In this report I will give my analysis of Tesco. I will explain the retail business and the sector which it operates in, I shall also explain PEEST – (Political, Economic, Ecological, Social and Technological) and the impact these macro-environmental factors may have on the business. I will discuss the working hours law (Political), the horsemeat scandal (Economical), saving the rainforest (Ecological), back to school stock (Social) and also the modern systems used within the stores (Technological). I will then give examples of how the economical forces influence the businesses workforce, customers and its stores.
a) Retail business and the sector it operates
Tesco has over 3300 stores in the UK, it is one of the largest multinational grocery stores that also sells a huge selection of other merchandise ranging from clothing, toys, electrical, entertainment, finance, insurance and fuel. It operates within the private sector and is a Public Limited Company (PLC) owned by its shareholders. The business is mainly classed as being in the tertiary sector due to it being the final point of sale for its products but can also be classed as being in the secondary sector due to its Tesco’s own brand products which it manufactures and then sells on itself. Within the business there are five different types of store: Tesco Express, Tesco Metro, Tesco Homeplus, Tesco Extra and Tesco Superstores. The business also operates online and has two other stores owned by the business but that have kept their own brand name: OneStop – a chain of convenience stores and Hobbies – a garden centre.
PEEST is an acronym for Political, Ecological/physical, Economic, Social/cultural and Technological. These are five macro-environmental forces that may impact on businesses. Below shows how each of these could impact on Tesco.
Employment law states that employees can only be required to work a certain number of hours each week. This means that the business needs to ensure that it has enough staff to cover all required shifts. Employees can opt-out of this and do extra hours as overtime should they wish to. If Tesco have more part-time employees they would have to employ more staff than if all workers do the maximum hours each week.
Economic factors can affect all business from the smallest such as a corner shop to the largest such as Tesco’s. In 2013 this is exactly what happened due to the horsemeat scandal. At this time the economic climate was already difficult and a scandal such as this impacted on the business affecting like-for-like sales of fresh and frozen products which fell drastically but the business dealt with the situation well and even won an award for its crisis management. Economic forces can hit businesses at any time but how the business reacts can determine whether or not they will survive.
Tesco are very aware of the impacts that their packaging, delivery trucks and carrier bags can have on the environment and introduced the Green Clubcard Points scheme and works hard to encourage customers to reuse carrier bags or buy a Bag for Life as a way of saving the Rainforest. The business also allows you to donate the clubcard points to “Together for Trees” so they automatically go towards saving the rainforest.
As a business Tesco needs to be aware of the social markets around them as and when they arise. For instance in August leading up to the new school year in September they will have school uniforms, stationary and other school equipment in stock. If they didn’t then parents may choose to do other shopping such as groceries in competitors stores who do provide such merchandise or who are closer to specialist retailers to save on multiple trips. This could impact on the businesses profits, especially if the store was in an area which had a high, school age population.
Technology is having an impact on businesses such as Tesco due to the ever changing nature of its uses such as the self-service tills that have been installed over the last several years in stores and new and updating security systems. Tesco needs to keep up-to-date with how it is constantly evolving and also must be efficient in its use as to not allow issues to arise with it.
c) Macro-environmental force- Technological
The world around us is evolving into a technologically reliant environment. Workforces can be affected in both a positive and negative way. For instance the self-service tills used at Tesco can mean that there is more staff available to be on hand on the shop floor improving customer service but could also mean that there is a need for less staff to be on duty cutting the amount of staff employed. Staff must also be kept up-to-date with the new systems which can mean costly retraining. Customers
The customers who shop in Tesco can also be affected by technology. The use of the self-service tills can create issues when it comes to their use. Customers can become agitated when problems arise due to scanning, weighing or age confirmation issues and have to wait around for a member of staff to come and correct the problem. Generally though these systems work to provide a quick and efficient shopping experience.
Tesco uses a variety of technology in its stores, from till systems, security alarms and computers in the offices. Problems can arise with these systems such as alarms malfunctioning and tills crashing, all of which can affect operations within the store in different ways. These systems must be serviced regularly and kept up-to-date to ensure the smooth running of the business. Technology has improved stores ‘profitability, management and control’ (Book 1, What is retailing?) Current technology allows Tesco to see at a glance what products are selling, like-for-likes and also control stock quicker than if done manually. (Word count – 261)
(Total word count – 982)
Part 2- Brief summary of TGF assessed activity 2: ethical consumer
In this discussion the group was asked to discuss whether or not we thought we are ethical consumers. I found it extremely interesting to see how many members of the group found that they would not consider themselves to be an ethical consumer. I myself admitted that until recently when I got with my partner that I never really spent any time thinking about what I bought or where it came from. But as my partner is vegan I have to spend a little extra time checking products if it is for us both. As stated in the activity people ‘shop for convenience most of the time’ ( M.Harvey, 2015). ‘We simply do not consider immediately the ethics of a product’ (C.Stewart, 2015). Another good point raised in the discussion is the point that what each and every one of us would consider ethical will for sure vary (R.Kent, 2015). I found this to be true as what I consider ethical such as eating meat and other animal products due to it being human nature my partner sees as being extremely unethical. So the main question I arrived at from this activity is what really is ethical? (Word count – 197)