Today we are covering a Pestel Analysis of Tesco, the UK supermarket giant. We also analysed Tesco using these other frameworks:
- Tesco Swot Analysis
- Tesco Porters Five Forces & Economic Moat Analysis
- Tesco Financial Ratio Analysis including DuPont Analysis
Table of Contents
Political Analysis Tesco
In terms of stability, The UK is one of the top countries with the most political stability. According to a report of the world bank collection of development about political stability and the absence of violence in 2020, the UK had a 90% confidence interval reported at 72.64%, indicating a higher political stability rate. Here below the statistics of that report, from 2010 to 2020, are shown:
This stability is positive for Tesco who can operate their operations without hindrance. Even the business faces fewer barriers to importing goods, which helps the company drive its sales and increase its profits.
Economic Analysis Tesco
The economic factors of the UK are the external driving elements that can impact businesses like Tesco. Examples of economic elements are inflation rate, exchange rate, economic growth, and others. From the macro point of view, the GDP growth rate is 7.4% for the UK, and it helps to grow retail businesses greatly. A country’s economic performance is indicated by GDP, and as GDP grows steadily in the UK, the market for Tesco also grows. With growing GDP, people’s national income also increases, increasing demand for products, including grocery products. As a result, the business of Tesco grew steadily from 2000 to 2019 as the UK’s GDP also grew significantly, according to a study. Here below the statistics of Tesco’s financial performance is given:
So, Economic factors can also positively impact the business of Tesco as the GDP rate of the country is growing steadily.
Social Analysis of Tesco
The people of the UK prefer supermarkets where they can get their groceries in one place. According to a study, about 46% of the people of the UK prefer large supermarkets because of the convenience of getting goods. Besides, discount and location factors also come into play. Tesco has 4074 stores around the UK, and this large number of store locations makes it convenient for people, and this has a huge impact. As per the study, among all the factors for choosing a grocery store, 36.9% of people emphasize only location, which illustrates the importance of store location. Here below the survey statistics about factors for selecting a supermarket are given:
Therefore, the people of the UK can get most of their desired grocery products in one place, and the location of the stores is also convenient for them, which impacts positively on the business of Tesco. For Tesco to be successful it must have stores in the best locations and offer the best prices.
Technological Analysis Tesco
The UK is a technologically developed country. About 95.53% of the People of the UK use the Internet. Besides, technological inventions and the adoption rate of businesses are also high. These technological advancements and adoptions help UK businesses stay updated with the newest technologies and get more facilities from them. Tesco also receives the benefit of that factor. Such as, Tesco has its online grocery store, and as most people are online, it makes the market for the business enormous. So, Tesco can sell its products online besides selling in offline stores. Besides that, various inventions of machinery for automation helped Tesco to automate their various operations, saving time and money for the company and increasing profit. Therefore, the technological environment of the UK helps businesses like Tesco to scale up their business and generate more profit.
Environmental Analysis Tesco
In general, industrialization causes harm to the environment in many cases. But Tesco is a retail company that is concerned about the environment. The company has also taken various measures to protect the environment. Such as, the company has taken steps against deforestation. To reduce deforestation, the company is sourcing its agricultural grocery products from areas with low deforestation rates. The company provides eco-friendly packaging for its consumers. Besides that, the company also targeted to reduce carbon that is emitted from agriculture by 12%. Therefore, in the UK, many people are concerned about the environment, and the step of Tesco makes environmentally concerned people purchase from Tesco. More importantly, this creates a positive image in the consumer’s mind, which helps the company increase its brand value.
Legal Analysis Tesco
The business of the UK has to follow the legal rules and regulations strictly. Various UK legislation has been a drawback for the company. Such as, recent UK legislation has prohibited Tesco from mergers and acquisitions. Besides that, the company must also abide by strict employer legal rules and regulations. Because of violating this rule, Tesco had to face legal problems in 2016. In addition to that, Tesco follows the rules of the Food retailing commission or, in short, FRC. Violating the rules of FRC can lead the company to face serious legal problems.