SIM 336 Strategic Management Assignment on The Tesco (GC0444)

Table of Contents

1.0      Introduction.

2.0 Overview of PESTLE’s models of external environment analysis.

3.0 Application of PESTLE to Tesco.

Political factors.

Economic Factors.

Social Factors.

Technological Factors.

Environmental Factors.

Legal Factors.

3.0 Conclusion.

References.

1.0  Introduction

Business firms are influencing not only by internal issues but also external issues. Business organizations need to evaluate the external environment of the business for taking better decisions. The different organizations are applied to different methods to evaluate the external environment of the business. Among them; PESTLE analysis is very popular. PESTLE stands for Political, economic, social, technological, legal, and environmental issues of the business firms.  It is an important method for evaluating the external issues of the business organizations that affect them directly and indirectly.

The PESTLE analysis tools have not only positive effects but also negative effects (Campbell and Craig, 2015). The prime aim of this analysis is to bring the effect of the PESTLE analysis tools on the key performance o the business firms. For this reason; this assignment is prepared. It helps to represent the meaning of PESTLE analysis tools as well as the merits and demerits of the PESTLE analysis tools for the performance of the business firms. Secondly; this paper practically applies the PESTLE tools to a firm named Tesco. In the last phase of this paper; the methods of effective PESTLE framework for Tesco are described.

2.0 Overview of PESTLE’s models of external environment analysis

PESTLE tools indicate the Political, economic, social, technological, legal, and environmental issues of the business firms.  It is an important method for evaluating the external issues of the business organizations that affect them directly and indirectly (Cheverton, 2014). The PESTLE analysis tools have not only positive effects but also negative effects. The prime aim of this analysis is to bring the effect of the PESTLE analysis tools on the key performance o the business firms. At present; most business organizations are using the PESTLE analysis for finding their strengths, weaknesses, opportunities, and threats in the existing market. Political issues are very important for the organizations that directly affect the activities of the business organizations. In a similar way; the changes and fluctuation in the economical and social issues also influence the business performance negatively and positively. Technological development and environmental changes also influence business performance negatively and positively.

According to Harrison (2017), PESTLE analysis helps organizations to find the weaknesses and threats in advance. The advanced market information helps the business organizations to utilize the opportunities and overcome the threats in the existing market.  Gillespie (2017) mentioned that advanced information also helps business firms to make better decisions and implement the decision effectively and efficiently.

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 The PESTLE analysis tool has certain advantages. Firstly; the PESTLE analysis is very easy as well as a simple method of finding and evaluating the external environment of the business firms. Secondly; this analysis helps the organizations to find the weaknesses and threats in advance (Perera, 2017). Thirdly; PESTLE analysis identifies the strengths, weaknesses, opportunities, and threats of the business firms in the existing market. Fourthly; by analyzing PESTLE analysis tools; the business firms are able to overcome the challenges in the existing market. Fifthly; this analysis helps to find a better alternative for the firms and take appropriate decisions at the appropriate time (Sirmon, 2013). Finally; this analysis helps to improve the overall condition and the performance of the business firms.

Despite the advantages of PESTLE analysis tools; this analysis has certain limitations. Firstly; PESTLE analysis considers only the external environment of the business firms. Secondly, PESTLE analysis is suitable for all organizations.  Teignmouth Shore (2015) noted that the PESTLE analysis is done by using estimated information, not real data. Teignmouth Shore (2015) also suggested that sometimes PESTLE analysis gives wrong information that leads to incorrect decisions regarding the business firms.  A PESTLE analysis has several alternative methods including Porter’s Five Forces and SWOT that give more accurate information than the PESTLE analysis.

3.0 Application of PESTLE to Tesco

This assignment applies the PESTLE tools to a company named Tesco. In the UK; Tesco is considered the top retailer firm.  The headquarters of Tesco is located in England. Additionally; it has gained the 3^rd position in the retail company in the UK. In 1919; Tesco has started its journey. At present; it has 6553 stores in 12 nations all over the world (Tesco Plc, 2018). Tesco has a 28.4% market share of the total market share in the UK. Therefore; the PESTEL analysis helps to identify the political, economic, social, technological, legal, and environmental factors that affect the functions of Tesco………….

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