THE EXTERNAL ENVIRONMENT OF TESCO PLC
Table of Contents
I. Introduction
II. Background of the Company
III. PEST Analysis
A. Political Factors
B. Economic Factors
C. Socio-Cultural Factors
D. Technological Factors
IV. Analysis
V. Conclusion
VI. References
I. Introduction
The direct selling industry is among the most active and prominent industries in the world. Those competing in this industry have by now come and gone on account of this constantly changing quality of this industry. Essentially, the process concerned and the practices seen by both contemporary and conventional retailers are alike. The component that has transformed is the environment which these companies control. More specially, the level of doubt in the external environment of the direct selling industry has transformed immeasurably. Hence, it turned out to be an indispensable element of the course of these companies to continually be watchful and aware with the elements of the environment which could impinge on the functions of the organisation. The companies in the direct selling industry who have been experts in this art of incessantly becoming accustomed to the alterations in the environment have been the ones flourishing in their field. This is seen in the case of the retail industry of UK, where Tesco Plc prevails as the leading retail company in the land.
II. Background of the Company
In 1919, established the company selling surplus products in the East End of London. Nowadays, it is among the global leading retailers and controls hundreds of stores. Its nearest competitors consist of Asta, Sainsbury’s, and Morrison. These players work hard to establish some competitive advantage over the other player. In the case of Tesco, their website has mentioned that their mission is “to create value for customers to earn their lifetime loyalty.” This manifests the company’s high respect on their customers and that they similarly keep them faithful by giving them the best possible of products and services in the market. Essentially, the organisation distinguishes the significance of individuals in their overall operations. These signify individuals in general, those who work internally and those that they deal with externally. The bottom line is that Tesco is known for taking care of its people. In spite of owning branches and stores in key cities around the globe, the centre of its operations is still concentrated in UK.
III. PEST Analysis
Tesco’s external environment has a strong effect on the functions of the organisation. In the article of (2001) they mentioned that specific sectors of the environment has the propensity to acquire certain implications to other spots of the company. Hence, it is imperative that organisations become conscious of such incidences to institute a level of elasticity that will guarantee their firm commercial accomplishment and know how to guarantee the alleviation of further losses.
A. Political Factors
It has to be highlighted that the organisation is operating in the public sphere as a public entity. Hence, excluding the buying and selling of its stocks, it is also obligated to comply with the competition regimes of EU and UK. Government posts such as the Office of Fair trading (OFT) monitors their every stirs to guarantee that the other players are cosseted from any unscrupulous actions. (Miller, Harvey, Parry 1998, 151) This means that the company is open to operate in any other member state in EU. The major barrier that they have to prevail over is existing retail monoliths in the respective EU member state.
B. Economic Factors
The direct selling industry in UK is considerably secure. Beginning from the food industry to the non-food trade, the consumers in UK have continually depended significantly on shops like groceries for their daily commodities and other product needs. ( 2005) This might well be the grounds why there are several participants in the direct selling industry of UK. There are those focusing on a specific target market to those that favour a locations-specific stratagem, retailers of all sizes has been gathering in the UK market and Europe for the reason of the potential it tenders.
C. Socio-Cultural Factors
Perhaps among the major alterations in the socio-cultural setting of UK is the movement of the people in favour of healthy living. ( 1998) This presents that the retailing industry have to now consider the nutritional substance of the merchandises that they are selling to the public. This similarly points to the purchasing patterns of the buyers in UK may possibly have been predisposed by this movement. A case in point of such signs of this trend is seen in the individual programs of schools to provide clean and healthy nourishment to their students. (1998) Moreover, the state has also commenced programmes that sustain the drive towards the healthy living in UK.
D. Technological Factors
The buyers of the UK market are literate in terms of handling new technology. (1999) Organisations that intend to operate in UK could effortlessly acquire admission through the World Wide Web. ( 1999) This is decidedly feasible for big companies as they by now own the brand recall from their core customers. Moreover, small retailers could similarly use this means to perform their business but they have to evidently distinguish themselves from the other competitors in the UK market.
E. Legal Factors
The consumers of the direct selling industry are similarly covered. In the circumstance surrounding their operations in the internet by means of , it seems that they may too come across particular issues as high online marketing charges proliferate in the UK. On the whole, this is a consequence of the severe policies that the UK government has ratified to control the employment of the internet for marketing and trade. ( 2001)
F. Environment
Despite being considered a monolith in the retail industry, Tesco have to correspondingly contend with issues that could place them at odds with the state. Plainly, there include abuses in management programmes prearranged by law could cause them to be legally responsible to the for enquiry. Moreover, they could similarly be legally responsible to the said authority if they are discovered vend merchandise deemed to be genetically changed and have yet to be permitted by the government for commercial circulation. ( 2004)
IV.Conclusion
The success story of Tesco with regards to international business has been one of the more looked upon cases. In any case, the discussions above proved that the ability of the company to take into consideration the implication of the environment to their overall operation. The case of Tesco showed that it is not enough that the products that they are selling the public are top of the line. They have to make sure that the products they are selling do have an actual demand from the customers. They have to guarantee that the products that they are offering will ensure sale. This is done by being acquainted with the market and establishing great relations with their customers through customer relationship management. Hence, the success of Tesco is manifested in the ability of the company to balance both the external and the internal operations of the firm. The demands of the people and the stability of the company to provide for these demands are the key ingredients to the overall success of Tesco.
V. Recommendation
The mission statement, moreover, signified that the workers are also regarded as among the major contributor their successful operations and treatment of the consumers. It has been pointed out in organisational studies that for CRM to operate appropriately, the company have to set up an environment that will be favourable to the performance of the said model. ( 2006) This is, it seems to be the purpose of the management as it considers both customer and the employees as important factors in the accomplishment of the company.
Based on the conclusions and arguments provided above, Tesco should heed the following recommendations regarding their international strategy.
· Establish a close relationship with the government institutions in the target country
It is advisable that the company rests on the good graces of the government on which they will be penetrating. To do this, all they have to do is accomplish all the prescribed acts and satisfy all the prerequisites for doing business. The company must also be acquainted with the law in order to know what their responsibilities and their possible liabilities.
· Before penetrating the market, the company must carry out a well conducted market research using tools like the Pestle Analysis
The surroundings of Tesco involve the political, economic, socio-cultural, and even the present technologies in society. In determining these elements, these could be used as tools in determining the possible strategies for the company. (2001) There is also some other studies mentioning that the likelihood for capital build up in a specific market would be sufficient. (2005) The rule in effect in a specific market would similarly form the strategic branding projects of a company. ( 1994) There are active markets akin to that of China and Hong Kong that needs foreign companies to institute joint ventures with local companies so as for their brands to operate in said markets. ( 1995)
· Implement the Card Club scheme right away
The use of schemes like the Card Club gave Tesco the chance to obtain the relevant information from the target market in addition to the individual customers of the organisation. (2006,) Fundamentally, this is the key condition for executing a suitable customer relationship management system.
· Establish a high standard of customer relationship management scheme.
It is obvious that the organisation has been imposing several standards of customer relationship Management (CRM). Looking back at its mission statement, the organisation has shown that they are pent towards taking care of their customers the pre-eminent way that they are capable.
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