For Tesco plc what factor are involved in a "PESTLE" (Political, Economic, Social, Technological, Legal, Environmental) Analysis?


4 Answers

Robin Burden Profile
Robin Burden answered
PESTLE might be used by Tesco to analyze their business model, and might form part of the company's decision-making process when implementing strategy.

What is PESTLE? How does it apply to Tesco?
The effect that PESTLE analysis has on the Tesco supermarket chain really depends on who is carrying out the analysis, and what they're planning to use the data for.

Based on the 'conglomerate' nature of Tesco's enterprise, I'd argue that every aspect of PESTLE could have a relevant impact on the business.

PESTLE is a form of business analysis that takes the following aspects into consideration:

  • Political
  • Economic
  • Social
  • Technological
  • Legal
  • Environmental
What do companies use PESTLE for?
When a company uses PESTLE, it looks at how relevant each of the aforementioned categories is to the performance of the business.

For companies like Tesco, who operate at various levels and provide a number of services (everything from high-street shopping through to personal loans and pet insurance), it might make more sense to apply the PESTLE criteria to each particular sub-division, rather than to the entire company as a whole.

A company like Tesco may also need to take into consideration other non-PESTLE influences such as geographic location.

Often, PESTLE is unable to distinguish between the impact of localized, nationwide and global factors.

For an in-depth analysis of Tesco supermarkets in terms of PESTLE, I'd suggest you have a look at the sample essay published on
Nathaniel Hobby Profile
Nathaniel Hobby answered
As with most companies and businesses, Tesco will be directly affected by the markets and countries they are currently operating in. It would also be appropriate to suggest that Tesco is influenced in many of these areas by its consumers, who decide to buy its products based on how they handle themselves in such circumstances as these. But in many of these areas, Tesco is seen as leading the way as opposed to being influenced by other sources.

  • The global market
Tesco can only compete and trade in the markets it is in and, in this sense, it will be directly influenced culturally, politically and economically by the changes going on in its area of influence.

As the market changes, as shares rise and fall and as other competitors do well or fail, Tesco will be directly influenced. The company will also be influenced by the country it operates in. This is because any changes in laws, tax and regulations made by the government will need to be adhered to and upheld by Tesco.

  • The consumers
Consumers have a great influence on companies such as Tesco because without consumers companies would cease to trade or make profits. In this way Tesco needs to be seen to be doing everything to benefit its customers. This means that it needs to be economical with them as well as showing themselves to be environmentally considerate. This is done through the supermarket's support of local communities and fair trade products.

  • Leading the way
Tesco is such a large company that it is, in turn, able to influence the culture it's in. As previously stated, its work with communities is beneficial in this way. Tesco is able to help lead the global market it's in because of its influence in it.
Tim O'Shea Profile
Tim O'Shea answered
Tesco is an international retailer and is currently third largest in the world by revenues. Many factors determine the success of the business and as such is useful to conduct a PESTLE business analysis as a framework. It is worth noting that many of the PESTLE themes cross over. For example a change in the political environment can lead to changes in the laws of that country.

Tesco operates in 14 countries so there are many scenarios for political change to effect their business. Politics in turns directly effects the law of that country or region. A recent example for Tesco South Korea is detailed in the Legal section below. The Politics of a country effect factors such as planning laws, opening times and days and anti competition laws. Due to EU Antitrust law Tesco in the UK are unlikely to be able to acquire any of their sizable UK competitors, so will have to grow organically rather than by acquisitions.

As the largest retailer in the UK Tesco enjoys a competitive advantage in terms of buying power. Suppliers have to comply with Tesco's demands or face being removed from the supply chain. Recently the public consensus is that Tesco have been too forceful in their relationship with suppliers which has lead to a anti Tesco backlash. Unless Tesco conduct business in manner that is socially acceptable they continue to risk bad sentiment.

Social factors can also effect how Tesco retain its key staff. The "fat cat" backlash in the UK means that Tesco are unlikely to able to renumerate to the highest levels for top management executives without backlash from shareholders, press and the public. This may effect hiring of those key positions for two reasons: The first being the pay and the second that executives may be less likely put themselves in a position of potential unfair scrutiny.

Finally the development of new stores is a social and political issue. In Tesco's defense following a public battle against opening a store, the local public tend to vote positively with their feet filling their trolleys in the isles.

Technology has been a great opportunity for Tesco and has allowed it to lead the field of online grocer retailing. Technology will continue to change the way that consumers shop so it is essential that Tesco doesn't let the competition gain ground by adopting a new technology more effectively than them. The Clubcard scheme is a technology based advantage, by collecting the shopping data of millions of customers over many years Tesco has the ability to understand each person better than the competition. Add this data to the Tesco Bank customers and Tesco really knows a great deal about the earning, spending and shopping habits of that customer. Mobile is a technology that Tesco should be looking at very closely.

Changes in law opens and closes markets for Tesco. Legislation effects trading hours and new store development through planning law.

A good example in 2012 was when the South Korean government restricted Sunday opening hours for supermarkets, the largest trading day in the country. This lowered Tesco profit levels in South Korea with immediate effect.

Sourcing product, energy and human resource in unsustainable ways may effect the environment of those resources and such the long term sustainability of the resource. Short term Tesco may not loose benefit but long term disregard for the environment may result in corporate accountability legislation to make them accountable for their environmental impact.

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Aisha Profile
Aisha answered
Tesco is a UK-based international grocery and merchandising retail chain. It is the largest retailer of United Kingdom.
The political factors are the political stability or instability of the UK government. The Economic factors are the buying power of buyers and suppliers in the economy. The social factors are the societal influence of the people towards Tesco. The technological factors are the adaptation of the new technology. The legal factors are the rules and regulations of the agencies for Tesco. And the environmental factors are the effects of Tesco towards the ecology and the environment.

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