PESTEL Analysis of Tesco Business Essay

PESTEL analysis is one of the strategic analytical tools used for business environment analysis; it mostly concerns the company’s external environment and factors affecting its operation. PESTEL is an abbreviation for political, economic, social, technology, environmental, and legal factors influencing the company. This business essay applies PESTEL analysis to evaluate the environment of Tesco. Political factors stand for the impact of the government on the business (Dooley Dransfield, 2006). In this domain, Tesco has strong connections with the Labor party (though the company’s authorities deny any connections and political affiliations), and produces a strong impact politically on the policies of tax reduction and expansion permissions. Economic factors relate to the state economy’s status and the way in which the domestic economic situation affects demand for the firm’s products (Harrison, 2013). The global economic crisis hit Tesco sharply, with consistent reporting of slowing earnings. However, they did not turn into losses thus far, only reflecting the falling expandable income of population stricken by the crisis and facing numerous layoffs. Social factors mean the population’s trends and features affecting the company’s popularity and performance (Dooley Dransfield, 2006). The major social factor to be considered by Tesco is the gradual ageing of the UK population, which requires going more mobile and offering flexible delivery options. Moreover, people are getting ever more health-conscious, so a stronger emphasis on healthy food offers may also attract more customers to Tesco. In the conditions of continuing consequences of the global financial crisis, keeping prices low and competitive enough may also be a beneficial approach in terms of preserving positive attitudes and popularity among consumers. Technological factors are evaluated as the state of technological progress, new technology adoption, etc. affecting the promotion of company’s products (Harrison, 2013). A globally dominant technological factor affecting Tesco at present is the increasing adoption of online shopping and mobile internet technology. Hence, shopping in physical supermarkets becomes less popular, especially among individuals who work and have scarce time for shopping. In connection with that, Tesco may preserve its competitiveness by offering more interactive tools to users, such as online pre-order of goods or online ordering of delivery. A mobile shopping application may also manifest Tesco’s embrace of the current technological trends and renew popularity among some categories of consumers losing their interest in physical shopping in favor of mobile and online options. More free time? Better grade? Click on this button nowOrder Now Environmental factors determine the customers’ attitude to the company as eco-friendly and environmentally sustainable, which determines the demand for its products and its reputation (Dooley Dransfield, 2006). In this regard, Tesco follows an explicit environmental strategy including control over greenhouse gas emissions, striving to zero net deforestation by 2020, sustainable sourcing of seafood, and focusing on the sustainable agricultural supply chains. Tesco also boasts next to zero discharge of hazardous chemicals and active involvement into reuse and recycling initiatives (Tesco, 2017). The legal environment of a business relates to the new and existing laws in the country of business’s operation and ways in which they affect company’s functioning (Harrison, 2013). In the legal domain, Tesco’s main concern is about monopoly and competition laws, which is the primary basis of its competitive advantage and survival in the increasingly competitive market. After the crisis, many small businesses have experienced problems with retail market entry, but Tesco should still monitor the situation to maintain a competitive edge and popularity among consumers.