate the process of reducing its carbon foot print further. Also, by getting suppliers to send bigger shipments may help to reduce the quantity of the packaging material used in packing smaller shipments. 4. Policy of reduce, recycle and reuse and conserve – By promoting the concept of reduce, recycle, reuse and conserve among its internal and external customers, Tesco will be able to achieve a significant mile stone toward reduction of its carbon foot print. By encouraging employees to turn off electrical and electronic items when not in use, by using refurbished office furniture and by using paper which comes from a recycled source, Tesco will be promoting the concept of recycle, reuse and conserve. 5. Initiate an ongoing search for “Greener” products and services in the local community – Tesco can initiate the process of getting its supplies and services from places nearer to its stores or warehouses, since the further the supplies or service providers have to travel, more will be the energy used to get them to the stores or warehouses.9 Profit - Loss Analysis of Recommendations The success or benefit of each of the above mentioned recommendations for reducing Tesco’s carbon foot print can only prove to be practicable, once a profit and loss analysis of these recommendations have been done. According to Tesco, the zero-emission distribution or delivery trucks will cost 400 British Pounds per month and this would cost five to twenty percent less than running on diesel. Thus, saving almost 20 million British Pounds every year for Tesco and also saving carbon-di-oxide emission equaling 60,000 cars every year traveling 51,000 miles each. By carbon labeling the products it sells and by using suppliers who take back packaging for reuse Tesco will be able to accentuate the brand image of Tesco as an environmental friendly organization and consequently increase the brand value of Tesco in the mind of the customers, stake holders, government and environmental friendly organizations. By promoting the concept of reduce, recycle and reuse and conserve10, Tesco will be saving on an average 2 Million British pounds world wide considering the cost of wood, paper, electricity and diesel saved.11 The search for “Greener” products and services in the local community will not only help in reducing the cost associated with transportation of products and services from long distances, but will also provide a sustainable development.12According to Brundtland Commission, 1987, “sustainable development” is necessary for any organization that wants to meet its present needs of growth without compromising the ability of developments in the future. This in conjunction with the business goals of Tesco would provide the exact profit scenario for Tesco’s environment friendly endeavors. Programme of Education The following plan of action can be used to induce and encourage energy conservation among Tesco employees during office hours. 1. Organize workshops to inform employees about the environment friendly initiatives by Tesco, thus motivating them to contribute in the efforts. 2. Gather suggestions from employees on ways to conserve energy in the workplace. 3. Organize painting, debate competitions to promote the concept of energy conservation. 4. Make mandatory rules to turn off equipments like lights, computers, fax machines when not in use, since this would reduce the energy used by more than twenty five percent.8 5. Encouraging communications by email rather than via paper memos and reading of email messages onscreen to determine whether it’s necessary to print them help to conserve energy. 6. Reducing paper wastage and also energy wastage by using fax-modem to fax documents directly from a computer without using a hard copy. 7. Encourage use of double sided documents whenever and wherever possible. 8. Discourage dripping taps. First by ensuring proper taps are in place and then educating employees to close taps tightly after use since one drop wasted per second wastes 10,000 litres of water per year.8 9. Installing displacement toilet dams in toilet reservoirs also ensures conservation of not only water but also the energy required to disinfect, store and use water. All these efforts should be communicated among the employees and various events should be organized where groups of employees and individual employees contributing to energy conservation or suggesting ways to conserve energy are given due recognition. News Release on Tesco’s Efforts to Reduce and offset Carbon Emission In an endeavor to reduce and offset carbon emission as a part of its environment friendly policy, Tesco has decided to put forth the concept of “Clean Green Tesco”. This project will spearhead the Tesco Corporate Social Responsibility for the year 2008. Will Hutton, the chief executive of The Work Foundation has recently praised Tesco13 for leading the debate on corporate responsibility. This debate is being looked upon as the cornerstone for works related to environmental friendly endeavors of Tesco. Under this project, Tesco will not only use biodiesel fleet for distribution, but will also use zero-emission delivery vans to cut down on carbon emission. This technology will be rolled out across Tesco store locations in a phased manner to ensure smooth and efficient transition without affecting its supply or distribution chain. According to Tesco supermarket chain’s distribution director, “reducing carbon emission and looking at how we can make the business more environment friendly is a priority, and by 2012 we aim to halve the amount of carbon emitted per case of goods delivered.”14 Tesco is currently using barges in an effort to reduce emission during freight transportation. This effort takes 50 trucks off the road every week, thus cutting carbon emission by eighty percent.14 Along with other notable efforts; Tesco is already planning on more wind turbines to produce energy as against the conventional methods using non renewable sources. Tesco, standing good on its 2006-2007 plans of reducing energy consumption, plans to release its corporate responsibility report15 to further enlighten its stake holders on the continuous nature of Tesco’s environmental friendly efforts. The developments aimed at to be covered in this report would include the following: 1. Efforts to achieve an absolute reduction in the carbon dioxide emissions from Tesco’s UK business. 2. Publications providing details of the carbon footprint of all Tesco stores and distribution centers worldwide with a target to halve emissions from such buildings by 2020. 3. A new target to reduce packaging by twenty five percent by 2010, and to label all packaging according to whether it can be recycled. 4. A saving of 500 million new carrier bags, achieved by rewarding customers with Green Clubcard points for re-using bags. 5. A move to set up eight ‘local sourcing’ buying offices to bring more local products to customers. 6. Installation of the world’s most advanced automated recycling machines in 120 of the Tesco stores. 7. Reduce the noise and frequency of deliveries to Tesco Express stores 8. Increase consultation with the local community before building new superstores, thus understanding the associated pollution hazards and carbon emission hazards in the area. 9. Provide help to small suppliers by holding open days across UK. This will ensure the faster development of local suppliers. 10. Plans for further improvement of local sourcing by introduction of regional counters in stores and by improving labeling to highlight the local products. Finally, this Corporate Social Responsibility report will also outline how Tesco is promoting and stepping up its ethical training programme for its consumers and suppliers, and will give results of audit of employment conditions among the overseas producers of Tesco. Thus, Tesco wants to ensure its customers that it will definitely continue on its path of energy conservation and do what it takes to reduce the carbon emissions. Bibliography 1. Armstrong. M. A handbook of Human Resource Management Practice (10th edition) 2006, Kogan Page , London 2. Business Wire (May 29, 2007) Detailed PEST Analysis of the Retail Sector in China. Available from (http://www.researchandmarkets.com/reports/c58222). [Accessed 24-Mar-08.] 3. Johnson, G. and Scholes, K. (1993) Exploring Corporate Strategy – Text and Cases, Hemel Hempstead: Prentice-Hall. 4.  Marketing Teacher: Pest Analysis. Available from (http://www.marketingteacher.com/Lessons/lesson_PEST.htm) [Accessed 24-mar-08] 5. Sebastian Blanco (Apr 28, 2007) Tesco will be first UK company with all-electric, zero-emission delivery fleet. Available from (http://www.autobloggreen.com/2007/04/28/tesco-will-be-first-uk-company-with-all-electric-zero-emission/) [Accessed 24-Mar-08] 6. Cheryl Morrissette (Apr 30, 2008). An All-Electric Delivery Van--The Modec. Available from (http://www.autobloggreen.com/2006/04/30/an-all-electric-delivery-van-the-modec/) [Accessed 24-Mar-08] 7. Sam Abuelsamid (Dec 18, 2006). British supermarket chain Tesco to run trucks on B50 biodiesel. Available from (http://www.autobloggreen.com/2006/12/18/british-supermarket-chain-tesco-to-run-trucks-on-b50-biodiesel/) [Accessed 24-Mar-08] 8. Mike Magda ( Mar 14, 2007) Tesco to carbon-label its retail products; will include distribution impact. Available from (http://www.autobloggreen.com/2007/03/14/tesco-to-carbon-label-its-retail-products-will-include-distribu/). [Accessed 24-Mar-08] 9. Susan Ward. 10 Ways to Make Your Business Environmentally Friendly. Available from (http://sbinfocanada.about.com/cs/environmentbiz/a/envirfriend1.htm) [Accessed 24-Mar-08] 10. Joel Makower. Taking the Wrinkles Out of Paper Recycling. Available from (http://environment.about.com/od/recycling/a/officepaper.htm) [Accessed 24-Mar-08] 11. Larry West. Do the Benefits of Recycling Outweigh the Costs? Available from (http://environment.about.com/od/recycling/a/benefit_vs_cost.htm) [Accessed 24-Mar-08] 12. Susan Ward. A Definition of Sustainable Development. Available from (http://sbinfocanada.about.com/cs/environmentbiz/a/sustaindevelop.htm) [Accessed 24-Mar-08] 13. The Work Foundation. Tesco and Corporate Responsibility (May10,2006) Available from (http://www.theworkfoundation.com/aboutus/media/pressreleases/tescocorporatesocialresponsibility.aspx) [Accessed 24-Mar-08] 14. Environmental Leader (Oct 19, 2007). Tesco Using Barges To Cut Emissions. Available from (http://www.environmentalleader.com/2007/10/19/tesco-using-barges-to-cut-emissions/) [Accessed 24-Mar-08] 15. Environmental Leader (June 5, 2007). Tesco Releases Corporate Responsibility Report. Available from ( http://www.environmentalleader.com/2007/06/05/tesco-releases-corporate-responsibility-report/) [Accessed 24-Mar-08] Read More