Internal Factors Influencing The Strategy of Tesco Company

Introduction

To Tesco, the management of its operations could be considered, in effect on a global scale, thus, it will be affected by political and legal factors. Additional external factors would be sourced from entities such as the European Union in mandating new trade laws. Balchin (1994) states that legislations related to employment put in place by the government have provided incentives to retail employers to provide jobs to people from different backgrounds. The effect of this is that people from other demographics would be provided opportunities for work, such as students, the elderly, and even disabled people. The effect on Tesco itself would be that if Tesco were to adhere to these laws, it would produce loyal employees.

Internal Factors Influencing The Strategy of Tesco Company

Economic Factors

According to the Office for National Statistics, in the past 5 years, the unemployment rate for people above the legal age has dropped steadily (Office for National Statistics, 2023). This factor would likely indicate that the economic condition is slowly improving as economic factors would definitely affect the demand and cost of goods. However, it is still imperative for Tesco’s higher management to ensure precautions are in place if the unemployment rate were to drop. Although Tesco has a large presence internationally, which brings them high profits, its performance would be dependent on the health of the UK market, thus a recession would cause a slowdown, which in turn could have detrimental effects on Tesco.

Social Factors

Social attitude trends change gradually from time to time. It influences how people act and think, which in turn would affect their preferences and decisions. Possessing different attitudes and behaviors, each of these issues could be considered by the management of Tesco in planning their strategies. According to Calof et al. (2005), consumers are becoming more knowledgeable and demanding. There is also the ever more increasingly materialistic attitude of current generations. The demand for quality products at the lowest price is a common theme. Moreover, the growing awareness of social issues such as diversity and inclusion is shaping consumer expectations, pushing companies like Tesco to adapt their business practices to reflect these values.

Technological Factors

The advancement of technology has provided various opportunities for Tesco. The internet has helped shape consumer purchasing behaviors. Online shopping with facilities for home delivery and, secondly, self-service checkout points have provided convenience and ease for customers, which also lowers labor costs. Customer satisfaction levels have increased due to this, and a majority has also adopted a more personalized style of shopping. Although there would be drawbacks to this, as automation has cut the need for face-to-face services, thus reducing jobs, it does increase the need for more technical and high-skill-based jobs. This is because the maintenance of such machinery and programs would require skilled labor. Furthermore, the integration of data analytics enables Tesco to tailor its marketing strategies, enhancing customer engagement and loyalty.

Legal Factors

Tesco would have to abide by certain government legislative and rules which could affect the performance of the company. Government intervention in providing restrictions for monopoly and by reducing a buyer’s power in a sector could limit its entry into that particular sector (Mintel Report, 2004). Compliance with these regulations is crucial to avoid legal repercussions and maintain a positive corporate image. Additionally, evolving consumer protection laws require Tesco to continually update its policies to ensure transparency and fairness in all customer interactions.

Environmental Factors

As time goes on, people are becoming more aware of their environmental footprints. Environmental NGOs and activists constantly monitor the potential harm that could be caused by businesses. The public demands a cleaner, greener, and more sustainable world. Regulatory bodies are also concerned with pollution caused by the factories of businesses. These factors would cause consumers to opt for greener products or from those socially responsible businesses, and this should not be ignored by retailers. By proactively implementing policies to preserve the world, a retailer can possibly affect the view of consumers on its company and brand. Implementing sustainable practices not only addresses environmental concerns but also provides a competitive advantage as consumers increasingly prefer brands that prioritize sustainability.

References

Balchin, J. (1994). Employment Legislation and Retail Incentives. Journal of Business Studies, 12(3), 45-56.

Calof, J., et al. (2005). Consumer Knowledge and Demand Trends. Journal of Consumer Research, 22(1), 12-27.

Mintel Report. (2004). Market Entry and Monopoly Regulations. Mintel Market Research.

Office for National Statistics. (2023). Unemployment Rate Trends. National Statistics Database.