PESTEL Analysis of Tesco PLC

Tesco PLC is faced with external factors which may affect its marketing planning and operations. These factors include: Political, Economic, social, technological, environmental and legal factors. These factors affect the marketing activities and objectives of the company in different ways as shown below.

  • Political factors

One of the PESTEL factors affecting TESCO PLC is political factors. There are various political factors affecting the company’s retail business. One of these factors include EU trade bloc. This economic union allowed for free trade between UK and other European countries using a common currency – Euro. This move therefore reduced barriers to trade. This affected the local retailers and customers of UK industry and boosted international trade in retail products by opening international markets.

UK is also enjoying a stable political environment. This is an essential factor in international business since a politically stable environment provides a good environment for business to be carried out harmoniously and smoothly. UK government under the leadership is enjoying a good business relationship with other countries. For instance, there is a good external political relationship between UK and other European countries such as Spain, Germany and France.

  • Legal factors

UK’s Intellectual property law, licensing and tax rate system also affect the retail industry in UK. By retaining the intellectual property rights, TESCO Company can develop technologies and innovations suited for its business. This leads to heavier commercialization of its products and develops an innovation culture within the company. This leads to improved product quality and brand loyalty. The UK government is committed to the development of the retail sector since UK is highly reliant on commodities (Dixon and O’Mahoney, 2010). TESCO Company is a retail company and is therefore in a good position to benefit from the government’s efforts to boost the retail sector.

  • Economic Factors

Generally, UK benefits from good macroeconomic fundamentals (Szalay, 2011. Businesses are benefiting from the growth in the economy boosted by the flourishing of the country’s retail industry. As the overall economy grows, businesses boom and the retail industry also grow. Other sectors of the economy need computers in their operations and the growth of those sectors therefore form a basis of improved markets for computers. The growth in the economy of UK is therefore a positive economic factor that influences the marketing strategies of Tesco.

The lending rates in UK are also low compared to other countries while the savings interest rates are high; hence investors earn more returns on their investments. This is because rates of borrowing will be low and the interest earned in from savings is high. Since savings affect investments, higher interest on savings will lead to more funds for investments by TESCO Company (Carbaugh, 2011). UK’s economy is also largely dependent on commodities. The manufacturing industry is therefore well established for TESCO to engage in its retail business.

The exchange rate for UK is also favourable since it is becoming stronger against other currencies.

  • Social factors

The development of the UK’s social Inclusion Initiative boosts the social standing of UK in General. Through initiative, a society is created in which every member of the society is valued, individual differences are treasured and the contribution of every member of the society appreciated. UK Companies have a role to play in this initiative and each company is expected to uphold a social policy which enables it to care for the welfare of the society during its operations. TESCO being part of the UK social circle as per the requirement of the Social Inclusion Initiative is ought to maintain a good social standing in the society and respect the society’s interests while undertaking its marketing activities.

  • Technological factors

Technology is often subject to change. It is an important PESTLE factor affecting Tesco PLC. Technological issues are very dynamic with new systems and innovations coming up very often. Retail industry is one of the industries that face the highest dynamism and change. Social Marketing is one of the most important innovative inventions of the retail industry. The use of personal computers has also boosted retail business in the UK, making exchange easier, effective and efficient.

  • Environmental factors

The environment within which TESCO conducts its business is a conducive one. There is little environmental pollution and degradation as the government of UK sets appropriate environmental policies which makes the environment sustainable for good business conduct. The company is also engaged in keeping the environment sustainable. The competitive environment of the market is also kept in a sustainable manner. All competitors are conducting their businesses are in an environmental friendly manner. This has enabled the business to operate its business in an effective manner which has allowed the company to meet its customers’ needs.

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