Tesco Strengths and Weaknesses

PESTLE analysis:

Pestle as an external factor, with its disadvantages allows multiple advantages of Tto Tesco's business organization by providing a simple and easy-to-use framework. The positive aspects involve cross-functional skills and productivity, encouraging strategic thinking within its operation, reducing potential threats, providing successful mechanisms enabling effective work production in identifying multiple job opportunities, and finally entering new markets globally (Karim et al. 2015).

Political factors:

As Tesco functions across national borders, political factors affect the business operations and performance of Tesco. The political factors include tax and security of the country Tesco operates in. Tesco's operation and management are influenced by the acts of legislation and the country's rules and regulations that it seeks to operate. An increase in VAT rates affects negatively the revenue of sales produced by Tesco (Zubizarreta et al. 2017). The ultimate source of income for Tesco is its sales revenue; therefore, the outcome follows the profit margin. The alarming threat of illness affects the sales revenue of Tesco, for which the government of the UK suggested embracing control of obesity and medical issues, to which Tesco introduced a healthy food range in the year 2014. Tesco provides job opportunities for the masses including students as well as elderly people, creating jobs for the domestic population and helping the stabilization of finances. With Tesco's employment opportunities, it even upholds and encounters huge demands for products resulting in the diversification of the workforce.

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Economic factors:

Economic factors affect Tesco's business operation influencing its costs, profits, demands, and price. The decrease in the effective demand for certain products is affected by the unemployment structure resulting in the low production of such goods (Wood et al. 2016).  During economic recession, unemployment increases, as a result, it reduces disposable income and allows customers to buy cheaper products. Tesco should be aware of any change in policy and regulation, price rates, and taxation that might affect the approachability of finance. The two key business strategies that are internalization and diversification helped in Tesco's progression and advancement (Lee and Vachon 2016).

Social factors:

Society is a major macro-level environmental factor affecting Tesco's business operation.  Customer's demands for products and goods are affected by their belief and social attitudes. The beliefs and attitudes are governed by social conditions, as people are concerned about health issues more that determine their selection of products. Tesco thus tries to adapt t to the change in the mode of demands of customers, producing more organic goods. Tesco examines that there is a gradual shift from bulk shopping toward limited shopping or one-stop shopping, which inculcates in the production of non-food products (Zubizarreta et al. 2017).

Technological factors:

Technology enhances the advancement of Tesco's production of new products. Technology helps in mass production with the wants and demands of the ready availability of products. Therefore, technological factors benefit both the customers along the organization. Customer is satisfied through efficient service response, for which Tesco stands as the second largest retailing company, implementing its best strategies on workforce and productivity. With the use of wireless devices, electronic shelf-labeling, electronic funds transfer systems, electronic scanners, radio frequency identification, and self-check-out machines, Teschas has become successful in its operation (Karim et al. 2015). These factors acknowledge Tesco's efficiency of distribution and stock activities.

Legislative factors:

The policies, rules and regulations, legislations established by the government impact the business process of Tesco. The factors include unnoticeable price alterations, demands of payments from suppliers, untimely practices, and others (Prajogo, 2016). In addition, there are powerful competitors against Tesco creating threats in the form of price-rates where there is an equal competition of rates of products, thereby, associating with strong differentiation of products. Therefore, Tesco lowers prices on fuel-purchased goods and promoted goods, and on the other hand, raises prices elsewhere in the store.

Environmental factors:

Tesco has been acknowledged for its responsibility towards the society it operates in, both national and foreign. Tesco looks out for the effects of global warming and restraints its operation being affected by it (Iles, 2007). Tesco is trying against the steady utilization of energy and greenhouse gases, aiming to protect the environment. It is examined that Tesco helped in reducing carbon footprint and waste products and increased awareness of social commitment among its employees.

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P2.  Analysis of Internal and External Factors in Identifying Tesco's Strengths and Weaknesses

SWOT analysis

Strength:

Tesco being a large retailer in the UK, with competitors worldwide, possesses the largest market share generating considerable revenues effectively. Tesco has full command over the sales channel that increases beyond the market expansion despite any decline (decline in overall sales), positively affecting heavy utilization of online sales channels in the ongoing marketplace (Bull et al. 2016). For instance, in the year of 2015, Tesco's online development grew by 20 percent despite facing a pre-tax loss of Great Britain's Pound 6.37 million in the same year. Clubcard benefits Tesco on various levels. It is used as an effective tool in increasing consumer purchase-process, and consumer loyalty. This is done by adding one point to the Clubcard of each customer for the respective Great Britain Pound spent (Rothaermel 2016). The Clubcard helps in assessing consumer behavior and feedback, implementing them in altering and advancing their products. The Brand (Tesco) or the company property itself increases its annual sales revenue (Prajogo 2016). The establishment of Tesco's strong portfolio helps the company gain huge financial resources in dealing with any immediate emergency, and this is done by selling a part of its property.

Weakness:

As examined, Tesco underwent a weaker performance in the previous year and the year 2009 as compared to its brand competitors. Tesco was affected by the replacement of several products and, the recalling of its goods which affected the finance and sales revenue creating an ill reputation for the brand (Bull et al. 2016). The company's significant operations take place in the UK where the recorded revenue of seventy-five percent during the fiscal year of 2009, resulting in the diversification of location and systemic risks in the overall Tesco market affecting highly the market of the UK, counted as a weakness for Tesco.

Opportunities:

With the popularity of Tesco, it creates opportunities for jobs for a large group of people and attracts millions of customers, accounting for 1 million customers in the year 2010. Such opportunities allow profitable functions focusing on a global expansion. The diversification of geography allows the company to improve its price rate and economic scale, minimizing the possibilities of risks (Anderson and Abensour 2017). Tesco's mobile has outgrown millions of customers in 2015, following major development and expansion in the technological area. Coursework Writing Help online at Pocket-friendly rates.

Threats:

There is a shift in the price architecture of Tesco by the credit crunch that lowers available income, affecting the strategies that need to change lower-priced common goods, focusing less on the high-priced goods. There has been an inconsiderable cost-growth of raw materials affecting negatively the profit margin of Tesco (Crane and Matten 2016). Exporting restrictions on specific food products reduces Tesco's margin rates on products allotted already low margins. Consumer's change in demand and behavior is a major threat to Tesco's business operative system. With the change in technology and social conditions, consumer patterns differ which results in product area evaluation and alteration.

Porter's five forces:

Rivalry:

Rivalry or industrial competitors state several factors such as cost differentiation, product differentiation, capacity, output, growth of the company and its market, and sales revenue. It is important to identify Tesco's competitors (Dobbs, 2014). Rivalry increases growth rate, therefore, it affects both positively and negatively. With the growing competition, Tesco never fails to identify the best quality products and implements essential strategies to meet such rivalries.

Potential entrants:

The disdistribution channels multiple modes of entry. It creates complexities among already established chains in the channels of distribution. In addition, the economy scale signifies that more number of economies indicates less threat of entry, that is, entrants are unable to get maximum market share, causing major cost disadvantages (Dobbs, 2014).

Buyers:

It is widely acceptable by the customers to deal with and purchase from a number of suppliers, as it is economically feasible, but it does not occur with Tesco as it does not allow multiple modes of supply. Tesco is economically profitable through the purchase from one retailer instead of a host of retailers.

Suppliers:

In Tesco, there is an advantage of dictatorship over the price of products, as well as in allotting payment of the supplier as suppliers. For instance, if retailers refuse to pay the price the former has asked, they will not be left with any option other than to sell. As this is the only way, the retailer would be able to save and sustain its small-market chains (Iles, 2007).

Substitutes:

The availability of effective substitutes for any product allows a ceiling of prices that the producers of the same product would charge, unless any seller of the same product would update and upgrade its quality, in turn reducing its cost or differentiating the product from its substitutes. However, this allows a major opening for Tesco in improving the quality of its product ensuring better performance over its competitors (Lee and Vachon 2016).

P3.  Strengths and Weaknesses Linked to External Macro-Factors

Tesco under the external environmental factors experiences several changes. The company cannot control the aspects of external factors but can respond to such changes, by bringing out proper management and business operations (Pawliczek and Rössler, 2016).

Strength: The everyday reports of economic conditions, and the help of media enable the company manager to gain full information about the economic conditions prevailing. This helps the manager in forming strict strategic plans and policies.

• The market condition changes rapidly with major turnovers. This leads to constant competition, however, allows Tesco to recall the existing and altered modes of productivity in heralding business expansion. This helps the company in the betterment of its product's quality and quantity (Bull et al. 2016).
• Taxation under legal external factors assumes both the strengths and weaknesses of any company. Some taxation occurs after plenty of years giving time to the company in preparing proper and effective business.
• With the establishment of internet media, that is undergoing rapid change and success. The business of Tesco is conducted online which constraints time and allows business to grow faster with the connection and loyalty of customers (Grefrath et al.2017).
• Opportunities are driven by external factors. By using external factor analysis as PESTLE, opportunities can be found and strengthen Tesco's business model. With the opportunity of technological trends and new social media channels, Tescohass benefited from building a marketing strategy against its competition.
• If external factors enable the understanding of political, social, and economic factors, it is used for analyzing specific products, customer relationships, and marketing plans. For instance, if a country faces an increase of fifteen percent in population within a certain city, it affects the business roundly (Dobbs, 2014). It affects both positively and negatively, but if there is an increase in elderly citizens and the company targets the age of 20-30, then it provides a chance to deliver its product to the newer group of the population, enhancing efficiency and productivity.

Weakness:

• A certain increase in the rate of interest and unemployment leads to lower utilization and consumption of specific goods and services. For instance, people undergoing a financial crisis would spend on cheaper goods and tend to spend less on sports accessories, cars, luxurious goods, and others, therefore, a financial crisis can cause changes in the external environment that can be non-profitable.
• Technological advancement and changes are rapid, as a result, it is the company's major concern to keep up with the regular changes to adapt sufficiently to technological change and reduce the market risk. It affects not only the production process, and design of products but also the distribution channels and delivery process (Anderson and Abensour, 2017).
• Similar to the changes in law, changes occur in governmental policies without notifications or warnings. For instance, the company's dependence on the government's financial assistance is affected by such change, as certain funding assistance may disappear without any warning or notice.

Reference list:

• Anderson, J. and Abensour, J. (2017). Measuring Your Company's Impact: How to Make the Most of Sustainability Reporting Frameworks. In Managing for Social Impact (pp. 255-271) Springer International Publishing.
• Bull, J.W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C., Lambini, C.K., Rawlins, M., Baral, H., Zähringer, J. and Carter-Silk, E. (2016). Strengths, weaknesses, opportunities, and threats: A SWOT analysis of the ecosystem services framework. Ecosystem services, 17, pp.99-111
• Crane, A. and Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
• Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry analysis templates.Competitiveness Review,24(1), pp.32-45
• Grefrath, C., Wagner, D., Macchi, M., Granados, M.H. and Stermann, S. (2017). Methods and Tools for Sustainable Development of Products and Services. In Value Networks in Manufacturing (pp. 223-246). Springer International Publishing.
• Karim, K., Suh, S., Carter, C. and Zhang, M. (2015). Corporate Social Responsibility: Evidence from the United Kingdom. Journal of International Business Research, 14(1), p.85
• Pawliczek, A. and Rössler, M. (2016). Knowledge of Management Tools and Systems in SMEs: Knowledge Transfer in Management. Knowledge Management Initiatives and Strategies in Small and Medium Enterprises, p.180

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