Pestel Analysis

3. PESTEL Analysis

PESTEL Analyses tool will help to analyze the indefinite and rapidly changing environment of Tesco. Various forces that are significantly impacting on the performance of the company will be identified for understanding the external environment.

Political factor

After China and its market expand to World Trade Organization, foreign trade began to develop in the country as most of the barriers of foreign trade and investments were removed. This was a huge encouragement for big companies to expand to the Chinese market which is the largest market in the world with its huge population of 1.3 million. Tesco also followed Western companies making way to the Chinese market (Straits Times, 2010). In 2009 Tesco and Chinese government made and agreement which allowed Tesco to create various joint ventures to develop shopping malls in the country. The joint ventures consisted of 3 malls: Fushan, Anshan and Qinhuangdao.

Additional 18 modern hypermarkets were opened in China in 2011 (Tesco, 2011). This means that the company is rapidly developing its foreign markets sector which accounts for a quarter of Tesco’s total profits.

Today’s globalized world has made a way for countries to promote free trade and make a way for international companies to expand to their markets (Lynch, 2003). After 10 ore countries joined the EU countries, all the European states started to promote the trade within the whole continent (BBC, 2013). Hence, it has been a good opportunity for Tesco to operate internationally across the whole European market.

Economic factor

As the economic factor is directly related to the social wellbeing of the customers and hence their purchasing behaviours, it is significantly important for Tesco to consider it for their strategic decisions. Though 2009 was a period of recessions in the United Kingdom, the government agreed to significantly reduce the interest rates. This lead to a higher number of unemployed population in 2010 (Euromonitor,...