Tesco and the UK external environment
Table of Contents
Summary
The research has been considered to be adequately developed on the structure of Tesco and its relation to the economic position of the United Kingdom. The country has witnessed a number o aspects, including the growth of the very structured elements that are of help to Tesco’s profitability. Further, during the course of the study, the external environment has been found to be an option for the better positioning of the organisation in the competitive situation of the United Kingdom. Further findings display the fact that Tesco is to ensure increased competence with the demand-supply areas of the UK economy in order to be of help and aid to its growth along the course. Don't use plagiarised sources.Get your custom essay just from $11/page
1 Introduction
Globalisation has caused migrations of human force, and with that cultural and moralities are also migrating from one place another. Tesco is one of the largest retail stores and is sharing leadership in the retail industry with some other leaders in the global retail sector. The company is a tremendous diverse labour force based on at least 3000 employees working in different stores located in different parts of the UK, especially the major cities. Tesco is operating in different kinds of stores, including convenience stores, metro, and express marts. Tesco diversity is not limited to its employees, but it also handles with the variety of customers. Tesco values its customers, and their strategic approach mainly focus on gaining loyalty for success. The report analyses the external environment of operations for TESCO in the UK and then discusses the trends which might influence the profitability for the firm.
1.1 Methodology
The research has been more secondary data based on statistics and other information being considered from reputed websites and news articles. The information related to Tesco has been extracted effectively from the official website for the company where details for its entire chain have been mentioned. On the other hand, the PESTLE analysis has been considered with respect to the data which has been observed within various articles and official online sources for data collection. In this regard, the Guardian and the similar esteemed sources have been considered to ensure the selection of the data. In this regard, the use of the higher and more structured method of secondary data allows reduction of the effort for the collection data using first hand or primary sources which require increased efforts and also a number of the ethical and financial strain on the research. Yet with the section of the secondary sources, the ascertaining of credibility had been quite extraordinary. Furthermore, the entity has been considered based on its effective operation and the extent to which it has seeped into the retail industry of the United Kingdom. The analysis via secondary sources allows division of findings into the areas that are more trend-oriented as it seeks to highlight previous trends and the changes which have been observed by other researchers and thus develop a stronger orientation for the future.
The research has been considered to deploy the use of sources such unique retail websites where the data is inclusive of the UK retail sector such as during the PESTLE analysis where the economic analysis has been maintained with a specific focus on the GDP and the addition of economic benefits and expenditure in the retail sector of the country. This has been considered to be quite an important aspect as the Tesco being the retail giant of the UK has a significant role to play in the contribution made by the retail sector to the country’s economy.
2 PESTLE Analysis
2.1 Political
The report over the political situation within the United Kingdom, Partington (2019) highlighted that Brexit with its decisiveness, has still been causing significant uncertainty for the retail industry and other sectors within the country. The political indecisiveness caused by Brexit effects growth prospects for Britain’s retail sector where the year 2019 had displayed a sloppy growth area for the retail industry with just 0.5% growth percentage. The report highlights the UK political stage to be one of the reasons for the contraction in all sectors and growth to either stagnate or decrease. Under such a scenario, it may be considered that the rise in uncertainty for businesses within the country is quite high based on the political situation.
2.2 Economic
The research by Rhodes (2018) mentions effective economic findings with respect to the UK market. A wide number of areas have been sought after, which mention that the economic output for the retail sector was £92.8 billion for the year 2017. The spending per cent on retail sales was inclusive of 39 pence on food, 12 pence for clothing and 8 pence on the household goods at various retail stores across the UK. The country witnesses several economic areas that affect the industries across the board. According to the Trading Economics (2019) report, the GDP has risen for the country and has been at its peak in the year (2018).
2.3 Social
The research by Hill (2019) mentions the social trends within the UK population to be excessively diverse. This is based on the fact that the population in Britain is to witness a huge slump ii ageings where older people have increased life expectancy. Thus each product or service witnesses a more demographically diverse population or audience to cater. The British Society is considered to bring several trends as a society with the ration of young to old not being that huge and life expectancy increasing beyond 75 for men women. Furthermore, the density of population can be considered to be quite effective for the growth of the populous within the country and also the industries operating
2.4 Technological
Technology has been amongst the crucial factors that have been a deliverable of modern-day Britain. The UK has witnessed the surge in the use of technology from robotics, personal etch and industrial technology usage. This has been effective with online sales such as that from the business online rather than in-person. The need to ensure that the use of the technological appraisals in the UK has been quite an efficient aspect for the growth of services, manufacturing and various other sectors and the relevant support that they provide to the economy of the country. Thus serves as a factor which potentially impacts how business run across the country.
2.5 Legal
The equality law of UK especially deals with the discrimination and age diversity in the organisations. The equality law of UK states that if there is an employment opportunity, every person who has the abilities, education, and skills should have the right to apply and be selected for the position. Such areas increase the abidance of various industrial segments within the country and allow a more prosperous and equality developing image for the UK to be propagated within the global context.
2.6 Environmental
From reducing the global carbon footprint to the reduction of its emissions, the UK has been at the lead for reducing carbon emission and maintaining a sustainable environment for the generations to come. To enable such practices, the country has marked the year 2050 as its year to inaugurate the net-zero emission until then the country systematically reduces the emissions. Further, hazards caused to the environment are maintained to the lowest with several legal actions intact for any lack of abidance. Thus with significant relation between the legal and the environmental factors, the UK market is considered to be quite fruitful for the greener operations and be supportive of the many initiatives taken by the government.
3 Discussion
In the view of Behboodi et al. (2018), the theory of demand and supply is referred to as the concept used for gaining an understanding of the overall economic system and its related functions. The demanded quantity for a specific good or service is referred to as the amount the customer is planning to buy within a specific period of time and at a certain price. It is a basic economic principle that states that when the supply exceeds the demand for particular goods or services, it will result in decreasing the prices. Conflicting to this when demand increases the supply, then the prices increases. With regard to this, Hafezalkotob et al. (2018), stated that the laws of supply are demand are refer to the operations of the market and to the governing of the economy. The concept is relatively simple, but demand and supply link can be influenced by various factors that create chaos with the attainment of equilibrium. In the case of Tesco, the major factor associated with demand is the population levels, personal disposable income, per capita, individual debt and employment levels. One the other hand, the drivers for supply include different variables like market size, competitors and cost of factors of productions. Food and household goods market size in the United Kingdom has experienced immense growth with the last few decades, and the main reason behind the growth is the increasing income and purchasing power of the people along with this the other factor is the increasing rate of immigration within the country.
In addition to this Behboodi et al. (2016), stated that the supply in the UK supermarket is based in the international sourced commodities which are usually imported from all over the world for meeting the demands and needs of the target market. Tesco is involved in selling different varieties of fresh and frozen food products along with other goods. Some of the issues faced by Tesco are the changing economic local circumstances which are affecting the demands of food and household items. A significant amount of materials for Tesco stores are sourced from the international market. Therefore international productions of different goods along with its demand are affected by the supplies available in the market. The consumer preferences are changing and shifting more towards healthy items. Therefore, demand for healthy items like food and vegetables are increasing along with the products that are eco-friendly.
When Tesco groceries price of goods increase the competitor can take benefit of it as when the price of good increase demand decreases vice versa. Some of the major competitors of Tesco are Wal-Mart, Carrefour, Amazon, and Woolworths. The competition level in the retail industry of UK has increased very much, but it has not influenced the position of Tesco in any way, and that is because the diversification strategy of the company has helped it in maintaining its position and has kept customers loyal. Changing stage of demographics the need for diversity culture already prevailing at Tesco is considered to be of great aid. The same has been observed when delivering recommended aspects for the store where it has been found to indulge in operational competence within. The consideration of the economic factors such as those that have been considered in the previous section where the retail sector witnessed a considerable amount of each pound that is spent, Tesco might want to expand its services with respect to capturing the UK and its retail industry completely. Thus it can be considered that while Tesco in the UK might witnesses a phase of uncertainty, it can be effectively considered that the entity might want to consider the fact that to ensure profitability it is important that pricing is enabled at the optimal with product ranges which meet the demand for within the market.
4 Conclusion
It can be concluded from the report above that the use of various forms of data which are all related to the secondary data collection methods has led to developing significant growth prospects of Tesco. The need to ensure that profitability for Tesco as a market leader is maintained the use of better strategies such as those already in use like diversity and management of resources can be extended. In addition, it can be concluded that Tesco as an organisation has enabled the external environment of the country to be supportive of its operations and thus be a potential area helping it to grow. The various social trends mentioned within PESTLE Analysis above are considered quite important for the growth of Tesco during the time of uncertainty such as the political areas which are yet to improve and get back to a stable position.
5 References
Partington, R. (2019). UK retailers suffer weaker sales due to Brexit uncertainty. [Online] Available at < https://www.theguardian.com/business/2019/mar/05/uk-retailers-suffer-weaker-sales-due-to-brexit-uncertainty > (Accessed on 11 December 2019)
Rhodes, C. (2018). Retail Sector in the UK. [Online] Available at < https://researchbriefings.files.parliament.uk/documents/SN06186/SN06186.pdf > (Accessed on 11 December 2019)
Trading Economics (2019). United Kingdom GDP per capita. [Online] Available at < https://tradingeconomics.com/united-kingdom/gdp-per-capita > (Accessed on 11 December 2019)
Hill, A. (2019).Fears of demographic timebomb in UK are unfounded, says study. [Online] Available at < https://www.theguardian.com/science/2019/nov/19/fears-of-demographic-timebomb-in-uk-are-unfounded-says-study > (Accessed on 11 December 2019)
Behboodi, S., Chassin, D.P., Crawford, C. and Djilali, N. (2016). Renewable resources portfolio optimisation in the presence of demand response. Applied Energy, 162, pp.139-148.
Behboodi, S., Chassin, D.P., Djilali, N. and Crawford, C. (2018). Transactive control of fast-acting demand response based on thermostatic loads in real-time retail electricity markets. Applied Energy, 210, pp.1310-1320.
Hafezalkotob, A., Mahmoudi, R., Hajisami, E. and Wee, HM (2018). Wholesale-retail pricing strategies under market risk and uncertain demand in supply chain using evolutionary game theory. Kybernetes, 47(6), pp.1178-1201.