TMDLTB004 Business in Context case study explores Tesco’s operations, examining political, economic, social, technological, legal, and environmental influences.
Business environment refers to the sum of all events, situations, and conditions which surround and impact activities, functions, and growth of organisations. Understanding the business environment is beneficial for companies as it offers insights into strengths and assets to overcome issues and problems. For this assignment help online report, Tesco has been selected, a global and leading supermarket chain operating across the United Kingdom and other countries. Tesco offers a wide range of food and non-food products and services to customers at affordable prices, ensuring everyone's daily needs are met. This report analyses the business environment of Tesco plc and explains how external factors positively and adversely impact Tesco. It also describes various environmental issues and eco-friendly practices used by Tesco, consistent with the TMDLTB004 Business in Context module.
This section of the TMDLTB004 Business in Context case study provides a comprehensive examination of the internal and external factors influencing Tesco's business operations. Utilizing a PESTEL framework, this section explores the political, economic, social, technological, environmental, and legal dimensions that shape Tesco’s strategic decisions. The analysis covers vital aspects such as the impact of Brexit on supply chains, economic inflation pressures, shifts in consumer preferences towards healthier options, and the integration of e-commerce platforms. Additionally, environmental sustainability initiatives and regulatory compliance challenges are highlighted to reflect the dynamic business environment. This detailed assessment highlights how Tesco navigates complex market conditions and adapts to evolving external pressures, consistent with the objectives of the TMDLTB004 Business in Context module.
7 Years | MA
Business environment refers to the collection of both internal and external elements such as; employees, consumers, investors, technological, political, economic, and many more (Camilleri, 2020). All these factors highly impact the business operations of the company in both positive and negative way. United Kingdom has robust and business-friendly culture which helps in trading and investing. The country has mature, open and liberal economy, high-spending customer market and business-friendly governing environment. Although, there are many external factors that impact the businesses including Tesco. The positive and negative impact of the different external elements is described below;
Political factors –This considerably form the business environment for the corporations like Tesco. These elements involve the impact of governments, rules, political stability and policies. There are many countries in which political conditions are not good. Political instability has increased the problems in investments, everyday operations and supply chains. Even changes in rules because of Brexit also significantly impacted the Tesco business. Brexit forced the company to change their rules and policies regarding company and workers which were not easy process and it also impacted the other business activities (Pereira, 2023). On the other hand, UK government offer the subsidies to motivate the industries and Tesco take it as an opportunity and gets advantages from government support. Tesco’s strategies to reduce carbon footprint align with the UK government initiatives.
Economic factors – As leading supermarket chains, the operations of the Tesco are tied to the world’s economic conditions including inflation, foreign exchange rates and growth rates. The high inflation rates heavily impacted the operating costs of the Tesco. Increasing inflation rates can lead to greater input costs which affects the supply chain network and profitability of Tesco. The company is regularly experiencing issues because of high inflation rates. The inflation rate in the United Kingdom was 2.2% in July 2024 (Clark, 2024). It made it complex for the company to set the prices and Tesco had to apply strategies to operate in the changing economic situations. During economic growth, people usually have good disposable incomes and they are more eager to spend on shopping and non-essential products. This helps the company to increase their sales and generate higher revenue.
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Social factors – these elements are essential for Tesco’s business because it involves different attitudes, beliefs, behaviours and lifestyles of the local people of countries where Tesco operates. Preferences, demands and tastes constantly change, driven by different elements such as sustainability, convenience and health consciousness. Tesco introduced the organic products due to growing demand for healthy products. It helped the company attract more customers towards the brand and increase the sales and profit margins (Parker, 2024). In past, the company also faced the issues related to availability of products in stores and due to empty shelves; customers showed anger towards the company and it reduced the number of customers. It is the most crucial for Tesco to focus on their activities and monitor each activity on regular basis so that customers can easily get desired product on time.
Technological factors –This has become a crucial aspect in terms of growth and development of the business. As the retail sector grows rapidly with the developments in technology, Tesco needs to constantly focus on technical innovation to improve customer experiences. In this manner, Tesco has introduced the e-commerce platform and online shopping to meet the expectations of people of new generation who prefer online shopping. Tesco’s website allows consumers to do shopping conveniently from their homes. The strong online presence of Tesco has played an important role in upholding the customer loyalty and increasing their market reach (Makos, 2024). On the other hand, the company has struggled regularly to keep up with the demands which result into delayed in delivery and cancelled deliveries. Thus, Tesco needs to invest in their supply chain management and logistics and embrace more effective data models which will help to reduce this problem.
Environmental factors – Retail sector is highly responsible for increasing the environmental issues. Sustainability responsibility has become serious concerns for businesses as well as customers. Tesco aims to reduce the carbon emission and set the determined objectives to obtain the net-zero emissions. The company has dedicated to decreasing its carbon footprint through setting the science-based targets and show their dedication to fighting with climate change. The company is also using the renewable energy and reduces the dependency on fossil fuels and support the environment. The company has installed solar panel which help to save the electricity. The company is facing the problems in managing food waste. Tesco needs to focus on waste management and apply suitable methods. If the Tesco will focus on different waste management technique then they can easily overcome the problems.
Legal factors – It is the most crucial for any business organisation including Tesco to comply with all the rules, regulations, policies and standards. It helps the company to maintain its brand image and avoid any legal difficulties. The company complies with the consumer protection law which is created by the governments. The company offers products at affordable prices and also protects confidential data of the customers who shop online. While, the company failed to follow the minimum wage policy and experienced criticism for paying low salary some of its employees (Gerged, 2021). Tesco was also imposed with the charges of mistreating their suppliers which made difficult for the company to regain the trust of consumer. Tesco should take proactive approach like applying more ethical practices, increase engagement with customers and communicate actions transparently with people.
Green practices of Tesco
Tesco is leading retail business and highly focuses on their practices and approaches which are utilised by the company to operate daily business activities. Retail companies are highly responsible for the increasing different type of environment issues such as; climate change, deforestation, overuse of natural resources, increasing waste and many more. It is most important for the companies to pay attention on environmental issues and adopt and apply the sustainable practices to preserve environment. Tesco has made considerable efforts to minimise its environment impact. Sustainability has become priority for Tesco because the organisation believes that without supporting and protecting environment, they cannot run business efficiently. Tesco was the first company who make the zero carbon objective back in year 2009 and since 2015, the company has minimised emission level by 61% (Tesco, 2024). The organisation has introduced the innovative and sustainable packaging in order to enhance recycling as well as reduce waste. The firm uses the compostable bags and eco-friendly containers and materials in their packaging of products. Tesco also has invested in green energy sources like solar panels to perform the daily business operations without impacting the environment. Solar panels helps the company through generating electricity and reducing reliance on conventional energy. Although, Tesco still experiences issues in decreasing environmental impact because the progress towards sustainability has been slow. The company need to re-evaluate their strategies and make possible changes in strategies. The company need to focus on their sustainable strategies because it is identified that approximately 50% of greenhouse gases produced during 2019 and 2020 because of manufacturing of products (Statista, 2024). Tesco also needs to increase their efforts to achieve the sustainability and net-zero emissions in the given time period. The organisation has applied the effective and ethical supply chain management approaches to lessen carbon emissions from logistics as well as transportation. The focus of the organisation on minimising environmental impact, supporting local societies and improving ethical practices is probably to have an optimistic influence on business functions and activities in long run. Investors are progressively paying attention on ESG factors while making decisions related to investment and high ESG rating will help the company to attract more investors towards the organisation.
Conclusion
As per above report, it is concluded that business external factors highly affected the business operations. This report has identified that there are several factors such as; political, economic, social, technological, environmental and legal that affected the Tesco’s business. Political instability and Brexit negatively influenced the business operations while UK government also provides support to the businesses. Business operations of the company also impacted by high inflation rates but in economic upturn has provided opportunity to increase sales. The company has also embraced the new technology and e-commerce business model to perform activities in successful manner. The company also put lot of efforts to offer high quality and affordable products to the customers and meet their changing demands. The company make efforts to reduce carbon emission by applying sustainable packaging solutions. Although, Tesco requires to make focus on the existing business strategy to achieve positive outcomes and get success in their projects and initiatives.
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