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PEST Factors At Tesco

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Introduction

PEST Factors at Tesco PEST factors (also known as the macro-environment) are four external factors that any business, especially large multinationals like Tesco should always monitor and take into consideration when running the business. The PEST factors that affect Tesco are: * Political - Marketing decisions are strongly influenced by changes in the political environment. Changes such as new legislations put forward by councils and governments, not just in the UK but also in the other thirteen countries that Tesco operates in. One legislation that affects Tesco rather predominantly is planning permission; a law heavily regulated in the UK, and as Tesco has approximately 2.75 million metres of shop space (inc. car parks and stock rooms). Owning so much space and with so many large superstores can make this factor a very difficult one to overcome. Furthermore, to make matters worse for Tesco, in 2004 'The Planning and Compulsory Purchase Act" was introduced, with its main aim to listen and work with the public for what they want, along with many strong opposition groups hindering Tescos plans for expansion. Before Tesco enters a new nation, it needs to be aware of any political instability that is happening or has happened in the past, and is likely to affect its trade. The thirteen countries in which Tesco operates are all politically stable and are not in danger of any threats which may lead to its stores getting shut down. ...read more.

Middle

For example, if Tesco wanted to import 2000 mobile phones from Japan for �2m to their UK stores, they would have to be bought with the Japanese currency; the Yen (�JP). This would mean having to trade in �2m worth of British Pounds (GB�). If the � was to fall in value due to bad British economy, Tesco would have to spend more �'s, resulting in the mobile phones costing more. On the other hand, if the � was to rise in value due to bad Japanese economy (or better British economy), Tesco would be able to spend less �'s to make up the �2m, thus reducing cost and increasing profit. Bad economy can lead to high unemployment rates in certain countries, and although unethical, can be easily exploited by multinationals such as Tesco. India for example, has a very high unemployment rate, and because of this, Tesco was able to base its sourcing offices there and pay its 3000+ workers cheaply, to save on wage costs. This does however bring bad publicity to businesses that can result in a loss of custom, so practices (such as the 'fair trade' initiative) have been put in place with certain businesses to benefit the Indian workers, paying a reasonable price for the service they offer. * Social - What people buy, and where people go are based upon social factors. ...read more.

Conclusion

Tesco started out selling online and by catalogue with their service 'Tesco Direct'; which was offered to everyone throughout the UK in their own homes. Tesco Direct started out rather low-key, offering only 8000 products online, and 1500 by catalogue, which has speedily expanded and now offers over 11,000 products online and 7000 by catalogue. This expansion is due to the increasing popularity in online shopping, with people choosing convenience, and their enhanced trust in giving out credit card details over going out in their car for the weekly shop. The internet and online shopping is one of the largest technological advances in the world, which makes it vital for Tesco to do well in this sector, mainly done through marketing, and Tesco spend approximately �20m per annum on Tesco Direct - well worth it to say Tesco have just announced a turnover of little under �180m; making Tesco the worlds biggest internet grocer. Complex information technology (IT) incorporating state of the art management and communication systems are also in place throughout Tesco stores and offices globally, making store and stock management much more straightforward. Tesco have the option of self-serve checkouts, reducing the need for counter staff and significantly improved their E-commerce (Tesco.com). Tesco also offers a loyalty card scheme (The Tesco Clubcard) - which uses highly sophisticated information gathering technology in order to find out information about customers and buying trends. The Tesco Clubcard is explained in further detail under the 'Market Research' section. ...read more.

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