Examine two elements of the P.E.S.T factors, which were Economic and Social factors for Tesco.

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Cassandra

In order to carry out our given P.E.S.T analysis key skills assignment, David and I were asked to give a formal presentation on Tesco. In order for David and I to carry out this presentation successfully we examined two elements of the P.E.S.T factors, which were Economic and Social factors. We then used different resources which were:

  • Internet (), ()
  • Books (Business studies Third Edition Dave hall)

(Business vocational A level Roger Lewis &Roger Trewit)

The reason why we decided to use these resources was because we wanted to see how these two elements of the P.E.S.T factors affected our business Tesco.

ECONOMIC ENVIRONMENT

The type of economic system existing in a country has a direct bearing on the potential for and the development of Tesco industry in that country. Tesco cannot escape the effects of the factors in the macroeconomic environment, be it domestic or global that influences the local market. Inflation, unemployment, interest rates, tax levels, the GDP and the rate of real growth in GDP (Inflation adjusted) are some aspects of the economy which Tesco must cope with.

Real growth makes more income available to people who then tend to spend more, leading to higher sales and more profits for Tesco. However growth also leads to higher competition in the long run. As the economy expands, higher demand levels lead more firms into the market, trying to fulfil the consumers' needs. The inflation (i.e. increase in price) leads to less goods being bought at higher prices. As Tesco cost of goods increases, they attempt to pass on this increase to the consumers. However, it is often not possible to pass on the entire amount to the consumer, hence resulting in cuts in the Tesco profits. With the increase in Purchasing Power Parity (PPP) and the disposable income of the UK consumer, retailing is catching up at a very fast pace in the country.

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 CONOMIC FACTORS

 

Inflation- Inflation affects Tesco in much the same way as changes in tax would. So if the changes in interest rates went down so may the prices. The lower the rate of inflation, the better it is for businesses, as it means that people can spend more and the prices of the products will be affordable. If the rate of inflation was high, people will be spending less, as their income will be less. This will also lead to the increase of the prices of goods.

The inflation will affect employment as if ...

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