Internal Factors Influencing The Strategy of Tesco Company

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 has 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 would to adhere to these laws, this would produce loyal employees.

Economical

According to the office for national statistics, in the past 5 years, the unemployment rate for people above the legal age has dropped steadily. This factor would likely indicate that the economical condition is slowly improving as economical factors would definitely affect demand and cost of goods. However, it is still imperative for the 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

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 and possessing different attitude and behavior , 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 of quality products with the lowest price is a common theme.

Technological

Advancement of technology has provided various opportunities for Tesco. The internet has helped shaped 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.

Legal

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, it could limit its entry into that particular sector (Mintel report, 2004).

Environmental

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 factories of businesses. These factors would cause consumers to opt for more green 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.