External Influences on Tesco
Tesco is a leading supermarket chain operating in six countries, mainly in Europe. These countries include the United Kingdom, Hungary, Republic of Ireland, Poland, Turkey, Czech Republic and Slovakia. Tesco also has stores in Asian countries like Japan, Malaysia, and South Korea among others. Like many multinational companies in the world, there are various external factors, which affect the performance of Tesco, as you will notice in this essay. These external facilities are mainly political and legislative, even though economic, social, environmental and technological factors come into play too.
Regarding employment laws, the government requires retailers to offer a range of jobs, including high-skilled, lower-paid, locally based, and centrally located jobs among others. This legislation is in place to ensure that organization meet the diverse needs of the population, ranging from students, senior citizens in the society and parents. Tesco understands the fact that retailers have a bigger role in creating jobs in any economy. It hires more students, aged and disabled workers who earn lower salaries. This category stands for desirable employees because of the high staff turnover of the industry.
Secondly, Tesco has a concern for economic factor since they influence costs, demand, profits, and prices. In most economies, unemployment is a major factor because it affects effective demand negatively. Normally, employment serves as a source of income, which gives people the power to purchase. When unemployment hit high levels, this power reduces, affecting the performance of Tesco. Even though most of these economic factors are usually out of the company’s control, they have significant impact on the performance of business organizations.
Socio-cultural factors also affect Tesco. Because of social changes in the United Kingdom, shopping trends among people have drastically changed. Today, most people prefer one-stop and bulk shopping. To keep pace with these changing trends, Tesco has increased its stock of non-food items on the shelves to ensure that its customers enjoy shopping at one point for their convenience. UK retailers are also shifting to value added services because of demographic changes in the country. Some of these factors include the aging UK population, decline home meal preparation and increased number of female workers in the country. Consumers are also more informed and concerned about health issues, which has direct impact on demand. This is also affecting their attitude towards certain foods in the market. To adapt to this changing mix, Tesco is increasing its organic products on shelves because of consumers’ beliefs.
Though it is a micro-environmental factor, technology has influenced Tesco’s development of most of its products. Importantly, new technology in the market benefits customers and the company simultaneously. Tesco has achieved high customer satisfaction because of convenient shopping, presence of personalized goods and services and availability of products. Tesco stores employ a wide range of technologies, including wireless devices, electronic shelve labeling, radio frequency identification, intelligent scale and self-checkout machine. Most of these technologies have improved Tesco’s efficiency in meeting the changing needs of customers and keeping pace with the stiff competition among retailers.
Environmentally, Tesco has to align its operations with government laws, which requires firms to beware of their responsibility in the society through environmental protection. Through regulation and governance, Tesco focuses at greater corporate social responsibility and ensuring that it gives back to the people in different ways. Government regulations like Food Retailing Commission (FRC) equally affect Tesco’s activities as the law dictates how firms interact with suppliers and controls alteration of prices without prior notice to concerned parties.
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