PESTLE and SWOT analysis for Tesco.

Swadiq Mujahid

Introduction:

In this assignment I will compare the two analytical techniques used in Task 1 in terms of their usefulness in making particular marketing decisions, including the most useful for specific decisions. The business I am using for the purpose of this assignment is Tesco PLC.

Tesco is a British-based international grocery and general merchandising retail chain. It is the largest British by both global sales and domestic market share with profits exceeding £2 billion. In 2008, Tesco became the world's fourth largest retailer, the first movement among the top five since 2003. Originally specialising in food and drink, it has into areas such as , , , , and , , retailing and renting , , , , and .

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Now I shall look at the PESTLE analysis and try to identify each of the factors

PESTLE Analysis

PEST analysis (also known as the STEER, STEEP, DESTEP, STEP, PESTE, PESTEL, or PESTLE model) stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the component of . The model has recently been further extended to STEEPLE and STEEPLED, adding education and demographics factors. It is a part of the external analysis when conducting a strategic analysis or doing and gives a certain overview of the different macro environmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations.

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Political factors

By analysing the political influences that affect Tesco PLC (e.g. change in governmental leadership, changes in national minimum wage, changes in interest rate etc), the company have been able to identify areas of the political factor that their business can stay updated with resulting in good planning and forecasting of future actions. They would agree that the Political factor of the PESTLE analysis is very useful for understanding the governmental environment and what to do when there is a change in political parties.

Economic factors

Being able to identify economic influences (e.g. change in currency strength, influences by the E.U, economic crisis etc) have helped Tesco to strategise the way that Tesco sell their product and their share as well.

High levels of unemployment within the London area may affect the sales figure of the business, which means that not lots of customers will buy from Tesco. These are all external influences that affect Tesco and they have no control over them; but to alternatively strategically they need to make sure that the pricing of their product is affordable.

Social factors

By evaluating the social factor of the PESTLE analysis, Tesco become able to examine society and its behaviours and by segment and target their customers. This factor is very useful for Tesco because they now understand how to alter their product and introduce a new product for their target customers.

Technological factors

Analysing and identifying technological areas of improvement has also helped Tesco to stay updated. By developing existing machinery and bring self service machinery, Tesco have been able to effectively operate within the workplace to increase the levels of performance and minimising extreme labour.

Legal factors

Legal factors such as new laws and change in legislations have helped Tesco to abide lawfully and maintain rightful operations. The Legal section of the PESTLE analysis is useful for the business in staying up to date with all the laws governing the Tesco’s activities, because illegal action can result in ...

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Technological factors

Legal factors

Environmental factors

The environmental factor has helped Tesco PLC to operate ethically resulting in an increase of reputation and image. Tesco is trying to be environmentally friendly by using recycled bags. That may help to decrease the problem with global warming and that will show that Tesco is aware of the global warming by taken activists such as (e.g. recycling, decreasing pollution to a minimum level etc).

The Environmental factors are useful for Tesco because they will benefit the community because the community wants to decrease the level of pollution and they will think that Tesco is aware of the community’s health and safety.

Now I shall talk about the SWOT analysis and identify each of them

SWOT analysis

SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. The technique is credited to Albert Humphrey, who led a research project at Stanford University in the 1960s and 1970s using data from Fortune 500 companies.

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Strength

Tesco are continuing to expand their business abroad. In 2000 Tesco significantly improved its trading performance achieving to sales growth in the mid single digits and like –for – like in the digits.

Tesco entered by acquiring a 50% stake in the Hymall chain from Ting Hsin of Taiwan in September 2004. In December 2006 it raised its stake to 90% in a £180 million deal. Most of Tesco China's stores are based around Shanghai, but according to Tesco it plans to equip the business to expand more quickly and in different areas. Tesco has been increasing its own brand products into the Chinese market as well as introducing the Tesco Express format.

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Weaknesses

Most of the time when customers got to shop at Tesco they find the products are not well packaged and customers complain, which will make Tesco a big reputation go down.

Tesco haven’t got self service machines, which means that customers will need to wait longer to get serviced by the staff. That can be seen as Tesco weakness, because they can provide self service machine to provide quick check out serve for their customers.

Tesco is being threatened with anti-social behaviour orders unless it withdraws Halloween themed eggs from sale. The superstore has sparked criticism on Mersey side for the packaging, which some people fear will encourage youngster stop throwing eggs at homes and cars.

Opportunities

Tesco can develop new products such as travel agency or open a nursery for young children that could attract customers to join in. Tesco can expand their business overseas; this will make their reputation go higher. Tesco local competitor’s such as small supermarkets may have poor products which will give opportunity for Tesco to get good products.

Tesco have an opportunity to be sponsoring the 2012 games, which will actually promote the Tesco’s brand name that may encourage new customers to buy from Tesco.

Since the UK in recession people are going to save money so this would give Tesco an opportunity to give better prices on their products and services as customers would be more likely to spend money on food and drinks, Tesco can surprises their competitors by offering better prices for their goods and services and also their can make special offers to attract customers.

Threats

Tesco will face threats from their competitors especially Asda because ever since they invented self service checkout many of many of Tesco customers have turned to Asda.

Asda's marketing promotions have usually been based solely on price, with Asda promoting itself under the slogan Britain's Lowest Priced Supermarket, 11 Years Running. As a wholly owned division of Wal-Mart, Asda is not required to declare quarterly or half-yearly earnings. It submits full accounts to each October.

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Tesco competitors like Asda, they are making profit by providing better goods and services, better prices plus Asda have invented self-service machinery so customers don’t need to wait for a long anymore.

Asda have been named as the cheapest supermarket so this means that there will be chance of Tesco customers to do their shopping in Asda because they provide cheaper product with a high quality.

Comparing between PESTLE and SWOT analysis toward Tesco PLC:

Tesco use the PESTLE analysis to help them to meet the business subjective, PESTLE analysis contain different factors that help Tesco to be successful ; for example the Technological factors may give Tesco an idea to be up-to-date with the latest technology which include products like Playstaion 3 , machinery such as self service machine and the club card.

Tesco use SWOT analysis to help them meet the business aim and objective, by the SWOT analysis Tesco will be able to know what are the business strength and weakness etc. If Tesco know what their weaknesses are, they will be able to develop them and that may allow Tesco to be ahead of the competitors depending on their action that may improve their weaknesses.

For my point of view I think SWOT analysis is the better marketing technique for Tesco ; because SWOT analysis give Tesco enough information about how the business is doing in term of strength and weaknesses etc. The SWOT analysis allows Tesco to be aware of the Threat that could affect the business in positive and negative way.

This is a conclusion of how the SWOT analysis can help Tesco to meet the business Aim and Objective: