Friday 13 April 2012

PESTLE analysis of Tesco

Political factors - Now Tesco is operating business in 14 courtiers all over the world, so its performance may be influenced by the local legislative and political conditions. Employment laws specified by local government must be followed in order to avoid legal hurdles. Most of the governments encourage the organizations to provide employment for local candidates so that local people can be benefited more. All kinds of jobs like low-paid, highly flexible, more skilled, highly-paid and local based jobs are available in stores like Tesco. Tesco employed different categories of people like students, elderly workers and disabled people for low labor rates. Tesco followed the employment legislation and other laws properly in every country where it has stores. 

Economical Factors - Demand for a product in market, price of the product and profits of an organization depends on the economic factors like interest, inflation rates and local unemployment levels. Organizations cannot have control on these economic factors, but it can show adverse effect on organization performance. Tesco is still completely depending on UK market even though it has stores in different countries, which mean if UK market collapsed or affected by any economic factors, Tesco will be in greater amount of risks.

Social Factors- Demographic changes and change in customer behaviors, attitudes are the important social factors which can show effect on business. As Tesco is into food business it has to examine the customers constantly, because today every customer is choosing healthy and tasty food items. Tesco understood the recent social changes and included non-food items in their sales list, thus it attracted more number of customers in the market.

Technological factors- Importing new technologies into business can be an advantage for organization as well as customer. In Tesco, using of advanced technologies improved customer satisfaction. Technologies used in most of the Tesco stores are:
  • Electronic shelf labeling
  • Electronic Point of Sale
  • Radio Frequency Identification,
  • Electronic Fund transfer system
  • Self check-out machines
Customer can feel more convenient as product is readily available to them. The above mentioned technologies helped Tesco in improving the stocking and distribution processes. 

Legal factor- Tesco performance is directly affected by some of the laws specified by governments. For example, Food Retailing Commission enforced to use standard pricing for products. That means retailers must not change the prices without any notice and it should not demand the payment from suppliers. Most of the companies try to change product prices regularly in order to attract customers towards them and to hold its position in market. Tesco reduced prices on promoted products where as other product prices increased so that it implemented politically correct pricing laws.  

Environmental factors- Organizations must take the social responsibility while developing products. Cutting wastage while product manufacturing, decreasing the usage of resources and reducing environmental damage are the important specifications to be followed by companies like Tesco.


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