External Environmental Analysis of Selected Company

Strategy analysis

External environmental analysis of selected company

3.1 PESTEL analysis

PESTLE analysis has been conducted to classify what sorts of strengths and opportunities the management of Tesco in United Kingdom faces presently and in future (Drummond and Ensor, 2005). The strengths and opportunities identified will serve as a base for pinpointing the strategies detailed in this report.

3.1.1 Political Forces

Because of functioning in a global setting, Tesco is chiefly impacted by the legislative and political circumstances of these nations, in addition to the European Union implementing governing directives. The UK government directive for employment persuades retailers to offer work for a range of people, varying from lower-paid, locally based and flexible to highly paid, highly skilled and centrally-placed occupations (Stone and Desmond, 2007). This section of legislation as well facilitates for the different demographics to be offered job opportunities, like disabled people, students, people from different backgrounds, working parents and senior nationals. This presents Tesco a competitive advantage as it generates loyal staff members.

3.1.2 Economic Forces

The present economic environment has been a reason for concern. The economic downturn has caused the level of unemployment in the United Kingdom to rise over 29 million (Keynote, 2010), this is one of the lofty figures recognised on record. Since economical forces are probable to influence profits, cost, demand, price, these figures ought to make Tesco's management feel mostly concerned. Though Tesco's global business does raise a high amount of proceeds, they are still mainly reliant on the UK market. If the rates of unemployment keep on soaring, the hold up of the UK food sector could encompass a sternly negative effect on Tesco.

3.1.3 Social Forces

Of late, it has been realized that British consumers have turned out to be "one stop" buyers. As a result of this action, Tesco has been capable of effectively diversifying their firm into an array of various markets. One can currently not only shop at their weekly store, however, can acquire electronic commodities, clothing, personal insurance, and an array of other commodities from Tesco.com. This provides Tesco an advantage over their rivals as consumers may opt for Tesco as they cover close to all bases of customer requirements. Additional social tendencies incorporate being more environmentally friendly and the need for organic consumption goods. Tesco have recognized these requirements and acclimatised the food variety to incorporate cede commodities and are endeavoring on developing into a Zero-Carbon corporation by 2050 (Tesco, 2011b)

3.1.4 Technological Forces

For the past ten years, the UK has undergone through key technological developments. So as to succeed in the UK, the firm has to embrace technology (Keynote, 2010). With where the technology has attained high heights, it appears just natural that Tesco ought to be a part of it. This specific variable of the macro-environment has facilitated in developing a lot of